FedNat Holding Company Reports Third Quarter of 2018 Results

SUNRISE, Fla., Nov. 06, 2018 (GLOBE NEWSWIRE) -- FedNat Holding Company (the “Company”) (Nasdaq: FNHC) today reported results for the three and nine months ended September 30, 2018.

Q3 2018 highlights (as measured against the same three-month period last year, except where noted):

• Net income of $8.0 million or $0.62 per diluted share.
• Annualized return on equity of 12.1%, excluding investment gains.
• 17.1% decrease in loss and loss adjustment expenses to $62.5 million.
• $4.1 million of claims, net of recoveries, from Hurricane Florence, Tropical Storm Gordon and other severe weather events.
• Gross written premiums of $139.0 million.
• 22.0% increase in net premiums earned to $98.5 million.
• Quarter-end Florida homeowners’ in-force policies of approximately 249,000.
• 50.7% increase in non-Florida homeowners’ in-force policies to approximately 41,000.
• Investment gains of $1.8 million, including unrealized gains across our equity portfolio.
• Reduced staffing by 15 positions during the quarter, representing approximately $0.9 million in annual savings as a result of our continued focus on maximizing operational efficiencies in our core lines of business.  Year-to-date decreased 85 positions representing approximately $5.1 million in annual savings.
• Book value per share increased 3.3% to $17.45 as compared to $16.89 as of June 30, 2018. Excluding accumulated other comprehensive income, book value per share increased 3.5% to $17.91 as of September 30, 2018 from $17.31 as of June 30, 2018, representing annualized growth of 14.0%.

Mr. Michael H. Braun, the Company’s Chief Executive Officer, said regarding the quarter’s results, “We continue to make progress in executing on our long-term growth objectives in a challenging market for Florida homeowners' insurers. Earnings were impacted by net retained losses due to Hurricane Florence and Tropical Storm Gordon and the continued wind-down of our non-core automobile and commercial general liability lines of business which we are exiting.  We also took action to strengthen our reserves in our core Homeowners line, in response to elevated fire and lightning claims in recent months. Net income was $8.0 million, or $0.62 cents, in the third quarter compared to last year’s quarterly loss from Hurricane Irma.  Revenue increased 18% over last year’s comparable quarter.  We improved non-catastrophe underwriting profitability and substantially improved our combined ratio from the prior year quarter. We continue to expand our non-Florida homeowners' business as gross premiums earned increased 54%.  I would like to acknowledge and thank our entire team though specifically our claims staff for providing excellent service to our policyholders in the aftermath of Hurricane Michael, which was truly catastrophic in nature.”

Mr. Braun added, “We are in a good position to deliver an improved performance in 2019 and beyond. Our new reinsurance program provides strong protection and has already helped reduce our costs and mitigate risk. Our plan is to continue to execute on our strategic priorities to grow market share in our core Homeowners business, increase our presence in nearby coastal states, while continuing to manage our risk.  These strategic initiatives combined with our underwriting expertise set the stage for a strong 2019.”

Consolidated

• Net income of $8.0 million or $0.62 per diluted share during the third quarter of 2018, as compared to net loss of $4.7 million or $0.36 per diluted share during the third quarter of 2017.
• Comparing to June 30, 2018, book value per share increased $0.56 to $17.45 at September 30, 2018.  The increase was predominantly driven by income of $0.62 per share, as noted above, offset by an increase in our accumulated other comprehensive loss of $0.04 per share.

Revenues

• Total revenue increased $12.1 million or 12.3%, to $110.8 million for the three months ended September 30, 2018, compared with $98.7 million for the three months ended September 30, 2017.  The increase was primarily driven by lower ceded premiums due to decreased reinsurance spend, partially offset by a decline in gross premiums earned and lower recognized investment gains for the three months ended September 30, 2018 as compared to the same period in 2017.
• With focus on profitability and managing our underwriting exposure, gross written premiums decreased $15.8 million, or 10.2%, to $139.0 million in the quarter, compared with $154.8 million for the same three-month period last year.  The decrease in premiums written is the result of declining premiums in the non-core businesses we are exiting, Automobile and commercial general liability, as well as a decline in homeowners Florida.  Our homeowners non-Florida business continues to show exceptional growth year over year, especially in the states of Texas and Louisiana.
• Gross premiums earned decreased $7.9 million, or 5.2%, to $144.9 million for the three months ended September 30, 2018, as compared to $152.8 million for the three months ended September 30, 2017.  The results are a reflection of our decision to exit the Automobile and commercial general liability lines and were partially offset by a 2.3% increase in earned premiums in Homeowners.  Additionally, in homeowners Florida, our 10.0% rate increase, effective August 1, 2017, has earned out and homeowners non-Florida continues to grow on an earned basis.
• Ceded premiums decreased $25.6 million, or 35.5%, to $46.4 million in the quarter, compared to $72.0 million the same three-month period last year.  The decrease was primarily driven by lower excess of loss reinsurance spend and lowering the homeowners Florida quota share from 10% to 2% as well as lower ceded premiums in Automobile as a result of decreases in premiums earned during the period.
• Other income decreased $1.5 million, or 28.9%, to $3.6 million in the quarter, compared with $5.1 million in the same three-month period last year, due to lower commission and brokerage revenue.  Commission income decreased as a result of lower Automobile fee income driven by the reduction in premiums earned and, to a lesser extent, lower fee income from other areas of the business.  The brokerage revenue decrease is the result of lower excess of loss reinsurance spend from the new reinsurance program, effective July 1, 2018.

Expenses

• Losses and loss adjustment expenses (“LAE”) decreased $12.9 million, or 17.1%, to $62.5 million for the three months ended September 30, 2018, compared with $75.4 million for the same three-month period last year.  The net loss ratio decreased 29.9 percentage points, to 63.4% in the current quarter, as compared to 93.3% in the third quarter of 2017.  The lower ratio was the result of the decrease in net losses from severe weather ($6.1 million in the third quarter of 2018, impacts of Hurricane Florence and Tropical Storm Gordon, as compared to $26.9 million in the prior year quarter, impacts of Hurricane Irma and Hurricane Harvey) and the decrease in the size of Automobile ($4.4 million lower losses, including adverse development) driven by the closure of poor performing programs.  These decreases were partially offset by $7.5 million of lower ceded losses related to Homeowners quota share treaties in the third quarter of 2018 as compared to the third quarter of 2017.
• The net expense ratio decreased 4.5 percentage points, to 36.9% in the current quarter, as compared to 41.4% in the third quarter of 2017.  Commissions and other underwriting expenses increased $3.0 million, or 10.5%, to $31.4 million for the three months ended September 30, 2018, compared with $28.4 million for the three months ended September 30, 2017.  The increase is made up of lower ceding commissions as a result of homeowners Florida quota share percentage being reduced from 10% to 2% and higher homeowners non-Florida commission costs due to higher premiums earned.  These items are offset by lower salaries and wages from the impact of our headcount reduction initiatives.
• Interest expense increased $0.9 million to $1.0 million for the three months ended September 30, 2018, compared with $0.1 million in the prior year period. The increase in interest expense is the result of the Company issuing $45.0 million of senior notes, late in December 2017.  During the third quarter of 2017, the Company only had $5.0 million of debt on its balance sheet.

Line of Business Results

• Homeowners’ net income for the current quarter was $8.2 million, which included 32.6% growth in net premiums earned compared to the third quarter of 2017.  The combined ratio for the current quarter was 93.6%, which includes strengthening of loss reserves related to higher level of fire and lightning related losses.
• Automobile's net loss for the third quarter of 2018 was $1.4 million, as compared with a loss of $1.2 million in the prior year quarter, driven by prior year reserve development and our ongoing exit from this line of business.  During the quarter, the Company finalized a novation agreement to transfer all in-force policies and renewal rights of its Texas Automobile book of business to a third party, effective August 1, 2018.
• Other’s net income of $1.2 million in the third quarter of 2018, includes $3.1 million of net investment income, $1.8 million of investment gains and $1.0 million of interest expense, as well as adverse prior year development in our commercial general liability book of business.

Subsequent Events

• On October 10, 2018, Hurricane Michael made landfall in the panhandle region of Florida.  The Company currently estimates that its aggregate gross losses as a result of Hurricane Michael will be approximately $275 million according to preliminary post landfall catastrophe model estimates.  The Company believes that its losses, including both Florida and Non-Florida exposures, net of reinsurance, should not exceed its first event pre-tax retention amount of $23 million.  For additional information, refer to the Company's Form 8-K dated October 15, 2018.
• In conjunction with the Company’s post-hurricane season capital management planning, effective October 1, 2018, FNIC has adjusted the cession percentage on its current quota share treaty, which became effective on July 1, 2018, from 2% to 10%.  No other terms of the treaty were modified.  This treaty covers FNIC’s Florida homeowners book of business, on an in-force, new and renewal basis, and excludes named storms.  For additional information on this treaty, refer to the Company's Form 8-K dated June 29, 2018.

Conference Call Information

The Company will hold an investor conference call at 9:00 AM (ET) Wednesday, November 7, 2018. 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: 2775258

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

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

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

About the Company

The Company is an 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, are 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 currently operates in Georgia, Texas, Alabama, and Florida, pending our withdrawal. The “Other” line of business primarily consists of our commercial general liability (pending our withdrawal) 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,
or Erick A. Fernandez (954) 308-1341

FEDNAT HOLDING COMPANY AND SUBSIDIARIES Consolidated Statement of Operations (In thousands, except per share data) (Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2018				2017				2018				2017
Revenues:
Net premiums earned		$	98,493			$	80,764			$	264,159			$	245,978
Net investment income		3,137				2,603				9,058				7,481
Net realized and unrealized investment gains (losses)		1,760				6,101				916				8,644
Direct written policy fees		3,796				4,098				10,685				13,617
Other income		3,646				5,131				14,833				14,190
Total revenues		110,832				98,697				299,651				289,910

Costs and expenses:
Losses and loss adjustment expenses		62,457				75,367				156,098				188,683
Commissions and other underwriting expenses		31,373				28,386				91,467				86,883
General and administrative expenses		5,000				5,042				16,345				14,737
Interest expense		1,032				81				3,139				247
Total costs and expenses		99,862				108,876				267,049				290,550

Income (loss) before income taxes		10,970				(10,179		)		32,602				(640		)
Income tax expense (benefit)		3,020				(3,781		)		8,587				(358		)
Net income (loss)		7,950				(6,398		)		24,015				(282		)
Net income (loss) attributable to non-controlling interest		—				(1,674		)		(218		)		(1,975		)
Net income (loss) attributable to FedNat Holding Company shareholders		$	7,950			$	(4,724	)		$	24,233			$	1,693

Net Income (Loss) Per Common Share
Basic		$	0.62			$	(0.36	)		$	1.90			$	0.13
Diluted		$	0.62			$	(0.36	)		$	1.88			$	0.13

Weighted Average Number of Shares of Common Stock Outstanding
Basic		12,749				13,135				12,775				13,211
Diluted		12,870				13,135				12,866				13,302

Dividends Declared Per Common Share		$	—			$	0.08			$	0.16			$	0.24

FEDNAT HOLDING COMPANY AND SUBSIDIARIES Selected Operating Metrics (Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2018				2017				2018				2017
		(In thousands)
Gross premiums written:
Homeowners Florida		$	114,441			$	126,211			$	355,818			$	373,875
Homeowners non-Florida		22,062				15,198				59,096				40,381
Automobile		(3,041		)		7,176				8,628				37,089
Commercial general liability		1,435				2,546				5,519				8,768
Federal flood		4,125				3,651				11,090				9,412
Total gross premiums written		$	139,022			$	154,782			$	440,151			$	469,525

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2018				2017				2018				2017
		(In thousands)
Gross premiums earned:
Homeowners Florida		$	118,603			$	121,771			$	356,507			$	359,147
Homeowners non-Florida		17,984				11,734				47,072				31,064
Automobile		2,766				13,525				17,876				43,932
Commercial general liability		2,122				3,005				7,144				9,339
Federal flood		3,432				2,744				9,640				7,838
Total gross premiums earned		$	144,907			$	152,779			$	438,239			$	451,320

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2018				2017				2018				2017
		(In thousands)
Net premiums earned:
Homeowners		$	95,805			$	72,266			$	252,857			$	217,820
Automobile		675				5,648				4,526				19,303
Commercial general liability		2,013				2,850				6,776				8,855
Total net premiums earned		$	98,493			$	80,764			$	264,159			$	245,978

FEDNAT HOLDING COMPANY AND SUBSIDIARIES Selected Operating Metrics (continued) (Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2018				2017				2018				2017
		(In thousands)
Commissions and other underwriting expenses:
Homeowners Florida		$	14,258			$	14,707			$	42,796			$	43,171
All others		4,866				5,853				14,488				17,150
Ceding commissions		(689		)		(5,457		)		(8,777		)		(14,511		)
Total commissions		18,435				15,103				48,507				45,810
Automobile		1,466				1,742				4,229				6,653
Homeowners non-Florida		571				371				1,354				983
Total fees		2,037				2,113				5,583				7,636
Salaries and wages		3,147				3,958				11,282				11,361
Other underwriting expenses		7,754				7,212				26,095				22,076
Total commissions and other underwriting expenses		$	31,373			$	28,386			$	91,467			$	86,883

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2018				2017				2018				2017
Net loss ratio		63.4		%		93.3		%		59.1		%		76.7		%
Net expense ratio		36.9		%		41.4		%		40.8		%		41.3		%
Combined ratio		100.3		%		134.7		%		99.9		%		118.0		%
Gross loss ratio		50.1		%		254.4		%		108.5		%		118.7		%
Gross expense ratio		25.6		%		25.5		%		26.6		%		25.7		%
Book value per share excluding non-controlling interest		$	17.45			$	15.93			$	17.45			$	15.93

FEDNAT HOLDING COMPANY AND SUBSIDIARIES Consolidated Balance Sheet (Unaudited)
		September 30,				December 31,
		2018				2017
ASSETS		(In thousands)
Investments:
Debt securities, available-for-sale, at fair value		$	424,148			$	423,238
Debt securities, held-to-maturity, at amortized cost		5,255				5,349
Equity securities, at fair value		19,535				15,434
Total investments		448,938				444,021
Cash and cash equivalents		69,457				86,228
Prepaid reinsurance premiums		134,285				135,492
Premiums receivable, net of allowance		34,286				46,393
Reinsurance recoverable, net		134,736				124,601
Deferred acquisition costs, net		47,395				40,893
Income taxes, net		3,006				9,817
Property and equipment, net		4,120				4,025
Other assets		14,388				13,403
Total assets		$	890,611			$	904,873

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Loss and loss adjustment expense reserves		$	221,114			$	230,515
Unearned premiums		296,329				294,423
Reinsurance payable		77,004				71,944
Long-term debt, net of deferred financing costs		44,377				49,251
Deferred revenue		4,913				6,222
Other liabilities		23,938				25,059
Total liabilities		667,675				677,414
Shareholders' Equity
Preferred stock, $0.01 par value: 1,000,000 shares authorized		—				—
Common stock, $0.01 par value: 25,000,000 shares authorized; 12,774,444 and 12,988,247 shares issued and outstanding, respectively		128				130
Additional paid-in capital		140,608				139,728
Accumulated other comprehensive income (loss)		(5,901		)		1,770
Retained earnings		88,101				70,009
Total shareholders’ equity attributable to FedNat Holding Company shareholders		222,936				211,637
Non-controlling interest		—				15,822
Total shareholders’ equity		222,936				227,459
Total liabilities and shareholders' equity		$	890,611			$	904,873

FEDNAT HOLDING COMPANY AND SUBSIDIARIES SUPPLEMENTAL INFORMATION Statements of Operations and Operating Metrics by Line of Business (Unaudited)
	Three Months Ended September 30,
	2018																2017
	Homeowners				Automobile				Other				Consolidated				Homeowners				Automobile				Other				Consolidated
	(Dollars in thousands)
Revenues:
Gross premiums written	$	136,503			$	(3,041	)		$	5,560			$	139,022			$	141,409			$	7,176			$	6,197			$	154,782
Gross premiums earned	136,587				2,766				5,554				144,907				133,505				13,525				5,749				152,779
Ceded premiums	(40,782		)		(2,091		)		(3,541		)		(46,414		)		(61,239		)		(7,877		)		(2,899		)		(72,015		)
Net premiums earned	95,805				675				2,013				98,493				72,266				5,648				2,850				80,764
Net investment income	—				—				3,137				3,137				—				—				2,603				2,603
Net realized and unrealized investment gains (losses)	—				—				1,760				1,760				—				—				6,101				6,101
Direct written policy fees	2,198				1,466				132				3,796				2,204				1,742				152				4,098
Other income	2,613				191				842				3,646				3,183				752				1,196				5,131
Total revenues	100,616				2,332				7,884				110,832				77,653				8,142				12,902				98,697
Costs and expenses:
Losses and loss adjustment expenses	56,856				2,609				2,992				62,457				65,600				7,013				2,754				75,367
Commissions and other underwriting expenses	28,647				1,545				1,181				31,373				24,184				2,978				1,224				28,386
General and administrative expenses	4,187				75				738				5,000				3,915				150				977				5,042
Interest expense	—				—				1,032				1,032				81				—				—				81
Total costs and expenses	89,690				4,229				5,943				99,862				93,780				10,141				4,955				108,876
Income (loss) before income taxes	10,926				(1,897		)		1,941				10,970				(16,127		)		(1,999		)		7,947				(10,179		)
Income tax expense (benefit)	2,768				(481		)		733				3,020				(6,221		)		(771		)		3,211				(3,781		)
Net income (loss)	8,158				(1,416		)		1,208				7,950				(9,906		)		(1,228		)		4,736				(6,398		)
Net income (loss) attributable to non-controlling interest	—				—				—				—				(1,674		)		—				—				(1,674		)
Net income (loss) attributable to FNHC shareholders	$	8,158			$	(1,416	)		$	1,208			$	7,950			$	(8,232	)		$	(1,228	)		$	4,736			$	(4,724	)
Ratios to net premiums earned:
Net loss ratio	59.3		%		386.5		%		148.6		%		63.4		%		90.8		%		124.2		%		96.6		%		93.3		%
Net expense ratio	34.3		%										36.9		%		38.9		%										41.4		%
Combined ratio	93.6		%										100.3		%		129.7		%										134.7		%

FEDNAT HOLDING COMPANY AND SUBSIDIARIES SUPPLEMENTAL INFORMATION Statements of Operations and Operating Metrics by Line of Business (Unaudited)
	Nine Months Ended September 30,
	2018																2017
	Homeowners				Automobile				Other				Consolidated				Homeowners				Automobile				Other				Consolidated
	(Dollars in thousands)
Revenues:
Gross premiums written	$	414,914			$	8,628			$	16,609			$	440,151			$	414,256			$	37,089			$	18,180			$	469,525
Gross premiums earned	403,579				17,876				16,784				438,239				390,211				43,932				17,177				451,320
Ceded premiums	(150,722		)		(13,350		)		(10,008		)		(174,080		)		(172,391		)		(24,629		)		(8,322		)		(205,342		)
Net premiums earned	252,857				4,526				6,776				264,159				217,820				19,303				8,855				245,978
Net investment income	—				—				9,058				9,058				—				—				7,481				7,481
Net realized and unrealized investment gains (losses)	—				—				916				916				—				—				8,644				8,644
Direct written policy fees	5,978				4,229				478				10,685				6,501				6,652				464				13,617
Other income	10,560				1,084				3,189				14,833				8,705				2,661				2,824				14,190
Total revenues	269,395				9,839				20,417				299,651				233,026				28,616				28,268				289,910
Costs and expenses:
Losses and loss adjustment expenses	141,428				6,777				7,893				156,098				159,497				25,119				4,067				188,683
Commissions and other underwriting expenses	83,284				5,021				3,162				91,467				72,073				11,091				3,719				86,883
General and administrative expenses	13,361				275				2,709				16,345				11,288				500				2,949				14,737
Interest expense	100				—				3,039				3,139				247				—				—				247
Total costs and expenses	238,173				12,073				16,803				267,049				243,105				36,710				10,735				290,550
Income (loss) before income taxes	31,222				(2,234		)		3,614				32,602				(10,079		)		(8,094		)		17,533				(640		)
Income tax expense (benefit)	7,911				(566		)		1,242				8,587				(3,886		)		(3,123		)		6,651				(358		)
Net income (loss)	23,311				(1,668		)		2,372				24,015				(6,193		)		(4,971		)		10,882				(282		)
Net income (loss) attributable to non-controlling interest	(218		)		—				—				(218		)		(1,975		)		—				—				(1,975		)
Net income (loss) attributable to FNHC shareholders	$	23,529			$	(1,668	)		$	2,372			$	24,233			$	(4,218	)		$	(4,971	)		$	10,882			$	1,693
Ratios to net premiums earned:
Net loss ratio	55.9		%		149.7		%		116.5		%		59.1		%		73.2		%		130.1		%		45.9		%		76.7		%
Net expense ratio	38.3		%										40.8		%		38.3		%										41.3		%
Combined ratio	94.2		%										99.9		%		111.5		%										118.0		%