Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 31, 2020

NATIONAL GENERAL HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
Delaware001-3631127-1046208
(State or other jurisdiction
of incorporation or organization)
(Commission
File Number)
(I.R.S. Employer
Identification Number)
59 Maiden Lane, 38th Floor
New York, New York 10038
(Address of principal executive offices) (zip code)
(212) 380-9500
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading
Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per shareNGHCThe Nasdaq Stock Market LLC
7.50% Non-Cumulative Preferred Stock, Series ANGHCPThe Nasdaq Stock Market LLC
Depositary Shares, Representing 1/40th of a Share of 7.50% Non-Cumulative Preferred Stock, Series BNGHCOThe Nasdaq Stock Market LLC
Depositary Shares, Representing 1/40th of a Share of 7.50% Non-Cumulative Preferred Stock, Series CNGHCNThe Nasdaq Stock Market LLC
7.625% Subordinated Notes due 2055NGHCZThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act (§240.12b-2 of this chapter).

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Item 2.02Results of Operations and Financial Condition.

On July 31, 2020, National General Holdings Corp. (the “Company”) issued a press release announcing its results of operations for the quarter ended June 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The press release is furnished and not filed pursuant to Instruction B.2 of Form 8-K.


Item 9.01Financial Statements And Exhibits.
(d) Exhibits.
Exhibit NumberDescription
104The Cover Page from the Company’s Current Report on Form 8-K dated July 31, 2020, formatted in Inline XBRL.




SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

NATIONAL GENERAL HOLDINGS CORP.
Date: July 31, 2020By:/s/ Jeffrey Weissmann
Jeffrey Weissmann
General Counsel and Secretary


Document
https://cdn.kscope.io/a2cbc4e5908a815d432b9caaa2554951-nghclogoa1811.jpg

National General Holdings Corp. Reports Second Quarter 2020 Results

NEW YORK, July 31, 2020 (GLOBE NEWSWIRE) - National General Holdings Corp. (Nasdaq: NGHC) reported second quarter 2020 net income of $157.6 million or $1.37 per diluted share, compared to net income of $69.0 million or $0.60 per diluted share in the second quarter of 2019. Second quarter 2020 operating earnings (non-GAAP)(1) were $157.6 million or $1.36 per diluted share compared to $78.1 million or $0.67 per diluted share in the second quarter of 2019.

Second Quarter 2020 Highlights versus Second Quarter 2019*

Gross written premium grew by $50.4 million to $1,243.2 million compared to the prior year’s quarter due to our P&C segment growth of 3.2%, driven by the acquisition of National Farmers Union Property and Casualty Company (“Farmers Union Insurance”) in the third quarter of 2019, and organic growth, largely offset by the premium refund provided due to lower miles driven as a result of the COVID-19 pandemic; and our A&H domestic segment growth of 20.2%, excluding our previously sold A&H international business.
The overall combined ratio(11,12) was 80.5% compared to 90.9% in the prior year’s quarter, excluding non-cash amortization of intangible assets. The P&C segment reported an improved combined ratio to 83.6% from 92.6% in the prior year’s quarter driven by our continued strong underwriting and recent declines in miles driven. The P&C combined ratio includes prior year unfavorable loss development of $8.6 million compared to $10.4 million unfavorable loss development in the prior year’s quarter, and $35.3 million of catastrophe losses related to weather-related events compared to $18.4 million of catastrophe losses in the prior year’s quarter. The A&H segment reported a decrease in the combined ratio to 65.0% from 82.6% in the prior year’s quarter, driven by strong operating results in our small group self-funded and individual products, absence of our international business which was sold in the fourth quarter of 2019, and growth in service and fee income of 51.3%. The A&H combined ratio includes $11.4 million of favorable loss development compared to $8.1 million of favorable loss development in the prior year’s quarter.
Stockholders’ equity was $3.0 billion and fully diluted book value per share was $22.02 at June 30, 2020, growth of 13.0% and 15.5%, respectively, from December 31, 2019. Excluding accumulated other comprehensive income, fully diluted book value per share was $20.40 at June 30, 2020, growth of 10.7%, from December 31, 2019. Our trailing twelve-month operating return on average equity (ROE)(13) was 18.1% as of June 30, 2020.
Second quarter of 2020 operating earnings (non-GAAP)(1) excludes the following, net of tax: $0.1 million loss on equity method investments, $4.4 million or $0.04 per share of net gain on investments and $4.2 million or $0.04 per share of non-cash amortization of intangible assets.
Repurchased 459,083 shares during the second quarter of 2020 as part of our share repurchase program.
Agreement announced on July 7, 2020 to be acquired by Allstate for expected total consideration of $34.50 per share cash (consisting of $32.00 in cash and an up to $2.50 per share closing dividend), subject to shareholder and regulatory approval and other customary closing conditions.

Barry Karfunkel, National General’s CEO, stated: “Our well diversified platform continues to perform well. With our recently announced agreement to be acquired by Allstate, we look forward to contributing to the greater Allstate. I want to personally thank each and every one of the National General team members for their outstanding and continued work during these unprecedented times and for their continuing contribution to the success of the pending acquisition.”

*NOTE: Unless specified otherwise, discussion of our second quarter 2020 and 2019 results do not include financial results from the Reciprocal Exchanges, which are presented within our consolidated financial results within this release but are not included in net income available to NGHC common stockholders.



Overview of Second Quarter 2020 as Compared to Second Quarter 2019

Property & Casualty - Gross written premium grew by 3.2% to $1,053.5 million, net written premium increased by 0.4% to $789.4 million, and net earned premium increased by 2.9% to $842.0 million. P&C gross written premium growth was driven by $47.7 million of added premiums from the acquisition of Farmers Union Insurance, and organic growth, largely offset by the premium refund provided due to lower miles driven as a result of the COVID-19 pandemic. Service and fee income was $112.0 million compared to $113.1 million in the prior year’s quarter. Excluding non-cash amortization of intangible assets, the combined ratio(11,12) was 83.6% with a loss and LAE ratio of 59.8% and an expense ratio(10,12) of 23.8%, versus a prior year combined ratio of 92.6% with a loss and LAE ratio of 72.6% and an expense ratio of 20.0%. The loss and LAE ratio was impacted by pre-tax catastrophe losses of approximately $35.3 million primarily related to weather-related events in the second quarter of 2020, compared to $18.4 million of losses in the second quarter of 2019. Unfavorable loss development was $8.6 million in the second quarter of 2020 primarily driven by small business auto, compared to unfavorable loss development of $10.4 million in the second quarter of 2019.

Accident & Health - Gross written premium grew by $18.0 million compared to the prior year’s quarter due to growth in both our small group self-funded and individual products. Excluding our A&H international business, our A&H domestic segment grew by 20.2% to $189.7 million. Service and fee income grew 51.3% to $80.1 million compared to $52.9 million in the prior year’s quarter. Excluding non-cash amortization of intangible assets, the combined ratio(11,12) was 65.0% with a loss and LAE ratio of 39.5% and an expense ratio(10,12) of 25.5%, versus a prior year combined ratio of 82.6% with a loss and LAE ratio of 52.0% and an expense ratio of 30.6%. The loss and LAE ratio reflects strong performance in both small group self-funded and individual products. Favorable loss development was $11.4 million in the second quarter of 2020, compared to favorable loss development of $8.1 million in the second quarter of 2019.

Reciprocal Exchanges - Results for the Reciprocal Exchanges are not included in net income available to NGHC common stockholders. Gross written premium was $98.4 million, net written premium was $57.3 million, and net earned premium was $54.8 million. Reciprocal Exchanges combined ratio(11,12) excluding non-cash amortization of intangible assets was 83.1% with a loss and LAE ratio of 54.8% and an expense ratio(10,12) of 28.3%.

Second quarter of 2020 net investment income decreased to $30.5 million, compared to $35.9 million in the second quarter of 2019. Total investments and cash and cash equivalents (including restricted cash) were $5.2 billion as of June 30, 2020. Accumulated other comprehensive income increased to a $186.9 million gain at June 30, 2020, from a $74.5 million gain at December 31, 2019, primarily due to market improvement.

Interest expense was $11.8 million, down from $12.9 million in the prior year’s quarter. Debt was $682.3 million at June 30, 2020, compared to $686.0 million at December 31, 2019.

The second quarter of 2020 provision for income taxes was $49.0 million and the effective tax rate for the quarter was 22.7% compared with income taxes of $22.3 million and an effective rate of 22.2% in the second quarter of 2019.

Stockholders’ equity was $2,995.1 million at June 30, 2020, growth of 13.0% from $2,649.5 million at December 31, 2019. Fully diluted book value per share was $22.02 at June 30, 2020, growth of 15.5% from $19.06 at December 31, 2019. Excluding accumulated other comprehensive income, fully diluted book value per share was $20.40 at June 30, 2020, growth of 10.7%, from December 31, 2019. Our trailing twelve-month operating return on average equity (ROE)(13) was 18.1% as of June 30, 2020.
2



Year-to-Date P&C Segment Notable Large Losses
YearQuarterEventP&C Notable Large Losses and LAE
($ millions)
P&C Loss and LAE Ratio Points*EPS Impact After Tax
2020Q2Weather-related Events$35.34.2%$0.24
2020Q1Weather-related Events$8.10.9%$0.06
2019Q2Weather-related Events$18.42.2%$0.13
2019Q1Winter Weather$12.11.6%$0.08

* Loss and LAE ratio points related to P&C net earned premium in quarter the loss event was recorded.

Additional item -

Homeowners Quota Share - Effective July 1, 2020, we cede 20.0% of net liability and receive a 37.0% ceding commission on in-force, new and renewal business, under our homeowners quota share reinsurance agreement.


About National General Holdings Corp.

National General Holdings Corp. (NASDAQ: NGHC), headquartered in New York City, is a specialty personal lines insurance holding company. National General traces its roots to 1939, has a financial strength rating of A- (excellent) from A.M. Best, and provides personal and commercial automobile, homeowners, umbrella, recreational vehicle, motorcycle, lender-placed, supplemental health and other niche insurance products.

# # #

IMPORTANT INFORMATION FOR INVESTORS

Additional Information and Where to Find It

This communication may be deemed solicitation material in respect of the proposed acquisition of National General Holdings Corp. (the “Company”) by The Allstate Corporation. In connection with the merger, the Company plans to file with the Securities and Exchange Commission and furnish its stockholders a proxy statement. Additionally, the Company will file other relevant materials with the Securities and Exchange Commission in connection with the proposed transaction.

The materials to be filed by the Company with the Securities and Exchange Commission may be obtained free of charge at the Securities and Exchange Commission’s web site at www.sec.gov. In addition, stockholders also may obtain free copies of the proxy statement, when available, from the Company by contacting National General Holdings Corp. Investor Relations at 59 Maiden Lane, 38th Floor New York, New York 10038, telephone number (212) 380-9462 or InvestorRelations@ngic.com.

INVESTORS AND STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT AND THE OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED MERGER BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER AND THE PARTIES TO THE MERGER.

3



Participants in the Solicitation

The Company and its directors, executive officers and other members of management and employees, under the Securities and Exchange Commission rules, may be deemed to be participants in the solicitation of proxies of the Company’s stockholders in connection with the proposed merger. Investors and security holders may obtain more detailed information regarding the names, affiliations and interests of certain of the Company’s executive officers and directors in the solicitation by reading the Company’s proxy statement for its 2020 annual meeting of stockholders and the proxy statement and other relevant materials which may be filed with the Securities and Exchange Commission in connection with the merger when and if they become available. Information concerning the interests of the Company’s participants in the solicitation, which may, in some cases, be different than those of the Company’s stockholders generally, will be set forth in the proxy statement relating to the merger when and if it becomes available. Additional information regarding the Company’s executive officers and directors in the solicitation is available by reading the Company’s proxy statement for its 2020 annual meeting of stockholders.

# # #
Forward Looking Statements

This news release contains “forward-looking statements” that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as “may,” “will,” “plan,” “expect,” “project,” “intend,” “estimate,” “anticipate” and “believe” or their variations or similar terminology. There can be no assurance that actual developments will be those anticipated by us. Actual results may differ materially from those expressed or implied in these statements as a result of significant risks and uncertainties, including, but not limited to, plans and expectations related to our proposed merger with The Allstate Corporation (“Allstate”), including anticipated timing for closing of the merger, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with Allstate, the inability to complete the proposed merger due to the failure to obtain stockholder approval for the proposed merger or the failure to satisfy other conditions to completion of the proposed merger, the possibility that competing offers will be made, non-receipt of expected payments from insureds or reinsurers, changes in interest rates, a downgrade in the financial strength ratings of our insurance subsidiaries, the potential effect of changes in LIBOR reporting practices, the effects of pandemics or other widespread health problems such as the ongoing COVID-19 pandemic on our business, including our investment portfolio, and the national and global economy generally, the effect of the performance of financial markets on our investment portfolio, our ability to accurately underwrite and price our products and to maintain and establish accurate loss reserves, estimates of the fair value of investments, development of claims and the effect on loss reserves, large loss activity including hurricanes and wildfires, the cost and availability of reinsurance coverage, the effects of emerging claim and coverage issues, the effect of unpredictable catastrophic losses, changes in the demand for our products, our degree of success in integrating acquired businesses, the effect of general economic conditions, state and federal legislation, the effects of tax reform, regulations and regulatory investigations into industry practices, risks associated with conducting business outside the United States, developments relating to existing agreements, disruptions to our business relationships with third party vendors or agencies, breaches in data security or other disruptions involving our technology, heightened competition, changes in pricing environments, and changes in asset valuations. The forward-looking statements contained in this news release are made only as of the date of this release. The Company undertakes no obligation to publicly update any forward-looking statement except as may be required by law. Additional information about these risks and uncertainties, as well as others that may cause actual results to differ materially from those projected, is contained in the Company’s filings with the Securities and Exchange Commission.

4




Income Statement - Second Quarter
$ in thousands
(Unaudited)

Three Months Ended June 30,
20202019
NGHCReciprocal ExchangesConsolidatedNGHCReciprocal ExchangesConsolidated
Revenues:
Gross written premium$1,243,165  $98,436  $1,341,601  $1,192,762  $121,146  $1,313,908  
Net written premium957,640  57,268  1,014,908  939,178  56,220  995,398  
Net earned premium1,010,782  54,785  1,065,567  984,021  46,630  1,030,651  
Ceding commission income35,530  11,110  46,640  43,346  16,846  60,192  
Service and fee income192,023  2,336  180,592  
(A)
166,049  1,516  148,908  
(G)
Net investment income30,523  2,012  31,175  
(B)
35,949  2,124  35,131  
(H)
Net gain (loss) on investments5,511  (353) 5,158  (5,274) 44  (5,230) 
Total revenues$1,274,369  $69,890  $1,329,132  
(C)
$1,224,091  $67,160  $1,269,652  
(I)
Expenses:
Loss and loss adjustment expense$570,439  $30,007  $600,446  $680,246  $35,289  $715,535  
Acquisition costs and other underwriting expenses219,278  10,100  229,378  185,951  8,175  194,126  
General and administrative expenses257,318  18,858  262,409  
(D)
244,827  21,597  247,767  
(J)
Interest expense11,779  1,360  11,779  
(E)
12,925  2,942  12,925  
(K)
Total expenses$1,058,814  $60,325  $1,104,012  
(F)
$1,123,949  $68,003  $1,170,353  
(L)
Income (loss) before provision (benefit) for income taxes$215,555  $9,565  $225,120  $100,142  $(843) $99,299  
Provision (benefit) for income taxes48,981  1,526  50,507  22,266  (25) 22,241  
Net income (loss) before non-controlling interest and dividends on preferred shares166,574  8,039  174,613  77,876  (818) 77,058  
Less: net income (loss) attributable to noncontrolling interest—  8,039  8,039  —  (818) (818) 
Net income before dividends on preferred shares166,574  —  166,574  77,876  —  77,876  
Less: dividends on preferred shares8,925  —  8,925  8,925  —  8,925  
Net income available to common stockholders$157,649  $—  $157,649  $68,951  $—  $68,951  

NOTES: Consolidated column includes eliminations as follows: (A) $(13,767), (B) $(1,360), (C) $(15,127), (D) $(13,767),
(E) $(1,360), (F) $(15,127), (G) $(18,657), (H) $(2,942), (I) $(21,599), (J) $(18,657), (K) $(2,942) and (L) $(21,599).

5




Income Statement - Year To Date
$ in thousands
(Unaudited)

Six Months Ended June 30,
20202019
NGHCReciprocal ExchangesConsolidatedNGHCReciprocal ExchangesConsolidated
Revenues:
Gross written premium$2,627,866  $190,289  $2,818,155  $2,596,971  $226,715  $2,823,686  
Net written premium2,111,948  112,563  2,224,511  2,054,887  105,175  2,160,062  
Net earned premium2,028,390  112,383  2,140,773  1,902,520  92,288  1,994,808  
Ceding commission income72,121  24,824  96,945  94,346  35,380  129,726  
Service and fee income383,180  3,493  360,033  
(A)
346,437  2,886  314,415  
(G)
Net investment income60,270  4,195  61,418  
(B)
70,232  4,294  68,576  
(H)
Net gain (loss) on investments(557) (1,146) (1,703) (4,508) (700) (5,208) 
Total revenues$2,543,404  $143,749  $2,657,466  
(C)
$2,409,027  $134,148  $2,502,317  
(I)
Expenses:
Loss and loss adjustment expense$1,220,070  $72,374  $1,292,444  $1,290,030  $77,314  $1,367,344  
Acquisition costs and other underwriting expenses437,023  20,597  457,620  389,284  16,760  406,044  
General and administrative expenses518,197  38,421  529,978  
(D)
487,660  43,109  495,861  
(J)
Interest expense23,559  3,047  23,559  
(E)
25,924  5,950  25,924  
(K)
Total expenses$2,198,849  $134,439  $2,303,601  
(F)
$2,192,898  $143,133  $2,295,173  
(L)
Income (loss) before provision (benefit) for income taxes$344,555  $9,310  $353,865  $216,129  $(8,985) $207,144  
Provision (benefit) for income taxes77,222  1,457  78,679  46,495  (1,748) 44,747  
Net income (loss) before non-controlling interest and dividends on preferred shares267,333  7,853  275,186  169,634  (7,237) 162,397  
Less: net income (loss) attributable to noncontrolling interest—  7,853  7,853  —  (7,237) (7,237) 
Net income before dividends on preferred shares267,333  —  267,333  169,634  —  169,634  
Less: dividends on preferred shares16,800  —  16,800  16,800  —  16,800  
Net income available to common stockholders$250,533  $—  $250,533  $152,834  $—  $152,834  

NOTES: Consolidated column includes eliminations as follows: (A) $(26,640), (B) $(3,047), (C) $(29,687), (D) $(26,640),
(E) $(3,047), (F) $(29,687) (G) $(34,908), (H) $(5,950), (I) $(40,858), (J) $(34,908), (K) $(5,950) and (L) $(40,858).
6




Earnings and Per Share Data
$ in thousands, except shares and per share data
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Net income available to common stockholders$157,649  $68,951  $250,533  $152,834  
Basic net income per common share$1.39  $0.61  $2.21  $1.35  
Diluted net income per common share$1.37  $0.60  $2.17  $1.33  
Operating earnings attributable to NGHC (non-GAAP)(1)
$157,643  $78,140  $263,402  $167,856  
Basic operating earnings per common share (non-GAAP)(1)
$1.39  $0.69  $2.32  $1.48  
Diluted operating earnings per common share (non-GAAP)(1)
$1.36  $0.67  $2.27  $1.45  
Dividends declared per common share$0.05  $0.04  $0.10  $0.08  
Weighted average number of basic shares outstanding113,542,628  113,178,552  113,549,952  113,097,084  
Weighted average number of diluted shares outstanding115,720,069  116,050,267  115,898,110  116,062,721  
Shares outstanding, end of period113,397,545  113,215,632  
Fully diluted shares outstanding, end of period115,574,986  116,087,347  
Book value per share$22.44  $17.92  
Fully diluted book value per share$22.02  $17.48  


Reconciliation of Net Income to Operating Earnings (Non-GAAP)(1)(13)
$ in thousands, except per share data
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Net income available to common stockholders$157,649  $68,951  $250,533  $152,834  
Add (subtract):
Equity in (earnings) losses of equity method investments160  (731) 3,888  203  
Net (gain) loss on investments(5,511) 5,274  557  4,508  
Non-cash amortization of intangible assets5,343  7,089  11,845  14,305  
Income tax expense (benefit) (2,443) (3,421) (3,994) 
Operating earnings attributable to NGHC (non-GAAP)(1)
$157,643  $78,140  $263,402  $167,856  
Operating earnings per common share (non-GAAP)(1):
Basic operating earnings per common share (non-GAAP)(1)
$1.39  $0.69  $2.32  $1.48  
Diluted operating earnings per common share (non-GAAP)(1)
$1.36  $0.67  $2.27  $1.45  

7




Balance Sheet
$ in thousands
(Unaudited)

June 30, 2020December 31, 2019
ASSETSNGHCReciprocal ExchangesConsolidatedNGHCReciprocal ExchangesConsolidated
Total investments (2)
$4,853,180  $340,103  $5,085,750  
(A)
$4,632,960  $329,494  $4,854,998  
(H)
Cash and cash equivalents, including restricted cash334,771  237  335,008  163,480  983  164,463  
Premiums and other receivables, net1,438,085  49,649  1,487,734  1,373,089  55,859  1,428,948  
Reinsurance balances1,614,713  196,005  1,810,718  1,745,036  225,019  1,970,055  
Intangible assets, net347,686  3,135  350,821  362,598  3,225  365,823  
Goodwill179,328  —  179,328  179,328  —  179,328  
Other (3)
776,916  29,364  768,484  
(B)
798,675  29,070  792,919  
(I)
Total assets$9,544,679  $618,493  $10,017,843  
(C)
$9,255,166  $643,650  $9,756,534  
(J)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Unpaid loss and loss adjustment expense reserves$2,626,314  $200,270  $2,826,584  $2,680,628  $205,786  $2,886,414  
Unearned premiums and other revenue2,102,044  226,403  2,328,447  2,059,688  252,553  2,312,241  
Reinsurance payable437,989  23,907  461,896  527,155  35,689  562,844  
Accounts payable and accrued expenses 320,176  45,549  327,929  
(D)
306,869  43,323  315,366  
(K)
Debt682,266  107,533  682,266  
(E)
686,006  107,456  686,006  
(L)
Other380,766  30,279  411,045  345,366  30,803  376,169  
Total liabilities$6,549,555  $633,941  $7,038,167  
(F)
$6,605,712  $675,610  $7,139,040  
(M)
Stockholders’ equity:
Preferred stock (4)
$450,000  $—  $450,000  $450,000  $—  $450,000  
Common stock (5)
1,139  —  1,139  1,134  —  1,134  
Treasury stock, at cost (6)
(8,482) —  (8,482) —  —  —  
Additional paid-in capital1,069,152  —  1,069,152  1,065,634  —  1,065,634  
Accumulated other comprehensive income186,864  —  186,864  74,548  —  74,548  
Retained earnings1,296,451  —  1,296,451  1,058,138  —  1,058,138  
Total National General Holdings Corp. stockholders’ equity2,995,124  —  2,995,124  2,649,454  —  2,649,454  
Noncontrolling interest—  (15,448) (15,448) —  (31,960) (31,960) 
Total stockholders’ equity$2,995,124  $(15,448) $2,979,676  $2,649,454  $(31,960) $2,617,494  
Total liabilities and stockholders’ equity$9,544,679  $618,493  $10,017,843  
(G)
$9,255,166  $643,650  $9,756,534  
(N)

NOTES: Consolidated column includes eliminations as follows: (A) $(107,533), (B) $(37,796), (C) $(145,329), (D) $(37,796),
(E) $(107,533), (F) $(145,329), (G) $(145,329) (H) $(107,456), (I) $(34,826), (J) $(142,282), (K) $(34,826), (L) $(107,456),
(M) $(142,282) and (N) $(142,282).

8




Segment Information - Second Quarter
$ in thousands
(Unaudited)

Three Months Ended June 30,
20202019
P&CA&HNGHCReciprocal
Exchanges
P&CA&HNGHCReciprocal Exchanges
Gross written premium$1,053,508  $189,657  $1,243,165  $98,436  $1,021,090  $171,672  $1,192,762  $121,146  
Net written premium789,428  168,212  957,640  57,268  786,471  152,707  939,17856,220  
Net earned premium841,985  168,797  1,010,782  54,785  817,972  166,049  984,021  46,630  
Ceding commission income35,059  471  35,530  11,110  39,418  3,928  43,346  16,846  
Service and fee income111,955  80,068  192,023  2,336  113,112  52,937  166,049  1,516  
Total underwriting revenues$988,999  $249,336  $1,238,335  $68,231  $970,502  $222,914  $1,193,416  $64,992  
Loss and loss adjustment expense (A)
503,784  66,655  570,439  30,007  593,922  86,324  680,246  35,289  
Acquisition costs and other underwriting expenses152,384  66,894  219,278  10,100  137,950  48,001  185,951  8,175  
General and administrative expenses199,327  57,991  257,318  18,858  183,535  61,292  244,827  21,597  
Total underwriting expenses$855,495  $191,540  $1,047,035  $58,965  $915,407  $195,617  $1,111,024  $65,061  
Underwriting income (loss)133,504  57,796  191,300  9,266  55,095  27,297  82,392  (69) 
Non-cash amortization of intangible assets4,041  1,302  5,343  30  5,412  1,677  7,089  12  
Underwriting income (loss) before amortization and impairment$137,545  $59,098  $196,643  $9,296  $60,507  $28,974  $89,481  $(57) 
Underwriting ratios
Loss and loss adjustment expense ratio (7)
59.8 %39.5 %56.4 %54.8 %72.6 %52.0 %69.1 %75.7 %
Operating expense ratio (Non-GAAP) (8)
24.3 %26.3 %24.6 %28.3 %20.7 %31.6 %22.5 %24.5 %
Combined ratio (Non-GAAP) (9)
84.1 %65.8 %81.0 %83.1 %93.3 %83.6 %91.6 %100.2 %
Underwriting ratios (before amortization and impairment)
Loss and loss adjustment expense ratio (7)
59.8 %39.5 %56.4 %54.8 %72.6 %52.0 %69.1 %75.7 %
Operating expense ratio (Non-GAAP) (10)
23.8 %25.5 %24.1 %28.3 %20.0 %30.6 %21.8 %24.4 %
Combined ratio before amortization and impairment (Non-GAAP) (11)
83.6 %65.0 %80.5 %83.1 %92.6 %82.6 %90.9 %100.1 %

(A) Loss and loss adjustment expenses for the three months ended June 30, 2020 included $8,584 of unfavorable loss development on prior accident year loss and loss adjustment expense reserves in the P&C segment, and $11,430 of favorable loss development in the A&H segment, versus $10,396 of unfavorable loss development in the P&C segment, and $8,135 of favorable loss development in the A&H segment for the three months ended June 30, 2019.

9




Segment Information - Year To Date
$ in thousands
(Unaudited)

Six Months Ended June 30,
20202019
P&CA&HNGHCReciprocal
Exchanges
P&CA&HNGHCReciprocal Exchanges
Gross written premium$2,251,184  $376,682  $2,627,866  $190,289  $2,166,755  $430,216  $2,596,971  $226,715  
Net written premium1,775,520  336,428  2,111,948  112,563  1,701,999  352,888  2,054,887105,175  
Net earned premium1,694,887  333,503  2,028,390  112,383  1,574,891  327,629  1,902,520  92,288  
Ceding commission income71,090  1,031  72,121  24,824  87,827  6,519  94,346  35,380  
Service and fee income222,588  160,592  383,180  3,493  232,488  113,949  346,437  2,886  
Total underwriting revenues$1,988,565  $495,126  $2,483,691  $140,700  $1,895,206  $448,097  $2,343,303  $130,554  
Loss and loss adjustment expense (A)
1,071,814  148,256  1,220,070  72,374  1,118,957  171,073  1,290,030  77,314  
Acquisition costs and other underwriting expenses301,658  135,365  437,023  20,597  283,435  105,849  389,284  16,760  
General and administrative expenses400,454  117,743  518,197  38,421  367,730  119,930  487,660  43,109  
Total underwriting expenses$1,773,926  $401,364  $2,175,290  $131,392  $1,770,122  $396,852  $2,166,974  $137,183  
Underwriting income (loss)214,639  93,762  308,401  9,308  125,084  51,245  176,329  (6,629) 
Non-cash amortization of intangible assets9,228  2,617  11,845  60  10,897  3,408  14,305  23  
Underwriting income (loss) before amortization and impairment$223,867  $96,379  $320,246  $9,368  $135,981  $54,653  $190,634  $(6,606) 
Underwriting ratios
Loss and loss adjustment expense ratio (7)
63.2 %44.5 %60.1 %64.4 %71.0 %52.2 %67.8 %83.8 %
Operating expense ratio (Non-GAAP) (8)
24.1 %27.4 %24.6 %27.3 %21.0 %32.1 %22.9 %23.4 %
Combined ratio (Non-GAAP) (9)
87.3 %71.9 %84.7 %91.7 %92.0 %84.3 %90.7 %107.2 %
Underwriting ratios (before amortization and impairment)
Loss and loss adjustment expense ratio (7)
63.2 %44.5 %60.1 %64.4 %71.0 %52.2 %67.8 %83.8 %
Operating expense ratio (Non-GAAP) (10)
23.6 %26.6 %24.1 %27.3 %