Indicate by check mark whether the ~~Registrant:~~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~~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~~registrant has submitted electronically ~~and posted on its corporate website, if any,~~ 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 ~~and post~~ 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”,~~filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

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 ☒

The number of shares of the registrant’s common stock outstanding as of ~~November 9, 2017~~May 10, 2023 was ~~3,165,003.~~$3,161,370.

Table of Contents

Table of Contents

~~Table of Contents~~



				Page
PART I		~~Page~~
~~PART I~~
Item 1.1	Financial Statements		3
		Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2023 (unaudited) and December 31, ~~2016~~2022	3
		Condensed Consolidated Statements of Earnings and Comprehensive Earnings ~~For~~for the Three-Month Periods Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 (unaudited)	4
		Condensed Consolidated Statements of ~~Earnings and Comprehensive Earnings For~~Stockholders Equity for the ~~Nine-Month~~Three-Month Periods Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 (unaudited)	5
		Condensed Consolidated Statements of Cash Flows ~~For~~for the ~~Nine-Month~~Three-Month Periods Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 (unaudited)	6
		Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20 21
Item 3.3	Quantitative and Qualitative Disclosures about Market Risk		37 33
Item 4.4	Controls and Procedures		3834

PART II
~~PART II~~
Item 1.1	Legal Proceedings		39 35
Item ~~1A.~~1A	Risk Factors		39 35
Item 2.2	Unregistered Sales of Equity Securities and Use of Proceeds		39 35
Item 3.3	Default Upon Senior Securities		39 35
Item 4.4	Mine Safety Disclosures		39 35
Item 5.5	Other Information		39 35
Item 6.6	Exhibits		4036

Signatures			37
~~Signatures~~		41

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¹~~Common stock securities consist of exchange trade funds (ETF) made up primarily of Dividends Select and the S&P 500.~~

2Par value $0.01; authorized: ~~2017~~2023 - 10,000,000 shares and ~~2016 - 0~~2022 – 10,000,000 shares; issued: ~~2017 -~~2023 – 3,500,000 shares and ~~2016 - 0~~2022 – 3,500,000 shares; outstanding: ~~2017 - 3,165,003~~2023 – 3,150,759 and ~~2016 - 0 shares.~~2022 – 3,153,741 shares

3~~2017 –334,997~~² 2023 – 349,241 shares and ~~2016~~2022 – 0346,259 shares

~~Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited)~~

1~~The unaudited pro forma earnings per share for the three months ended September 30, 2016 is provided as a basis for comparison of current period earnings.~~

2Weighted average number of common shares outstanding for the three months ended September 30, 2016 is based on the resulting shares from the initial public offering that was completed in March 2017 and are used to calculate the pro forma earnings per share for the three months ended September 30, 2016.

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Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited)

1~~The unaudited pro forma earnings per share for the nine months ended September 30, 2016 is provided as a basis for comparison of current period earnings.~~

2Weighted average number of common shares outstanding for the nine months ended September 30, 2016 is based on the resulting shares from the initial public offering that was completed in March 2017 and are used to calculate the pro forma earnings per share for the nine months ended September 30, 2016.

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Condensed Consolidated Statements of Ca~~sh Flows~~Stockholders’ Equity (Unaudited)

¹Amount represents restricted stock units that have fully vested in the period.

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ICC Holdings, Inc. (the Company) is a Pennsylvania corporation that was organized in 2016. As used in this Form ~~10-Q,~~10-Q, references to ~~“the Company,~~the “Company,” “we,” “us,” and “our” refer to the consolidated ~~group for the period after the completion of the stock conversion and refer to ICC and its subsidiaries for the period prior to the stock conversion.~~group. On a stand-alone basis ICC Holdings, ~~Inc~~Inc. is referred to as the “Parent Company.” The consolidated group consists of the holding company, ICC Holdings, Inc., an operating insurance company, Illinois Casualty Company (ICC), and ICC’s three wholly-owned subsidiaries, Beverage Insurance Agency, Inc., an inactive insurance agency, Estrella Innovative Solutions, Inc., an outsourcing company, and; ICC Realty, LLC, a real estate services and holding company; Beverage Insurance Agency, Inc., a non-insurance subsidiary; Estrella Innovative Solutions, Inc., an outsourcing company; Southern Hospitality Education, LLC, dba Katkin, a full-service food safety and education company; and Illinois Casualty Company (ICC), an operating insurance company and parent company of ICC Properties, LLC, a real estate series limited liability company. Both ICC ~~is an~~and ICC Properties, LLC are Illinois domiciled ~~company.~~

ICC Holdings, Inc. was formed so that it could acquire all of the capital stock of ICC in a mutual-to-stock conversion. The plan of conversion was approved by ICC policyholders at a special meeting on March 17, 2017. Simultaneously, surplus notes totaling $1.65 million were converted into 165,000 shares of the Company’s common stock. The Company’s offering closed on March 24, 2017, and our Employee Stock Ownership Plan (ESOP) purchased 350,000 of the shares in the offering. In order to complete the purchase of common shares, the ESOP borrowed money from ICC. ICC Holdings, Inc. secured a loan with American Bank & Trust in March 2017 and used the proceeds to repay ICC for the money borrowed by the ESOP. On March 28, 2017, the Company’s stock began trading on the NASDAQ Capital Market under the “ICCH” ticker. The Company paid $1.0 million of underwriting fees to Griffin Financial Group, LLC. Proceeds received from the offering net of offering costs and underwriting fees was $28.7 million.

Prior to the conversion on March 24, 2017, ICC Holdings, Inc did not engage in any operations. After the conversion, ICC Holdings, Inc’s primary assets are the outstanding capital stock of ICC and a portion of the net proceeds from the stock offering completed in connection with the mutual-to-stock conversion. On the effective date of the conversion, ICC became a wholly owned subsidiary of ICC Holdings, Inc. The mutual to stock conversion was accounted for as a change in corporate form with the historic basis of ICC’s assets, liabilities, and equity unchanged as a result. The condensed consolidated financial statements as of and for the three and nine months ended September 30, 2017, include ICC Holdings and subsidiaries. The financial statements as of December 31, 2016, as of September 30, 2016, and for the three and nine months ended September 30, 2016, represent the financial position and results of operations of ICC and its subsidiaries only, as the conversion to stock form was completed on March 24, 2017.entities.

We are a specialty insurance carrier primarily underwriting commercial multi-peril, liquor liability, workers’ compensation, and umbrella liability coverages for the food and beverage industry through our subsidiary insurance company, ICC. ICC writes business in Arizona, Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Ohio, Pennsylvania, Utah, and Wisconsin and markets through independent agents. Approximately ~~31.3%~~23.0% and ~~33.3%~~23.3% of the premium is written in Illinois for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, respectively. For the nine months ended September 30, 2017 and 2016, respectively, approximately 34.5% and 37.2% of the premium is written in Illinois. ICC has three wholly owned subsidiaries, Beverage Insurance Agency, Estrella Innovative Solutions, Inc., and ICC Realty, LLC.; however theThe Company operates as ~~a single~~one segment.

The unaudited condensed consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting and with the instructions to Form ~~10-Q.~~10-Q. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. As such, these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s ~~December 31, 2016~~ Annual Report on Form ~~10-K. The condensed consolidated balance sheet at~~ 10-K, for the year ended December 31, ~~2016, was derived from the audited consolidated balance sheet of ICC as of that date.~~2022 (the “202210-K”). Management believes that the disclosures are adequate to make the information presented not misleading, and all normal and recurring adjustments necessary to present fairly the financial position at ~~September 30, 2017, and~~March 31, 2023 the results of operations of the Company and its subsidiaries for all periods presented have been made. The results of operations for any interim period are not necessarily indicative of the operating results for a full year.

The preparation of the unaudited condensed consolidated interim financial statements requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated interim financial statements, and the reported amounts of revenue and expenses during the period. These amounts are inherently subject to change and actual results could differ significantly from these estimates.

On January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 was issued to improve recognition and measurement of credit losses and to provide more decision-useful information about those losses. This new impairment model is based on expected losses rather than incurred losses. ASU 2016- 13 requires that a financial asset measured at amortized cost be presented at the net amount expected to be collected by means of an allowance for credit losses that is included in net earnings. Credit losses relating to available-for-sale debt securities are also required to be recorded through a reversible allowance for credit losses but is limited to the amount by which fair value is less than amortized cost. The Company applied this standard to fixed maturity securities, premiums and reinsurance balances receivable, ceded unearned premiums, reinsurance balances recoverable on unpaid losses and settlement expenses, and other assets using the loss-rate method. The impact of this standard was and is expected to continue to be minimal. In total, the cumulative-effect adjustment made to the financials as of the beginning of the year resulted in a $113,760 decrease in retained earnings.

There are no prospective accounting standards that would have a material impact on our financial statements as of March 31, 2023.

Annually, the Company reviews the major asset classes of property and equipment held for impairment. For the periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, the Company recognized no impairments. Property and equipment are summarized as follows:

Comprehensive (loss) earnings include net earnings (loss) plus unrealized gains ~~and losses~~(losses) on available-for-sale investment securities, net of tax. In reporting the components of comprehensive earnings on a net basis in the statement of earnings and comprehensive earnings, the Company used a ~~34%~~21% tax rate. Other comprehensive earnings, as shown in the consolidated statements of earnings and comprehensive earnings, is net of tax expense of $424,347 and benefit of $1,320,892 for the three months ended March 31, 2023 and 2022, respectively.

The following table presents changes in accumulated other comprehensive (loss) earnings for unrealized gains and losses on available-for-sale securities:

The following table illustrates the components of other comprehensive earnings for each period presented in the condensed consolidated interim financial statements.

The following table provides the reclassifications ~~out of~~from accumulated other comprehensive earnings for the periods presented:

Certain risks and uncertainties are inherent to our day-to-day operations. Adverse changes in the economy could lower demand for our insurance products or negatively impact our investment results, both of which could have an adverse effect on the revenue and profitability of our operations. The COVID-19 pandemic and subsequent governmental policies, including fiscal and monetary policies have resulted in, and may continue to result in, significant disruptions in economic activity and financial markets. Russia’s invasion of Ukraine, supply chain disruptions, labor shortages and tightening, inflation and related monetary policy responses, and recession fears are also causing volatility and disruptions in credit and capital markets, adverse developments or general investor sentiment regarding the value of our investment securities as a result of rising interest rates or otherwise, and the business prospects of the industry we serve. The cumulative effects of these events on the Company cannot be predicted, but could reduce demand for our insurance policies, result in increased level of losses, settlement expenses or other operating costs, or reduce the market value of invested assets held by the Company.

The Company’s investments ~~include~~are primarily composed of fixed income debt securities and common and preferred ~~stock~~ equity securities. ~~All of the Company’s investments are presented~~We carry our equity securities at fair value and categorize all our fixed maturity debt securities as available-for-sale (AFS), which are carried at fair value. When available, quoted market prices are obtained to determine fair value for the Company’s investments. If a quoted market price is not available, fair value is estimated using a secondary pricing source or using quoted market prices of similar securities. The Company has no investment securities for which fair value is determined using Level 3 inputs as defined in Note 3– Fair Value Disclosures. Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the settlement date, which does not differ significantly from trade date accounting.

The following istables are a summary of the proceeds from sales, maturities, and calls of ~~available-for-sale~~AFS fixed maturity and equity securities and the related gross realized gains and ~~losses for the nine-months ended September 30, 2017 and 2016.~~losses.

The amortized cost and estimated fair value of fixed income securities at ~~September 30, 2017,~~March 31, 2023, by contractual maturity, are shown as follows:

Expected maturities may differ from contractual maturities due to call provisions on some existing securities.

The following table is a schedule of ~~cost or~~ amortized cost and estimated fair values of investments in ~~fixed income~~securities classified as available for sale at March 31, 2023 and ~~equity securities as of Septembeeer 30, 2017 and~~ December 31, ~~2016:~~2022

All the Company’s collateralized securities carry an average credit rating of AA+ by one or more major rating agencies and continue to pay according to contractual terms. Included within MBS/ABS/CMBS, as defined in Note 3– Fair Value Disclosures, are ~~residential mortgage~~asset backed securities with fair values of ~~$14,092,583~~$7,877,374 and ~~$10,288,405~~$10,567,904, residential mortgage-backed securities of $23,391,756 and $19,288,540, and commercial ~~mortgage backed~~mortgage-backed securities of ~~$7,529,511~~$8,990,549 and ~~$7,600,109~~$8,946,897 at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, respectively.

The following ~~table is~~tables are also used as part of the impairment analysis and ~~displays~~display the total value of securities that were in an unrealized loss position as of ~~September 30, 2017,~~March 31, 2023 and December 31, ~~2016.~~2022. The ~~table segregates~~tables segregate the securities based on type, noting the fair value, ~~cost (or~~ amortized ~~cost),~~cost, and unrealized loss on each category of investment as well as in total. The table further classifies the securities based on the length of time they have been in an unrealized loss position.

~~As of September 30, 2017, the Company held 9 common stock and preferred stock~~The fixed income portfolio contained 232 securities in an unrealized loss ~~position.~~position as of March 31, 2023. Of these 9232 securities, ~~three~~136 have been in an unrealized loss position for 12 consecutive months or longer and represent $10,209 in unrealized losses. As of December 31, 2016, the Company held 21 equity securities that were in unrealized loss positions. Of these 21 securities, two were in an unrealized loss position for 12 consecutive months or longer and represented $33,929 in unrealized losses.

The fixed income portfolio contained 45 securities in an unrealized loss position as of September 30, 2017. Of these 45 securities, 11 have been in an unrealized loss position for 12 consecutive months or longer and represent $122,263$8,275,349 in unrealized losses. All fixed income securities in the investment portfolio continue to pay the expected coupon payments under the contractual terms of the securities. Credit-related impairments on fixed income securities that we do not plan to sell, and for which we are not more likely than not to be required to sell, are recognized in net earnings. Any non-credit related impairment is recognized in comprehensive earnings. Based on management’s analysis, the fixed income portfolio is of a high credit

quality, and it is believed it will recover the amortized cost basis of the fixed income securities. Management monitors the credit quality of the fixed income investments to assess if it is probable that the Company will receive its contractual or estimated cash flows in the form of principal and interest.

~~For the nine months ended September 30, 2017, the Company~~There were no other-than-temporary impairment losses recognized in net earnings ~~$57,316 of other-than-temporary impairment (OTTI) losses on an ETF included in common stock that was impaired~~ during the ~~second quarter of 2017~~three months ended March 31, 2023 and subsequently sold in the third quarter of 2017. During the first nine months of 2016, the Company recognized $205,834 of OTTI on one common stock security and $6,897 of OTTI on one fixed income security.March 31, 2022. For all fixed income securities at a loss at ~~September 30, 2017,~~March 31, 2023, management believes it is probable that the Company will receive all contractual payments in the form of principal and interest. In addition, the Company is not required to, nor does it intend to sell these investments prior to recovering the entire amortized cost basis offor each security, which may be at maturity. ~~Management does not consider these investments to be other-than-temporarily impaired at September 30, 2017. Based on managent’s analysis, it was concluded that the~~The fixed ~~maturity~~income securities in an unrealized loss position were not other-than-temporarily ~~impared~~impaired at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016.~~2022.

3. Net unrealized gains recognized during the three months ended March 31, 2023 on equity securities held as of March 31, 2023 were $639,418. Net unrealized losses recognized during the three months ended March 31, 2022 on equity securities held as of March 31, 2022 were $1,292,692.

Other invested assets as of March 31, 2023 and December 31, 2022 were $5,073,580 and $4,722,137, respectively.

Other invested assets as of March 31, 2023 include privately held investments of $214,630 and notes receivable of $4,433,950, compared to $214,630 and $4,082,507, respectively, at December 31, 2022. Most of the notes bear interest between 3.9% and 7.25%. One note has interest at prime minus 25 basis points with a floor of 4.0%. For the three months ended March 31, 2023, $11,224 in note payments were received and $2,667 in accrued escrow and interest receivable was recorded. Comparatively, as of December 31, 2022, $244,046 in note payments were received and $10,496 in accrued escrow and interest receivable was recorded. The Company had no allowance recorded related to uncollectible note receivables at March 31, 2023 and December 31, 2022.

In addition, other invested assets include a membership in the Federal Home Loan Bank of Chicago (FHLBC) with a carrying value of $425,000 as of March 31, 2023 and December 31, 2022.

In November 2021, we agreed to commit up to $10.0 million to a private investment fund, subject to regulatory approval, which may be callable from time to time by such fund. As of March 31, 2023 and December 31, 2022, no calls were received.

Fair value is defined as the price in the principal market that would be received for an asset to facilitate an orderly transaction between market participants on the measurement date. The fair value of certain financial instruments is determined based on their underlying characteristics and relevant transactions in the marketplace. GAAP guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance also describes three levels of inputs that may be used to measure fair value.

The following are the levels of the fair value hierarchy and a brief description of the type of valuation inputs that are used to establish each level:

As a part of the process to determine fair value, management utilizes widely recognized, ~~third-party~~third-party pricing sources to determine fair values. Management has obtained an understanding of the ~~third-party~~third-party pricing sources’ valuation methodologies and inputs. The following is a description of the valuation techniques used for financial assets that are measured at fair value, including the general classification of such assets pursuant to the fair value hierarchy.

Corporate, Agencies, and Municipal ~~Bonds—~~Bonds—The pricing vendor employs a multi-dimensional model which uses standard inputs including (listed in order of priority for use) benchmark yields, reported trades, broker/dealer quotes, issuer spreads, ~~two-sided~~two-sided markets, benchmark securities, market bids/offers and other reference data. The pricing vendor also monitors market indicators, as well as industry and economic events. All bonds valued using these techniques are classified as Level 2. All Corporate, Agencies, and Municipal securities are deemed Level 2.

Mortgage-backed Securities (MBS)/, Collateralized Mortgage Obligations (CMO), Commercial Mortgage-backed Securities (CMBS) and Asset-backed Securities (ABS)—The pricing vendor evaluation methodology includes principally interest rate movements and new issue data. Evaluation of the tranches (non-volatile, volatile, or credit sensitivity) is based on the pricing vendors’ interpretation of accepted modeling and pricing conventions. This information is then used to determine the cash flows for each tranche, benchmark yields, pre-payment assumptions and to incorporate collateral performance. To evaluate CMO volatility, an option adjusted spread model is used in combination with models that simulate interest rate paths to determine market price information. This process allows the pricing vendor to obtain evaluations of a broad universe of securities in a way that reflects changes in yield curve, index rates, implied volatility, mortgage rates, and recent trade activity. ~~MBS/~~MBS, CMBS, CMO and ABS with corroborated and observable inputs are classified as Level 2. All ~~MBS/~~MBS, CMBS, CMO and ABS holdings are deemed Level 2.

U.S. Treasury Bonds, Common Stocks and Exchange Traded ~~Funds—~~Funds—U.S. treasury bonds and exchange traded equities have readily observable price levels and are classified as Level 1 (fair value based on quoted market prices). All common stock holdings are deemed Level 1.

Preferred ~~Stock—~~Stock—Preferred stocks do not have readily observable prices but do have quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets in markets that are not active; and inputs other than quoted prices and are classified as Level 2. All preferred stock holdings are deemed Level 2.

Due to the relatively short-term nature of cash and cash equivalents, ~~and the mortgage on the home office,~~ their carrying amounts are reasonable estimates of fair value. ~~Reported~~Other invested assets include notes receivable, stock, and a membership in ~~Note 4–Debt~~, the ~~surplus notes, capital lease obligations, and other debt obligations~~Federal Home Loan Bank of Chicago (FHLBC). Notes receivable are carried at face value and given that there is no readily available market for these to trade in, management believes that face value accurately reflects fair value. Cash and cash equivalents are classified as Level 1 of the hierarchy. The mortgage on the home officeoutstanding balance plus accrued interest. Stock and the ~~surplus notes~~membership in FHLBC are carried at ~~Level 2~~cost.

Assets measured at fair value on a recurring basis as of March 31, 2023, are summarized below:

Assets measured at fair value on a recurring basis as of ~~September 30, 2017,~~December 31, 2022, are as summarized below:

~~Assets measured at fair value on a recurring basis as of December 31, 2016, are as summarized below:~~

As noted in the previous tables, the Company did not have any assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)3) as of ~~September 30, 2017, and~~ March 31, 2023 or December 31, ~~2016.~~2022. Additionally, there were no securities transferred in or out of Levels 1 or and 2 during the ~~nine-month~~three-month periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016.~~2022.

As of September 30, 2017 and December 31, 2016, outstanding debt balances totaled $4,454,138 and $3,786,950, respectively. The average rate on remaining debt was 3.9% as of September 30, 2017, compared to 5.0% as of December 31, 2016.

~~Long-term debt consists of the following as of the periods referenced below:~~

ICC’s Plan of Conversion from a mutual to a stock company was approved by ICC policyholders at a special meeting on March 17, 2017. Simultaneously, surplus notes totaling $1.65 million, representing all outstanding surplus notes as of that date were converted into 165,000 shares of the Company’s common stock. The remaining $200,000 balance of surplus notes was paid in March 2017.

The Company ~~entered into a sale leaseback arrangement~~had $15,000,000 in 2016 that is accounted for as a capital lease. Under the agreement, Bofi Federal Bank purchased electronic data processing software, vehicles, and other assets which are leased to the Company. These assets remain on the Company’s books due to provisions within the agreement that trigger capital lease accounting. To secure the lowest rate possible of 4.7%, the Company pledged additional bonds totaling $860,969 during 2016, bringing the total pledged to $1,808,523outstanding debt as of ~~September 30, 2017,~~March 31, 2023 and December 31, 2016, respectively. There was no gain or loss recognized as part of this transaction. Lease payments totaled $125,494 for the three months ended September 30, 2017 and 2016. Lease payments totaled $376,485 and $334,227 for the nine months ended September 30, 2017 and 2016, respectively. The term of the electronic data processing lease is 48 months and the term of the titled vehicles lease is 36 months. The outstanding lease obligation at September 30, 2017 was $912,510 compared to $1,227,541 at Decemeber 31, 2016.

ICC Holdings, Inc. secured a loan with ~~American Bank & Trust~~a commercial bank in March 2017 in the amount of ~~$3,500,000~~$3.5 million and used the proceeds to repay ICC for the money borrowed by the ESOP. The term of the loan is five years bearing interest at 3.65%. The Company pledged ~~the ESOP shares~~stock and ~~$1.5~~$1.0 million of ~~trust~~marketable assets as collateral for the loan. Additionally, the Company entered into two debt agreements in 2016 with Bofi Federal Bank; one agreement for $500,000 and another debt agreement for $75,000. The terms of the loans were 36 months, but the Company had the option to prepay the $500,000 loan after 12 months. The Company paid ~~off~~$3.5 million in April 2022, which fully extinguished the ~~remaining balance of the $500,000~~ loan ~~in September 2017. The total balance of the debt agreements at September 30, 2017 and December 31, 2016 was $3,541,611 and $525,619, respectively. The Bofi loans bear interest at 4.7%.~~

The Company ~~maintains~~ also has borrowing capacity of $44.3 million with the Federal Home Loan Bank of Chicago (FHLBC), which is 25% of net admitted statutory assets of Illinois Casualty Company as of the prior year-end.

As part of the Company’s response to COVID-19, the Company obtained, in March 2020, a ~~mortgage on~~$6.0 million loan from the FHLBC as a precautionary measure to increase its ~~home office. Interest is charged at a fixed rate~~cash position, to provide increased liquidity, and to compensate for potential reductions in premium receivable collections. The term of ~~2.6% and~~ the loan ~~matures in 2017.~~is five years bearing interest at 1.4%. The ~~building is used~~Company pledged $6.8 million of fixed income securities as collateral ~~to secure~~ for this loan.

In May 2021, the Company entered into a $4.0 million, 0.74% fixed interest, five-year FHLBC loan.

In May 2022, this Company entered into a $5.0 million, five-year, 1.36% fixed interest loan.

The ~~loan balance at September 30, 2017 and December 31, 2016 was $17 and $183,790, respectively.~~Company has $19.1 million in bonds pledged as collateral for all FHLBC loans.

We ~~maintain a~~increased our revolving line of credit with ~~American Bank & Trust, which permits borrowing up~~a commercial bank from $2.0 million to ~~an aggregate principal amount~~$4.0 million in July 2022. As of ~~$1.75 million.~~March 31, 2023, the balance on the line of credit was $0. This ~~facility was entered into during 2013 and is renewed annually with a current expiration of August 1, 2018. The~~ line of credit is priced at ~~30 day LIBOR~~Prime plus 2%0.5% with a floor of ~~3.5%.~~4.75% and renews annually with a current expiration date of July 2023. We intend to renew the line of credit in July. The Company pledged $4.0 million of business assets in the event the Company draws down on the line of credit. This agreement includes an annually calculated financial debt covenant requiring a minimum total adjusted capital of $21.0 million. Total adjusted capital is the sum of an insurer’s statutory capital and surplus as determined in accordance with the statutory accounting applicable to the annual financial statements required to be filed with Illinois Department of Insurance. As of March 31, 2023, our total adjusted capital is in excess of $60.0 million. There was no interest paid on the line of credit during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~$584 of interest paid on the line of credit during the nine months ended September 30, 2016. There are no financial covenants governing this agreement.~~2022.

In the ordinary course of business, the Company assumes and cedes premiums and selected insured risks with other insurance companies, known as reinsurance. A large portion of the reinsurance is put into effect under contracts known as treaties and, in some instances, by negotiation on each individual risk (known as facultative reinsurance). In addition, there are several types of treaties including quota share, excess of loss and catastrophe reinsurance contracts that protect against losses over stipulated amounts arising from any one occurrence or event. The arrangements allow the Company to pursue greater diversification of business and serve to limit the maximum net loss to a single event, such as a catastrophe. Through the quantification of exposed policy limits in each region and the extensive use of computer-assisted modeling techniques, management monitors the concentration of risks exposed to catastrophic events.

Through the purchase of reinsurance, the Company also generally limits its net loss on any individual risk to a maximum of ~~$500,000,~~$1,000,000 for casualty and workers’ compensation business and $1,000,000 for property, although certain treaties contain an annual aggregate deductible before reinsurance applies.

Premiums, written and earned, along with losses and settlement expenses incurred for the periods presented is summarized as follows:

The following table is a reconciliation of the Company’s unpaid losses and settlement expenses:

For the three months ended March 31, 2023 and 2022, we experienced favorable development of $24,000 and unfavorable development of $2,670,000, respectively.

The Company’s effective tax rate for the ~~nine~~three month ~~period~~periods ended ~~September 30, 2017,~~March 31, 2023 was ~~-15.3%,~~20.4% compared to ~~30.1%~~23.7% for the same period in ~~2016.~~2022. Effective rates are dependent upon components of pretax earnings and losses and the related tax effects.

Income tax expense for the three ~~and nine-month~~ month periods ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022 differed from the amounts computed by applying the U.S. federal tax rate of ~~34%~~21% to pretax income from continuing operations as demonstrated in the following ~~tables:~~table:

~~The Company has recorded its deferred tax assets and liabilities using the statutory federal tax rate of 34%.~~ Management believes it is more likely than not that all deferred tax assets will be recovered as the result of future operations, which will generate sufficient taxable income to realize the deferred tax asset. ~~In addition, it is believed that when these deferred items reverse in future years, taxable income will be taxed at an effective rate of 34%.~~

As of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, the Company does not have any capital or operating loss carryforwards. Periods still subject to ~~Internal Revenue Service (IRS)~~IRS audit include ~~2013~~2019 through current year. Unrealized losses on fixed income securities and equity securities the investment portfolio during 2022 have kept the Company in net deferred tax asset position as of March 31, 2023. There are currently no open tax exams.

In connection with our conversion and public offering, we ~~establish~~established an ESOP. The ESOP borrowed from the Company to purchase 350,000 shares in the offering. The issuance of the shares to the ESOP resulted in a contra account established in the ~~shareholder’s~~ equity section of the balance sheet for the unallocated shares at an amount equal to their $10.00 per share purchase price.

The Company may make discretionary contributions to the ESOP and pay dividends on unallocated shares to the ~~ESOP,~~ESOP. ICC makes annual contributions to the ESOP ~~uses funds it receives~~sufficient to repay the loan. When loan payments are made, ESOP shares are allocated to participants based on relative ~~compensation~~compensation. The Company repurchases shares from participants that have left our employment. ICC Holdings contributed $0 and ~~expense is recorded. No contributions~~$0 to the ESOP for the three months ended March 31, 2023 and 2022, respectively. No other contributions were made to the ESOP during ~~the nine months ended September 30, 2017.~~these time periods.

A compensation expense charge is booked monthly during each year for the shares committed to be allocated to ~~particpants~~participants that year, determined with reference to the fair market value of our stock at the time the commitment to allocate the shares is accrued and recognized. For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, we recognized compensation expense of ~~$262,150~~$89,943 related to 5,779 shares of our common stock that are committed to be released to participants’ accounts at December 31, 2023. For the three months ended March 31, 2022, we recognized compensation expense of $96,594 related to ~~15,003~~5,779 shares of our common stock that were committed to be released to ~~partipants’~~participants’ accounts at December 31, 2017. Of the 15,003 shares committed to be released, 2,240 shares were commited on September 30, 2017 and had no impact on the weighted average common shares outstanding for the three and nine months ended September 30, 2017.2022.

~~Mr. John R. Klockau,~~Restricted stock units (RSUs) were granted for the first time in February 2018 and more recently in April of each year. RSUs have a ~~director of~~grant date value equal to the ~~Company, held two surplus notes from the Company totaling $1,150,000 which were converted into 115,000 shares~~closing price of the Company’s ~~common~~ stock on ~~March 17, 2017. John R. Klockau received a payment for interest on~~ the ~~surplus notes~~dates the shares are granted. The RSUs vest onethird over three years beginning the first anniversary of ~~$12,975 during~~ the ~~three months ended~~ date of grant. The Company recognized $52,850 in RSU expense as of March 31, ~~2017. Additionally, Mr. Klockau is a claims consultant~~2023 and ~~was paid $10,350 and $8,012~~$205,403 as of ~~September 30, 2017 and 2016, respectively, related to his services to the Company.~~December 31, 2022.

The Company received licenses to do business in Kentucky and North Dakota in early Q22023. The Company granted 17,600 of the Company and a Senior Managing Director of Griffin Financial Group (Griffin). Mr. Burgess was paid $2,690, and $1,074 as of September 30, 2017 and 2016, respectively. Griffin was paid $893,240 and $9,704 as of September 30, 2017 and 2016, respectively. Griffin and Stevens & Lee are affiliated. Stevens & Lee is a full-service law firm that was paid $46,286 and $628,516 as of September 30, 2017 and 2016, respectively.restricted stock units on April 1, 2023.

~~Subsequent events have been evaluated through the date the financial statements were issued.~~

Item 2. ~~Management’s~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Private Securities Litigation Reform Act of 1995 (the “Reform Act”) provides a safe harbor for forward-looking statements made by or on behalf of ICC Holdings, Inc. ICC Holdings, Inc., and its representatives may, from time to time, make written or verbal forward-looking statements, including statements contained in ICC Holdings, Inc.'s filings with the Securities and Exchange Commission (SEC) and its reports to shareholders. Generally, the inclusion of the words “anticipates,” ~~“believe,~~“believes,” “estimate,” “expect,” “future,” “intend,~~” “estimate,~~” “may,” “plans,” “seek”, “will,” or the negative of such terms and similar expressions identify statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections. All statements addressing operating performance, events, or developments that ICC Holdings, Inc. expects or anticipates will occur in the future, including statements relating to sales growth, earnings or earnings per share growth, and market share, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements within the meaning of the Reform Act. The forward-looking statements are and will be based on management’s then-current beliefs and assumptions regarding future events and operating performance and on information currently available to management and are applicable only as of the dates of such statements.

Forward-looking statements involve risks, uncertainties and assumptions, including, among other things, the factors discussed under the heading “Item 1A. Risk Factors” of ICC Holdings, Inc.’s Annual Report on Form 10-K and those listed below. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Actual results may differ materially from those expressed in these forward-looking statements due to ~~a number of~~several uncertainties and risks, including the risks described in this Quarterly Report on Form 10-Q and other unforeseen risks. Readers should not put undue reliance on any forward-looking statements. These statements speak only as of the date of this Quarterly Report on Form 10-Q, even if subsequently made available by us on our website or otherwise, and we undertake no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

All of these factors are difficult to predict, and many are beyond our control. These important factors include those discussed under ~~“Item~~“Item 1A. Risk Factors” of ICC Holdings, Inc.’s 2022 Annual Report on Form 10-K and those listed below:

Because forward-looking information is subject to various risks and uncertainties, actual results may differ materially from that expressed or implied by the forward-looking information.

All subsequent written and oral forward-looking information attributable to ICC Holdings, Inc. or any person acting on our behalf is expressly qualified in its entirety by the cautionary statement contained or referred to in this section.

In the following discussion and analysis of results of operations and financial condition, certain financial measures may be considered “non-GAAP financial measures” under Securities and Exchange Commission rules. These rules require supplemental explanation and reconciliation, which is provided in this Quarterly Report on Form 10-Q. Management uses the non-GAAP measures “losses and settlement expense ratio”, “expense ratio” and “combined ratio” in its evaluation of business and financial performance. These disclosures have limitations as an analytical tool, should not be viewed as a substitute for net earnings determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Management believes that this non-GAAP supplemental information is helpful in understanding the Company’s ongoing operating results.

ICC is a regional property and casualty insurance company incorporated in Illinois and focused exclusively on the food and beverage industry. On the effective date of the mutual-to-public company conversion, ICC became a wholly owned subsidiary of ICC Holdings, Inc. ~~The consolidated financial statements of ICC prior to the conversion became the consolidated financial statements of ICC Holdings, Inc. upon completion of the conversion.~~

For the ~~nine~~three months ended ~~September 30, 2017, we~~March 31, 2023, the Company had direct written ~~premium~~premiums of ~~$40,527,000,~~$20,815,000, net premiums earned of ~~$32,740,000,~~$17,801,000, and net ~~income~~earnings of ~~$265,000.~~$1,579,000. For the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2022, we had direct premiums written of ~~$39,169,000,~~$19,566,000, net premiums earned of ~~$31,695,000,~~$16,017,000, and net ~~income~~loss of ~~$1,586,000.~~$160,000. At ~~September 30, 2017,~~March 31, 2023, we had total assets of ~~$153,159,000~~$197,807,000 and equity of ~~$63,741,000.~~$63,599,000. At December 31, ~~2016,~~2022, we had total assets of ~~$122,160,000~~$192,162,000 and equity of ~~$33,600,000.~~

We are an “emerging growth company” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to: not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; exemptions from the requirements of holding an annual non-binding advisory vote on executive compensation and nonbinding stockholder approval of any golden parachute payments not previously approved.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have taken advantage of the extended transition period provided by Section 107 of the JOBS Act. However, we may decide to comply with the effective dates for financial accounting standards applicable to emerging growth companies at a later date in compliance with the requirements in Sections 107(b)(2) and (3) of the JOBS Act. If we do so, we will prominently disclose this decision in the first periodic report or registration statement following our decision, and such decision is irrevocable.$60,441,000.

We derive our revenue primarily from premiums earned, net investment income and net realized and unrealized gains (losses) from investments.

Gross premiums written isare equal to direct and assumed premiums before the effect of ceded reinsurance. Net premiums written is the difference between gross premiums written and premiums ceded or paid to reinsurers (ceded premiums written).

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Premiums earned isare the earned portion of our net premiums written. Gross premiums written include all premiums recorded by an insurance company during a specified policy period. Insurance premiums on property and casualty insurance contracts are recognized in proportion to the underlying risk insured and are earned ratably over the duration of the policies. At the end of each accounting period, the portion of the premiums that isare not yet earned is included in unearned premiums and is realized as revenue in subsequent periods over the remaining term of the policy. Our policies typically have a term of twelve months. Thus, for example, for a policy that is written on July 1, ~~2018,~~2023, one-half of the premiums would be earned in ~~2018~~2023 and the other half would be earned in ~~2019.~~2024.

We invest our surplus and the funds supporting our insurance liabilities (including unearned premiums and unpaid loss and loss adjustment expenses) in cash, cash equivalents, equities, fixed ~~maturity~~ securities, and real estate. Investment income includes interest and dividends earned on invested ~~assets.~~assets as well as rental income on investment properties. Net realized gains and losses on invested assets are reported separately from net investment income. We recognize realized gains when invested assets are sold for an amount greater than their cost or amortized cost (in the case of fixed ~~maturity~~ securities) and recognize realized losses when investment securities are written down as a result of an ~~other than temporary~~other-than-temporary impairment or sold for an amount less than their cost or amortized cost, as applicable. We recognize in earnings the change in unrealized gains and losses on equity securities when our equity securities are trading at an amount greater than or less than their cost, respectively. Net unrealized gains on equity securities for the three months ended March 31, 2023 were $639,000. Net unrealized losses for the three months ended March 31, 2022 for equity securities were $1,293,000. Our portfolio of investment securities is managed by antwo independent third ~~party and manager~~parties with managers specializing in the insurance industry. The board of directors’ investment committee is responsible for establishing investment policies and monitoring risk limits and tolerances. We seek to protect customers’ benefits by optimizing the risk/return relationship on an ongoing basis, avoiding high levels of investments that may be redeemed by the issuer, maintaining sufficiently liquid investments and avoiding undue asset concentrations through diversification. We are exposed to two primary sources of investment risk:

Our ability to manage credit risk is essential to our business and our profitability. We devote considerable resources to the credit analysis of each new investment. We manage credit risk through industry, issuer and asset class diversification.

~~Loss~~Losses and settlement expenses represent the largest expense item and include: (1) claim payments made, (2) estimates for future claim payments and changes in those estimates for prior periods, and (3) costs associated with investigating, defending, and adjusting claims.

Amortization of deferred policy acquisition costs and other operating expenses

Expenses incurred to underwrite risks are referred to as policy acquisition expenses. Variable policy acquisition costs consist of commission expenses, premium taxes and certain other underwriting expenses that vary with and are primarily related to the writing and acquisition of new and renewal business. These policy acquisition costs are deferred and amortized over the effective period of the related insurance policies. Fixed policy acquisition costs are expensed as incurred. These costs include salaries, rent, office supplies, and depreciation. Other operating expenses consist primarily of information technology costs, accounting, and internal control salaries, as well as audit and legal expenses.

We use the asset and liability method of accounting for income taxes. Deferred income taxes arise from the recognition of temporary differences between financial statement carrying amounts and the tax bases of our assets and liabilities. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. The effect of a change in tax rates is recognized in the period of the enactment date.

We evaluate our insurance operations by monitoring certain key measures of growth and profitability. In addition to reviewing our financial performance based on results determined in accordance with generally accepted accounting principles in the United States (GAAP), we utilize certain ~~non-GAAP~~operational financial measures that we believe are valuable in managing our business and for comparison to our peers. These ~~non-GAAP~~operational measures are combined ratio, written premiums, underwriting income, the ~~loss~~losses and ~~loss adjustment~~settlement expense ratio, the expense ratio, the ratio of net written premiums to statutory surplus and return on average equity.

We measure growth by monitoring changes in gross premiums written and net premiums written. We measure underwriting profitability by examining losses and settlement expense, underwriting expense, and combined ratios. We also measure profitability by examining underwriting income (loss) and net ~~income~~earnings (loss).

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The ~~loss~~losses and settlement expense ratio is the ratio (expressed as a percentage) of ~~loss~~losses and settlement expenses incurred to net premiums earned. We measure the ~~loss~~losses and settlement expense ratio on an accident year and calendar year loss basis to measure underwriting

profitability. An accident year loss ratio measures ~~loss~~losses and ~~loss adjustment~~settlement expenses for insured events occurring in a particular year, regardless of when they are reported, as a percentage of premiums earned during that year. A calendar year loss ratio measures loss and settlement expense for insured events occurring during a particular year and the change in loss reserves from prior accident years as a percentage of premiums earned during that year.

The underwriting expense ratio is the ratio (expressed as a percentage) of amortization of deferred policy acquisition costs and other operating expenses to premiums earned, and measures our operational efficiency in producing, underwriting, and administering our insurance business.

Our GAAP combined ratio is the sum of the ~~loss~~losses and ~~loss adjustment~~settlement expense ratio and the expense ratio and measures our overall underwriting profit. If the GAAP combined ratio is below 100%, we are making an underwriting profit. If our combined ratio is at or above 100%, we are not profitable without investment income and may not be profitable if investment income is insufficient.

The net premiums written to statutory surplus ratio represents the ratio of net premiums written, after reinsurance ceded, to statutory surplus. This ratio measures our exposure to pricing errors in our current book of business. The higher the ratio, the greater the impact on surplus should pricing prove inadequate.

Underwriting income (loss) measures the pre-tax profitability of our insurance operations. It is derived by subtracting ~~loss~~losses and ~~loss adjustment~~settlement expense, amortization of deferred policy acquisition costs, and ~~other operating~~underwriting and administrative expenses from net earned premiums. Each of these items is presented as a caption in our statements of ~~operations.~~earnings.

We use net ~~income~~earnings (loss) to measure our profit and return on average equity to measure our effectiveness in utilizing equity to generate net ~~income.~~earnings. In determining return on average equity for a given year, net ~~income~~earnings (loss) is divided by the average of the beginning and ending equity for that year.

The accounting policies and estimates considered by management to be critically important in the preparation and understanding of the Company’s financial statements and related disclosures are presented in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the Company’s ~~2016~~ Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2022.

Our results of operations are influenced by factors affecting the property and casualty insurance industry in general. The operating results of the United States property and casualty insurance industry are subject to significant variations due to competition, weather, catastrophic events, regulation, general economic conditions, judicial trends, fluctuations in interest rates and other changes in the investment environment.

Our premium ~~growth~~ and underwriting results have been, and continue to be, influenced by market conditions. Pricing in the property and casualty insurance industry historically has been cyclical. During a soft market cycle, price competition is more significant than during a hard market cycle and makes it difficult to attract and retain properly priced commercial business. A hard market typically has a positive effect on premium growth.

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Table of Contents

~~Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016~~

~~The major components of operating revenues and net earnings are as follows:~~

For the nine months

ended September 30,
(In thousands)

2017

2016
Revenues

Total premiums earned

$
32,740

$
31,695
Investment income, net of investment expense

1,849

1,433
Realized investment gains (losses), net

386

19
Other income

198

104
Total revenues

$
35,173

$
33,251
Summarized components of net earnings

Underwriting (loss) income¹

$
(1,586)

$
1,186
Investment income, net of investment expense

1,849

1,433
Realized investment gains, net

386

19
Other income

198

104
General corporate expenses

452

337
Interest expense

174

140
Earnings, before income taxes

221

2,265
Income tax (benefit) expense

(44)

679
Net earnings

$
265

$
1,586
Total other comprehensive earnings

895

1,912
Comprehensive earnings

$
1,160

$
3,498

1Calculated by subtracting the sum of loss and settlement expenses (2017 -$21,527 and 2016 -$18,711) and policy and acquisistion costs and other operating expenses (2017 - $12,799 and 2016 - $11,798) from net premiums earned (2017 -$32,740 and 2016 - $31,695).

For the nine months ended September 30,

2017

2016
Non-GAAP Ratios:

Losses and settlement expense ratio1

65.75%

59.04%
Expense ratio2

39.09%

37.22%
Combined ratio3

104.84%

96.26%

1~~Calculated by dividing loss and settlement expenses by net premiums earned.~~

2~~Calculated by dividing the sum of policy acquisition costs and operating expenses by net earned premiums.~~

3~~The sum of the losses and settlement expense ratio and the expense ratio. A combined ratio of under 100% indicates an underwriting profit. A combined ratio over 100% indicates an underwriting loss.~~

The following summarizes our results for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016:~~2022:

Premiums

Direct premiums written ~~grew~~increased by ~~$1,358,000,~~$1,249,000, or ~~3.5%~~6.4%, to ~~$40,527,000~~$20,815,000 for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 from ~~$39,169,000~~$19,566,000 for the same period of ~~2016.~~2022. Net written premium ~~grew~~increased by ~~$1,508,000,~~$1,181,000, or ~~4.5%~~6.8%, to ~~$34,725,000~~$18,513,000 for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 from ~~$33,217,000~~$17,332,000 for the same period in ~~2016.~~2022. Net premiums earned ~~grew~~increased by ~~$1,045,000,~~$1,784,000, or ~~3.3%~~11.1%, infor the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 as compared to the ~~nine~~three months ended ~~September 30, 2016, primarily due to~~March 31, 2022, consistent with our increased ~~organic growth.~~premium writings in 2023 and 2022.

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, we ceded to reinsurers ~~$5,993,000~~$2,484,000 of earned premiums, compared to ~~$5,959,000~~$2,290,000 of earned premiums for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2022. Ceded earned premiums as a percent of direct ~~premiums~~premiums written ~~was 14.8% in~~increased to 11.9% from 11.7% for the ~~nine~~three months ended March 31, 2023 as compared to the three months ended ~~September 30, 2017, and 15.2% in the nine months ended September 30, 2016.~~

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~~Table~~March 31, 2022 as a result of ~~Contents~~increased direct earned premiums.

Premiums are earned ratably over the term of the policy whereas written premiums are reflected on the effective date of the policy.

Investment Income

Net investment income increased by $292,000, or 31.8%, to $1,209,000 for the three months ended March 31, 2023, as compared to $917,000 for the same period in 2022. This increase is a result of increased rates on our fixed income portfolio and an increase in overall investment holdings.

Other Income

Other income is derived from policies we write and represents additional charges to policyholders for services outside of the premium charge, such as installment billing or policy issuance costs. Another component of other income is attributable to sales made by the Company’s subsidiary, ~~Estrella Innovative Solutions, Inc.~~Katkin. Other income ~~increased~~decreased by ~~$94,000~~$113,000, or ~~90.4%~~71.1%, during the ~~nine~~three months ended September 30, 2017 as compared to the same period of 2016 primarily as a result of an increase in third party sales made by Estrella Innovative Solutions, Inc. as well as a slight growth in premium fee’s volume.

~~Unpaid Losses and Settlement Expenses~~

~~The following table details our unpaid losses and settlement expenses.~~

For the Nine-Months Ended

September 30,

September 30,
(In thousands)

2017

2016
Unpaid losses and settlement expense - beginning of the period:

Gross

$
52,817

$
61,056
Less: Ceded

12,115

19,158
Net

40,702

41,898
Increase (decrease) in incurred losses and settlement expense:

Current year

22,897

18,901
Prior years

(1,370)

(190)
Total incurred

21,527

18,711
Deduct: Loss and settlement expense payments for claims incurred:

Current year

8,381

5,110
Prior years

12,937

13,990
Total paid

21,318

19,100
Net unpaid losses and settlement expense - end of the period

40,911

41,509
Plus: Reinsurance recoverable on unpaid losses

11,641

15,665
Gross unpaid losses and settlement expense - end of the period

$
52,552

$
57,174

~~Net unpaid losses and settlement expense decreased $598,000, or 1.4%, in the nine months ended September 30, 2017~~March 31, 2023 as compared to the same period in ~~2016.~~2022 due to increased premiums written off.

Unpaid Losses and Settlement Expenses

	For the Three-Months Ended
	March 31,

(In thousands)	2023			2022
Unpaid losses and settlement expense - beginning of the period:
Gross	$	67,614		$	61,835
Less: Ceded		13,610			14,521
Net		54,004			47,314
Increase in incurred losses and settlement expense:
Current year		11,072			7,525
Prior years		(24	)		2,670
Total incurred		11,048			10,195
Deduct: Loss and settlement expense payments for claims incurred:
Current year		1,158			1,389
Prior years		5,487			4,802
Total paid		6,645			6,191
Net unpaid losses and settlement expense - end of the period		58,407			51,318
Plus: Reinsurance recoverable on unpaid losses		14,356			16,089
Plus: CECL allowance for reinsurance recoverable on unpaid losses		104			—
Gross unpaid losses and settlement expense - end of the period	$	72,867		$	67,407

Gross unpaid losses and settlement expenses increased by $5,460,000, or 8.1%, in the three months ended March 31, 2023 as compared to the same period in 2022. For the three months ended March 31, 2023 and 2022, we experienced favorable development of $24,000 and unfavorable development of $2,670,000, respectively.

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Losses and Settlement Expenses

Losses and settlement expenses increased by ~~$2,816,000,~~$853,000, or ~~15.0%~~8.4%, to ~~$21,527,000~~$11,048,000 for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, from ~~$18,711,000~~$10,195,000 for the same period in ~~2016.~~2022. The increase in losses and settlement expenses ~~for the nine months ended September 30, 2017 is primarily due to an increase~~was driven by spring storms in ~~frequency and severity of fire and storm losses as well as higher retention of property losses compared to the same period in 2016.~~late March 2023.

Policy Acquisition Costs and Other Operating Expenses and the Expense Ratio

Policy acquisition costs are costs we incur to issue policies, which include commissions, premium taxes, underwriting reports, and underwriter compensation costs. The Company offsets the direct commissions it pays with ceded commissions it receives from reinsurers. Other operating expenses consist primarily of information technology costs, accounting, and internal control salaries, as well as audit and legal expenses. Policy acquisition costs and other operating expenses increased by ~~$1,001,000~~$578,000, or ~~8.5%.~~10.0%, to $6,350,000 for the three months ended March 31, 2023 from $5,772,000 for the same period in 2022. The increase in ~~policy acquisition costs and other operating~~these expenses ~~during the nine months ended September 30, 2017~~ is ~~primarily driven by~~mainly due to increases in ~~the other operating expenses. This is~~salaries and direct commissions. Salaries are up mainly due to ~~additional~~increased costs associated with ~~operating~~business growth. Commissions increased as a ~~public company which did not occur in previous years.~~result of increased premiums.

Our expense ratio is calculated by dividing the sum of policy acquisition costs and operating expenses by net earned premiums. We use the expense ratio to evaluate the operating efficiency of our consolidated operations. Costs that cannot be readily identifiable as a direct cost of a product line remain in ~~Corporate and Other.~~general corporate expenses.

Our expense ratio ~~increased~~decreased by ~~187~~30 basis ~~points~~points from ~~37.22%~~36.0% to ~~39.09%~~35.7% for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 as compared to ~~2016.~~

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~~Table of Contents~~the same period in 2022. The primary driver for this change is earned premium increasing at a higher rate than policy acquisition costs.

General Corporate Expenses

General corporate expenses consist primarily of occupancy costs, such as rent and ~~utilities.~~utilities, and CECL expenses. These costs are largely fixed and, therefore, do not vary significantly with premium volume but do vary with the Company’s changes in properties held for investment. ~~Accordingly, our~~Our general corporate expenses increased by ~~$115,000,~~$5,000, or ~~34.1%~~2.6%, in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 as compared to the same period in ~~2016.~~2022.

~~Investment Income~~

Net investment income increased by $416,000, or 29.0% during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016, primarily from increases in the composition of the investment portfolio. Average cash and invested assets during the nine months ended September 30, 2017 was $96,154,000 compared to $79,867,000 during the same period in 2016, an increase of $16,287,000, or 20.4%. The increase in the portfolio was primarily due to proceeds from the initial public offering that closed on March 24, 2017.Interest Expense

Interest ~~Expense~~

~~Interest~~ expense ~~increased~~decreased to ~~$174,000~~$45,000 for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 from ~~$140,000~~$61,000 for the same period during ~~2016. This 24.3% increase year over year reflects~~2022 as a result of paying off the ~~Company’s financing of certain assets under financial sales-leaseback transactions as well as interest expense on debt agreements entered into during 2016 and 2017. See~~ ~~Financial Position – Leaseheld Obligations~~ ~~and~~ ~~Financial Position – Debt Obligations~~.$3.5M loan the Company had with American Bank & Trust.

Income Tax Expense

We reported income tax expense of $406,000 and benefit of ~~$44,000 and income tax expense of $679,000~~$50,000 for the ~~nine months~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, respectively. The ~~decrease~~increase in income tax expense in ~~2017~~2023 relates to ~~lower levels of pretax earnings for~~ the ~~nine months ended September 30, 2017 compared to the same period~~positive change in ~~2016.~~unrealized gains and losses. Our effective tax rate for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 was ~~negative 20.0%~~20.4%, compared to ~~30.0%~~23.7% for the same period in ~~2016.~~2022. Effective rates are dependent upon components of pretax earnings and losses and the related tax effects. The effective rate was lower for the nine months ended September 30, 2017 compared to the same period in 2016 primarily due to favorable provision adjustments and an increase in the dividends received deduction.

The Company has not established a valuation allowance against any of the net deferred tax assets.

- 26 ~

Table of Contents

~~Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016~~

~~The major components of operating revenues and net earnings are as follows:~~

For the three months

ended September 30,
(In thousands)

2017

2016
Revenues

Total premiums earned

$
11,191

$
10,849
Investment income, net of investment expense

688

663
Realized investment gains (losses), net

(2)

(119)
Other income

49

28
Total revenues

$
11,926

$
11,421
Summarized components of net earnings (loss)

Underwriting (loss) income¹

$
(1,216)

$
440
Investment income, net of investment expense

688

663
Realized investment (losses), net

(2)

(119)
Other income

49

28
General corporate expenses

184

137
Interest expense

65

49
Loss (earnings), before income taxes

(730)

826
Income tax (benefit) expense

(381)

131
Net (loss) earnings

$
(349)

$
695
Total other comprehensive earnings

298

93
Comprehensive (loss) earnings

$
(51)

$
788

1Calculated by subtracting the sum of loss and settlement expenses (2017 -$8,063 and 2016 -$6,154) and policy and acquisistion costs and other operating expenses (2017 - $4,334 and 2016 - $4,255) from net premiums earned (2017 - $11,191 and 2016 - $10,849).

For the three months ended September 30,

2017

2016
Non-GAAP Ratios:

Losses and settlement expense ratio1

72.05%

56.72%
Expense ratio2

38.82%

39.21%
Combined ratio3

110.87%

95.93%

1~~Calculated by dividing loss and settlement expenses by net premiums earned.~~

2~~Calculated by dividing the sum of policy acquisition costs and operating expenses by net earned premiums.~~

~~The following summarizes our results for the three months ended September 30, 2017 and 2016:~~

~~Premiums~~

Direct premiums written increased by $826,000, or 6.2%, from the three months ended September 30, 2017 as compared to the same period of 2016, while net written premium grew by $910,000, or 8.1%, during the same period. Net premiums earned grew by $343,000, or 3.2%, in the three months ended Septmeber 30, 2017 as compared to the three months ended September 30, 2016, primarily due to increased organic growth and lower levels of premium ceded to reinsurance.

For the three months ended September 30, 2017, we ceded to reinsurers $2,051,000 of earned premiums, compared to $2,110,000 of earned premiums for the three months ended September 30, 2016. Ceded earned premiums as a percent of direct premiums written were 14.5% in the three months ended September 30, 2017, and 15.9% in the three months ended September 30, 2016.

~ 27 ~

~~Table of Contents~~

~~Premiums are earned ratably over the term of the policy whereas written premiums are reflected on the effective date of the policy.~~

~~Other Income~~

Other income is derived from policies we write and represents additional charges to policyholders for services outside of the premium charge, such as installment billing or policy issuance costs. Another component of other income is attributable to sales made by the Company’s subsidiary, Estrella Innovative Solutions, Inc. Other income increased by $20,000 or 71.4% during the three months ended September 30, 2017 as compared to the same period in 2016 primarily as a result of an increase in third party sales made by Estrella Innovative Solutions, Inc. as well as a slight growth in premium based fees.

~~Losses and Settlement Expenses~~

~~Losses and settlement expenses increased by $1,909,000, or 31.0%, to $~~8,063,000 for the three months ended September 30, 2017, from $6,154,000 for the same period in 2016. The increase in losses and settlement expenses for the three months ended September 30, 2017 is primarily due to an increase in frequency and severity of fire and storm losses as well as higher retention of property losses compared to the same period in 2016.

~~Policy Acquisition Costs and Other Operating Expenses and the Expense Ratio~~

Policy acquisition costs and other operating expenses increased by $89,000 or 2.1% for the three months ended September 30, 2017 compared to the same period in 2016. The increase in policy acquisition costs and other operating expenses during the three months ended September 30, 2017 is primarily driven by increases in the other operating expenses. This is due to additional costs associated with operating as a public company which did not occur in previous years.

Our expense ratio is calculated by dividing the sum of policy acquisition costs and operating expenses by net earned premiums. We use the expense ratio to evaluate the operating efficiency of our consolidated operations. Costs that cannot be readily identifiable as a direct cost of a product line remain in Corporate and Other. Our expense ratio decreased by 39 basis points from 39.21% to 38.82% for the three months ended September 30, 2017 as compared to 2016.

~~General Corporate Expenses~~

~~Our general corporate expenses increased by $47,000, or 34.3%, in the three months ended September 30, 2017 as compared to the same period in 2016.~~

~~Investment Income~~

Net investment income increased by $25,000, or 3.8% during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016, primarily from reduced investment expense. Average cash and invested assets during the three months ended September 30, 2017 was $113,116,000 compared to $81,706,000 during the same period in 2016, an increase of $31,410,000, or 38.4%. The increase in the portfolio was primarily due to proceeds from the initial public offering that closed on March 24, 2017.

~~Interest Expense~~

Interest expense increased to $65,000 for the three months ended September 30, 2017 from $49,000 for the same period in 2016. This 32.7% increase year over year reflects the Company’s financing of certain assets under financial sales-leaseback transactions as well as interest expense on debt agreements entered into during 2016 and 2017. See ~~Financial Position – Leaseheld Obligations~~ ~~and~~ ~~Financial Position – Debt Obligations~~.

~~Income Tax Expense~~

We reported income tax benefit of $381,000 and income tax expense of $131,000 for the three months ended September 30, 2017 and 2016, respectively. The flip to income tax benefit for the three months ended September 30, 2017, versus income tax expense for the same period in 2016 relates to a net loss before income taxes for the three months ended September 30, 2017 compared to a net earnings before income taxes for the same period in 2016. Our effective tax rate for the three months ended September 30, 2017, was 52.2%, compared to 15.9% for the same period in 2016. Effective rates are dependent upon components of pretax earnings and the related tax effects. The effective rate for the three months ended September 30, 2017, differened from the statutory tax rate primarily due to favorable provision adjustments and an increase in the dividends received deduction.

~~The Company has not established a valuation allowance against any of the net deferred tax assets.~~

~ 28 ~

~~Table of Contents~~

Financial Position

The ~~major components~~following summarizes our financial position as of ~~our assets~~March 31, 2023 and ~~liabilities are as follows:~~December 31, 2022:

As of

September 30,

December 31,

2017

2016
(In thousands)

(Unaudited)

Assets

Investments and cash:

Available for sale securities, at fair value

Fixed maturity securities (amortized cost - $85,067 at 9/30/2017

$
87,040

$
64,134
and $62,929 at 12/31/2016)

Common Stocks (cost - $10,248 at 9/30/2017 and $6,312 at 12/31/2016)

11,265

6,983
Preferred Stocks (cost - $3,671 at 9/30/2017 and $2,925,434 at 12/31/2016)

3,785

2,798
Property held for investment, at cost, net of accumulated depreciation of

2,865

2,207
$103 at 9/30/2017 and $51 at 12/31/2016

Cash and cash equivalents

6,854

4,377
Total investments and cash

111,809

80,499
Accrued investment income

716

524
Premiums and reinsurance balances receivable, net of allowances for

18,219

17,479
uncollectible amounts of $50 at 9/30/2017 and 12/31/2016

Ceded unearned premiums

297

271
Reinsurance balances recoverable on unpaid losses and settlement

11,641

12,115
expenses, net of allowances for uncollectible amounts of

$0 at 9/30/2017 and 12/31/2016

Federal income taxes

1,218

1,037
Deferred policy acquisition costs, net

4,556

4,163
Property and equipment, at cost, net of accumulated depreciation of

3,564

3,720
$4,748 at 9/30/2017 and $4,308 at 12/31/2016

Other assets

1,139

2,352
Total assets

$
153,159

$
122,160

Liabilities and Equity

Liabilities:

Unpaid losses and settlement expenses

$
52,552

$
52,817
Unearned premiums

26,789

24,778
Reinsurance balances payable

179

110
Corporate debt

4,454

3,787
Accrued expenses

4,072

4,827
Other liabilities

1,372

2,241
Total liabilities

89,418

88,560

Equity:

Common stock1

35

—
Additional paid-in capital

32,296

—
Accumulated other comprehensive earnings, net of tax

2,049

1,154
Retained earnings

32,711

32,446
Less: Unearned ESOP shares at cost (2017 - 334,997 shares and 2016 - 0 shares)

(3,350)

—
Total equity

63,741

33,600
Total liabilities and equity

$
153,159

$
122,160

1~~Par value $0.01; authorized: 2017 - 10,000,000 shares and 2016 - 0 shares; issued: 2017 - 3,500,000 and 2016 - 0 shares; outstanding: 2017 - 3,165,003 and 2016 - 0 shares.~~

~ 29 ~

~~Table of Contents~~

Unpaid Losses and ~~LAE~~Settlement Expense

Our reserves for unpaid loss and ~~LAE~~settlement expense are summarized below:


	As of September 30,		As of December 31,		As of March 31,		As of December 31,
(In thousands)	2017		2016		2023		2022
Case reserves	$	20,139	$	20,171	$	29,367	$	28,231
IBNR reserves		20,772		20,531		29,040		25,773
Net unpaid losses and settlement expense		40,911		40,702		58,407		54,004
Reinsurance recoverable on unpaid loss and settlement expense		11,641		12,115
Reinsurance recoverables, excluding CECL allowance						14,460		13,610
Reserves for unpaid loss and settlement expense	$	52,552	$	52,817	$	72,867	$	67,614

Actuarial Ranges

The selection of the ultimate loss is based on information unique to each line of business and accident year and the judgment and expertise of our actuary and management.

The following table provides case and IBNR reserves for losses and loss adjustment expenses as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016.~~2022.

As of ~~September 30, 2017~~March 31, 2023

(In thousands)
Case Reserves

IBNR Reserves

Total Reserves
Commercial liability
$
15,453

$
15,110

$
30,563
Property

1,781

4,310

6,091
Other

2,905

1,352

4,257
Total net reserves

20,139

20,772

40,911
Reinsurance recoverables

7,326

4,315

11,641
Gross reserves
$
27,465

$
25,087

$
52,552

(In thousands)	Case Reserves		IBNR Reserves		Total Reserves
Commercial liability	$	22,371	$	24,455	$	46,826
Property		3,795		1,585		5,380
Other		3,201		3,000		6,201
Total net reserves		29,367		29,040		58,407
Reinsurance recoverables, excluding CECL allowance		3,101		11,359		14,460
Gross reserves	$	32,468	$	40,399	$	72,867

As of December 31, ~~2016~~2022

								Actuarially Determined Range of Estimates
(In thousands)	Case Reserves		IBNR Reserves			Total Reserves		Low		High
Commercial liability	$	21,356	$	22,737		$	44,093
Property		3,690		(24	)		3,666
Other		3,185		3,060			6,245
Total net reserves		28,231		25,773			54,004	$	48,006	$	57,398
Reinsurance recoverables		3,716		9,894			13,610		11,595		15,484
Gross reserves	$	31,947	$	35,667		$	67,614	$	59,601	$	72,882

Actuarially Determined
Range of Estimates
(In thousands)
Case Reserves

IBNR Reserves

Total Reserves

Low

High
Commercial liability
$
15,627

$
14,655

$
30,282

Property

2,652

4,036

6,688

Other

1,892

1,840

3,732

Total net reserves

20,171

20,531

40,702

$
36,178

$
41,107
Reinsurance recoverables

7,595

4,520

12,115

9,431

12,637
Gross reserves
$
27,766

$
25,051

$
52,817

$
45,609

$
53,744

- 27 -

~ 30 ~

Table of Contents

Our actuary determined a range of reasonable reserve estimates which reflect the uncertainty inherent in the loss reserve process. This range does not represent the range of all possible outcomes. We believe that the ~~actuarially-determined~~actuarially determined ranges represent reasonably likely changes in the loss and settlement expense estimates, however actual results could differ significantly from these estimates. The range was determined by line of business and accident year after a review of the output generated by the various actuarial methods utilized. The actuary reviewed the variance around the select loss reserve estimates for each of the actuarial methods and selected reasonable low and high estimates based on his knowledge and judgment. In making these judgments the actuary typically assumed, based on his experience, that the larger the reserve the less volatility and that property reserves would exhibit less volatility than casualty reserves. In addition, when selecting these low and high estimates, the actuary considered:

●

·historical industry development experience in our business line;

●

historical ~~industry~~company development ~~experience~~experience;

●

the impact of court decisions on insurance coverage issues, which can impact the ultimate cost of settling claims;

●

changes in our ~~business line;~~internal claims processing policies and procedures; and

●

·trends and risks in claim costs, such as risk that medical cost inflation could increase.

~~historical company development experience;~~

~~the impact of court decisions on insurance coverage issues, which can impact the ultimate cost of settling claims;~~

~~changes in our internal claims processing policies and procedures; and~~

~~trends and risks in claim costs, such as risk that medical cost inflation could increase.~~

Our actuary is required to exercise a considerable degree of judgment in the evaluation of all of these and other factors in the analysis of our loss and settlement expense reserves, and related range of anticipated losses. Because of the level of uncertainty impacting the estimation process, it is reasonably possible that different actuaries would arrive at different conclusions. The method of determining the reserve range has not changed and the reserve range generated by our actuary is consistent with the observed development of our loss reserves over the last few years.

The width of the range in reserves arises primarily because specific losses may not be known and reported for some period and the ultimate losses paid and loss adjustment expenses incurred with respect to known losses may be larger than currently estimated. The ultimate frequency or severity of these claims can be very different than the assumptions we used in our estimation of ultimate reserves for these exposures.

Specifically, the following factors could impact the frequency and severity of claims, and therefore, the ultimate amount of loss and settlement expense paid:

●

·the rate of increase in labor costs, medical costs, and material costs that underlie insured risks;

●

development of risk associated with our expanding producer relationships and our growth in new states or states where we currently have small market share; and

●

~~the rate~~impact of ~~increase~~changes in ~~labor costs, medical costs, and material costs that underlie insured risks;~~

laws or regulations.

~~development of risk associated with our expanding producer relationships and our growth in new states or states where we currently have small market share; and~~

~~impact of changes in laws or regulations.~~

The estimation process for determining the liability for unpaid loss and settlement expense inherently results in adjustments each year for claims incurred (but not paid) in preceding years. Negative amounts reported for claims incurred related to prior years are a result of claims being settled for amounts less than originally estimated (favorable development). Positive amounts reported for claims incurred related to prior years are a result of claims being settled for amounts greater than originally estimated (unfavorable development). For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, we experienced favorable development of ~~$1,370,000~~$24,000 and ~~$190,000,~~unfavorable development of $2,670,000, respectively.

~~Potential~~The potential for variability in our reserves is evidenced by this development. As further illustration of reserve variability, we initially estimated unpaid loss and settlement expense net of reinsurance at the end of ~~2016~~2022 at ~~$40,702,000.~~$54,004,000. As of ~~September 30, 2017,~~March 31, 2023, that reserve was re-estimated at ~~$39,332,000,~~$53,980,000, which is ~~$1,370,000, or 3.4%, lower~~$24,000 more favorable than the initial estimate.

The estimation of our reserves is based on several actuarial methods, each of which incorporates many quantitative assumptions. The judgment of the actuary plays an important role in selecting among various loss development factors and selecting the appropriate method, or combination of methods, to use for a given accident year. The ranges presented above represent the expected variability around the actuarially determined central estimate. The total range around our actuarially determined estimate varies from (5.9)% to 6.9%. As shown in the table below, since 2012 the variance in our originally estimated accident year loss reserves has ranged from (6.4%) deficient to 17.7% redundant as of September 30, 2017.

~ 31 ~

~~Table of Contents~~

~~Recent Variabilities of Incurred Losses and Settlement Expense, Net of Reinsurance~~

Accident Year Data
(In thousands)

2012

2013

2014

2015

2016
As originally estimated

$
19,276

$
22,064

$
22,267

$
24,293

$
25,619
As estimated at September 30, 2017

19,264

22,220

23,685

20,001

24,555
Net cumulative redundancy (deficiency)

$
12

$
(156)

$
(1,417)

$
4,292

$
1,065
% redundancy (deficiency)

0.1%

(0.7)%

(6.4)%

17.7%

4.2%

~~The table below summarizes the impact on equity, net of tax, from changes in estimates of net unpaid loss and settlement expense:~~

December 31,

2016
(In thousands)
Aggregate Loss and Settlement Reserve

Percentage Change in Equity
Reserve Range for Unpaid Losses and Settlement Expense

Low End
$
36,178

8.9%
Recorded

40,702

0.0%
High End

41,107

-0.8%

If the net loss and settlement expense reserves were recorded at the high end of the actuarially-determined range as of Decemeber 31, 2016, the loss and settlement expense reserves would increase by $405,000 before taxes. This increase in reserves would have the effect of decreasing net income and equity as of December 31, 2016 by $267,000. If the loss and settlement expense reserves were recorded at the low end of the actuarially-determined range, the net loss and settlement expense reserves at December 31, 2016 would be reduced by $4,524,000 with corresponding increases in net income and equity of $3.0 million.

Investments

Our investments are primarily composed of fixed maturity debt securities and both common and preferred stock equity securities. We categorize all our debt securities ~~investments are classified~~ as available-for-sale ~~and~~(AFS), which are carried at ~~estimated~~ fair value as determined by management based upon quoted market prices when available. If a quoted market price is not available, fair value is estimated using a secondary pricing source or ~~a recognized pricing service at the reporting date for those or~~using quoted market prices of similar ~~investments.~~securities. Changes in unrealized investment gains or losses on our ~~investments,~~AFS securities, net of applicable income taxes, are reflected directly in equity as a component of comprehensive ~~income~~earnings (loss) and, accordingly, have no effect on net ~~income~~earnings (loss). Equity securities are carried at fair value with subsequent changes in fair value recorded in net earnings (loss). Investment income is recognized when earned, and capital gains and losses are recognized when investments are sold, or ~~other-than-temporarily impaired.~~credit loss has occurred.

- 28 -

Table of Contents

Effective with the adoption of ASU 2016-13, Financial Instruments—Credit Losses, on January 1, 2023, we consider several factors, including, but not limited to, the following when evaluating whether a decline in value for AFS debt securities relates to credit losses:

●

the extent to which fair value is less than amortized cost;

●

adverse conditions related to the security, an industry, geographic area such as changes in the financial condition of the issuer of the security, changes in technology, or discontinuation of a segment of the business that may affect future earnings potential;

●

the payment structure of the debt security and the likelihood of the issuer being able to make future payments;

●

failure of the issuer of the security to make scheduled interest or principal payments; and

●

any changes to the rating of the security by a rating agency.

In addition, we no longer consider the duration of the decline in value in assessing whether our fixed income securities available for sale have a credit loss impairment. If a credit loss is determined to exist, the credit loss impairment is recognized as a credit loss expense in the statement of operations with an offset to an allowance for credit losses. Subsequent changes (favorable and unfavorable) in expected credit losses are recognized immediately in net income as a credit loss expense or a reversal of credit loss expense. Credit losses are limited to the amount by which the amortized cost of the security exceeds fair value. The Company and its independent investment managers evaluated our available-for-sale securities and determined that as of January 1, 2023 and March 31, 2023, there were no securities for which an allowance for credit losses adjustment was needed.

The fair value and unrealized losses for our securities that were temporarily impaired are as follows:

	March 31, 2023
	Less than 12 Months					12 Months or Longer					Total
(In thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury	$	—	$	—		$	1,270	$	(82	)	$	1,270	$	(82	)
MBS/ABS/CMBS		8,487		(278	)		23,680		(2,405	)		32,167		(2,683	)
Corporate		17,023		(736	)		16,761		(2,771	)		33,784		(3,507	)
Municipal		2,456		(204	)		10,317		(3,017	)		12,773		(3,221	)
Redeemable preferred stock		298		(11	)		—		—			298		(11	)
Total temporarily impaired fixed maturity securities	$	28,264	$	(1,229	)	$	52,028	$	(8,275	)	$	80,292	$	(9,504	)


	September 30, 2017												December 31, 2022
	Less than 12 Months				12 Months or Longer				Total				Less than 12 Months					12 Months or Longer					Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury	$	995	$	(4)	$	—	$	—	$	995	$	(4)	$	615	$	(37	)	$	638	$	(63	)	$	1,253	$	(100	)
MBS/ABS/CMBS		9,213		(104)		2,075		(82)		11,288		(186)		21,200		(1,365	)		12,833		(1,742	)		34,033		(3,107	)
Corporate		1,571		(3)		1,983		(15)		3,554		(18)		27,689		(2,896	)		5,829		(1,256	)		33,518		(4,152	)
Municipal		1,397		(10)		859		(25)		2,256		(35)		11,502		(3,089	)		2,080		(885	)		13,582		(3,974	)
Total fixed maturities		13,176		(121)		4,917		(122)		18,093		(243)
Common stocks		647		(8)		—		—		647		(8)
Preferred stocks		644		(19)		426		(10)		1,070		(29)
Total temporarily impaired securities	$	14,467	$	(148)	$	5,343	$	(132)	$	19,810	$	(280)
Redeemable preferred stock														189		(27	)		—		—			189		(27	)
Total temporarily impaired fixed maturity securities													$	61,195	$	(7,414	)	$	21,380	$	(3,946	)	$	82,575	$	(11,360	)

~ 32 ~

~~Table of Contents~~Corporate Bonds

The net unrealized losses in the Corporate bond portfolio decreased by about $0.7 million from a loss of $4,114,000 at the end of 2022 to a loss of $3,407,000 as of March 31, 2023. This slight improvement in the unrealized loss position was driven by the Treasury yield curve shifting down about 40 bps during the first quarter which caused the price of bonds to move higher.

December 31, 2016

Less than 12 Months

12 Months or Longer

Total
(In thousands)
Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses
U.S. Treasury
$
994

$
(6)

$
—

$
—

$
994

$
(6)
MBS/ABS/CMBS

10,713

(257)

323

(1)

11,036

(258)
Corporate

5,476

(76)

984

(15)

6,460

(91)
Municipal

2,995

(135)

—

—

2,995

(135)
Total fixed maturities

20,178

(474)

1,307

(16)

21,485

(490)
Common stocks

—

—

446

(34)

446

(34)
Preferred stocks

2,328

(132)

—

—

2,328

(132)
Total temporarily impaired securities
$
22,506

$
(606)

$
1,753

$
(50)

$
24,259

$
(656)

Municipal Bonds

The unrealized losses in the Municipal portfolio decreased by about $0.8 million from a loss of $3,896,000 at the end of 2022 to a loss of $3,083,000 as of ~~September 30, 2017 and December~~March 31, ~~2016 were primarily related to changes~~2023. This slight improvement in the interest rate environment. Fair values of interest rate sensitive instruments may be affected by increases and decreases in prevailing interest rates which generally translate, respectively, into decreases and increases in fair values of fixed maturity investments. The fair values of interest rate sensitive instruments also may be affectedunrealized loss position was driven by the ~~credit worthiness~~Treasury yield curve shifting down about 40 bps during the first quarter which caused the price of ~~the issuer, prepayment options, relative values of other investments, the liquidity of the instrument, and other general market conditions.~~bonds to move higher.

We ~~monitor our investment~~screen the portfolio for securities that hit certain thresholds and review those securities for potential impairment. The thresholds vary by sector. For Corporates, as an example, we screen for any holding that has a market price below $80. For Municipals, we screen for securities that have ~~experienced~~an unrealized loss of more than 5% of book value. For structured securities, we use more quantitative analysis, including a ~~decline in fair~~discounted cash-flow model to measure the amount by which the present value of expected future cash flows is below ~~cost to evaluate whether~~ the ~~decline is other than temporary.~~asset’s amortized cost. When assessing whether the ~~amortized cost basis~~fair value of the security will be recovered, we may compare the present value of the cash flows likely to be collected, based on an evaluation of all available information relevant to the collectability of the security, to the amortized cost basis of the security. The shortfall of the present value of the cash flows expected to be collected in relation to the amortized cost basis is referred to as the “credit ~~loss.”~~loss”. If there is a credit loss, the impairment is ~~considered to be~~ other-than-temporary. IfUnder the new guidance for AFS debt securities, if we identify that an other-than-temporary impairment ~~loss~~ has occurred, we then determine whether we intend to sell the security, or if it is more likely than not that we will be required to sell the security prior to recovering the amortized cost basis less any current-periodan allowance for credit ~~losses. If we determine that we do not intend to sell, and it is not more likely than not that we will be required to sell the security, the amount of the impairment loss related to the credit loss~~losses (ACL) will be recorded in ~~earnings, and the~~earnings. Any remaining portion of unrealized losses related to the ~~other-than-temporary impairment loss~~noncredit-related component will continue to be recognized in other comprehensive income (loss), net of tax. If we determine that we intend to sell the security, or that it is more likely than not that we will be required to sell the security prior to recovering its amortized cost basis less any current-period credit losses, the full amount of the ~~other-than-temporary impairment~~OTTI will be recognized ~~in earnings.~~as a realized loss.

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For the ~~nine months ended September 30, 2017, the Company incurred $57,000 of OTTI losses on an ETF included in common stock that was impaired in the~~ three months ended ~~June 30, 2017 and subsequently sold~~March 31, 2023, the Company did not take a credit loss or impairment charge on any of its security holdings. Adverse investment market conditions, or poor operating results of underlying investments, could result in credit losses or impairment charges in the ~~three months ended September 30, 2017. During the first nine months of 2016, the Company recognized $213,000 of impairment losses.~~future.

We use quoted values and other data provided by independent pricing services in our process for determining fair values of our investments. The evaluations of such pricing services represent an exit price and a good faith opinion as to what a buyer in the marketplace would pay for a security in a current sale. This pricing service provides us with one quote per instrument. For fixed maturity securities that have quoted prices in active markets, market quotations are provided. For fixed maturity securities that do not trade ~~on a~~ daily, ~~basis,~~ the independent pricing service prepares estimates of fair value using a wide array of observable inputs including relevant market information, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. The observable market inputs that our independent pricing service utilizes may include (listed in order of priority for use) benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers, and other reference data on markets, industry, and the economy. Additionally, the independent pricing service uses an option adjusted spread model to develop prepayment and interest rate scenarios. The pricing service did not use broker quotes in determining the fair values of our investments.

Should the independent pricing service be unable to provide a fair value estimate, we would attempt to obtain a non-binding fair value estimate from a number of broker-dealers and review this estimate in conjunction with a fair value estimate reported by an independent business news service or other sources. In instances where only one broker-dealer provides a fair value for a fixed maturity security, we use that estimate. In instances where we ~~are able to~~can obtain fair value estimates from more than one broker-dealer, we would review the range of estimates and would select the most appropriate value based on the facts and circumstances. Should neither the independent pricing service nor a broker-dealer provide a fair value estimate, we would develop a fair value estimate based on cash flow analyses and other valuation techniques that utilize certain unobservable inputs. Accordingly, we would classify such a security as a Level 3 investment.

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~~Table of Contents~~

The fair value estimates of our investments provided by the independent pricing service at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, respectively, were utilized, among other resources, in reaching a conclusion as to the fair value of our investments.

Management reviews the reasonableness of the pricing provided by the independent pricing service by employing various analytical procedures. We review all securities to identify recent downgrades, significant changes in pricing, and pricing anomalies on individual securities relative to other similar securities. This will include looking for relative consistency across securities in common sectors, durations, and credit ratings. This review will also include all fixed maturity securities rated lower than “A” by Moody’s or S&P. If, after this review, management does not believe the pricing for any security is a reasonable estimate of fair value, then it will seek to resolve the discrepancy through discussions with the pricing service. In our review, we did not identify any such discrepancies for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 and for the year ended December 31, ~~2016,~~2022, and no adjustments were made to the estimates provided by the pricing ~~service for the years 2015 and 2014.~~service. The classification within the fair value hierarchy of Accounting Standards Codification (ASC) Topic 820, Fair Value Measurement, is then confirmed based on the final conclusions from the pricing review.

Deferred Policy Acquisition Costs

Certain acquisition costs consisting of direct and ceded commissions, premium taxes and certain other direct underwriting expenses that vary with and are primarily related to the production of business are deferred and amortized over the effective period of the related insurance policies as the underlying policy premiums are earned. At ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, deferred acquisition costs and the related unearned premium reserves were as follows:

(In thousands)
September 30, 2017

December 31, 2016
Deferred acquisition costs
$
4,556

$
4,163
Unearned premium reserves

26,789

24,778

(In thousands)	March 31, 2023		December 31, 2022
Deferred acquisition costs	$	7,733	$	7,167
Unearned premium reserves		41,095		40,527

The method followed in computing deferred acquisition costs limits the amount of deferred costs to their estimated realizable value, which gives effect to the premium to be earned, related investment income, loss and loss adjustment expenses, and certain other costs expected to be incurred as the premium is earned. Future changes in estimates, the most significant of which is expected loss and loss adjustment expenses, may require adjustments to deferred policy acquisition costs. If the estimation of net realizable value indicates that the deferred acquisition costs are not recoverable, they would be written off.

Income Taxes

We use the asset and liability method of accounting for income taxes. Deferred income taxes arise from the recognition of

temporary differences between financial statement carrying amounts and the tax bases of our assets and liabilities. A valuation

allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. The effect of a change in tax rates is recognized in the period of the enactment date.

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We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets, which are inherently subjective, are reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record an additional valuation allowance against our deferred tax assets.

As of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, we had no material unrecognized tax benefits or accrued interest and penalties. Federal tax years ~~2013~~2019 through ~~2015~~the current year are open for examination.

Other Assets

As of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016~~2022, other assets totaled ~~$1,139,000~~$1,357,000 and ~~$2,351,000,~~$1,277,000, respectively. ~~The decrease is primarily due to deferred stock offering and conversion expenses being settled in the first quarter of 2017.~~

Outstanding Debt

As of September 30, 2017 and December 31, 2016, outstanding debt balances totaled $4,454,000 and $3,787,000, respectively. We incurred interest expense for the nine month periods ended September 30, 2017, and 2016, of $174,000 and $140,000, respectively. We incurred interest expense of $65,000 and $49,000 for the three months ended September 30, 2017 and 2016, respectively. The average rate on debt was 3.9% as of September 30, 2017, compared to 5.0% as of December 31, 2016.

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~~Table of Contents~~

~~Surplus Notes~~

ICC’s plan of conversion from a mutual to a stock company was approved by ICC policyholders at a special meeting on March 17, 2017. Simultaneously, surplus notes totaling $1,650,000 were converted into 165,000 shares of the Company’s common stock. The remaining $200,000 balance of surplus notes was paid in March 2017.

~~Leasehold Obligations~~

The Company ~~entered into a sale leaseback arrangement~~had $15,000,000 in 2016 that is accounted for as a capital lease. Under the agreement, Bofi Federal Bank purchased electronic data processing software, vehicles, and other assets which are leased to the Company. These assets remain on the Company’s books due to provisions within the agreement that trigger capital lease accounting. To secure the lowest rate possible of 4.7%, the Company pledged additional bonds totaling $861,000 during 2016, bringing the total pledged to $1,809,000outstanding debt, as of ~~September 30, 2017,~~March 31, 2023 and December 31, 2016, respectively. There was no gain or loss recognized as part of this transaction. Lease payments totaled $125,000 and $125,000 for the three months ended September 30, 2017 and 2016, respectively. Lease payments totaled $376,000 and $334,000 for the nine months ended September 30, 2017 and 2016, respectively. The term of the electronic data processing lease is 48 months and the term of the titled vehicles lease is 36 months. The outstanding lease obligation at September 30, 2017 was $913,000 compared to $1,228,000 at Decemeber 31, 2016.

~~Debt Obligation~~2022,

ICC Holdings, Inc. secured a loan with ~~American Bank & Trust~~a commercial bank in March 2017 in the amount of ~~$3,500,000~~$3.5 million and used the proceeds to repay ICC for the money borrowed by the ESOP. The term of the loan is five years bearing interest at 3.65%. The Company pledged ~~the ESOP shares~~stock and ~~$1.5~~$1.0 million of ~~trust~~marketable assets as collateral for the loan. ~~Additionally,~~The Company paid $3.5 million in April 2022, which fully extinguished the loan balance.

The Company also has borrowing capacity of $44.3 million with the Federal Home Loan Bank of Chicago (FHLBC), which is 25% of net admitted statutory assets of Illinois Casualty Company as of the prior year-end. As of March 31, 2023, the Company has used $15.0 million of that capacity.

As part of the Company’s response to COVID-19, the Company obtained, in March 2020, a $6.0 million loan from the FHLBC as a precautionary measure to increase its cash position, to provide increased liquidity, and to compensate for potential reductions in premium receivable collections. The term of the loan is five years bearing interest at 1.4%. The Company pledged $6.8 million of fixed income securities as collateral for this loan.

In May 2021, the Company entered into two debt agreements in 2016 with Bofi Federal Bank; one agreement for $500,000 and another debt agreement for $75,000. The terms of the loans were 36 months, but the Company had the option to prepay the $500,000 loan after 12 months. The Company paid off the remaining balance of the $500,000 loan in September 2017. The total balance of the debt agreements at September 30, 2017 and December 31, 2016 was $3,542,000 and $526,000, respectively. The Bofi loans beara $4.0 million, 0.74% fixed interest, ~~at 4.7%.~~ five-year FHLBC loan.

~~Home Office Mortgage~~A one-year FHLBC loan for $5.0 million, 0% interest was entered into in May 2021. Upon maturity in May 2022, this loan rolled over to a $5.0 million, five-year, 1.36% fixed interest loan.

The Company ~~maintains a mortgage on its home office. Interest is charged at a fixed rate of 2.6% and the loan matures~~has $19.1 million in ~~2017. The building is used~~bonds pledged as collateral ~~to secure the loan. The loan balance at September 30, 2017 and December 31, 2016 was $0 and $184,000, respectively.~~for all FHLBC loans.

Revolving Line of Credit

We ~~maintain a~~increased our revolving line of credit with ~~American Bank & Trust, which permits borrowing up~~a commercial bank from $2.0 million to ~~an aggregate principal amount~~$4.0 million in July 2022. As of ~~$1.75 million.~~March 31, 2023, the balance on the line of credit was $0. This ~~facility was entered into during 2013 and is renewed annually with a current expiration of August 1, 2017. The~~ line of credit is priced at ~~30 day LIBOR~~Prime plus 2%0.5% with a floor of ~~3.5%.~~4.75% and renews annually with a current expiration date of July 2023. We intend to renew the line of credit in July. The Company pledged $4.0 million of business assets in the event the Company draws down on the line of credit. This agreement includes an annually calculated financial debt covenant requiring a minimum total adjusted capital of $21.0 million. Total adjusted capital is the sum of an insurer’s statutory capital and surplus as determined in accordance with the statutory accounting applicable to the annual financial statements required to be filed with Illinois Department of Insurance. As of March 31, 2023, our total adjusted capital is in excess of $60.0 million. There was no interest paid on the line of credit during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~$584~~2022.

Other Liabilities

As of ~~interest paid on the line~~March 31, 2023 and December 31, 2022, other liabilities totaled $842,000 and $1,103,000, respectively.

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Table of ~~credit during the nine months ended September 30, 2016. There are no financial covenants governing this agreement.~~

Contents

ESOP

In connection with ~~the~~our conversion and public offering, the ESOP financed the purchase of 10.0% of the common stock issued in the offering for $3,500,000 with the proceeds of a loan from ICC prior to the expiration of the offering. ICC ~~will make~~makes annual contributions to the ESOP sufficient to repay that loan. See Note 8 – Employee Benefits of this Form 10-Q as well as the “Management — Benefit Plans and Employment Agreements —Employee Stock Ownership Plan” section of the Company’s ~~2016~~ Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2022.

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~~Table of Contents~~

Stock-based Incentive Plan

Under the ~~stock-based incentive plan,~~ICC Holdings, Inc. 2016 Equity Incentive Plan, we ~~may issue~~reserved for issuance a total of 490,000 shares of common stock. Of this amount, ~~an amount equal to 10% of the~~350,000 shares of common stock ~~issued~~may be granted in the ~~offering may be used to make~~form of restricted stock and stock-settled restricted stock unit awards, and ~~4% of the~~140,000 shares of common stock ~~issued~~may be granted in the ~~offering may be used to award~~form of stock options under the stock-based incentive plan. The grant-date fair value of any common stock used for restricted stock and restricted stock unit awards will represent unearned compensation. As we accrue compensation expense to reflect the vesting of such shares, unearned compensation will be reduced accordingly. We ~~will also~~ compute compensation expense at the time stock ~~options~~units are awarded based on the fair value of such options on the date they are granted. This compensation expense ~~will be~~is recognized over the appropriate service period. Restricted stock units (RSUs) were granted for the first time in February 2018 with additional RSUs granted in March 2019, April 2020, April 2021, and April 2022. The RSUs vest one third over three years from the first anniversary of the date of grant. SeeNote 8 – Employee Benefits of this Form 10-Q as well as the “Management — Benefit Plans and Employment Agreements” section of the Company’s ~~2016~~2022 Annual Report on Form 10-K.

Liquidity and Capital Resources

We generate sufficient funds from our operations and maintain a high degree of liquidity in our investment portfolio to meet the demands of claim settlements and operating expenses. The primary sources of funds are premium collections, investment earnings and maturing investments. We participate in the Insured Cash Sweep (ICS) with our local bank, which maintains our operating accounts. ICS ensures that our funds are spread throughout the ICS network and no balance is higher than $250,000 each night so that all our funds are fully insured.

The ~~increase~~decrease in cash ~~flows from financing~~provided by operating activities of $1.1 million during the ~~nine~~three months ended ~~September 30, 2017 relates~~March 31, 2023 compared to the ~~initial public offering~~same period in 2022 was due to decreases in accrued expenses and ~~changes~~increases in ~~debt and shares outstanding.~~reinsurance balances recoverable.

We maintain investment and reinsurance programs that are intended to provide sufficient funds to meet our obligations without forced sales of investments. We maintain a portion of our investment portfolio in relatively short-term and highly liquid assets to ensure the availability of funds.

~~Upon completion of the offering, we became subject~~In addition to the ~~proxy solicitation, periodic reporting, insider trading prohibitions~~investment and reinsurance programs mentioned, we have access to cash via the Federal Home Loan Bank of Chicago of $44.3 million. We have drawn down $15.0 million as of March 31, 2023. We also have a $4.0 million line of credit with a local financial institution. As of March 31, 2023, our balance on the line of credit was $0.

As of March 31, 2023, we have cash and other ~~requirements~~investments maturing with one year of $4.4 million and an additional $15.3 million maturing between one and five years.

We believe that over the ~~Exchange Act~~next twelve to twenty-four months our cash generated from operations and investments will provide sufficient sources of liquidity to ~~most of~~meet our needs. In the ~~provisions of the Sarbanes-Oxley Act of 2002. We estimate that the cost of initial compliance with the requirements of the Sarbanes-Oxley Act~~event they are not sufficient, we believe our cash available from financing activities will be ~~approximately $300,000 and that compliance with the ongoing requirements of the Exchange Act and the Sarbanes-Oxley Act will result in an increase of approximately $200,000 in~~sufficient to cover our ~~annual operating expenses.~~cash flow needs.

Cash flows from continuing operations for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 were as follows:

	Three-Months Ended March 31,
(In thousands)	2023			2022
Net cash provided by operating activities	$	2,340		$	3,394
Net cash used in investing activities		(3,013	)		(3,391	)
Net cash used in financing activities		(46	)		(29	)
Net decrease in cash and cash equivalents	$	(719	)	$	(26	)

Nine Months Ended September 30,
(In thousands)
2017

2016
Net cash provided by operating activities
$
623

$
4,165
Net cash (used in) investing activities

(27,794)

(2,601)
Net cash provided by (used in) financing activities

29,649

(114)
Net increase (decrease) in cash and cash equivalents
$
2,478

$
1,450

ICC Holdings, ~~Inc’s~~Inc.’s principal source of liquidity ~~will be~~is dividend payments and other fees received from ICC, Beverage Insurance Agency Inc., and ICC Realty, LLC. ICC is restricted by the insurance laws of Illinois as to the amount of dividends or other distributions it may pay to us. Under Illinois law, there is a maximum amount that may be paid by ICC during any twelve-month period. ICC may pay dividends to us after notice to, but without prior approval of the Illinois Department of Insurance in an amount “not to exceed” the greater of (i) 10% of the surplus as regards policyholders of ICC as reported on its most recent annual statement filed with the Illinois Department of Insurance, or (ii) the statutory net income of ICC for the period covered by such annual statement. Dividends in excess of this amount are considered “extraordinary” and are subject to the approval of the Illinois Department of Insurance.

The amount available for payment of dividends from ICC in ~~2017~~2023 without the prior approval of the Illinois Department of Insurance is approximately ~~$3.4~~$6.0 million based upon the insurance company’s ~~2016~~2022 annual statement. Prior to its payment of any dividend, ICC is required to provide notice of the dividend to the Illinois Department of Insurance. This notice must be provided to the Illinois Department of Insurance 30 days prior to the payment of an extraordinary dividend and 10 days prior to the payment of an ordinary dividend. The Illinois Department of Insurance has the power to limit or prohibit dividend payments if ICC is in violation of any law or regulation. These restrictions or any subsequently imposed restrictions may affect our future liquidity.

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~~Table~~ ICC paid $0 in dividends to ICC Holdings, Inc.in the first three months of ~~Contents~~

~~The following table summarizes, as of September 30, 2017 our future payments under contractual obligations~~2023 and ~~estimated claims and claims related payments for continuing operations.~~2022.

Payments due by period
(In thousands)
Total

Less than 1 year

1-3 years

3-5 years

More than 5 years
Estimated gross loss and settlement expense payments
$
52,552

$
20,758

$
20,600

$
7,095

$
4,099
Debt obligations

4,155

75

316

3,764

—
Capital lease obligations

1,019

126

863

30

—
Home office mortgage

-

-

—

—

—
Operating lease obligations

192

48

144

—

—
Total
$
57,918

$
21,007

$
21,924

$
10,889

$
4,099

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The actual timing of ~~the amounts of the~~ gross loss and loss adjustment expense payments is ~~an estimate~~unknown and therefore timing estimates are based on historical experience and the expectations of future payment patterns. ~~However, the timing of these payments may vary from the amounts stated above.~~

~~Off-Balance Sheet Arrangements~~

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital reserves.

ItemItem 3. Quantitative and Qualitative Information about Market Risk

Market Risk

Market risk is the risk that we will incur losses due to adverse changes in the fair value of financial instruments. We have exposure to three principal types of market risk through our investment activities: interest rate risk, credit risk and equity risk. Our primary market risk exposure is to changes in interest rates. We have not entered, and do not plan to enter, into any derivative financial instruments for hedging, trading, or speculative purposes.

Interest Rate Risk

Interest rate risk is the risk that we will incur economic losses due to adverse changes in interest rates. Our exposure to interest rate changes primarily results from our significant holdings of fixed rate investments. Fluctuations in interest rates have a direct impact on the fair value of these securities.

The average maturity of the debt securities in our investment portfolio at ~~September 30, 2017,~~March 31, 2023, was ~~7.3~~8.0 years. Our debt securities investments include U.S. government bonds, securities issued by government agencies, obligations of state and local governments and governmental authorities, and corporate bonds, most of which are exposed to changes in prevailing interest rates, and which may experience moderate fluctuations in fair value resulting from changes in interest rates. We carry these investments as ~~available for sale.~~available-for-sale. This allows us to manage our exposure to risks associated with interest rate fluctuations through active review of our investment portfolio by our management and board of directors and consultation with our ~~third party~~third-party investment manager.

Fluctuations in near-term interest rates could have an impact on ~~our~~the results of operations and cash flows. Certain of these securities may have call features. In a declining interest rate environment these securities may be called by their issuer and replaced with securities bearing lower interest rates. If we are required to sell these securities in a rising interest rate environment, we may recognize losses.

As a general matter, we attempt to match the durations of our assets with the durations of our liabilities. Our investment objectives include maintaining adequate liquidity to meet our operational needs, optimizing our after-tax investment income, and our after-tax total return, all of which are subject to our tolerance for risk.

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The table below shows the interest rate sensitivity of our fixed maturity investments measured in terms of fair value (which is equal to the carrying value for all of our investment securities that are subject to interest rate changes):


	September 30, 2017				March 31, 2023
Hypothetical Change in Interest Rates (In thousands)	Estimated Change in Fair Value		Fair Value		Estimated Change in Fair Value			Fair Value
200 basis point increase	$	(7,799)	$	79,241	$	(9,787	)	$	87,695
100 basis point increase		(4,004)		83,036		(5,108	)		92,374
No change		—		87,040		—			97,482
100 basis point decrease		3,978		91,018
200 basis point decrease		7,120		94,160
100 basis point decrease¹						5,493			102,975
200 basis point decrease¹						11,298			108,780

¹Assumes US rates are floored at 0%.

Credit Risk

Credit risk is the potential economic loss principally arising from adverse changes in the financial condition of a specific debt issuer. We address this risk by investing primarily in fixed maturity securities that are rated investment grade and at least 70% of our investment securities must be rated at least “A” by Moody’s or an equivalent rating quality. We also independently, and through our independent ~~third party~~third-party investment manager, monitor the financial condition of all of the issuers of fixed maturity securities in the portfolio. To limit our exposure to risk, we employ diversification rules that limit the credit exposure to any single issuer or asset class.

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Equity Risk

Equity price risk is the risk that we will incur economic losses due to adverse changes in equity prices.

~~Impact of Inflation~~

Inflation increases our customers’ needs for property and casualty insurance coverage due to the increase in the value of the property covered and any potential liability exposure. Inflation also increases claims incurred by property and casualty insurers as property repairs, replacements and medical expenses increase. These cost increases reduce profit margins to the extent that rate increases are not implemented on an adequate and timely basis. We establish property and casualty insurance premiums levels before the amount of loss and loss expenses, or the extent to which inflation may impact these expenses, are known. Therefore, we attempt to anticipate the potential impact of inflation when establishing rates. Because inflation has remained relatively low in recent years, financial results have not been significantly affected by it.

ItemItem 4. Controls and Procedures

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that required information is recorded, processed, summarized, and reported within the required timeframe as specified in the SEC’s rules and ~~forms of the SEC.~~forms. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

~~Our management,~~In connection with the preparation of this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision of and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, ~~evaluated~~as of March 31, 2023, of the effectiveness of the design and operation of our disclosure controls and ~~procedures at September 30, 2017.~~procedures. Based onupon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that as of March 31, 2023, our disclosure controls and procedures were ~~effective, at the reasonable assurance level, as of September 30, 2017.~~effective.

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~~Table of Contents~~

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) identified during the ~~last fiscal~~first quarter of 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

ItemItem 1. Legal Proceedings

There were no material changes to report.

~~Ite~~mItem 1A. Risk Factors

~~There were no material changes to report.~~A description of the risks associated with our business, financial conditions and results of operations is set forth in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

~~Ite~~m Item2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Use~~Purchases of ~~Proceeds from Initial Public Offering~~Equity Securities by the Issuer and Affiliated Purchasers

~~Statement on Form S-1 (File No. 333-214081) for the initial public offering~~The following table summarizes repurchases of ~~our~~ common stock ~~was declared effective~~pursuant to share repurchase programs authorized by the ~~Securities and Exchange Commission on February 14, 2017. The Registration Statement on Form S-1 authorized an aggregate~~Board of 10,000,000 shares of our common stock. On March 24, 2017, we closed our initial public offering whereby 3,500,000 shares of our common stock were sold, including 350,000 shares to the Company’s ESOP, at a public offering price of $10.00 per share. Upon completion of the sale of the shares of our common stock, referenced in the preceding sentence, the initial public offering terminated.

The managing underwriters of the initial public offering were Griffin Financial Group. The Company paid to the underwriters of the initial public offering underwriting discounts and commissions totaling approximately $1.0 million. In addition, we incurred expenses of approximately $1.4 million which, when added to the underwriting discounts and commissions, amounted to total expenses of approximately $2.4 million. Thus, the net offering proceeds, after deducting underwriting discounts and commissions and offering expenses were approximately $28.7 million to the Company.

There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the Securities and Exchange Commission on February 13, 2017 pursuant to Rule 424(b)(4).Directors.

Purchases of Equity Securities

Period	(a) Total number of shares (or units) purchased		(b) Average price paid per share (or unit)		(c) Total number of shares (or units) purchased as part of publicly announced plans or programs		(d) Maximum number (or approximate dollar value) of shares (or units) that may be purchased under the plans or programs (1)
January 1 – January 31, 2023		2,361	$	15.50		2,361	$	5,016,160
February 1 – February 28, 2023		437	$	15.67		437	$	5,009,313
March 1 – March 31, 2023		184	$	15.73		184	$	5,006,418
Total		2,982	$	15.54		2,982	$	5,006,418

(1)	In December 2022, the Company announced the establishment of a $5.0 million share repurchase program with no expiration date. The authorization is in addition to the existing share repurchase program authorized in August 2018.

Item 3. ~~Defau~~ltDefault Upon Senior Securities

Not applicable.

Item 4. MineMine Safety Disclosures

Not applicable.

~~Ite~~mItem 5. Other Information

Not applicable.

~ 39 ~

- 35 -

Table of Contents

Item 6. Exhibits

It~~em 6. Exhibits~~

Exhibit Number
~~Exhibit~~ ~~Number~~	Description
3.1		Form of Amended and Restated Articles of Incorporation of ICC Holdings, Inc. (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-214081) filed on December 23, 2016)
3.2		Form of Amended and Restated Bylaws of ICC Holdings, Inc. (incorporated by reference to Exhibit 3.2 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-214081) filed on December 23, 2016)
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Inline XBRL (iXBRL) Documents attached as Exhibit 101
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~ 40 ~

- 36 -

Table of Contents

~~SIGN~~~~ATURES~~SIGNATURES

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, thereunto duly authorized, on ~~November 13, 2017.~~May 15, 2023.



ICC HOLDINGS, INC.

By:	/s/ Arron K. Sutherland
	Arron K. Sutherland President, Chief Executive Officer and Director (Principal Executive Officer)

By:	/s/ Michael R. Smith
	Michael R. Smith Chief Financial Officer (Principal Financial and Accounting Officer)	~~Michael R. Smith~~ ~~Chief Financial Officer~~ ~~(Principal Financial and Accounting Officer)~~

~ 41 ~

- 37 -


Pennsylvania (State or other jurisdiction of incorporation or organization)		81-3359409 (I.R.S. Employer Identification No.)

225 20th Street, Rock Island, Illinois (Address of principal executive offices)		61201 (Zip Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ICCH	The NASDAQ Stock Market LLC


	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ~~☐ (Do not check if a smaller reporting company)~~☒	Smaller reporting company ☒
		Emerging growth company ☒☐



	As of				*As of*
	September 30,		December 31,		*March 31,*			*December 31,*
	2017		2016		*2023*			*2022*
		(Unaudited)			(Unaudited)
Assets
Investments and cash:
Available for sale securities, at fair value
Fixed maturity securities (amortized cost - $85,067,335 at	$	87,040,384	$	64,134,023
9/30/2017 and $62,929,091 at 12/31/2016)
Common stocks¹ (cost - $10,247,724 at		11,264,700		6,982,547
9/30/2017 and $6,311,708 at 12/31/2016)
Preferred stocks (cost - $3,670,999 at		3,785,161		2,798,413
9/30/2017 and $2,925,434 at 12/31/2016)
Property held for investment, at cost, net of accumulated depreciation of		2,865,376		2,207,424
$103,080 at 9/30/2017 and $50,948 at 12/31/2016
Fixed maturity securities (amortized cost of $106,652,848 at 3/31/2023 and $104,580,681 at 12/31/2022)					$	97,481,837		$	93,388,971
Common stocks at fair value						20,957,988			20,438,907
Preferred stocks at fair value						2,858,411			2,772,605
Other invested assets						5,073,580			4,722,137
Property held for investment, at cost, net of accumulated depreciation of $653,586 at 3/31/2023 and $464,713 at 12/31/2022						6,316,139			6,002,233
Cash and cash equivalents		6,853,760		4,376,847		2,422,295			3,139,986
Total investments and cash		111,809,381		80,499,254		135,110,250			130,464,839
Accrued investment income		715,950		524,156		791,303			791,812
Premiums and reinsurance balances receivable, net of allowances for		18,219,138		17,479,487
uncollectible amounts of $50,000 at 9/30/2017 and 12/31/2016
Premiums and reinsurance balances receivable, net of allowances for credit losses of $50,000 at 3/31/2023 and 12/31/2022						31,777,408			31,270,460
Ceded unearned premiums		297,127		270,751		804,651			947,851
Reinsurance balances recoverable on unpaid losses and settlement expenses,		11,640,539		12,114,998
net of allowances for uncollectible amounts of $0 at 9/30/2017 and 12/31/2016
Reinsurance balances recoverable on unpaid losses and settlement expenses, net of allowances for credit losses of $104,000 at 3/31/2023 and $0 at 12/31/2022						14,355,652			13,610,295
Federal income taxes		1,217,921		1,037,506		2,532,833			3,318,730
Deferred policy acquisition costs, net		4,556,116		4,162,927		7,732,551			7,167,036
Property and equipment, at cost, net of accumulated depreciation of		3,564,286		3,719,535
$4,747,642 at 9/30/2017 and $4,308,247 at 12/31/2016
Other assets		1,138,907		2,351,347
Property and equipment, at cost, net of accumulated depreciation of $6,688,410 at 3/31/2023 and $6,590,602 at 12/31/2022						3,344,690			3,313,719
Other Assets, net of allowances for credit losses of $51,000 at 3/31/2023 and $0 at 12/31/2022						1,357,172			1,277,469
Total assets	$	153,159,365	$	122,159,961	$	197,806,510		$	192,162,211
Liabilities and Equity

Liabilities:
Unpaid losses and settlement expenses	$	52,551,866	$	52,817,254	$	72,866,600		$	67,614,063
Unearned premiums		26,789,274		24,777,712		41,095,297			40,527,182
Reinsurance balances payable		179,000		109,790		281,462			1,405,337
Corporate debt		4,454,138		3,786,950		15,000,000			15,000,000
Accrued expenses		4,072,007		4,827,042		4,122,442			6,072,020
Other liabilities		1,371,653		2,241,003		842,180			1,102,678
Total liabilities		89,417,938		88,559,751		134,207,981			131,721,280

Equity:
Common stock2		35,000		—
Common stock¹						35,000			35,000
Treasury stock, at cost²						(5,509,869	)		(5,463,535	)
Additional paid-in capital		32,296,455		—		33,204,129			33,119,125
Accumulated other comprehensive earnings, net of tax		2,048,763		1,154,175
Accumulated other comprehensive (loss), net of tax						(7,245,164	)		(8,841,517	)
Retained earnings		32,711,173		32,446,035		45,166,018			43,701,233
Less: Unearned Employee Stock Ownership Plan shares at cost3		(3,349,964)		—		(2,051,585	)		(2,109,375	)
Total equity		63,741,427		33,600,210		63,598,529			60,440,931
Total liabilities and equity	$	153,159,365	$	122,159,961	$	197,806,510		$	192,162,211



	For the Three-Months Ended
	September 30,
	2017		2016
Net premiums earned	$	11,191,448	$	10,848,363
Net investment income		688,134		663,111
Net realized investment (losses) gains		(1,833)		93,561
Other-than-temporary impairment losses		—		(212,731)
Other income		48,667		28,058
Consolidated revenues		11,926,416		11,420,362
Losses and settlement expenses		8,063,401		6,154,162
Policy acquisition costs and other operating expenses		4,344,129		4,254,640
Interest expense on debt		64,810		48,563
General corporate expenses		183,540		137,109
Total expenses		12,655,880		10,594,474
(Loss) earnings before income taxes		(729,464)		825,888
Total income tax (benefit) expense		(380,681)		130,920
Net (loss) earnings	$	(348,783)	$	694,968

Other comprehensive earnings, net of tax		297,680		93,301
Comprehensive (loss) earnings	$	(51,103)	$	788,269

(Loss) earnings per share1:
Basic:
Basic net (loss) earnings per share		$ (0.11)		$ 0.22
Diluted:
Diluted net (loss) earnings per share		$ (0.11)		$ 0.22

Weighted average number of common shares outstanding2:
Basic		3,160,892		3,150,000
Diluted		3,160,892		3,150,000

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☒	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~



	For the Nine-Months Ended				*For the Three-Months Ended*
	September 30,				*March 31,*
	2017		2016		*2023*			*2022*
Net premiums earned	$	32,740,312	$	31,694,591	$	17,801,297		$	16,016,677
Net investment income		1,849,421		1,433,005		1,209,415			917,081
Net realized investment gains		442,945		231,779
Other-than-temporary impairment losses		(57,316)		(212,731)
Net realized investment (losses) gains						(75,565	)		207,585
Net unrealized gains (losses) on equity securities						639,418			(1,292,692	)
Other income		197,647		103,919		45,836			159,431
Consolidated revenues		35,173,009		33,250,563		19,620,401			16,008,082
Losses and settlement expenses		21,527,043		18,711,078		11,047,681			10,195,201
Policy acquisition costs and other operating expenses		12,799,079		11,797,914		6,349,581			5,772,400
Interest expense on debt		174,349		140,185		45,400			61,011
General corporate expenses		451,660		336,581		193,674			189,415
Total expenses		34,952,131		30,985,758		17,636,336			16,218,027
Earnings before income taxes		220,878		2,264,805
Total income tax (benefit) expense		(44,260)		679,270
Net earnings	$	265,138	$	1,585,535
Earnings (loss) before income taxes						1,984,065			(209,945	)
Total income tax expense (benefit)						405,520			(49,805	)
Net earnings (loss)					$	1,578,545		$	(160,140	)

Other comprehensive earnings, net of tax		894,588		1,912,733
Comprehensive earnings	$	1,159,726	$	3,498,268
Other comprehensive earnings (loss), net of tax						1,596,353			(4,969,069	)
Comprehensive earnings (loss)					$	3,174,898		$	(5,129,209	)

Earnings per share1:
Earnings per share:
Basic:
Basic net earnings per share		$ 0.08		$ 0.50
Basic net earnings (loss) per share					$	0.54		$	(0.05	)
Diluted:
Diluted net earnings per share		$ 0.08		$ 0.50
Diluted net earnings (loss) per share						0.53		$	(0.05	)

Weighted average number of common shares outstanding2:
Weighted average number of common shares outstanding:
Basic		3,154,992		3,150,000		2,942,659			3,060,208
Diluted		3,154,992		3,150,000		2,956,273			3,072,176

	*Common stock*		*Treasury stock*			*Unearned ESOP*			*Additional paid-in capital*			*Retained earnings*			*Accumulated other comprehensive earnings (loss)*			*Total equity*
Balance, January 1, 2022	$	35,000	$	(3,155,399	)	$	(2,343,745	)	$	32,965,136		$	44,282,895		$	2,920,027		$	74,703,914
Purchase of treasury stock		—		(25,574	)		—			—			—			—			(25,574	)
Net loss		—		—			—			—			(160,140	)		—			(160,140	)
Other comprehensive loss, net of tax		—		—			—			—			—			(4,969,069	)		(4,969,069	)
Restricted stock unit expense		—		58,481	1		—			(13,977	)		—			—			44,505
ESOP compensation expense		—		—			57,790			38,804			—			—			96,594
Balance, March 31, 2022	$	35,000	$	(3,122,492	)	$	(2,285,955	)	$	32,989,963		$	44,122,755		$	(2,049,042	)	$	69,690,229



	Nine-Month Periods Ended September 30,
	2017		2016
Cash flows from operating activities:
Net earnings	$	265,138	$	1,585,535
Adjustments to reconcile net earnings to net cash provided
by (used in) operating activities
Net realized investment gains		(442,945)		(231,779)
Other-than-temporary impairment losses		57,316		212,731
Depreciation		628,778		597,247
Deferred income tax		138,384		147,071
Amortization of bond premium and discount		228,760		171,148
Change in:
Accrued investment income		(191,794)		80,924
Premiums and reinsurance balances receivable (net)		(739,651)		(1,119,734)
Reinsurance balances payable		69,210		398,674
Ceded unearned premiums		(26,376)		(225,864)
Reinsurance balances recoverable		474,459		3,869,799
Deferred policy acquisition costs		(393,189)		(296,711)
Accrued expenses		(755,035)		91,450
Unpaid losses and settlement expenses		(265,388)		(3,881,498)
Unearned premiums		2,011,562		1,748,012
Current federal income tax		(779,648)		511,995
Other		343,091		505,701
Net cash provided by operating activities		622,672		4,164,701
Cash flows from investing activities:
Purchases of:
Fixed maturity securities, available-for-sale		(28,002,993)		(9,803,432)
Common stocks, available-for-sale		(5,900,497)		(388,740)
Preferred stock, available-for-sale		(638,922)		(1,477,320)
Property and equipment		(422,364)		(818,476)
Property held for investment		(710,082)		(1,628,344)
Proceeds from sales, maturities and calls of:
Fixed maturity securities, available-for-sale		5,670,040		9,827,239
Common stocks, available-for-sale		2,154,214		1,590,088
Preferred stock, available-for-sale		55,199		—
Property and equipment		967		98,049
Net cash (used in) investing activities		(27,794,438)		(2,600,936)
Cash flows from financing activities:
Net proceeds received from issuance of shares of common stock and ESOP expense		28,981,491		—
Proceeds from loan		3,499,149		500,000
Proceeds from sale leaseback		—		777,643
Repayments of borrowed funds		(2,831,961)		(561,926)
Demutualization costs		—		(829,887)
Net cash provided by (used in) financing activities		29,648,679		(114,170)
Net increase in cash and cash equivalents		2,476,913		1,449,595
Cash and cash equivalents at beginning of year		4,376,847		2,179,511
Cash and cash equivalents at end of period	$	6,853,760	$	3,629,106
Supplemental information:
Federal income tax paid	$	600,000	$	—
Interest paid		141,098		62,980

	*Three-Month Periods Ended March 31,*
	*2023*			*2022*
Cash flows from operating activities:
Net earnings (loss)	$	1,578,545		$	(160,140	)
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities
Net realized investment losses (gains)		75,565			(207,585	)
Net unrealized (gains) losses on equity securities		(639,418	)		1,292,692
Depreciation		173,491			159,695
Deferred income tax		267,226			(234,026	)
Amortization of bond premium and discount		29,821			62,566
Stock-based compensation expense		142,794			141,098
Change in:
Accrued investment income		509			(67,148	)
Premiums and reinsurance balances receivable		(506,948	)		(210,325	)
Ceded unearned premiums		143,200			19,022
Reinsurance balances payable		(1,123,875	)		(864,638	)
Reinsurance balances recoverable		(843,357	)		(1,567,475	)
Deferred policy acquisition costs		(565,515	)		(617,926	)
Unpaid losses and settlement expenses		5,252,537			5,572,567
Unearned premiums		568,115			1,296,802
Accrued expenses		(1,949,578	)		(1,266,826	)
Current federal income tax		124,565			163,924
Other		(386,200	)		(118,260	)
Net cash provided by operating activities		2,341,477			3,394,017
Cash flows from investing activities:
Purchases of:
Fixed maturity securities		(5,960,521	)		(4,818,111	)
Common stocks		(807,926	)		(709,822	)
Preferred stocks		(78,716	)		(651,918	)
Other invested assets		(360,000	)		(100,000	)
Property held for investment		(358,210	)		(402,375	)
Property and equipment		(160,191	)		(170,989	)
Proceeds from sales, maturities and calls of:
Fixed maturity securities		3,830,441			2,445,125
Common stocks		778,071			636,104
Preferred stocks		95,628			365,508
Other invested assets		8,557			9,209
Property and equipment		33			5,789
Net cash used in investing activities		(3,012,834	)		(3,391,480	)
Cash flows from financing activities:
Repayments of borrowed funds		—			(3,054	)
Purchase of treasury stock		(46,334	)		(25,574	)
Net cash used in financing activities		(46,334	)		(28,628	)
Net decrease in cash and cash equivalents		(717,691	)		(26,091	)
Cash and cash equivalents at beginning of year		3,139,986			4,606,378
Cash and cash equivalents at end of period	$	2,422,295		$	4,580,287
Supplemental information:
Interest paid	$	39,500		$	59,900


	*Three-Months Ended March 31,*
	*2023*			*2022*
Beginning balance	$	(8,841,517	)	$	2,920,027

Other comprehensive earnings (loss) before reclassification		1,564,342			(4,961,385	)
Amount reclassified from accumulated other comprehensive earnings (loss)		32,011			(7,684	)
Net current period other comprehensive earnings (loss)		1,596,353			(4,969,069	)
Ending balance	$	(7,245,164	)	$	(2,049,042	)



	Three-Month Periods Ended September 30,
	2017						2016
	Pre-tax		Tax		After-tax		Pre-tax		Tax		After-tax
Other comprehensive earnings (loss), net of tax
Unrealized gains and losses on investments:
Unrealized holding (losses) gains arising during the period	$	449,199	$	(152,728)	$	296,471	$	22,196	$	(7,547)	$	14,649
Reclassification adjustment for (gains) losses included in net earnings		1,833		(624)		1,209		119,170		(40,518)		78,652
Total other comprehensive (loss) earnings	$	451,032	$	(153,352)	$	297,680	$	141,366	$	(48,065)	$	93,301

*Amounts Reclassified from*
*Accumulated Other Comprehensive Earnings*
	*Three-Month Periods Ended*
Details about Accumulated Other	*March 31,*						*Affected Line Item in the Statement*
Comprehensive Earnings Component	*2023*			*2022*			*where Net Earnings is Presented*
Unrealized losses (gains) on AFS investments:
	$	40,520		$	(9,727	)	Net realized investment losses (gains)
		(8,509	)		2,043		Income tax expense (benefit)
Total reclassification adjustment, net of tax	$	32,011		$	(7,684	)



Amounts Reclassified from
Accumulated Other Comprehensive Earnings
Details about Accumulated Other	Three-Months Ended September 30,				Nine-Month Periods Ended September 30,				Affected Line Item in the Statement
Comprehensive Earnings Component	2017		2016		2017		2016		where Net Earnings is Presented
Unrealized gains (losses) on AFS investments:
	$	1,833	$	(93,561)	$	(442,945)	$	(231,779)	Net realized investment gains
		—		212,731		57,316		212,731	Other-than-temporary impairment losses
		(624)		(40,518)		131,113		6,476	Income tax expense
Total reclassification adjustment, net of tax	$	1,209	$	78,652	$	(254,516)	$	(12,572)

					*Gross Unrealized*
	*Amortized Cost*		*Fair Value*		*Gains*		*Losses*
2023
Fixed maturity securities:
U.S. Treasury	$	1,352,511	$	1,270,102	$	—	$	(82,409	)
MBS/ABS/CMBS		42,847,960		40,259,680		94,625		(2,682,905	)
Corporate		41,385,970		37,979,132		99,207		(3,506,045	)
Municipal		20,757,963		17,675,339		138,836		(3,221,460	)
Redeemable preferred stock		308,444		297,584		—		(10,860	)
Total fixed maturity securities	$	106,652,848	$	97,481,837	$	332,668	$	(9,503,679	)

					*Gross Unrealized*
	*Amortized Cost*		*Fair Value*		*Gains*		*Losses*
2022
Fixed maturity securities:
U.S. Treasury	$	1,352,752	$	1,252,960	$	—	$	(99,792	)
MBS/ABS/CMBS		41,858,596		38,803,341		51,477		(3,106,732	)
Corporate		39,716,139		35,602,055		38,867		(4,152,951	)
Municipal		21,437,389		17,541,694		78,117		(3,973,812	)
Redeemable preferred stock		215,805		188,921		—		(26,884	)
Total fixed maturity securities	$	104,580,681	$	93,388,971	$	168,461	$	(11,360,171	)



	Cost or				Gross Unrealized
	Amortized Cost		Fair Value		Gains		Losses
2017
Fixed maturity securities:
U.S. treasury	$	1,346,253	$	1,343,760	$	1,912	$	(4,405)
MBS/ABS/CMBS		29,887,277		29,917,463		216,031		(185,845)
Corporate		30,546,761		31,657,013		1,128,163		(17,911)
Municipal		23,287,044		24,122,148		870,229		(35,125)
Total fixed maturity securities		85,067,335		87,040,384		2,216,335		(243,286)
Equity securities:
Common stocks		10,247,724		11,264,700		1,024,776		(7,800)
Preferred stocks		3,670,999		3,785,161		142,736		(28,574)
Total equity securities		13,918,723		15,049,861		1,167,512		(36,374)
Total AFS securities	$	98,986,058	$	102,090,245	$	3,383,847	$	(279,660)



	For the Nine-Months Ended Ended September 30,
							Net realized
	Proceeds		Gains		Losses		gain
2017
Fixed maturity securities	$	5,670,040	$	29,328	$	(21)	$	29,307
Common stocks		2,154,214		415,471		(2,752)		412,719
Preferred stocks		55,199		919		—		919
2016
Fixed maturity securities	$	9,827,239	$	155,428	$	(3,732)	$	151,696
Equity securities	$	1,590,088	$	80,083	$	—	$	80,083

	*For the Three-Months Ended March 31,*
								*Net Realized*
	*Proceeds*		*Gains*		*Losses*			*Gains (Losses)*
2023
Fixed maturity securities	$	3,830,441	$	—	$	(40,520	)	$	(40,520	)
Common stocks		778,071		126,001		(185,458	)		(59,457	)
Preferred stocks		95,628		24,412		—			24,412
2022
Fixed maturity securities	$	2,445,125	$	9,727	$	—		$	9,727
Common stocks		636,104		204,190		(8,070	)		196,120
Preferred stocks		365,508		7,745		(6,007	)		1,738



	September 30, 2017						December 31, 2016
			12 Mos						12 Mos
	< 12 Mos.		& Greater		Total		< 12 Mos.		& Greater		Total
U.S. Treasury
Fair value	$	995,313	$	—	$	995,313	$	993,576	$	—	$	993,576
Cost or Amortized cost		999,718		—		999,718		999,520		—		999,520
Unrealized Loss		(4,405)		—		(4,405)		(5,944)		—		(5,944)

MBS/ABS/CMBS
Fair value		9,212,756		2,075,299		11,288,055		10,712,987		322,641		11,035,628
Cost or Amortized cost		9,316,739		2,157,161		11,473,900		10,968,840		323,901		11,292,741
Unrealized Loss		(103,983)		(81,862)		(185,845)		(255,853)		(1,260)		(257,113)

Corporate
Fair value		1,571,361		1,983,352		3,554,713		5,476,442		984,115		6,460,557
Cost or Amortized cost		1,574,106		1,998,518		3,572,624		5,552,624		999,376		6,552,000
Unrealized Loss		(2,745)		(15,166)		(17,911)		(76,182)		(15,261)		(91,443)

Municipal
Fair value		1,396,750		858,505		2,255,255		2,995,362		—		2,995,362
Cost or Amortized cost		1,406,640		883,740		2,290,380		3,130,204		—		3,130,204
Unrealized Loss		(9,890)		(25,235)		(35,125)		(134,842)		—		(134,842)

Subtotal, fixed income
Fair value		13,176,180		4,917,156		18,093,336		20,178,367		1,306,756		21,485,123
Cost or Amortized cost		13,297,203		5,039,419		18,336,622		20,651,188		1,323,277		21,974,465
Unrealized Loss		(121,023)		(122,263)		(243,286)		(472,821)		(16,521)		(489,342)

Common Stock
Fair value		647,000		—		647,000		—		445,872		445,872
Cost or Amortized cost		654,800		—		654,800		—		479,801		479,801
Unrealized Loss		(7,800)		—		(7,800)		—		(33,929)		(33,929)

Preferred Stock
Fair value		643,660		425,875		1,069,535		2,328,345		—		2,328,345
Cost or Amortized cost		662,025		436,084		1,098,109		2,460,791		—		2,460,791
Unrealized Loss		(18,365)		(10,209)		(28,574)		(132,446)		—		(132,446)

Total
Fair value		14,466,840		5,343,031		19,809,871		22,506,712		1,752,628		24,259,340
Cost or amortized cost		14,614,028		5,475,503		20,089,531		23,111,979		1,803,078		24,915,057
Unrealized Loss	$	(147,188)	$	(132,472)	$	(279,660)	$	(605,267)	$	(50,450)	$	(655,717)

	*March 31, 2023*									*December 31, 2022*
				*12 Months*									*12 Months*
	*< 12 Months*			*& Greater*			*Total*			*< 12 Months*			*& Greater*			*Total*
Fixed Maturity Securities:
U.S. Treasury
Fair value	$	—		$	1,270,102		$	1,270,102		$	615,367		$	637,594		$	1,252,961
Amortized cost		—			1,352,510			1,352,510			652,424			700,329			1,352,753
Unrealized loss		—			(82,409	)		(82,409	)		(37,057	)		(62,735	)		(99,792	)
MBS/ABS/CMBS
Fair value		8,486,970			23,680,223			32,167,193			21,199,819			12,833,310			34,033,129
Amortized cost		8,765,241			26,084,857			34,850,098			22,564,779			14,575,082			37,139,861
Unrealized loss		(278,271	)		(2,404,634	)		(2,682,905	)		(1,364,960	)		(1,741,772	)		(3,106,732	)
Corporate
Fair value		17,022,608			16,761,188			33,783,797			27,688,403			5,829,396			33,517,799
Amortized cost		17,757,398			19,532,444			37,289,842			30,584,890			7,085,860			37,670,750
Unrealized loss		(734,790	)		(2,771,256	)		(3,506,045	)		(2,896,487	)		(1,256,464	)		(4,152,951	)
Municipal
Fair value		2,456,155			10,316,853			12,773,008			11,502,050			2,079,831			13,581,881
Amortized cost		2,660,564			13,333,904			15,994,468			14,590,996			2,964,697			17,555,693
Unrealized loss		(204,409	)		(3,017,050	)		(3,221,460	)		(3,088,946	)		(884,866	)		(3,973,812	)
Redeemable preferred stock
Fair value		297,584			—			297,584			188,921			—			188,921
Amortized cost		308,444			—			308,444			215,805			—			215,805
Unrealized loss		(10,860	)		—			(10,860	)		(26,884	)		—			(26,884	)
Total
Fair value		28,263,317			52,028,366			80,291,683			61,194,560			21,380,131			82,574,691
Amortized cost		29,491,647			60,303,715			89,795,362			68,608,894			25,325,968			93,934,862
Unrealized loss		(1,228,329	)	$	(8,275,349	)	$	(9,503,679	)	$	(7,414,334	)	$	(3,945,837	)	$	(11,360,171	)

			*Significant*
	*Quoted in Active*		*Other*		*Significant*
	*Markets for*		*Observable*		*Unobservable*
	*Identical Assets*		*Inputs*		*Inputs*
	*(Level 1)*		*(Level 2)*		*(Level 3)*		*Total*
AFS securities
Fixed maturity securities
U.S. treasury	$	1,270,102	$	—	$	—	$	1,270,102
MBS/ABS/CMBS		—		40,259,680		—		40,259,680
Corporate		—		37,979,132		—		37,979,132
Municipal		—		17,675,339		—		17,675,339
Redeemable preferred stocks		—		297,584		—		297,584
Total fixed maturity securities		1,270,102		96,211,735		—		97,481,837
Equity securities
Common stocks		20,957,988		—		—		20,957,988
Perpetual preferred stocks		—		2,858,411		—		2,858,411
Total equity securities		20,957,988		2,858,411		—		23,816,399
Total marketable investments measured at fair value	$	22,228,089	$	99,070,147	$	—	$	121,298,236



			Significant
	Quoted in Active		Other		Significant
	Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
AFS securities
Fixed maturity securities
U.S. treasury	$	1,343,760	$	—	$	—	$	1,343,760
MBS/ABS/CMBS		—		29,917,463		—		29,917,463
Corporate		—		31,657,013		—		31,657,013
Municipal		—		24,122,148		—		24,122,148
Total fixed maturity securities		1,343,760		85,696,624		—		87,040,384
Equity securities
Common stocks		11,264,700		—		—		11,264,700
Preferred stocks		—		3,785,161		—		3,785,161
Total equity securities		11,264,700		3,785,161		—		15,049,861
Total AFS securities	$	12,608,460	$	89,481,785	$	—	$	102,090,245

	*RSUs*			*Weighted Average Grant Date Fair Value*
Nonvested at December 31, 2022	$	273,591		$	15.72
Granted		—			—
Vested		(52,850	)		13.93
Nonvested at March 31, 2023	$	220,741		$	16.22

	●	·infection rates, severity of pandemics, including COVID-19 and its variants, civil unrest and their effects on our business operations and claims activity, and any adverse impact to our insureds, brokers, agents, and employees;
	●	our debt and debt service requirements which may restrict our operation and financial flexibility, as well as imposing unfavorable interest and financing costs;
	●	our ability to maintain our existing credit facilities or obtain satisfactory new credit facilities or other borrowings;
	●	changes to our assessment as to whether it is more likely than not that we will be required to sell, or have the intent to sell, available for sale or fixed maturity investments before their anticipated recovery;
	●	our ability to implement business strategies, including our acquisition strategy and expansion plans;
	●	our acquisition strategy many not be successful in locating advantageous targets;
	●	our ability to successfully integrate any assets, liabilities, customers, systems and management personnel we acquire into our operations and our ability to realize related revenue synergies, strategic gains, and cost savings many be significantly harder to achieve, if at all, or may take longer to achieve;
	●	potential goodwill impairment charges, future impairment charges and fluctuations in the fair values of reporting units or of assets in the event projected financial results are not achieved within expected time frames;
	●	disruptions and negative investor sentiment caused by bank failures during 2023;


	For the nine months
	ended September 30,
(In thousands)	2017		2016
Revenues
Total premiums earned	$	32,740	$	31,695
Investment income, net of investment expense		1,849		1,433
Realized investment gains (losses), net		386		19
Other income		198		104
Total revenues	$	35,173	$	33,251
Summarized components of net earnings
Underwriting (loss) income¹	$	(1,586)	$	1,186
Investment income, net of investment expense		1,849		1,433
Realized investment gains, net		386		19
Other income		198		104
General corporate expenses		452		337
Interest expense		174		140
Earnings, before income taxes		221		2,265
Income tax (benefit) expense		(44)		679
Net earnings	$	265	$	1,586
Total other comprehensive earnings		895		1,912
Comprehensive earnings	$	1,160	$	3,498


	For the nine months ended September 30,
	2017		2016
Non-GAAP Ratios:
Losses and settlement expense ratio1		65.75%		59.04%
Expense ratio2		39.09%		37.22%
Combined ratio3		104.84%		96.26%


	For the three months
	ended September 30,
(In thousands)	2017		2016
Revenues
Total premiums earned	$	11,191	$	10,849
Investment income, net of investment expense		688		663
Realized investment gains (losses), net		(2)		(119)
Other income		49		28
Total revenues	$	11,926	$	11,421
Summarized components of net earnings (loss)
Underwriting (loss) income¹	$	(1,216)	$	440
Investment income, net of investment expense		688		663
Realized investment (losses), net		(2)		(119)
Other income		49		28
General corporate expenses		184		137
Interest expense		65		49
Loss (earnings), before income taxes		(730)		826
Income tax (benefit) expense		(381)		131
Net (loss) earnings	$	(349)	$	695
Total other comprehensive earnings		298		93
Comprehensive (loss) earnings	$	(51)	$	788


	Accident Year Data
(In thousands)	2012		2013		2014		2015			2016
As originally estimated	$	19,276	$	22,064	$	22,267	$	24,293	$	25,619
As estimated at September 30, 2017		19,264		22,220		23,685		20,001		24,555
Net cumulative redundancy (deficiency)	$	12	$	(156)	$	(1,417)	$	4,292	$	1,065
% redundancy (deficiency)		0.1%		(0.7)%		(6.4)%		17.7%		4.2%


	Nine Months Ended September 30,
(In thousands)	2017		2016
Net cash provided by operating activities	$	623	$	4,165
Net cash (used in) investing activities		(27,794)		(2,601)
Net cash provided by (used in) financing activities		29,649		(114)
Net increase (decrease) in cash and cash equivalents	$	2,478	$	1,450


	Payments due by period
(In thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Estimated gross loss and settlement expense payments	$	52,552	$	20,758	$	20,600	$	7,095	$	4,099
Debt obligations		4,155		75		316		3,764		—
Capital lease obligations		1,019		126		863		30		—
Home office mortgage		-		-		—		—		—
Operating lease obligations		192		48		144		—		—
Total	$	57,918	$	21,007	$	21,924	$	10,889	$	4,099