unam_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended June 30, 2021 or

☐	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from ____ to ____.

	Commission File No. 00-003978

UNICO AMERICAN CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Nevada		95-2583928
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

26050 Mureau Road, Calabasas, California		91302
(Address of Principal Executive Offices)		(Zip Code)

Registrant's telephone number, including area code: (818) 591‑9800

No Change

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, No Par Value	UNAM	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at August 17, 2021
Common Stock, no par value per share		5,304,863

UNICO AMERICAN CORPORATION

INDEX TO FORM 10-Q

		Page No.
Cautionary Note Regarding Forward-Looking Statements		3
Part I ‑ Financial Information		5
	Item 1. Financial Statements	5
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	40
	Item 4. Controls and Procedures	40
Part II ‑ Other Information		41
	Item 1. Legal Proceedings	41
	Item 1A. Risk Factors	41
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	44
	Item 3. Defaults Upon Senior Securities	44
	Item 4. Mine Safety Disclosures	44
	Item 5. Other Information	44
	Item 6. Exhibits	44
Signatures		45

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q, and the documents incorporated by reference in this document, the Company’s press releases and oral statements made from time to time by the Company or on the Company’s behalf, may contain “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (or “the Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (or “the Exchange Act”). In this context, forward-looking statements are not historical facts and include statements about the Company’s plans, objectives, beliefs and expectations. Forward-looking statements include statements preceded by, followed by, or that include the words “believes,” “expects,” “anticipates,” “seeks,” “plans,” “estimates,” “intends,” “projects,” “targets,” “should,” “could,” “may,” “will,” “can,” “can have,” “likely,” the negatives thereof or similar words and expressions. These forward-looking statements are contained throughout this Form 10-Q, including, but not limited to, statements found in Part I – Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Forward-looking statements are only predictions and are not guarantees of future performance. These statements are based on current expectations and assumptions involving judgments about, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company’s control. These predictions are also affected by known and unknown risks, uncertainties and other factors that may cause the Company’s actual results to be materially different from those expressed or implied by any forward-looking statement. Many of these factors are beyond the Company’s ability to control or predict. The Company’s actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors. Such factors include, but are not limited to, the following:

·	Unico's ability to continue to operate as a "going concern";
·	substantial historical net losses of Crusader Insurance Company (“Crusader”), the principal subsidiary of the Company, which may continue in the future;
·	failure to meet minimum capital and surplus requirements required of property and casualty insurance companies;
·	Crusader will be limited in the amount of dividends that it can declare and pay to Unico because of decreases in its policyholder surplus;
·	possible restrictions on new business that may be written by Crusader by its principal insurance regulator because of its reduced policyholder surplus;
·	vulnerability to climate change and significant catastrophic property loss;
·	the impact of the recent coronavirus pandemic;
·	ability to adjust claims accurately;
·	insufficiency of loss and loss adjustment expense reserves to cover future losses;
·	ability to realize deferred tax assets;
·	the negative impact of emerging claim and coverage issues;
·	ability to accurately underwrite risks and charge adequate premium;
·	ability to obtain reinsurance or collect from reinsurers and or losses in excess of reinsurance limits;
·	excess underwriting capacity and unfavorable premium rates;
·	extensive regulation and legislative changes;
·	risk management framework could prove inadequate;
·	reliance on subsidiaries to satisfy obligations, including privacy and data protection laws;
·	downgrade in financial strength rating or long-term issuer credit rating by A.M. Best;
·	changes in interest rates;
·	investments subject to credit, prepayment and other risks;
·	geographic concentration;
·	single operating location;
·	reliance on independent insurance agents and brokers;
·	insufficient reserve for doubtful accounts;
·	litigation;
·	enforceability of exclusions and limitations in policies;
·	difficulty in acquiring necessary data;
·	reliance on information technology systems;
·	systems damage, failures, interruptions, cyber-attacks and intrusions, or unauthorized data disclosures;
·	delays and cost overruns in connection with the upgrade of its legacy information technology system;
·	ability to attract, develop and retain employees and maintain appropriate staffing levels;
·	insolvency, financial difficulties, or default in performance of obligations by parties with significant contracts or relationships;

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·	ability to effectively compete;
·	levy assessments by various underwriting pools and programs;
·	maximization of long-term value which may sometimes conflict with short-term earnings expectations;
·	control by a small number of stockholders;
·	difficulty in effecting a change of control or sale of any subsidiaries;
·	limited trading of stock;
·	changes in accounting standards, including those issued by the Financial Accounting Standards Board;
·	changes in federal or state tax laws;
·	ability to prevent or detect acts of fraud with disclosure controls and procedures;
·	change in general economic conditions;
·	dependence on key personnel;
·	no assurance of dividend declaration in the future so returns may be limited to stock value;
·	significant costs and substantial management time devoted to operating as a public company; and
·	failure to maintain effective system of internal controls.

Please see Part I - Item 1A – “Risk Factors” in the Company’s 2020 Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission (“SEC”), as well as other documents we file with the SEC from time-to-time, for other important factors that could cause the Company’s actual results to differ materially from the Company’s current expectations and from the forward-looking statements discussed herein. Because of these and other risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. In addition, these statements speak only as of the date of this Form 10-Q and, except as may be required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason.

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PART I - FINANCIAL INFORMATION

ITEM 1. -FINANCIAL STATEMENTS

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30		December 31
	2021		2020
	(Unaudited)
ASSETS
Investments
Available-for-sale:
Fixed maturities, at fair value (amortized cost: $84,601,638 at June 30, 2021, and $80,071,280 at December 31, 2020)	$	86,746,661	$

SEC Form 10-Q filed by Unico American Corporation