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New words:
burial, CGI, contributor, decide, EGI, entity, Fargo, imposed, injury, Prime, rebalancing, substantially, tenor, transportation, uncollected, unsecured
Removed:
commenced, expiring, reinsured, satisfy, unchanged
Financial report summary
?Risks
- If we fail to price our insurance policies sufficiently, our business competitiveness, financial condition, and results of operations could be materially adversely affected.
- Intense competition and the fact that we write only a single line of insurance could adversely affect our ability to sell policies at rates that we deem adequate.
- Our concentration in California ties our performance to the business, economic, demographic, natural perils, competitive, legislative and regulatory conditions in that state.
- We rely on traditional insurance agents, specialty agents, brokers and other distribution partners.
- We rely on statistical data models and analytics that leverage internal and external data.
- If we are unable to obtain reinsurance or collect on ceded reinsurance, our ability to write new policies and to renew existing policies could be adversely affected and our financial condition and results of operations could be materially adversely affected.
- We obtained reinsurance covering the losses incurred prior to July 1, 1995, and we could be liable for some or all of those losses if the coverage provided by the LPT Agreement proves inadequate or we fail to collect from the reinsurers that are a party to such transaction.
- We focus on small businesses, and those businesses may be severely and disproportionately impacted by a downturn in economic conditions.
- Our liability for losses and LAE is based on estimates and may be inadequate to cover our actual losses and expenses.
- We are a holding company with no direct operations. We depend on the ability of our subsidiaries to transfer funds to us to meet our obligations and capital management objectives, and our insurance subsidiaries' ability to pay dividends to us is restricted by law.
- Acts of terrorism and natural, or man-made catastrophes or other disruptive events could materially adversely impact our financial condition and results of operations.
- Regulatory and Legal Risks
- The insurance business is subject to extensive regulation and legislative changes, which impact the manner in which we operate our business.
- Administrative proceedings, legal actions, or judicial decisions involving our insurance subsidiaries could have a material adverse effect on our business, financial condition and results of operations.
- Assessments and other surcharges for guaranty funds, second injury funds, and other mandatory pooling arrangements may reduce our profitability.
- State insurance laws, certain provisions of our charter documents, and Nevada corporation law could prevent or delay a change in control that could be beneficial to us and our stockholders.
- We may be unable to realize our investment objectives, and economic conditions in the financial markets could lead to investment losses.
- We may require additional capital in the future, which may not be available to us or may be available only on unfavorable terms.
- Our business is largely dependent on the efforts of our executives and other key employees because of their industry and technical expertise, knowledge of our markets, and relationships with the insurance agents and brokers and partners that sell our products.
- We rely on our information technology and telecommunication systems, including those of third parties that we outsource certain business functions to, and the disruption or failure of these systems, cyber-attacks on these systems, or security breaches or incidents could materially and adversely affect our business.
- A failure to effectively maintain, enhance and modernize our information technology systems, effectively develop and deploy new technologies, and execute new business initiatives, could adversely affect our business.
- We are subject to laws and regulations governing privacy and information security that could adversely affect our business or subject us to liability.
Management Discussion
- Our underwriting results benefited from an increase in net premiums earned because of higher new and renewal business premiums and higher net favorable prior year loss reserve development. Our investment results benefited from a sharp increase in our net investment income due to higher bond yields and net realized and unrealized gains. Our non-underwriting expenses in 2023 included the cost of the early lease termination of our former corporate headquarters and a write-off of previously capitalized cloud computing costs associated with a policy management system.