ICC Holdings, Inc. (NASDAQ:ICCH) is a regional property and casualty insurance company focused exclusively on the food and beverage industry. The company has demonstrated strong financial performance, reporting annual net income of $4,256,895, annual revenue of $82,942,127, annual operating cash flow of $8,520,265, and annual free cash flow of $7,902,941.
Financials
In the latest quarter ended March 31, 2024, ICC Holdings reported direct premiums written of $23,736,000, up 14.0% from the same period in 2023. Net premiums earned increased by 13.6% to $20,222,000, driven by the company's increased premium writings in 2024 and 2023. The growth in premiums was partially offset by a rise in ceded earned premiums, which increased to 14.1% of direct premiums written from 11.2% in the prior-year quarter, due to increased direct earned premiums and the addition of a ceding allowance on the first excess reinsurance contracts.
Net investment income increased by 19.1% to $1,440,000 in the first quarter of 2024, reflecting higher rates on the fixed income portfolio and an increase in overall investment holdings. Other income, which represents additional charges to policyholders for services outside of the premium charge, decreased to $51,000 due to decreased sales at the company's Katkin subsidiary.
Losses and settlement expenses increased by 11.7% to $12,337,000 in the first quarter of 2024, primarily due to higher current year accident losses compared to the same period in 2023. Policy acquisition costs and other operating expenses rose by 20.7% to $7,663,000, driven by increases in salaries and commissions. The company's expense ratio increased by 220 basis points to 37.9% for the quarter.
Liquidity
ICC Holdings maintains a strong balance sheet, with total assets of $216,433,000 and equity of $68,685,000 as of March 31, 2024. The company's liquidity position remains robust, with cash and other investments maturing within one year of $20.3 million and an additional $47.6 million maturing between one and five years. ICC Holdings also has access to $48.2 million in borrowing capacity with the Federal Home Loan Bank of Chicago, of which $15.0 million was drawn as of March 31, 2024.
The company's underwriting performance has been solid, with a combined ratio of 97.1% for the first quarter of 2024, compared to 95.7% in the same period of 2023. This reflects the company's disciplined underwriting approach and effective risk management strategies.
Business Overview
ICC Holdings operates in a niche market, focusing exclusively on the food and beverage industry. Approximately 21.7% and 23.0% of the company's premium was written in Illinois for the three months ended March 31, 2024 and 2023, respectively. The company's geographic concentration in Illinois exposes it to potential regulatory and economic risks specific to that state.
In terms of the company's product mix, ICC Holdings primarily underwrites commercial multi-peril, liquor liability, workers' compensation, and umbrella liability coverages. The company's diversified product portfolio helps mitigate concentration risk and provides a balanced revenue stream.
Outlook
Looking ahead, ICC Holdings has not provided any specific guidance for the remainder of 2024. However, the company's strong market position, disciplined underwriting, and diversified product offerings suggest it is well-positioned to continue delivering consistent financial performance.
Risks and Challenges
One potential risk factor for ICC Holdings is the impact of inflation on its claims costs. The company's ability to maintain underwriting profitability in the face of rising inflation will be crucial. Additionally, the company's reliance on reinsurance to manage its exposure to large losses could be a source of risk if reinsurance costs increase or reinsurance capacity becomes more limited.
Conclusion
Overall, ICC Holdings has demonstrated its ability to navigate the challenges of the property and casualty insurance industry, delivering solid financial results and maintaining a strong balance sheet. The company's focus on the food and beverage industry, diversified product portfolio, and disciplined underwriting approach position it well for continued success.