UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
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Securities
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Definitive
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Soliciting
Material under §240.14a-12 |
1347
PROPERTY INSURANCE HOLDINGS, INC.
(Name
of Registrant as Specified in Its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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of Filing Fee (check the appropriate box):
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On
November 16, 2020, 1347 Property Insurance Holdings, Inc. (the
“Company”) issued a press release, which includes a discussion of
the Company’s annual meeting to be held on December 14, 2020 (the
“Annual Meeting”) and the Company’s intended name change to FG
Financial Group, Inc., which is one of the ballot items to be voted
on at the Annual Meeting. Proxies to be voted at the Annual Meeting
may be solicited on our behalf by our directors, officers and
employees telephonically, electronically or by other means of
communication, and by Alliance Advisors, LLC, whom we have hired to
assist in the solicitation of proxies for the Annual Meeting.
Alliance Advisors, LLC will receive a fee of $5,000, plus
reasonable out-of-pocket costs and expenses, for its
services.
The
press release dated November 16, 2020 is set forth
below:
1347 PROPERTY INSURANCE HOLDINGS, INC. REPORTS THIRD QUARTER 2020
FINANCIAL RESULTS;
PLANS TO CHANGE NAME TO FG FINANCIAL GROUP, INC.
Company
Formally Names Larry Swets, Jr. Chief Executive
Officer
St.
Petersburg, FL – November 16, 2020 – 1347 Property Insurance
Holdings, Inc. (Nasdaq: PIH) (the “Company”), a holding company
which is implementing business plans to operate as a diversified
holding company of reinsurance and investment management
businesses, today announced the filing of its financial results for
its third fiscal quarter ended September 30, 2020 on Form 10-Q,
which can be found at the SEC’s website at www.sec.gov, or at PIH’s
corporate website: www.1347pih.com.
The
company will hold its annual meeting on December 14, 2020, the
details of which can be found in the annual proxy statement filed
with the Securities and Exchange Commission on October 30, 2020.
Among the ballot items to be voted on at the annual meeting is the
intended name change of the company to FG Financial Group, Inc. to
better reflect the Company’s diversified holding company strategy.
Upon approval of the name change, the company expects to change the
ticker of its common stock on the NASDAQ market to “FGF”, while the
series A preferred shares, also traded on the NASDAQ market, will
trade with the ticker “FGFPP”.
Select
Q3 2020 Financial Results
Net
loss attributable to common shareholders was $9.9 million for the
quarter, or $1.69 per diluted share. General and administrative
expenses in the quarter were $1.9 million. Major non-operating
items contributing to the net loss included:
|
|
● |
Non-cash
losses associated with the change in fair value of the Company’s
investment in the common stock of FedNat Holding Company (Nasdaq:
FNHC) (“FedNat”) of $5.8 million. |
|
|
● |
Realized
losses of $2.1 million associated with the sale of 330,231 FNHC
shares pursuant to a Share Repurchase and Cooperation Agreement
transaction entered into with Hale Partnership Capital Management,
LLC, which yielded an increase of treasury shares of 1,130,512, or
$5.2 million. |
As
of September 30, 2020, key balance sheet items
included:
|
|
● |
Cash
and cash equivalents of $15.2 million. |
|
|
● |
Equity
securities, consisting of 1,442,871 shares of common stock of
FedNat, with a cost basis of $20.8 million. As of September 30,
2020, the equity securities were valued at $9.1 million, compared
with $19.6 million as of June 30, 2020, as the share price declined
during the period and the company reduced its holdings. |
|
|
● |
Limited
liability investments totaling $9.3 million, which primarily
consists of $4.0 million to sponsor the launch of FG Special
Situations Fund, LP through Fundamental Global Asset Management
(“FGAM”), and $4.6 million invested in FGI Metrolina Property
Income Fund, LP (“Metrolina”). |
|
|
● |
Book
value per common share of approximately $3.81. |
1347
Property Insurance Holdings, Inc.
November
16, 2020
Appointment
of Larry Swets, Jr. as Chief Executive Officer
|
|
● |
The
Company has appointed the Interim Chief Executive Officer of the
Company, Larry G. Swets Jr., to serve as the Company’s Chief
Executive Officer, effective November 10, 2020. Mr. Swets, who has
served as a director of the Company since November 2013 and
previously served as the Company’s Chairman from March 2017 to May
2018, had been appointed to serve as the Company’s Interim Chief
Executive Officer in June 2020. |
Other
Information
|
|
● |
As of
November 11, 2020, the value of the Company’s investment in FedNat
common stock was $9.3 million, resulting in a pre-tax, unrealized
holding gain, of $0.2 million for the period beginning October 1
and ending November 11, 2020. |
|
|
● |
On
September 14, 2020 and September 28, 2020 the Company invested $2
million and $3 million, respectively into its joint venture, FGAM,
to capitalize FG Special Situations Fund Advisor, LLC (“Advisor”),
a Delaware limited liability company formed on September 2, 2020,
and to sponsor the launch of FG Special Situations Fund, LP (the
“Fund”), a Delaware limited partnership formed on September 2,
2020. The Fund’s investment will be used by FG New America
Investors, LLC (the “Sponsor”) as part of a total of $8.6 million
of risk capital used to launch FG New America Acquisition Corp
(NYSE: FGNA), a newly formed special purpose acquisition company
which consummated its initial public offering on October 2,
2020. |
About 1347 Property Insurance Holdings, Inc.
1347
Property Insurance Holdings, Inc. is implementing business plans to
operate as a diversified insurance, reinsurance and investment
management holding company and is incorporated in Delaware. The
Company endeavors to make opportunistic and value-oriented
investments in insurance, reinsurance and related businesses. The
Company’s principal business operations are conducted through its
subsidiaries and affiliates. The Company also provides investment
management services to unaffiliated companies.
Forward Looking Statements
This
press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended
(the “Securities Act”), and Section 21E of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). These statements are
therefore entitled to the protection of the safe harbor provisions
of these laws. These statements may be identified by the use of
forward-looking terminology such as “anticipate,” “believe,”
“budget,” “can,” “contemplate,” “continue,” “could,” “envision,”
“endeavor,” “estimate,” “expect,” “evaluate,” “forecast,” “goal,”
“guidance,” “indicate,” “intend,” “likely,” “may,” “might,”
“outlook,” “plan,” “possibly,” “potential,” “predict,” “probable,”
“probably,” “pro-forma,” “project,” “seek,” “should,” “target,”
“view,” “will,” “would,” “will be,” “will continue,” “will likely
result”, “change” or the negative thereof or other variations
thereon or comparable terminology. In particular, discussions and
statements regarding the Company’s expectations as to its financial
results and the Company’s future business plans and initiatives are
forward-looking in nature.
1347
Property Insurance Holdings, Inc.
November
16, 2020
We
have based these forward-looking statements on our current
expectations, assumptions, estimates, and projections. While we
believe these to be reasonable, such forward-looking statements are
only predictions and involve a number of risks and uncertainties,
many of which are beyond our control. These and other important
factors may cause our actual results, performance, or achievements
to differ materially from any future results, performance or
achievements expressed or implied by these forward-looking
statements, and may impact our ability to implement and execute on
our future business plans and initiatives. You should be aware that
many of the risks listed below were, and are expected to continue
to be, exacerbated by the COVID-19 pandemic. Management cautions
that the forward-looking statements in this press release are not
guarantees of future performance, and we cannot assume that such
statements will be realized or the forward-looking events and
circumstances will occur. Factors that might cause such a
difference include, without limitation: risks associated with our
limited business operations since the closing of the sale of all of
the issued and outstanding equity of three of the Company’s
wholly-owned insurance subsidiaries to FedNat Holding Company (the
“Asset Sale”); risks associated with our inability to identify and
realize business opportunities, and the undertaking of any new such
opportunities, following the Asset Sale; our ability to change our
name and effect the required approvals to change our name; our
ability to spend or invest the net proceeds from the Asset Sale in
a manner that yields a favorable return; general conditions in the
global economy, including the impact of health and safety concerns
from the current COVID-19 pandemic and the impact of governmental
measures taken in response thereto; the uncertainty and difficulty
in predicting the ultimate impact of the COVID-19 pandemic on our
business; our lack of operating history or established reputation
in the reinsurance industry; our inability to obtain or maintain
the necessary approvals to operate reinsurance subsidiaries; risks
associated with operating in the reinsurance industry, including
inadequately priced insured risks, credit risk associated with
brokers we may do business with, and inadequate retrocessional
coverage; our inability to execute on our investment and investment
management strategy, risks associated with the Company’s
investments and joint ventures; potential loss of value of
investments; the risk of becoming or being deemed an investment
company; fluctuations in our short-term results as we implement our
new business strategy; risks of being unable to attract and retain
qualified management and personnel to implement and execute on our
business and growth strategy; failure of our information technology
systems, data breaches and cyber-attacks; our ability to establish
and maintain an effective system of internal controls; our limited
operating history as a publicly traded company; the requirements of
being a public company and losing our status as a smaller reporting
company or becoming an accelerated filer; any potential conflicts
of interest between us and our controlling stockholders and
different interests of controlling stockholders; potential
conflicts of interest between us and our directors and executive
officers; the impact of the COVID-19 pandemic on the business of
FedNat Holding Company; continued volatility or further decline in
the value of the shares of FedNat Holding Company common stock
received by us as consideration in the Asset Sale or limitations
and restrictions with respect to our ownership of such shares;
risks of being a minority stockholder of FedNat Holding Company;
and risks of our inability to continue to satisfy the continued
listing standards of the Nasdaq following completion of the Asset
Sale.
Our
expectations and future plans and initiatives may not be realized.
If one of these risks or uncertainties materialize, or if our
underlying assumptions prove incorrect, actual results may vary
materially from those expected, estimated or projected. You are
cautioned not to place undue reliance on forward-looking
statements. The forward-looking statements included in this press
release are made only as of the date hereof and do not necessarily
reflect our outlook at any other point in time. We do not undertake
and specifically decline any obligation to update any such
statements or to publicly announce the results of any revisions to
any such statements to reflect new information, future events or
developments.
INVESTOR
RELATIONS:
The
Equity Group Inc.
Jeremy
Hellman, CFA
Vice
President
(212)
836-9626 / jhellman@equityny.com
1347
Property Insurance Holdings, Inc.
November
16, 2020
1347
PROPERTY INSURANCE HOLDINGS, INC.
Consolidated
Statements of Operations and Comprehensive Loss
($
in thousands, except share and per share data)
(Unaudited)
| |
|
Three
months ended
September
30,
|
|
|
Nine
months ended
September
30,
|
|
| |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
| Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net
investment income (loss) |
|
$ |
(7,715 |
) |
|
$ |
523 |
|
|
$ |
(16,992 |
) |
|
$ |
1,257 |
|
| Other
income |
|
|
25 |
|
|
|
– |
|
|
|
79 |
|
|
|
– |
|
| Total revenue |
|
|
(7,690 |
) |
|
|
523 |
|
|
|
(16,913 |
) |
|
|
1,257 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
|
1,900 |
|
|
|
595 |
|
|
|
4,210 |
|
|
|
2,236 |
|
| Total expenses |
|
|
1,900 |
|
|
|
595 |
|
|
|
4,210 |
|
|
|
2,236 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from continuing operations before
income tax benefit |
|
|
(9,590 |
) |
|
|
(72 |
) |
|
|
(21,123 |
) |
|
|
(979 |
) |
| Income tax
benefit |
|
|
– |
|
|
|
(12 |
) |
|
|
(665 |
) |
|
|
(162 |
) |
| Net loss from continuing
operations |
|
|
(9,590 |
) |
|
|
(60 |
) |
|
|
(20,458 |
) |
|
|
(817 |
) |
| Net loss from
discontinued operations, net of income taxes |
|
|
– |
|
|
|
(3,475 |
) |
|
|
– |
|
|
|
(7,152 |
) |
| Net loss |
|
$ |
(9,590 |
) |
|
$ |
(3,535 |
) |
|
$ |
(20,458 |
) |
|
$ |
(7,969 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends
declared on Series A Preferred Shares |
|
|
350 |
|
|
|
350 |
|
|
|
1,050 |
|
|
|
1,050 |
|
| Loss attributable to common
shareholders |
|
$ |
(9,940 |
) |
|
$ |
(3,885 |
) |
|
$ |
(21,508 |
) |
|
$ |
(9,019 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted loss per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Continuing
operations |
|
$ |
(1.69 |
) |
|
$ |
(0.07 |
) |
|
$ |
(3.58 |
) |
|
$ |
(0.31 |
) |
|
Discontinued operations |
|
|
– |
|
|
|
(0.58 |
) |
|
|
– |
|
|
|
(1.19 |
) |
| Loss per share
attributable to common shareholders |
|
$ |
(1.69 |
) |
|
$ |
(0.65 |
) |
|
$ |
(3.58 |
) |
|
$ |
(1.50 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and
diluted |
|
|
5,893,125 |
|
|
|
6,015,753 |
|
|
|
6,009,267 |
|
|
|
6,013,771 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated
Statement of Comprehensive Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(9,590 |
) |
|
$ |
(3,535 |
) |
|
$ |
(20,458 |
) |
|
$ |
(7,969 |
) |
| Unrealized
gains on investments available for sale, net of income taxes |
|
|
– |
|
|
|
(92 |
) |
|
|
– |
|
|
|
1,783 |
|
| Comprehensive loss |
|
$ |
(9,590 |
) |
|
$ |
(3,627 |
) |
|
$ |
(20,458 |
) |
|
$ |
(6,186 |
) |
1347
Property Insurance Holdings, Inc.
November
16, 2020
1347
PROPERTY INSURANCE HOLDINGS, INC.
Consolidated
Balance Sheets
($
in thousands, except share and per share data)
| |
|
September 30, 2020 (unaudited) |
|
|
December 31, 2019 |
|
| ASSETS |
|
|
|
|
|
|
|
|
| Equity securities, at fair
value (cost basis of $20,751 and $25,500, respectively) |
|
$ |
9,119 |
|
|
$ |
29,487 |
|
| Limited liability investments
(including $4,013 and $0 held by the Company’s consolidated
VIE) |
|
|
9,268 |
|
|
|
4,005 |
|
| Cash and cash equivalents (including
$50 and $0 held by the Company’s consolidated VIE) |
|
|
15,233 |
|
|
|
28,509 |
|
| Current income taxes recoverable |
|
|
1,824 |
|
|
|
1,265 |
|
| Other
receivables and assets (including $937 and $0 held by the Company’s
consolidated VIE) |
|
|
1,512 |
|
|
|
188 |
|
| Total assets |
|
$ |
36,956 |
|
|
$ |
63,454 |
|
| |
|
|
|
|
|
|
|
|
| LIABILITIES |
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
480 |
|
|
$ |
400 |
|
| Deferred tax liability, net |
|
|
– |
|
|
|
106 |
|
| Other
liabilities |
|
|
82 |
|
|
|
33 |
|
| Total liabilities |
|
$ |
562 |
|
|
$ |
539 |
|
| |
|
|
|
|
|
|
|
|
| SHAREHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
| Series A Preferred Shares, $25.00 par
value, 1,000,000 shares authorized, 700,000 shares issued and
outstanding as of both periods |
|
$ |
17,500 |
|
|
$ |
17,500 |
|
| Common stock, $0.001 par value; 10,000,000 shares authorized;
6,238,875 and 6,217,307 shares issued as of September 30, 2020 and
December 31, 2019, respectively, and 4,957,364 and 6,065,948 shares
outstanding as of September 30, 2020 and December 31, 2019,
respectively |
|
|
6 |
|
|
|
6 |
|
| Additional paid-in capital |
|
|
46,917 |
|
|
|
46,754 |
|
| Accumulated
deficit |
|
|
(21,844 |
) |
|
|
(336 |
) |
| |
|
|
42,579 |
|
|
|
63,924 |
|
| Less:
treasury stock at cost; 1,281,511 and 151,359 shares as of
September 30, 2020 and December 31, 2019, respectively |
|
|
(6,185 |
) |
|
|
(1,009 |
) |
| Total
shareholders’ equity |
|
|
36,394 |
|
|
|
62,915 |
|
| Total liabilities and shareholders’
equity |
|
$ |
36,956 |
|
|
$ |
63,454 |
|
