UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 1-U

 

Current Report Pursuant to Regulation A

 

Date of Report: September 16, 2024

(Date of earliest event reported)

 

Forge Group, Inc.

(Exact name of registrant as specified in its charter)

 

Pennsylvania

85-4184821

(State or other incorporation)

(I.R.S. Employer Identification No.)

 

P.O. Box 15033

Worcester, MA 01615

(Full mailing address of principal executive offices)

 

(202) 547-8700

(Issuer’s telephone number, including area code)

 

Common Stock

(Title of each class of securities issued pursuant to Regulation A)

 

 

 

 

Item 9. Other Events

 

Financial Results for the periods ended March 31, 2024, and June 30, 2024

 

On September 16, 2024, Forge Group, Inc. (the “Company”) issued press releases, which will be posted on its website and on its company page on the OTC Market website, announcing its financial results for the three and six-month periods ended March 31, 2024, and June 30, 2024, respectively. Copies of the press releases are filed as Exhibits 1U.1 and 1U.2 to this Report on Form 1-U.

 

 

Exhibit No.

Description of Exhibit

1U.1

Forge Group, Inc. Announces 1st Quarter 2024 Financial Results

1U.2

Forge Group, Inc. Announces 2nd Quarter 2024 Financial Results

 

 

Safe Harbor Statement

 

The information furnished in Form 1-U is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section, and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

 

This Current Report on Form 1-U may contain 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. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in our Offering Statement on Form 1-A dated February 7, 2022, filed with the Securities and Exchange Commission (“SEC”), as such factors may be updated from time to time in our periodic filings and prospectus supplements filed with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in our filings with the SEC. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Forge Group, Inc.

     
 

By:

/s/ Patrick J. Bracewell

   

Patrick J. Bracewell

   

Chief Executive Officer

     
 

Date: September 16, 2024

 

 

Exhibit 1.u1

 

pic1.jpg

 

Forge Group, Inc. Announces 1st Quarter 2024 Financial Results

 

 

BETHESDA, Maryland, September 16, 2024 – Forge Group, Inc. (the “Company”, “we”, “us”, “our”, or “Forge”) (OTC Pink: FIGP), a specialist commercial auto insurance business, recently announced its financial results for three months ended March 31, 2024.

 

The Company has provided certain selected financial data in the table below for the three months ended March 31, 2024 (“1Q24”) and 2023 (“1Q23”), respectively:

 

Selected Financial Data

 
                 
   

For the 3 months ended

 
   

March 31,

   

March 31,

 
   

2024

   

2023

 

(dollars in thousands except for per-share items)

 

(unaudited)

   

(unaudited)

 
                 

Gross premiums written

    5,743       5,021  

Net premiums written

    5,279       4,619  
                 

Net premiums earned

    4,660       3,191  

Underwriting income (loss) 1

    (712 )     (823 )

Operating income (loss) before income taxes 2

    (319 )     (464 )
                 

Operating ratios

               

Loss ratio 3

    63.5 %     57.5 %

Expense ratio 4

    51.8 %     68.3 %

Combined ratio 5

    115.3 %     125.8 %

Less: Investment ratio 6

    -8.4 %     -11.2 %

Operating ratio 7

    106.8 %     114.5 %
                 

Adjusted book value per common share equivalent 8

  $ 19.75     $ 19.63  

Adjusted tangible book value per common share equivalent 9

  $ 17.48     $ 17.33  

 

 

Footnotes

1.

Underwriting income (loss) is a non-GAAP financial metric which measures the pre-tax profitability of our insurance operations before considering investment income. It is derived by subtracting loss and loss adjustment expense and underwriting expenses from net premiums earned.

2.

Pre-tax operating income (loss) is a non-GAAP financial metric which measures the profitability of our insurance operations before considering the impact of net realized and unrealized gains (losses), income (loss) from real estate operations, and certain non- recurring items.

3.

Loss ratio is losses and loss adjustment expenses incurred expressed as a percentage of net premiums earned.

4.

Expense ratio is underwriting expenses expressed as a percentage of net premiums earned.

5.

Combined ratio is the sum of the loss ratio and the expense ratio.

6.

Investment ratio is net investment income expressed as a percentage of net premiums earned.

7.

Operating ratio is the combined ratio minus the investment ratio.

8.

Adjusted book value per common share equivalent is a non-GAAP metric that our board and management team uses to evaluate overall long-term corporate performance. See Exhibits for more detail.

9.

Adjusted tangible book value per common share equivalent is a non-GAAP metric that our board and management team uses to evaluate overall long-term corporate performance. See Exhibits for more detail.

 

 

 

1Q24 financial highlights include:

 

 

Premium revenue. Gross premiums written were $5.7 million in 1Q24, an increase of 14.4% vs. the prior year comparable period. Net premiums written were $5.3 million in 1Q24, an increase of 14.3% vs. the prior year comparable period. Net premiums earned were $4.7 million in 1Q24, an increase of  46.0% vs. the prior year comparable period.

 

 

Loss ratio. Our loss ratio continues to perform well and below that of the commercial auto industry generally. Our loss ratio was 63.5% in 1Q24 compared to 57.5% for 1Q23.

 

 

Expense ratio. Our expense ratio continues to decline as we grow our premium revenue and scale our fixed expenses. Our expense ratio was 51.8% in 1Q24, which represents a decline of 16.5% vs. the prior year comparable period.

 

 

Combined ratio. Our combined ratio continues to decline as our expense ratio declines and our loss ratio remains within our long-term targets. As a reminder, a lower combined ratio is better and our intermediate-term goal is to generate a combined ratio of below 100%, thereby producing an underwriting profit. Our combined ratio was 115.3% in 1Q24, which represents a decline of 10.5% vs. the prior year comparable period.

 

 

o

Underwriting income (loss). We reported an underwriting loss of $712 thousand in 1Q24 compared to an underwriting loss of $823 thousand in 1Q23. This represents an improvement of $111 thousand.

 

 

Operating ratio. Our operating ratio continues to decline due to improvement in the combined ratio. Our investment ratio declined in 1Q24 vs. the prior year comparable period as our premium revenue (denominator) increased at a more rapid rate than net investment income. As a reminder, a lower operating ratio is better and our near-term goal is to generate an operating ratio below 100%, thereby producing an operating profit. Our operating ratio was 106.8% in 1Q24, which represents a decline of 7.7% vs. the prior year comparable period.

 

 

o

Operating income (loss) before income taxes. We reported a pre-tax operating loss of $319 thousand in 1Q24 compared to a pre-tax operating loss of $464 thousand in 1Q23. This represents an improvement of $145 thousand.

 

 

Adjusted book value and tangible book value per common share equivalent. Adjusted book value per common share equivalent (adjusted book value per share) was $19.75 as of March 31, 2024, which represents an increase of 0.7% compared to March 31, 2023. Adjusted tangible book value per common share equivalent (adjusted tangible book value per share) was $17.48 as of March 31, 2024, which represents an increase of 0.9% compared to March 31, 2023. We remain focused on minimizing erosion in our per-share net worth while we scale and reach sustainable profitability.

 

 

The Company commented:

 

Forge is off to a strong start in 2024. In 2023, our focus was on launching our new fully integrated digital insurance platform and transitioning off our legacy technology platform. In 2024, with this major initiative behind us, we have turned our focus to optimizing our agent and client experience using our new platform and streamlining and improving internal processes and procedures. In 1Q24, we have made significant progress rolling out our new digital agent portal (FIRE – Forge Insurance Rating Engine), which makes it easy for our distribution partners to quote business with Forge, allowing us to "activate" a large pool of contracted distribution partners. This new tool will be particularly helpful as we look to expand in the "small business class" segment, which is a primary focus in 2024 and a core part of our long-term business plan. Although we are starting from a relatively small base, growth in the “small business class” segment in 1Q24 has been in- line with our internal plan, and we continue to believe this segment will provide us with a long runway for profitable growth.

 

 

Page 2 of 9

 

During 1Q24, we generated gross premiums written of $5.7 million, which represents an increase of 14.4%, compared to 1Q23. We expect strong year-over-year premium growth to continue as we move through 2024. Pursuant to GAAP, written premium is earned ratably over the term of the policy contract; however, this metric (written premium) provides a helpful indicator as to the increase in our overall business production.

 

An insurance company’s loss ratio is the most critical measure to the company’s underwriting profitability. Our loss ratio in 1Q24 remains within our long-term targets. Our loss ratio for 1Q24 was 63.5% compared to 57.5% in 1Q23. Because we are a small company at this stage, our loss ratio, which is an important driver of our overall profitability, is less predictable, particularly over shorter measurement periods (e.g., 3 - 6 months).

 

We continue to make progress on our expense ratio. Our expense ratio in 1Q24 was 51.8%, which represents a decrease of 16.5% compared to 1Q23. We remain focused on scaling our fixed expenses through profitable premium revenue growth.

 

We reported a pre-tax operating loss of $319 thousand in 1Q24 compared to a pre-tax operating loss of $464 thousand in 1Q23. This represents an improvement of $145 thousand. We reported a pre-tax profit, after net realized and unrealized gains (losses) of $43 thousand in 1Q24 compared to a pre-tax loss of $204 thousand for 1Q23. This represents an improvement of $247 thousand.

 

As we noted in our 2023 year-end reports, during 1Q24, we repurchased 16,000 of our outstanding shares of common stock at a price of $8.75 per share.

 

In summary, we are continuing to build on the work done in 2023 and are off to a strong start in 1Q24. Our financial results remain consistent with our long-term business plan, and we look forward to providing our shareholders with more updates as we move through the year.

 

 

About Forge

 

Forge Group, Inc. is a commercial auto insurance specialist. We principally focus on delivering commercial auto insurance products to small business owners and operators that operate in (i) certain business class segments and (ii) certain geographic markets in the U.S. Additional information is available on the Company’s website at: www.forgeinsurance.com.

 

 

Forward-Looking Statements

 

This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as the Company or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Similarly, statements herein that describe the Company’s business strategy, outlook, objectives, plans, intentions, or goals are also forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements. Please review the risks factors and uncertainties identified in the Company’s 2023 Annual Report on Form 1-K, Semi-Annual Reports on Form 1-SA and our other filings with the Securities and Exchange Commission. Any forward-looking statement made by the Company in this document speaks only as of the date of this release. Except as required by applicable law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or developments or otherwise.

 

Page 3 of 9

 

Note Regarding Financial Measures

 

Investors should be aware that accounting principles generally accepted in the United States prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when we establish reserves for one or more contingencies. Also, our regular reserve reviews may result in adjustments of varying magnitude as additional information regarding claims activity becomes known. Reported results, therefore, may be volatile in certain accounting periods.

 

 

Special Note Regarding Non-GAAP Financial Measures

 

We believe that the non-GAAP financial measures in this report, including those in the Exhibits, provide important and useful information for our shareholders. We use these non-GAAP measures for internal planning purposes and to evaluate our ongoing operations and performance. These non-GAAP financial measures are presented as supplemental information and not as alternatives to any GAAP financial measures.

 

Page 4 of 9

 

Exhibits

 

Exhibit 1: Simplified Income Statement

 

The “Simplified Income Statement” exhibit is a non-GAAP presentation of “Net income (loss) attributable to Forge Group, Inc.” and is based on the Company’s Consolidated Statements of Operations and Comprehensive Earnings. This exhibit separates the Company’s core insurance operations (including investment income earned on income-generating securities) from the following other activities and items: real estate operations, the impact of net realized and unrealized gains (losses) on investment securities, and certain non-recurring items.

 

   

For the 3 months ended

 
   

March 31,

   

March 31,

 
   

2024

   

2023

 

(dollars in thousands)

 

(unaudited)

   

(unaudited)

 
                 

Net premiums earned

    4,660       3,191  
                 

Losses and loss adjustment expenses

    2,957       1,833  
                 

Policy acquisition costs and other operating expenses

    2,339       2,195  

Lease expense

    52       54  

Sublease (income)

    (42 )     (41 )

Depreciation and amortization (excl. real estate) 1

    67       67  

Service fee and other (income) expense

    (1 )     (94 )

Underwriting expenses

    2,415       2,181  
                 

Underwriting gain (loss)

    (712 )     (823 )

Net investment income

    393       359  

Operating income (loss) before income taxes

    (319 )     (464 )

Net realized and unrealized gains (losses) 2

    375       331  

Income (loss) from real estate operations 3

    (13 )     (71 )

Income (loss) before income taxes

    43       (204 )

Income tax expense (benefit)

    24       (41 )

Net income (loss)

    19       (162 )

Net loss (gain) attributable to noncontrolling interest

    1       -  

Net income (loss) attributable to Forge Group, Inc.

    20       (162 )

 

Footnotes

1.

Total depreciation and amortization minus depreciation and amortization attributable to real estate.

2.

Net realized investment gains (losses) plus net unrealized gains (losses) on equity securities.

3.

Income from real estate held for investment minus (i) depreciation of real estate held for the production of income, (ii) amortization of leases in place, (iii) amortization of finance costs, (iv) real estate operating expenses, and (v) interest expense.

 

Page 5 of 9

 

Exhibit 2: Adjusted Book Value and Tangible Book Value Per Common Share Equivalent

 

“Adjusted book value per common share equivalent” and “adjusted tangible book value per common share equivalent” are non-GAAP metrics and are not intended to be an expression of the Company’s opinion of the value of its common stock.

 

   

  As of

 
   

March 31,

   

December 31,

   

March 31,

 

(dollars in thousands except for per-share items)

 

2024

   

2023

   

2023

 
                         

Calculation of Numerators

                       

Total equity

    45,551       45,874       46,222  

Less: Noncontrolling interest

    (700 )     (700 )     (708 )

GAAP book value

    44,851       45,174       45,514  

Less: Accumulated other comprehensive (income) loss (AOCI)

    2,139       2,152       2,586  

GAAP book value excluding AOCI

    46,991       47,326       48,100  

Add: Theoretical proceeds from exercise of options 1

    1,276       1,228       2,014  

Add: Non-GAAP real estate adjustments, net 2

    4,015       3,828       3,630  

Adjusted book value (numerator)

    52,282       52,383       53,744  

Less: Goodwill and other intangibles

    (6,009 )     (6,076 )     (6,276 )

Adjusted tangible book value (numerator)

    46,273       46,307       47,467  
                         

Calculation of Denominator

                       

Common shares outstanding

    2,044       2,050       2,050  

Common shares issuable upon conversion of Series A Preferred Stock 3

    458       458       458  

Common shares underlying restricted stock awards outstanding 4

    20       23       30  

Common shares issuable upon exercise of outstanding options 5

    125       120       200  

Common share equivalents (denominator)

    2,647       2,652       2,738  
                         

Non-GAAP Measures

                       

Adjusted book value per common share equivalent 6

  $ 19.75     $ 19.76     $ 19.63  

Adjusted tangible book value per common share equivalent 7

  $ 17.48     $ 17.46     $ 17.33  

 

Footnotes

1.

Proceeds that would be received from the exercise of outstanding stock options (vested and unvested).

2.

Intended to represent Company’s interest in real estate investments at historical cost. See Exhibit 3.

3.

Common shares issuable upon conversion of the Company’s Series A Preferred Stock.

4.

Common shares underlying restricted stock awards outstanding (unvested).

5.

Common shares underlying outstanding stock options (vested and unvested).

6.

Adjusted book value (numerator) divided by common share equivalents (denominator).

7.

Adjusted tangible book value (numerator) divided by common share equivalents (denominator).

 

Page 6 of 9

 

Exhibit 3: Non-GAAP Real Estate Adjustments

 

The “Non-GAAP Real Estate Adjustments” contains certain non-GAAP adjustments and metrics intended to present the value of the Company’s interest in its real estate investments at historical cost. These non-GAAP adjustments and metrics are not intended to be an expression of the Company’s opinion of the value of its real estate investments.

 

 

         

As of

         
   

March 31,

   

December 31,

   

March 31,

 
(dollars in thousands)  

2024

   

2023

   

2023

 
                         

Real estate held for the production of income, net

    29,390       29,543       30,002  

Add: Leases in place

    2,460       2,512       2,701  

Add: Deferred rent 1

    2,383       2,356       2,273  

Real assets (GAAP)

    34,232       34,411       34,977  

Add: Accumulated depreciation 2

    6,079       5,926       5,467  

Add: Accumulated amortization 3

    1,704       1,652       1,884  

Less: Deferred rent

    (2,383 )     (2,356 )     (2,273 )

Real assets (Non-GAAP) 4

    39,633       39,633       40,054  
                         

Notes payable, net (GAAP)

    26,155       26,325       26,809  

Add: Unamortized finance costs

    1,050       1,074       1,145  

Notes payable (Non-GAAP) 5

    27,206       27,399       27,954  
                         

Net real assets (Non-GAAP) 6

    12,427       12,234       12,100  

Less: Net real assets (GAAP) 7

    (8,077 )     (8,086 )     (8,167 )

Non-GAAP adjustments 8

    4,350       4,148       3,933  

Less: Noncontrolling interest 9

    (335 )     (319 )     (303 )

Non-GAAP real estate adjustments, net

    4,015       3,828       3,630  

 

Footnotes

1.

Cumulative difference between actual cash receipts and rental income recorded on a straight-line basis.

2.

Accumulated depreciation on real estate held for the production of income.

3.

Accumulated amortization on leases in place.

4.

Approximation of total cost basis of real estate investments.

5.

Gross principal amount of notes payable.

6.

Real assets (non-GAAP) minus notes payable (non-GAAP).

7.

Real assets (GAAP) minus notes payable (GAAP).

8.

Difference between non-GAAP and GAAP net real assets

9.

Portion of non-GAAP adjustments attributable to 7.7% owned by operating partner.

 

Page 7 of 9

 

Exhibit 4: Consolidated Balance Sheets

 

Forge Group, Inc. and Subsidiaries

 

Consolidated Balance Sheets

 
                         
   

As of

 
   

March 31,

   

December 31,

   

March 31,

 
   

2024

   

2023

   

2023

 

(dollars in thousands)

 

(unaudited)

   

(audited)

   

(unaudited)

 
                         

Assets

                       

Investments and cash:

                       

Fixed maturity securities, at fair value

  $ 27,775     $ 27,970     $ 27,354  

Redeemable preferred stock, at fair value

    1,381       1,363       1,361  

Perpetual preferred stock, at fair value

    585       562       565  

Common stock, at fair value

    1,819       1,691       2,652  

Other invested assets

    4,748       4,524       4,402  

Real estate held for the production of income, net

    29,390       29,543       30,002  

Cash and cash equivalents

    7,872       6,968       5,561  

Restricted cash

    227       226       217  

Total investments and cash

    73,797       72,848       72,115  
                         

Accrued investment income

    336       297       316  

Premium and reinsurance balances receivable

    7,926       8,256       6,566  

Ceded unearned premiums

    157       71       149  

Reinsurance balances recoverable on unpaid losses

    828       690       1,080  

Deferred policy acquisition costs, net

    300       298       266  

Deferred rent

    2,383       2,356       2,273  

Leases in place

    2,460       2,512       2,701  

Right-of-use asset, net

    140       143       148  

Goodwill and other intangibles

    6,009       6,076       6,276  

Other assets

    2,258       2,006       1,639  

Total assets

  $ 96,593     $ 95,551     $ 93,530  
                         

Liabilities and Equity

                       

Liabilities:

                       

Unpaid losses and loss adjustment expenses

  $ 9,912     $ 8,426     $ 8,832  

Unearned premium

    10,988       10,283       7,849  

Reinsurance balances payable

    158       36       209  

Accrued expenses

    2,254       2,437       1,789  

Notes payable

    26,155       26,325       26,809  

Defined benefit plan unfunded liability

    336       333       488  

Operating lease liability, net

    692       729       836  

Other liabilities

    546       1,108       497  

Total liabilities

    51,042       49,676       47,309  
                         

Mezzanine Equity:

                       

Preferred stock, without par value 1

    -       -       -  

Additional paid-in capital (Preferred Stock)

    5,227       5,227       5,227  

Stockholders' Equity:

                       

Common stock, $0.01 par value 2

    21       21       21  

Treasury stock

    (210 )     (70 )     -  

Additional paid-in capital

    16,502       16,604       16,353  

Unearned employee stock ownership plan shares

    (1,624 )     (1,827 )     (1,827 )

Retained earnings

    27,074       27,372       28,325  

Accumulated other comprehensive income (loss), net of tax

    (2,139 )     (2,152 )     (2,586 )

Noncontrolling interest

    700       700       708  

Total equity

    45,551       45,874       46,222  

Total liabilities and equity

  $ 96,593     $ 95,551     $ 93,530  

 

Footnotes

1.

1,000,000 shares authorized, 550,000 shares issued and outstanding.

2.

10,000,000 shares authorized, 2,044,148, 2,050,232, and 2,050,000 issued and outstanding, respectively.

 

Page 8 of 9

 

Exhibit 5: Consolidated Statements of Earnings and Comprehensive Earnings

 

Forge Group, Inc. and Subsidiaries

 

Consolidated Statements of Earnings and Comprehensive Earnings

 
                 
   

For the 3 months ended

 
   

March 31,

   

March 31,

 
   

2024

   

2023

 

(dollars in thousands)

 

(unaudited)

   

(unaudited)

 
                 

Revenues

               

Net premiums earned

  $ 4,660     $ 3,191  

Income from real estate held for investment

    556       569  

Net investment income

    393       359  

Net realized investment gains

    4       (37 )

Net unrealized gains on equity securities

    370       368  

Service fee and other income (expense)

    1       94  

Total revenues

    5,985       4,544  
                 

Expenses

               

Losses and loss adjustment expenses

    2,957       1,833  

Policy acquisition costs and other operating expenses

    2,339       2,195  

Depreciation and amortization

    296       335  

Real estate operating expense

    55       79  

Interest expense on debt

    284       292  

Lease expense

    52       54  

Sublease income

    (42 )     (41 )

Total expenses

    5,942       4,747  
                 

Income (loss) before income taxes

    43       (204 )
                 

Income tax expense (benefit)

    24       (41 )

Net income (loss)

    19       (162 )

Net loss (gain) attributable to noncontrolling interest

    1       -  

Net income (loss) attributable to Forge Group, Inc.

    20       (162 )
                 

Other comprehensive income (loss), net of tax

               

Unrealized gains (losses) on AFS securities, net of tax

    16       226  

Reclassification adjustment for losses (gains) included in net income

    (3 )     (1 )

Total other comprehensive income (loss), net of tax

    13       225  
                 

Total comprehensive income (loss)

    32       62  

 

Page 9 of 9

Exhibit 1.u2

 

pic1.jpg

Forge Group, Inc. Announces 2nd Quarter 2024 Financial Results

 

 

BETHESDA, Maryland, September 16, 2024 – Forge Group, Inc. (the “Company”, “we”, “us”, “our”, or “Forge”) (OTC Pink: FIGP), a specialist commercial auto insurance business, recently announced its financial results for six months ended June 30, 2024.

 

The Company has provided certain selected financial data in the table below for the three months ended June 30, 2024 (“2Q24”) and 2023 (“2Q23”), respectively, and the six months ended June 30, 2024 (“YTD 2024”) and 2023 (“YTD 2023”), respectively:

 

Selected Financial Data

 
                                 
   

For the 3 months ended

   

For the 6 months ended

 
   

June 30,

   

June 30,

   

June 30,

   

June 30,

 
   

2024

   

2023

   

2024

   

2023

 

(dollars in thousands except for per-share items)

 

(unaudited)

   

(unaudited)

   

(unaudited)

   

(unaudited)

 
                                 

Gross premiums written

    5,354       3,524       11,097       8,546  

Net premiums written

    4,988       3,259       10,267       7,878  
                                 

Net premiums earned

    5,143       3,524       9,803       6,715  

Underwriting income (loss) 1

    (395 )     (942 )     (1,107 )     (1,765 )

Operating income (loss) before income taxes 2

    17       (576 )     (302 )     (1,040 )
                                 

Operating ratios

                               

Loss ratio 3

    56.3 %     66.9 %     59.7 %     62.4 %

Expense ratio 4

    51.4 %     59.8 %     51.6 %     63.9 %

Combined ratio 5

    107.7 %     126.7 %     111.3 %     126.3 %

Less: Investment ratio 6

    -8.0 %     -10.4 %     -8.2 %     -10.8 %

Operating ratio 7

    99.7 %     116.3 %     103.1 %     115.5 %
                                 

Adjusted book value per common share equivalent 8

  $ 19.76     $ 19.46     $ 19.76     $ 19.46  

Adjusted tangible book value per common share equivalent 9

  $ 17.51     $ 17.19     $ 17.51     $ 17.19  

 

 

Footnotes

1.

Underwriting income (loss) is a non-GAAP financial metric which measures the pre-tax profitability of our insurance operations before considering investment income. It is derived by subtracting loss and loss adjustment expense and underwriting expenses from net premiums earned.

2.

Pre-tax operating income (loss) is a non-GAAP financial metric which measures the profitability of our insurance operations before considering the impact of net realized and unrealized gains (losses), income (loss) from real estate operations, and certain non- recurring items.

3.

Loss ratio is losses and loss adjustment expenses incurred expressed as a percentage of net premiums earned.

4.

Expense ratio is underwriting expenses expressed as a percentage of net premiums earned.

5.

Combined ratio is the sum of the loss ratio and the expense ratio.

6.

Investment ratio is net investment income expressed as a percentage of net premiums earned.

7.

Operating ratio is the combined ratio minus the investment ratio.

8.

Adjusted book value per common share equivalent is a non-GAAP metric that our board and management team uses to evaluate overall long-term corporate performance. See Exhibits for more detail.

9.

Adjusted tangible book value per common share equivalent is a non-GAAP metric that our board and management team uses to evaluate overall long-term corporate performance. See Exhibits for more detail.

 

 

 

2Q24 financial highlights include:

 

 

Premium revenue. Gross premiums written were $5.4 million in 2Q24, an increase of 51.9% vs. the prior year comparable period. Net premiums written were $5.0 million in 2Q24, an increase of 53.1% vs. the prior year comparable period. Net premiums earned were $5.1 million in 2Q24, an increase of 45.9% vs. the prior year comparable period.

 

 

Loss ratio. Our loss ratio continues to perform well and below that of the commercial auto industry generally. Our loss ratio was 56.3% in 2Q24 compared to 66.9% for 2Q23.

 

 

Expense ratio. Our expense ratio continues to decline as we grow our premium revenue and scale our fixed expenses. Our expense ratio was 51.4% in 2Q24, which represents a decline of 8.4% vs. the prior year comparable period.

 

 

Combined ratio. Our combined ratio continues to decline as our expense ratio declines and our loss ratio remains within our long-term targets. As a reminder, a lower combined ratio is better and our intermediate-term goal is to generate a combined ratio of below 100%, thereby producing an underwriting profit. Our combined ratio was 107.7% in 2Q24, which represents a decline of 19.1% vs. the prior year comparable period.

 

 

o

Underwriting income (loss). We reported an underwriting loss of $395 thousand in 2Q24 compared to an underwriting loss of $942 thousand in 2Q23. This represents an improvement of $547 thousand.

 

 

Operating ratio. Our operating ratio continues to decline due to improvement in the combined ratio.Our investment ratio declined in 2Q24 vs. the prior year comparable period as our premium revenue (denominator) increased at a more rapid rate than net investment income. As a reminder, a lower operating ratio is better and our near-term goal is to generate an operating ratio below 100%, thereby producing an operating profit. Our operating ratio was 99.7% in 1Q24, which represents a decline of 16.7% vs. the prior year comparable period.

 

 

o

Operating income (loss) before income taxes. We reported pre-tax operating income of $17 thousand in 2Q24 compared to a pre-tax operating loss of $576 thousand in 2Q23. This represents an improvement of $593 thousand.

 

 

Adjusted book value and tangible book value per common share equivalent. Adjusted book value per common share equivalent (adjusted book value per share) was $19.76 as of June 30, 2024, which represents an increase of 1.5% compared to June 30, 2023. Adjusted tangible book value per common share equivalent (adjusted tangible book value per share) was $17.51 as of June 30, 2024, which represents an increase of 1.9% compared to June 30, 2023. We remain focused on minimizing erosion in our per-share net worth while we scale and reach sustainable profitability.

 

 

YTD 2024 financial highlights include:

 

 

Premium revenue. Gross premiums written were $11.1 million YTD 2024, an increase of 29.9% vs. the prior year comparable period. Net premiums written were $10.3 million YTD 2024, an increase of 30.3% vs. the prior year comparable period. Net premiums earned were $9.8 million YTD 2024, an increase of 46.0% vs. the prior year comparable period.

 

 

Loss ratio. Our loss ratio continues to perform well and below that of the commercial auto industry generally. Our loss ratio was 59.7% YTD 2024 compared to 62.4% for YTD 2023.

 

 

Page 2 of 10

 

 

 

Expense ratio. Our expense ratio continues to decline as we grow our premium revenue and scale our fixed expenses. Our expense ratio was 51.6% YTD 2024, which represents a decline of 12.3% vs. the prior year comparable period.

 

 

Combined ratio. Our combined ratio continues to decline as our expense ratio declines and our loss ratio remains within our long-term targets. As a reminder, a lower combined ratio is better and our intermediate-term goal is to generate a combined ratio of below 100%, thereby producing an underwriting profit. Our combined ratio was 111.3% YTD 2024, which represents a decline of 15.0% vs. the prior year comparable period.

 

 

o

Underwriting income (loss). We reported an underwriting loss of $1.1 million YTD 2024 compared to an underwriting loss of $1.8 million YTD 2023. This represents an improvement of $658 thousand.

 

 

Operating ratio. Our operating ratio continues to decline due to improvement in the combined ratio. Our investment ratio declined YTD 2024 vs. the prior year comparable period as our premium revenue (denominator) increased at a more rapid rate than net investment income. As a reminder, a lower operating ratio is better and our near-term goal is to generate an operating ratio below 100%, thereby producing an operating profit. Our operating ratio was 103.1% YTD 2024, which represents a decline of 12.4% vs. the prior year comparable period.

 

 

o

Operating income (loss) before income taxes. We reported a pre-tax operating loss of $302 thousand YTD 2024 compared to a pre-tax operating loss of $1.0 million YTD 2023. This represents an improvement of $738 thousand.

 

 

The Company commented:

 

We have had a strong first half of 2024. We have made considerable progress across all areas of the business, and we are seeing tangible improvements in our financial performance as a result. In terms of new business production, we continue to expand our distribution reach and have made progress growing brand awareness – particularly in certain core states. Our distribution and operations teams have successfully rolled out our digital agent portal (FIRE) to many of our distribution partners, and an increasing percentage of our new business submissions are coming through the FIRE portal. This has increased productivity, compressed quoting turnaround time, and has improved the overall agent experience. We will continue to refine the agent portal as we move through the remainder of 2024 (and beyond). As mentioned in our 1Q24 earnings release, rolling out the agent portal to our distribution partners has been a focus in the first half of 2024 as it is critical to growing in the “small business class” segment – a key strategic initiative for 2024. This segment, while starting from a very small base at year-end 2023, has become a meaningful contributor to our new business premium in 2Q24 and we expect this trend to continue (as it grows at a faster rate than our legacy public auto business class segment) – which is consistent with our long-term business plan. During YTD 2024, we generated gross premiums written of $11.1 million, which represents an increase of 29.9%, compared to YTD 2023. We expect this trend to continue as we move through the remainder of 2024.

 

We are mindful of the challenges growth can present, particularly in a “risk” business such as insurance. As we grow, we must ensure that our operations and infrastructure are able to support a larger business. To that end we have invested in our data and analytics capabilities. Having access to the right data (and the ability to analyze this data) allows us to monitor the various dimensions of our business on a real-time basis. We continue to make progress building out our data and analytics capabilities – making progress expanding departmental dashboards during the first half of 2024. For example, in our claims area, we are focused on continuing to handle claims proactively – monitoring, among other things, cycle times (the time it takes to close claims), claims inventory (number of open claims), and claims adjuster workload (open claims per adjuster). In our servicing area, we are elevating dashboards to monitor agent and customer response times. In short, we are building more sophisticated analytical capabilities which will allow us to monitor our performance and service levels on a real-time basis – and act quickly if needed. Better analytics will also help us improve business planning and resource allocation as we think about 2025 and beyond.

 

Page 3 of 10

 

An insurance company’s loss ratio is the most critical measure to the company’s underwriting profitability. Our loss ratio was 59.7% YTD 2024, which is well within our long-term targets and below that of the commercial auto industry. We attribute this to our lower-risk strategy (operating only in certain states and in certain business class segments) and our product design and pricing – which are supported by seasoned underwriters and claims professionals.

 

We continue to make progress on our expense ratio – a key focus area. Our expense ratio in 2Q24 was 51.4%, which represents a decrease of 8.4% compared to 2Q23. We have added a handful of additional team members in 2024, both to support our larger business (we have added staff in the claims and data analytics areas) and continue the acceleration of our growth in the “small business class” segment (we have added staff in the business development area). We believe these are sound investments and expect our expense ratio to continue moving lower through the remainder of 2024.

 

We are pleased to report a pre-tax operating profit – before the impact of net realized and unrealized gains (losses) and income (loss) from real estate operations – of $17 thousand in 2Q24 compared to a pre-tax operating loss of $576 thousand in 2Q23. This represents an improvement of $593 thousand. We wrote down in value a private investment in 2Q24 (OTTI adjustment) which adversely impacted overall pre-tax profitability. As a result of this write-down, we reported a pre-tax loss, after net realized and unrealized gains (losses) of $361 thousand in 2Q24 compared to a pre-tax loss of $442 thousand for 2Q23. By way of background, we made two separate “venture-stage” private investments in 2019, totaling $1.4 million at cost. Both investments have been a drag on our results over the last 12 months. As of June 30, 2024, these investments were carried on our balance sheet at an aggregate value of $203 thousand (or 15% of the amount of our original investment). The silver lining here – if any – is that their impact on our go-forward financial results will likely be minimal. With the benefit of hindsight, it is our view that, given the binary nature of such “venture-stage” investments, they should sit within a portfolio of similar investments (not be made on a one-off basis). These were the only “venture-stage” investments we have made at Forge (and they will likely be our last). Despite the impact of the write-down of these investments, our adjusted book value per share was $19.76 as of June 30, 2024, which represents an increase of 1.5% compared to June 30, 2023.

 

In summary, we are incredibly excited about the progress we’ve made thus far in the first half of 2024. Our financial results remain consistent with our long-term business plan, and we look forward to providing our shareholders with more updates as we move through the year.

 

 

About Forge

 

Forge Group, Inc. is a commercial auto insurance specialist. We principally focus on delivering commercial auto insurance products to small business owners and operators that operate in (i) certain business class segments and (ii) certain geographic markets in the U.S. Additional information is available on the Company’s website at: www.forgeinsurance.com.

 

 

Forward-Looking Statements

 

This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as the Company or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Similarly, statements herein that describe the Company’s business strategy, outlook, objectives, plans, intentions, or goals are also forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements. Please review the risks factors and uncertainties identified in the Company’s 2023 Annual Report on Form 1-K, Semi-Annual Reports on Form 1-SA and our other filings with the Securities and Exchange Commission. Any forward-looking statement made by the Company in this document speaks only as of the date of this release. Except as required by applicable law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or developments or otherwise.

 

Page 4 of 10

 

Note Regarding Financial Measures

 

Investors should be aware that accounting principles generally accepted in the United States prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when we establish reserves for one or more contingencies. Also, our regular reserve reviews may result in adjustments of varying magnitude as additional information regarding claims activity becomes known. Reported results, therefore, may be volatile in certain accounting periods.

 

 

Special Note Regarding Non-GAAP Financial Measures

 

We believe that the non-GAAP financial measures in this report, including those in the Exhibits, provide important and useful information for our shareholders. We use these non-GAAP measures for internal planning purposes and to evaluate our ongoing operations and performance. These non-GAAP financial measures are presented as supplemental information and not as alternatives to any GAAP financial measures.

 

Page 5 of 10

 

Exhibits

 

Exhibit 1: Simplified Income Statement

 

The “Simplified Income Statement” exhibit is a non-GAAP presentation of “Net income (loss) attributable to Forge Group, Inc.” and is based on the Company’s Consolidated Statements of Operations and Comprehensive Earnings. This exhibit separates the Company’s core insurance operations (including investment income earned on income-generating securities) from the following other activities and items: real estate operations, the impact of net realized and unrealized gains (losses) on investment securities, and certain non-recurring items.

 

   

For the 3 months ended

   

For the 6 months ended

 
   

June 30,

   

June 30,

   

June 30,

   

June 30,

 
   

2024

   

2023

   

2024

   

2023

 

(dollars in thousands)

 

(unaudited)

   

(unaudited)

   

(unaudited)

   

(unaudited)

 
                                 

Net premiums earned

    5,143       3,524       9,803       6,715  
                                 

Losses and loss adjustment expenses

    2,894       2,359       5,852       4,192  
                                 

Policy acquisition costs and other operating expenses

    2,583       2,046       4,923       4,241  

Lease expense

    53       52       105       106  

Sublease (income)

    (43 )     (41 )     (86 )     (82 )

Depreciation and amortization (excl. real estate) 1

    67       67       134       134  

Service fee and other (income) expense

    (16 )     (16 )     (18 )     (110 )

Underwriting expenses

    2,643       2,107       5,058       4,288  
                                 

Underwriting gain (loss)

    (395 )     (942 )     (1,107 )     (1,765 )

Net investment income

    411       366       805       725  

Operating income (loss) before income taxes

    17       (576 )     (302 )     (1,040 )

Net realized and unrealized gains (losses) 2

    (367 )     147       8       478  

Income (loss) from real estate operations 3

    (11 )     (14 )     (24 )     (84 )

Income (loss) before income taxes

    (361 )     (442 )     (318 )     (646 )

Income tax expense (benefit)

    13       11       37       (30 )

Net income (loss)

    (374 )     (454 )     (355 )     (616 )

Net loss (gain) attributable to noncontrolling interest

    1       (6 )     2       (6 )

Net income (loss) attributable to Forge Group, Inc.

    (373 )     (460 )     (353 )     (622 )

 

Footnotes

1.

Total depreciation and amortization minus depreciation and amortization attributable to real estate.

2.

Net realized investment gains (losses) plus net unrealized gains (losses) on equity securities.

3.

Income from real estate held for investment minus (i) depreciation of real estate held for the production of income, (ii) amortization of leases in place, (iii) amortization of finance costs, (iv) real estate operating expenses, and (v) interest expense.

 

Page 6 of 10

 

Exhibit 2: Adjusted Book Value and Tangible Book Value Per Common Share Equivalent

 

“Adjusted book value per common share equivalent” and “adjusted tangible book value per common share equivalent” are non-GAAP metrics and are not intended to be an expression of the Company’s opinion of the value of its common stock.

 

 

   

   As of

 
   

June 30,

   

December 31,

   

June 30,

 

(dollars in thousands except for per-share items)

 

2024

   

2023

   

2023

 
                         

Calculation of Numerators

                       

Total equity

    45,391       45,874       45,504  

Less: Noncontrolling interest

    (699 )     (700 )     (713 )

GAAP book value

    44,693       45,174       44,791  

Less: Accumulated other comprehensive (income) loss (AOCI)

    2,110       2,152       2,644  

GAAP book value excluding AOCI

    46,803       47,326       47,434  

Add: Theoretical proceeds from exercise of options 1

    1,276       1,228       2,014  

Add: Non-GAAP real estate adjustments, net 2

    4,211       3,828       3,834  

Adjusted book value (numerator)

    52,290       52,383       53,283  

Less: Goodwill and other intangibles

    (5,942 )     (6,076 )     (6,210 )

Adjusted tangible book value (numerator)

    46,348       46,307       47,073  
                         

Calculation of Denominator

                       

Common shares outstanding

    2,044       2,050       2,050  

Common shares issuable upon conversion of Series A Preferred Stock 3

    458       458       458  

Common shares underlying restricted stock awards outstanding 4

    20       23       30  

Common shares issuable upon exercise of outstanding options 5

    125       120       200  

Common share equivalents (denominator)

    2,647       2,652       2,738  
                         

Non-GAAP Measures

                       

Adjusted book value per common share equivalent 6

  $ 19.76     $ 19.76     $ 19.46  

Adjusted tangible book value per common share equivalent 7

  $ 17.51     $ 17.46     $ 17.19  

 

Footnotes

1.

Proceeds that would be received from the exercise of outstanding stock options (vested and unvested).

2.

Intended to represent Company’s interest in real estate investments at historical cost. See Exhibit 3.

3.

Common shares issuable upon conversion of the Company’s Series A Preferred Stock.

4.

Common shares underlying restricted stock awards outstanding (unvested).

5.

Common shares underlying outstanding stock options (vested and unvested).

6.

Adjusted book value (numerator) divided by common share equivalents (denominator).

7.

Adjusted tangible book value (numerator) divided by common share equivalents (denominator).

 

Page 7 of 10

 

Exhibit 3: Non-GAAP Real Estate Adjustments

 

The “Non-GAAP Real Estate Adjustments” contains certain non-GAAP adjustments and metrics intended to present the value of the Company’s interest in its real estate investments at historical cost. These non-GAAP adjustments and metrics are not intended to be an expression of the Company’s opinion of the value of its real estate investments.

 

 

 

 

As of

 
   

June 30,

   

December 31,

   

June 30,

 
(dollars in thousands)  

2024

   

2023

   

2023

 
                         

Real estate held for the production of income, net

    29,237       29,543       29,849  

Add: Leases in place

    2,407       2,512       2,635  

Add: Deferred rent 1

    2,400       2,356       2,294  

Real assets (GAAP)

    34,044       34,411       34,779  

Add: Accumulated depreciation 2

    6,232       5,926       5,620  

Add: Accumulated amortization 3

    1,757       1,652       1,950  

Less: Deferred rent

    (2,400 )     (2,356 )     (2,294 )

Real assets (Non-GAAP) 4

    39,633       39,633       40,054  
                         

Notes payable, net (GAAP)

    25,977       26,325       26,650  

Add: Unamortized finance costs

    1,027       1,074       1,121  

Notes payable (Non-GAAP) 5

    27,004       27,399       27,771  
                         

Net real assets (Non-GAAP) 6

    12,629       12,234       12,283  

Less: Net real assets (GAAP) 7

    (8,067 )     (8,086 )     (8,129 )

Non-GAAP adjustments 8

    4,562       4,148       4,154  

Less: Noncontrolling interest 9

    (351 )     (319 )     (320 )

Non-GAAP real estate adjustments, net

    4,211       3,828       3,834  

 

Footnotes

1.

Cumulative difference between actual cash receipts and rental income recorded on a straight-line basis.

2.

Accumulated depreciation on real estate held for the production of income.

3.

Accumulated amortization on leases in place.

4.

Approximation of total cost basis of real estate investments.

5.

Gross principal amount of notes payable.

6.

Real assets (non-GAAP) minus notes payable (non-GAAP).

7.

Real assets (GAAP) minus notes payable (GAAP).

8.

Difference between non-GAAP and GAAP net real assets

9.

Portion of non-GAAP adjustments attributable to 7.7% owned by operating partner.

 

Page 8 of 10

 

Exhibit 4: Consolidated Balance Sheets

 

Forge Group, Inc. and Subsidiaries

 

Consolidated Balance Sheets

 
                         
   

As of

 
   

June 30,

   

December 31,

   

June 30,

 
   

2024

   

2023

   

2023

 

(dollars in thousands)

 

(unaudited)

   

(audited)

   

(unaudited)

 
                         

Assets

                       

Investments and cash:

                       

Fixed maturity securities, at fair value

  $ 27,134     $ 27,970     $ 27,108  

Redeemable preferred stock, at fair value

    1,392       1,363       1,368  

Perpetual preferred stock, at fair value

    562       562       529  

Common stock, at fair value

    2,010       1,691       2,431  

Other invested assets

    3,809       4,524       4,930  

Real estate held for the production of income, net

    29,237       29,543       29,849  

Cash and cash equivalents

    9,236       6,968       5,659  

Restricted cash

    230       226       220  

Total investments and cash

    73,610       72,848       72,094  
                         

Accrued investment income

    298       297       238  

Premium and reinsurance balances receivable

    7,430       8,256       6,141  

Ceded unearned premiums

    104       71       95  

Reinsurance balances recoverable on unpaid losses

    1,038       690       1,266  

Deferred policy acquisition costs, net

    351       298       254  

Deferred rent

    2,400       2,356       2,294  

Leases in place

    2,407       2,512       2,635  

Right-of-use asset, net

    96       143       146  

Goodwill and other intangibles

    5,942       6,076       6,210  

Other assets

    1,952       2,006       1,783  

Total assets

  $ 95,629     $ 95,551     $ 93,157  
                         

Liabilities and Equity

                       

Liabilities:

                       

Unpaid losses and loss adjustment expenses

  $ 10,843     $ 8,426     $ 9,936  

Unearned premium

    10,781       10,283       7,530  

Reinsurance balances payable

    13       36       -  

Accrued expenses

    1,293       2,437       1,691  

Notes payable

    25,977       26,325       26,650  

Defined benefit plan unfunded liability

    339       333       497  

Operating lease liability, net

    434       729       802  

Other liabilities

    559       1,108       547  

Total liabilities

    50,237       49,676       47,653  
                         

Mezzanine Equity:

                       

Preferred stock, without par value 1

    -       -       -  

Additional paid-in capital (Preferred Stock)

    5,227       5,227       5,227  

Stockholders' Equity:

                       

Common stock, $0.01 par value 2

    21       21       21  

Treasury stock

    (210 )     (70 )     -  

Additional paid-in capital

    16,604       16,604       16,426  

Unearned employee stock ownership plan shares

    (1,624 )     (1,827 )     (1,827 )

Retained earnings

    26,785       27,372       27,587  

Accumulated other comprehensive income (loss), net of tax

    (2,110 )     (2,152 )     (2,644 )

Noncontrolling interest

    699       700       713  

Total equity

    45,391       45,874       45,504  

Total liabilities and equity

  $ 95,629     $ 95,551     $ 93,157  

 

Footnotes

1.

1,000,000 shares authorized, 550,000 shares issued and outstanding.

2.

10,000,000 shares authorized, 2,044,148, 2,050,232, and 2,050,000 issued and outstanding, respectively.

 

Page 9 of 10

 

Exhibit 5: Consolidated Statements of Earnings and Comprehensive Earnings

 

Forge Group, Inc. and Subsidiaries

 

Consolidated Statements of Earnings and Comprehensive Earnings

 
                                 
   

For the 3 months ended

   

For the 6 months ended

 
   

June 30,

   

June 30,

   

June 30,

   

June 30,

 
   

2024

   

2023

   

2024

   

2023

 

(dollars in thousands)

 

(unaudited)

   

(unaudited)

   

(unaudited)

   

(unaudited)

 
                                 

Revenues

                               

Net premiums earned

  $ 5,143     $ 3,524     $ 9,803     $ 6,715  

Income from real estate held for investment

    546       543       1,102       1,112  

Net investment income

    411       366       805       725  

Net realized investment gains

    (344 )     (89 )     (339 )     (126 )

Net unrealized gains on equity securities

    (23 )     236       347       604  

Service fee and other income (expense)

    16       16       18       110  

Total revenues

    5,750       4,596       11,735       9,140  
                                 

Expenses

                               

Losses and loss adjustment expenses

    2,894       2,359       5,852       4,192  

Policy acquisition costs and other operating expenses

    2,583       2,046       4,923       4,241  

Depreciation and amortization

    296       309       592       644  

Real estate operating expense

    44       23       99       102  

Interest expense on debt

    284       291       568       583  

Lease expense

    53       52       105       106  

Sublease income

    (43 )     (41 )     (86 )     (82 )

Total expenses

    6,111       5,039       12,053       9,786  
                                 

Income (loss) before income taxes

    (361 )     (442 )     (318 )     (646 )
                                 

Income tax expense (benefit)

    13       11       37       (30 )

Net income (loss)

    (374 )     (454 )     (355 )     (616 )

Net loss (gain) attributable to noncontrolling interest

    1       (6 )     2       (6 )

Net income (loss) attributable to Forge Group, Inc.

    (373 )     (460 )     (353 )     (622 )
                                 

Other comprehensive income (loss), net of tax

                               

Unrealized gains (losses) on AFS securities, net of tax

    (9 )     (131 )     6       95  

Reclassification adjustment for losses (gains) included in net income

    38       73       36       72  

Total other comprehensive income (loss), net of tax

    29       (58 )     42       166  
                                 

Total comprehensive income (loss)

    (345 )     (512 )     (313 )     (450 )

 

Page 10 of 10

Forge (PK) (USOTC:FIGP)
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