NASHVILLE, TN / ACCESS Newswire / March 4, 2025 / First Acceptance Corporation (OTCQX:FACO) today reported its financial results for the quarter and year ended December 31, 2024. A quarterly report can be found at www.otcmarkets.com/stock/FACO/disclosure.
Income before income taxes, for the three months ended December 31, 2024 was $9.5 million, compared with $84.0 million (or $11.0 million excluding the gain on the sale of the insurance agency of $73.0 million) for the three months ended December 31, 2023. Net income for the three months ended December 31, 2024 was $8.2 million, compared with $62.4 million for the three months ended December 31, 2023. Diluted net income per share was $0.21 for the three months ended December 31, 2024, compared with $1.62 for the same period in the prior year (or $0.21 excluding the after-tax gain on the sale of the insurance agency).
Income before income taxes, for the year ended December 31, 2024 was $33.4 million, compared with $99.0 million (or $26.0 million excluding the gain on the sale of the insurance agency of $73.0 million) for the year ended December 31, 2023. Net income for the year ended December 31, 2024 was $26.3 million, compared with $73.9 million for the year ended December 31, 2023. Diluted net income per share was $0.67 for the year ended December 31, 2024, compared with $1.92 for the same period in the prior year (or $0.51 excluding the after-tax gain on the sale of the insurance agency).
For the three months ended December 31, 2024, we recognized favorable prior period loss and LAE development of $1.9 million, compared with unfavorable prior period development of $2.0 million for the same period in the prior year. For the year ended December 31, 2024, we recognized $13.3 million of unfavorable prior period loss and LAE development compared with $1.7 million for the same period in the prior year. As a result of this unfavorable prior period loss and LAE development, we recognized a reduction in commission expense from a contingent commission adjustment to an independent agent of $11.8 million, for the year ended December 31, 2024.
Revenues for the year ended December 31, 2024 were reduced by ceded premiums earned of $47.4 million from a new reinsurance agreement that was effective July 1, 2024 and also did not include commission and fee income from the insurance agency that was sold effective December 1, 2023.
The Company's President and Chief Executive Officer, Ken Russell commented "After rebounding from negative insurance industry conditions following the COVID pandemic, First Acceptance management is proud of our financial accomplishments over the past two fiscal years.
In 2022, our financial results were negatively impacted by a nationwide increase in used car prices and vehicle repair costs resulting from post-pandemic market reactions and supply chain disruptions. However, since the end of 2022, the Company has experienced eight consecutive quarters of profitable operations. This turnaround was achieved primarily through growth in premiums written along with necessary regulatory rate increases and the continuous monitoring and adjusting of underwriting standards. Additionally, our investment management team was able to take advantage of favorable market and interest rate changes in concert with our continually increasing investable assets.
The sale of our insurance agency operations in December 2023 provided the Company with sufficient statutory capital to generate gross premiums written in 2024 in excess of $500 million, which is an all-time high for the Company. Highlighted by record earnings per share of $0.69 and book value per share of $4.44, this continual growth, combined with effective claims handling, cost containment, and the transition to a total independent agency distribution system, lead to the following significant financial achievements over the past two fiscal years:
Income before income taxes were $26.0 million in 2023 (after excluding the $73.0 million gain on the sale of the insurance agency) and increased to $33.4 million in 2024.
Gross premiums written (before reinsurance) were $542.7 million in 2024 reflecting an increase of 101% from $269.6 million in 2022.
Investment income increased from $3.9 million in 2022 to $18.4 million in 2024 driven by favorable market conditions and the increase in cash and invested assets from $176.8 at December 31, 2022 to $407.8 million at December 31, 2024.
Tangible book value per share increased from $0.85 at December 31, 2022 to $4.41 at December 31, 2024, primarily the result of diluted earnings per share of $1.92 in 2023 (or $0.51 excluding the after-tax gain on the sale of the insurance agency) and $0.69 in 2024.
These positive accomplishments should provide our stockholders with confidence in the resilience of First Acceptance and its leadership to weather through challenging conditions and protect the value of their investment."
About First Acceptance Corporation
First Acceptance Corporation is an insurance holding company headquartered in Nashville that underwrites non-standard personal automobile insurance through insurance companies known as the First Acceptance Insurance Group. Subsequent to December 1, 2023, we solely offer our own underwritten insurance policies through independent agents.
Additional information about First Acceptance Corporation can be found online at www.firstacceptance.com.
Forward-Looking Statements
This press release contains forward-looking statements. All statements made other than statements of historical fact are forward-looking statements. You can identify these statements from our use of the words "believe," "expect," "look," or the negative of these objective terms and similar expressions. These statements, which have been included in reliance on the "safe harbor" provisions of the federal securities laws, involve risks and uncertainties. Investors are hereby cautioned that these statements may be affected by important factors, including, among others, the factors set forth under the caption "Risk Factors" in our Annual Report for the year ended December 31, 2024, filed by the Company with the OTCQX. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
First Acceptance Corporation and Subsidiaries Condensed Consolidated Statements of Income (amounts in thousands, except per share data)
