FedNat Holding Company Inc. (FNHC) stock plunge during pre-market trading. Here’s the update

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FedNat Holding Company Inc. (NASDAQ: FNHC) stock gained by 17.53% at last close while the FNHC stock price declines by 18.31% in the pre-market trading session. FedNat Holding Company is a regional insurance holding company that, through its affiliates and contractual ties with independent agents and general agents, regulates nearly all elements of the insurance underwriting, marketing, and claims operations.

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FNHC stock, Financial Outcomes

FedNat Holding announced second-quarter 2021 financial highlights, here’s the summary:


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  • $50.4 million has been calculated in net loss, largely due to a non-cash charge of $17.0 million for a valuation allowance against their net deferred tax asset.
  • $50.5 million in adjusted operating loss of $(2.90) per diluted share, principally due to a non-cash charge of $17.0 million for a valuation allowance against our net deferred tax asset. Adjusted operating loss of $33.5 million, with the exception of the non-cash charge, compares to $28.1 million or $(2.05) per diluted share.
  • $17.3 million has been reported in extra ceded premiums from 2020/2021 treaty year retention events due to further excess-of-loss reinsurance acquisitions and reinstatement charges.
  • There were $196.3 million in gross written premiums compared to $205.4 million the previous year.
  • The current quarter’s gross loss ratio is 35.4 percent, with a gross expense ratio of 24.2 percent, compared to 39.8 percent and 21.2 percent in the second quarter of 2020, respectively
  • The Company completed an offering of $21.0 million in convertible Senior Unsecured Notes due 2026 on April 20, 2021, with interest paid semi-annually at a fixed rate of 5.0 percent per year.
  • Non-insurance business liquidity was about $80 million as of June 30, 2021, but it dropped to $40 million as a consequence of surplus injections into our insurance carriers as a result of the second-quarter performance.
  • As of June 30, 2021, the book value per share was $5.64.

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Michael H. Braun, FedNat’s Chief Executive Officer commented,

High catastrophic losses, as well as big expenditures from extra reinsurance purchases and reinstatement charges, weighed heavily on FedNat’s earnings this quarter as the company attempted to lessen the effect of weather losses on their insurance businesses’ statutory capital. They were able to maintain acceptable capital balances at their insurance firms as a result of these efforts and capital downstreaming. The effect of a non-cash charge for a valuation allowance against their net deferred tax assets is also included in FedNat’s second-quarter profits. They anticipate realizing the net deferred tax assets in the future; nevertheless, the timing of this recognition will be determined by the timing of pre-tax revenue earned in future quarters.

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