| Summary of Significant Accounting Policies | 12 Months Ended |
| Dec. 31, 2015 |
| Notes to Financial Statements | |
| NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES Nature of Business Unico American Corporation is an insurance holding
company that underwrites property and casualty insurance through its insurance company subsidiary; provides property, casualty
and health insurance through its agency subsidiaries; and provides insurance premium financing and membership association services
through its other subsidiaries. Unico American Corporation is referred to herein as the "Company" or "Unico,"
and such references include both the corporation and its subsidiaries, all of which are wholly owned. Unico was incorporated under
the laws of Nevada in 1969. Principles of Consolidation The accompanying consolidated financial statements
include the accounts of Unico American Corporation and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation. Basis of Presentation The consolidated financial statements have been
prepared in conformity with U.S. generally accepted accounting principles (GAAP). As described in Note 14, the Company's insurance
subsidiary also files financial statements with regulatory agencies prepared on a statutory basis of accounting that differs from
GAAP. Use of Estimates in the Preparation of the
Financial Statements The preparation of financial statements in conformity
with GAAP requires the Company to make estimates and assumptions that affect its reported amounts of assets and liabilities and
its disclosure of any contingent assets and liabilities at the date of its financial statements, as well as its reported amounts
of revenues and expenses during the reporting period. The most significant assumptions in the preparation of these consolidated
financial statements relate to losses and loss adjustment expenses. While every effort is made to ensure the integrity of such
estimates, actual results may differ. Investments All of the CompanyÂ’s fixed maturity investments
are classified as available-for-sale and are stated at fair value, with unrealized gains or losses, net of applicable deferred
income taxes, excluded from earnings and credited or charged to a separate component of equity. Although all of the Company's investments
are classified as available-for-sale and the Company may sell investment securities from time to time in response to economic and
market conditions, its investment guidelines place primary emphasis on buying and holding high-quality investments to maturity.
Interest income on fixed maturity investments and short-term investments is recognized on an accrual basis at each measurement
date and is included in net investment income in the CompanyÂ’s Consolidated Statements of Operations. The Company has a comprehensive portfolio
monitoring process to identify and evaluate each fixed income security whose carrying value may be other-than-temporarily
impaired. For each fixed income security in an unrealized loss position, the Company assesses whether it is more likely than
not that the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as
liquidity, contractual or regulatory purposes, or the credit quality of the underlying security. If a security meets this
criteria, the security's decline in fair value is considered other than temporary and is recorded as a net realized
investment loss in the Consolidated Statements of Operations and in the Consolidated Statements of Comprehensive Income
(Loss) based on the specific identification method. There were no realized investments gains (losses) from other than
temporary impairments for any of the periods presented in the accompanying Consolidated Statements of Operations. For each
fixed income security that the Company does not intend to sell or for which it is more likely than not that the Company would
not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the
impairment, if any, from the amount related to all other factors and reports the credit loss component in net realized
investment gains (losses). There was no credit loss component for any of the periods presented in the
accompanying Consolidated Statements of Operations. The unrealized gains from fixed maturities are reported as
“Accumulated other comprehensive income (loss),” which is a separate component of stockholders’ equity, net of
any deferred tax effect. Short-term investments include U.S. treasury
bills, a U.S. treasury money market fund, certificates of deposit and bank money market and savings accounts that are all highly
rated and redeemable within one year. Fair Value of Financial Instruments The Company employs a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value. The fair value of a financial instrument is the amount
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date (the exit price). Financial assets and financial liabilities recorded on the Consolidated Balance Sheets at
fair value are categorized based on the reliability of inputs to the valuation techniques. (See Note 4.) The Company has used the following methods and
assumptions in estimating its fair value disclosures:
Fixed
maturities:
1. Investment securities, excluding long-term
certificates of deposit – Fair values are obtained from a national quotation service.
2. Long-term certificates of deposit –
The carrying amounts reported at cost in the Consolidated Balance Sheets for these instruments approximate their fair values.
Cash
and short-term investments – The carrying amounts reported at cost in the Consolidated Balance Sheets approximate their fair
values given the short-term nature of these instruments.
Receivables,
net – The carrying amounts reported at cost in the Consolidated Balance Sheets approximate their fair values given the short-term
nature of these instruments.
Accrued
expenses and other liabilities – The carrying amounts reported at cost in the Consolidated Balance Sheets approximate the
fair values given the short-term nature of these instruments. Property and Equipment All property and equipment is
stated at cost less accumulated depreciation and amortization on the Consolidated Balance Sheets. The Company acquired an office building located
at 26050 Mureau Road, Calabasas, California, in September 2013. Leasehold improvements to
the structure are amortized over the shorter of the useful life of the leasehold improvements or the remaining years of the lease.
Improvements to the structure are amortized over the useful life of the improvements. Depreciation
on the Calabasas building is computed using the straight line method over 39 years. Depreciation on computed using the straight line method over
3 to 15 years. Amortization of leasehold improvements in the Calabasas building is being computed using the shorter of the useful
life of the leasehold improvements or the remaining years of the lease. Depreciation
on property and equipment located in Woodland Hills, California, is computed using straight line methods over 3 to 7 years. Amortization
of leasehold improvements on property located in Woodland Hills, California, is computed using the shorter of the useful life of
the leasehold improvements or the remaining years of the lease. Income Taxes The Company and its wholly owned subsidiaries
file consolidated federal and state income tax returns. Pursuant to the tax allocation agreement, the CompanyÂ’s wholly owned
subsidiaries, Crusader Insurance Company (Crusader) and American Acceptance Corporation (AAC), are allocated taxes or tax credits
in the case of losses, at current corporate rates based on their own taxable income or loss. The Company files income tax returns
under U.S. federal and various state jurisdictions. The Company is subject to examination by U.S. federal income tax authorities
for tax returns filed starting at taxable year 2012 and California state income tax authorities for tax returns filed starting
at taxable year 2011. There are no ongoing examinations of income tax returns by federal or state tax authorities. As of December 31, 2015, the Company had no
unrecognized tax benefits or liabilities. In addition, the Company had not accrued interest and penalties related to unrecognized
tax benefits or liabilities. However, if interest and penalties would need to be accrued related to unrecognized tax benefits or
liabilities, such amounts would be recognized as a component of federal income tax expense. As a California insurance company, Crusader
is obligated to pay a premium tax on direct written premium in all states that Crusader is admitted. Premium taxes are deferred
and amortized as the related premium is earned. The premium tax is in lieu of state franchise taxes and is not included in the
provision for state taxes. The provision for federal income taxes is computed
on the basis of income as reported for financial reporting purposes. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income
tax purposes, and are measured using the enacted tax rates and laws expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Income tax expense provisions increase or decrease in the same period
in which a change in tax rates is enacted. At each balance sheet date, management assesses
the need to establish a valuation allowance that reduces deferred tax assets when it is more-likely-than-not that any portion of
the deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon generating sufficient
taxable income of the appropriate character within the carryback and carryforward periods available under the tax law. Management
considers the reversal of deferred tax liabilities, projected future taxable income of an appropriate nature and tax-planning strategies
when making this assessment. Although realization is not assured, management believes that it is more likely-than-not that the
CompanyÂ’s deferred tax assets net of the valuation allowance will be realized. Earnings Per Share Basic earnings per share exclude the impact
of common share equivalents and are based upon the weighted average common shares outstanding. Diluted earnings per share utilize
the average market price per share when applying the treasury stock method in determining common share dilution. When outstanding
stock options are dilutive, they are treated as common share equivalents for purposes of computing diluted earnings per share and
represent the difference between basic and diluted weighted average shares outstanding. In loss periods, the options are excluded
from the calculation of diluted earnings per share, as the inclusion of such options would have an anti-dilutive effect. Revenue Recognition a. General Agency Operations Commissions
due the Company are recognized as income on the effective date of b. Insurance Company Operation Premium is earned on a pro-rata basis
over the terms of the policies. Premium applicable to the unexpired terms of policies in force are recorded as unearned premium.
The Company receives a commission on policies that are ceded to its reinsurers. This commission is considered earned on a pro-rata
basis over the terms of the policies. c. Insurance Premium Financing
Operations Premium finance interest may be charged
to policyholders who choose to finance insurance premium. Interest may be charged at rates that vary with the amount of premium
financed. Premium finance interest, if any, is recognized using a method that approximates the interest (actuarial) method. Other
charges and fees earned include late fees, returned check fees and payment processing fees that are earned when recorded. Losses and Loss Adjustment Expenses The liability
for unpaid losses and loss adjustment expenses is based upon the accumulation of individual case estimates for losses reported
prior to the close of the accounting period plus estimates based on experience and industry data for development of case estimates
and for incurred but unreported losses and loss adjustment expenses. There is
a high level of uncertainty inherent in the evaluation of the required loss and loss adjustment expense reserves for Crusader.
The long-tailed nature of liability claims and the volatility of jury awards exacerbate that uncertainty. Crusader records The ultimate cost of claims is dependent upon future events, the outcomes
of which are affected by many factors. CrusaderÂ’s claim reserving procedures and settlement philosophy, current and perceived social
and economic inflation, current and future court rulings and jury attitudes, improvements in medical technology, and many other
economic, scientific, legal, political, and social factors all can have significant effects on the ultimate costs of claims. Changes
in Company operations and management philosophy also may cause actual developments to vary from the past. Since the emergence and
disposition of claims are subject to uncertainties, the net amounts that will ultimately be paid to settle claims may vary significantly
from the estimated amounts provided for in the accompanying consolidated financial statements. Any adjustments to reserves are
reflected in the operating results of the periods in which they are made. Management believes that the Restricted
Funds Restricted funds are as follows:
Year ended December 31
2015 2014
Premium trust funds (1) $ 44,181 $ 112,008
Assigned to state agencies (2) 700,000 700,000
Total restricted funds $ 744,181 $ 812,008
(1) As required by law, the Company segregates
from its operating accounts the premium collected from insuredÂ’s that are payable to insurance companies into separate trust
accounts. These amounts are included in cash and short-term investments. Trust restrictions on cash and short-term investments
were $44,181 and $112,008 at December 31, 2015 and 2014, respectively.
(2) Included in fixed maturity investments are statutory deposits assigned to and held by the California
State Treasurer and the Insurance Commissioner of the State of Nevada. These deposits are required for writing certain lines of
business in California and for admission in states other than California. Deferred
Policy Acquisition Costs ASC Topic 944, “Financial Services –
Insurance,” establishes uniformity in the practice of determining costs related to the acquisition of new or renewal insurance
contracts that qualify for deferral. Policy acquisition costs consist of commissions, premium taxes, inspection fees and certain
other underwriting costs, which are related to the successful production of Crusader insurance policies. Policy acquisition costs
that are eligible for deferral are deferred and amortized as the related premium is earned
and are limited to their estimated realizable value Ceding commission applicable to the unexpired terms Reinsurance Crusader employs reinsurance to provide
greater diversification of business allowing management to control exposure to potential losses arising from large risks by reinsuring
certain levels of risk in various areas of exposure, to reduce the loss that may arise from catastrophes, and to provide additional
capacity for growth. Prepaid reinsurance premium and reinsurance receivables are reported as assets and represent ceded unearned
premium and reinsurance recoverable on both paid and unpaid losses and loss adjustment expenses, respectively. Amounts recoverable
from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. Crusader
evaluates each of its ceded reinsurance contracts at its inception to determine if there is sufficient risk transfer to allow the
contract to be accounted for as reinsurance under current accounting literature. As of December 31, 2015, all such ceded contracts
are accounted for as risk transfer reinsurance. Crusader evaluates and monitors the financial
condition of its reinsurers and factors such as collection periods, disputes, applicable coverage defenses and other factors to
assess the need for any allowance against anticipated reinsurance recoveries. No such allowance was considered necessary at December
31, 2015 or 2014. Segment Reporting ASC Topic 280, “Segment
Reporting,” establishes standards for the way information about operating segments are reported in financial statements.
The Company has identified its insurance company operation as its primary reporting segment. Revenues from this segment
comprised 91% of consolidated revenues for the year ended December 31, 2015, 90% of consolidated revenues for the year ended
December 31, 2014, and 89% of consolidated revenues for the year ended December 31, 2013. The CompanyÂ’s remaining
operations constitute a variety of specialty insurance services, each with unique characteristics and individually
insignificant to consolidated revenues. The insurance company operation is conducted
through Crusader, which as of December 31, 2015, was licensed as an admitted insurance carrier in the states of Arizona, California,
Nevada, Oregon, and Washington. Crusader is a multi-line property and casualty insurance company, which began transacting business
on January 1, 1985. For the year ended December 31, 2015, 98% of CrusaderÂ’s business was commercial multi-peril (CMP) insurance
policies. CMP policies provide a combination of property and liability coverage for businesses. Commercial property coverage insures
against loss or damage to buildings, inventory and equipment from natural disasters, including hurricanes, windstorms, hail, water,
explosions, severe winter weather, and other events such as theft and vandalism, fires and storms and financial loss due to business
interruption resulting from covered property damage. However, Crusader does not write earthquake coverage. Commercial liability
coverage insures against third party liability from accidents occurring on the insuredÂ’s premises or arising out of its operations,
such as injuries sustained from products sold or the operation of the insuredÂ’s premises. In addition to CMP policies, Crusader
also writes separate policies to insure commercial property and commercial liability risks on a mono-line basis. Revenues, income before income taxes and
assets by segment are as follows:
Year ended December 31
2015 2014 2013
Revenues
Insurance company operation $ 30,420,988 $ 27,466,597 $ 27,806,086
Other insurance operations 12,811,385 11,991,554 11,874,171
Intersegment eliminations (1) (9,967,734 ) (8,987,911 ) (8,549,365 )
Total other insurance operations 2,843,651 3,003,643 3,324,806
Total revenues $ 33,264,639 $ 30,470,240 $ 31,130,892
Income (loss) before income taxes
Insurance company operation $ 1,161,930 $ 3,552,323 $ 3,276,209
Other insurance operations (2,896,888 ) (2,255,818 ) (2,035,434 )
Total income (loss) before income taxes $ (1,734,958 ) $ 1,296,505 $ 1,240,775
Assets
Insurance company operation $ 118,482,261 $ 123,048,404 $ 118,996,312
Intersegment eliminations (2) (1,409,797 ) (1,657,750 ) (482,624 )
Total insurance company operation 117,072,464 121,390,654 118,513,688
Other insurance operations 23,097,971 14,624,915 14,339,500
Total assets $ 140,170,435 $ 136,015,569 $ 132,853,188 (1) Intersegment
revenue eliminations reflect commissions paid by Crusader to Unifax Insurance Systems, Inc. (Unifax), a wholly owned subsidiary
of Unico. (2) Intersegment
asset eliminations reflect the elimination of Crusader receivables from Unifax and Unifax payables to Crusader. Concentration of Risks In 2015 and 2014, 99.5% and 99.8%, respectively,
of CrusaderÂ’s direct written premium was derived from California. In 2015, approximately 39% and 40% of the $960,670 commission
income from the CompanyÂ’s health insurance program was from Guardian Life Insurance Company of America dental and group life
plan programs and the Blue Shield Care Trust, health and life insurance programs, respectively. In 2014, approximately 38% and
39% of the $1,082,412 commission income from the CompanyÂ’s health insurance program was from Guardian Life Insurance Company
of America dental and group life plan programs and the Blue Shield Care Trust, health and life insurance programs, respectively. CrusaderÂ’s reinsurance recoverable
on paid and unpaid losses and loss adjustment expenses is as follows:
Name of Reinsurer A.M. Best Rating Amount Recoverable as of December 31, 2015 Amount Recoverable as of December 31, 2014
Platinum Underwriters Reinsurance, Inc. A $ 5,835,678 $ 2,880,171
Hannover Ruckversicherungs AG A+ 2,813,283 1,914,641
Partners Reinsurance Company of the U.S. A (30 ) (30 )
General Reinsurance Corporation A++ (29 ) (29 )
TOA Reinsurance A+ 1,739,410 544,535
QBE Reinsurance Corporation A (28 ) 24,494
Total $ 10,388,284 $ 5,363,782 Stock-Based Compensation Share-based compensation expense for all share-based
payment awards granted or modified on or after January 1, 2006, is based on the grant-date fair value estimated in accordance
with the provisions of ASC 718, “Compensation - Stock Compensation” using the modified prospective transition method. Recently Issued Accounting Standards In May 2015, the Financial Accounting
Standards Board issued Accounting Standards Update (ASU) 2015-09 “Disclosures About Short-Duration Contracts.” The
objective of this ASU is to increase transparency about significant estimates in unpaid losses and loss adjustment expenses and
provide additional information about amount, timing and uncertainty of cash flows related to unpaid losses and loss adjustment
expenses. ASU 2015-09 is not expected to have any impact on the CompanyÂ’s consolidated financial statements. The disclosure
mandated by ASU 2015-09 will become effective for annual and quarterly reporting periods ended on and after December 31, 2016. |
| Nature of Business | Nature of Business Unico American Corporation is an insurance holding
company that underwrites property and casualty insurance through its insurance company subsidiary; provides property, casualty
and health insurance through its agency subsidiaries; and provides insurance premium financing and membership association services
through its other subsidiaries. Unico American Corporation is referred to herein as the "Company" or "Unico,"
and such references include both the corporation and its subsidiaries, all of which are wholly owned. Unico was incorporated under
the laws of Nevada in 1969. |
| Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements
include the accounts of Unico American Corporation and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation. |
| Basis of Presentation | Basis of Presentation The consolidated financial statements have been
prepared in conformity with U.S. generally accepted accounting principles (GAAP). As described in Note 14, the Company's insurance
subsidiary also files financial statements with regulatory agencies prepared on a statutory basis of accounting that differs from
GAAP. |
| Use of Estimtes in the Preparation of the Financial Statements | Use of Estimates in the Preparation of the
Financial Statements The preparation of financial statements in conformity
with GAAP requires the Company to make estimates and assumptions that affect its reported amounts of assets and liabilities and
its disclosure of any contingent assets and liabilities at the date of its financial statements, as well as its reported amounts
of revenues and expenses during the reporting period. The most significant assumptions in the preparation of these consolidated
financial statements relate to losses and loss adjustment expenses. While every effort is made to ensure the integrity of such
estimates, actual results may differ. |
| Investments | Investments All of the CompanyÂ’s fixed maturity investments
are classified as available-for-sale and are stated at fair value, with unrealized gains or losses, net of applicable deferred
income taxes, excluded from earnings and credited or charged to a separate component of equity. Although all of the Company's investments
are classified as available-for-sale and the Company may sell investment securities from time to time in response to economic and
market conditions, its investment guidelines place primary emphasis on buying and holding high-quality investments to maturity.
Interest income on fixed maturity investments and short-term investments is recognized on an accrual basis at each measurement
date and is included in net investment income in the CompanyÂ’s Consolidated Statements of Operations. The Company has a comprehensive portfolio
monitoring process to identify and evaluate each fixed income security whose carrying value may be other-than-temporarily
impaired. For each fixed income security in an unrealized loss position, the Company assesses whether it is more likely than
not that the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as
liquidity, contractual or regulatory purposes, or the credit quality of the underlying security. If a security meets this
criteria, the security's decline in fair value is considered other than temporary and is recorded as a net realized
investment loss in the Consolidated Statements of Operations and in the Consolidated Statements of Comprehensive Income
(Loss) based on the specific identification method. There were no realized investments gains (losses) from other than
temporary impairments for any of the periods presented in the accompanying Consolidated Statements of Operations. For each
fixed income security that the Company does not intend to sell or for which it is more likely than not that the Company would
not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the
impairment, if any, from the amount related to all other factors and reports the credit loss component in net realized
investment gains (losses). There was no credit loss component for any of the periods presented in the
accompanying Consolidated Statements of Operations. The unrealized gains from fixed maturities are reported as
“Accumulated other comprehensive income (loss),” which is a separate component of stockholders’ equity, net of
any deferred tax effect. Short-term investments include U.S. treasury
bills, a U.S. treasury money market fund, certificates of deposit and bank money market and savings accounts that are all highly
rated and redeemable within one year. |
| Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company employs a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value. The fair value of a financial instrument is the amount
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date (the exit price). Financial assets and financial liabilities recorded on the Consolidated Balance Sheets at
fair value are categorized based on the reliability of inputs to the valuation techniques. (See Note 4.) The Company has used the following methods and
assumptions in estimating its fair value disclosures:
Fixed
maturities:
1. Investment securities, excluding long-term
certificates of deposit – Fair values are obtained from a national quotation service.
2. Long-term certificates of deposit –
The carrying amounts reported at cost in the Consolidated Balance Sheets for these instruments approximate their fair values.
Cash
and short-term investments – The carrying amounts reported at cost in the Consolidated Balance Sheets approximate their fair
values given the short-term nature of these instruments.
Receivables,
net – The carrying amounts reported at cost in the Consolidated Balance Sheets approximate their fair values given the short-term
nature of these instruments.
Accrued
expenses and other liabilities – The carrying amounts reported at cost in the Consolidated Balance Sheets approximate the
fair values given the short-term nature of these instruments. |
| Property and Equipment | Property and Equipment All property and equipment is
stated at cost less accumulated depreciation and amortization on the Consolidated Balance Sheets. The Company acquired an office building located
at 26050 Mureau Road, Calabasas, California, in September 2013. Leasehold improvements to
the structure are amortized over the shorter of the useful life of the leasehold improvements or the remaining years of the lease.
Improvements to the structure are amortized over the useful life of the improvements. Depreciation
on the Calabasas building is computed using the straight line method over 39 years. Depreciation on computed using the straight line method over
3 to 15 years. Amortization of leasehold improvements in the Calabasas building is being computed using the shorter of the useful
life of the leasehold improvements or the remaining years of the lease. Depreciation
on property and equipment located in Woodland Hills, California, is computed using straight line methods over 3 to 7 years. Amortization
of leasehold improvements on property located in Woodland Hills, California, is computed using the shorter of the useful life of
the leasehold improvements or the remaining years of the lease. |
| Income Taxes | Income Taxes The Company and its wholly owned subsidiaries
file consolidated federal and state income tax returns. Pursuant to the tax allocation agreement, the CompanyÂ’s wholly owned
subsidiaries, Crusader Insurance Company (Crusader) and American Acceptance Corporation (AAC), are allocated taxes or tax credits
in the case of losses, at current corporate rates based on their own taxable income or loss. The Company files income tax returns
under U.S. federal and various state jurisdictions. The Company is subject to examination by U.S. federal income tax authorities
for tax returns filed starting at taxable year 2012 and California state income tax authorities for tax returns filed starting
at taxable year 2011. There are no ongoing examinations of income tax returns by federal or state tax authorities. As of December 31, 2015, the Company had no
unrecognized tax benefits or liabilities. In addition, the Company had not accrued interest and penalties related to unrecognized
tax benefits or liabilities. However, if interest and penalties would need to be accrued related to unrecognized tax benefits or
liabilities, such amounts would be recognized as a component of federal income tax expense. As a California insurance company, Crusader
is obligated to pay a premium tax on direct written premium in all states that Crusader is admitted. Premium taxes are deferred
and amortized as the related premium is earned. The premium tax is in lieu of state franchise taxes and is not included in the
provision for state taxes. The provision for federal income taxes is computed
on the basis of income as reported for financial reporting purposes. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income
tax purposes, and are measured using the enacted tax rates and laws expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Income tax expense provisions increase or decrease in the same period
in which a change in tax rates is enacted. At each balance sheet date, management assesses
the need to establish a valuation allowance that reduces deferred tax assets when it is more-likely-than-not that any portion of
the deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon generating sufficient
taxable income of the appropriate character within the carryback and carryforward periods available under the tax law. Management
considers the reversal of deferred tax liabilities, projected future taxable income of an appropriate nature and tax-planning strategies
when making this assessment. Although realization is not assured, management believes that it is more likely-than-not that the
CompanyÂ’s deferred tax assets net of the valuation allowance will be realized. |
| Earnings Per Share | Earnings Per Share Basic earnings per share exclude the impact
of common share equivalents and are based upon the weighted average common shares outstanding. Diluted earnings per share utilize
the average market price per share when applying the treasury stock method in determining common share dilution. When outstanding
stock options are dilutive, they are treated as common share equivalents for purposes of computing diluted earnings per share and
represent the difference between basic and diluted weighted average shares outstanding. In loss periods, the options are excluded
from the calculation of diluted earnings per share, as the inclusion of such options would have an anti-dilutive effect. |
| Revenue Recognition | Revenue Recognition a. General Agency Operations Commissions
due the Company are recognized as income on the effective date of b. Insurance Company Operation Premium is earned on a pro-rata basis
over the terms of the policies. Premium applicable to the unexpired terms of policies in force are recorded as unearned premium.
The Company receives a commission on policies that are ceded to its reinsurers. This commission is considered earned on a pro-rata
basis over the terms of the policies. c. Insurance Premium Financing
Operations Premium finance interest may be charged
to policyholders who choose to finance insurance premium. Interest may be charged at rates that vary with the amount of premium
financed. Premium finance interest, if any, is recognized using a method that approximates the interest (actuarial) method. Other
charges and fees earned include late fees, returned check fees and payment processing fees that are earned when recorded. |
| Loss and Loss Adjustment Expenses | Losses and Loss Adjustment Expenses The liability
for unpaid losses and loss adjustment expenses is based upon the accumulation of individual case estimates for losses reported
prior to the close of the accounting period plus estimates based on experience and industry data for development of case estimates
and for incurred but unreported losses and loss adjustment expenses. There is
a high level of uncertainty inherent in the evaluation of the required loss and loss adjustment expense reserves for Crusader.
The long-tailed nature of liability claims and the volatility of jury awards exacerbate that uncertainty. Crusader records The ultimate cost of claims is dependent upon future events, the outcomes
of which are affected by many factors. CrusaderÂ’s claim reserving procedures and settlement philosophy, current and perceived social
and economic inflation, current and future court rulings and jury attitudes, improvements in medical technology, and many other
economic, scientific, legal, political, and social factors all can have significant effects on the ultimate costs of claims. Changes
in Company operations and management philosophy also may cause actual developments to vary from the past. Since the emergence and
disposition of claims are subject to uncertainties, the net amounts that will ultimately be paid to settle claims may vary significantly
from the estimated amounts provided for in the accompanying consolidated financial statements. Any adjustments to reserves are
reflected in the operating results of the periods in which they are made. Management believes that the |
| Restricted Funds | Restricted
Funds Restricted funds are as follows:
Year ended December 31
2015 2014
Premium trust funds (1) $ 44,181 $ 112,008
Assigned to state agencies (2) 700,000 700,000
Total restricted funds $ 744,181 $ 812,008
(1) As required by law, the Company segregates
from its operating accounts the premium collected from insuredÂ’s that are payable to insurance companies into separate trust
accounts. These amounts are included in cash and short-term investments. Trust restrictions on cash and short-term investments
were $44,181 and $112,008 at December 31, 2015 and 2014, respectively.
(2) Included in fixed maturity investments are statutory deposits assigned to and held by the California
State Treasurer and the Insurance Commissioner of the State of Nevada. These deposits are required for writing certain lines of
business in California and for admission in states other than California. |
| Deferred Policy Acquisition Costs | Deferred
Policy Acquisition Costs ASC Topic 944, “Financial Services –
Insurance,” establishes uniformity in the practice of determining costs related to the acquisition of new or renewal insurance
contracts that qualify for deferral. Policy acquisition costs consist of commissions, premium taxes, inspection fees and certain
other underwriting costs, which are related to the successful production of Crusader insurance policies. Policy acquisition costs
that are eligible for deferral are deferred and amortized as the related premium is earned
and are limited to their estimated realizable value Ceding commission applicable to the unexpired terms |
| Reinsurance | Reinsurance Crusader employs reinsurance to provide
greater diversification of business allowing management to control exposure to potential losses arising from large risks by reinsuring
certain levels of risk in various areas of exposure, to reduce the loss that may arise from catastrophes, and to provide additional
capacity for growth. Prepaid reinsurance premium and reinsurance receivables are reported as assets and represent ceded unearned
premium and reinsurance recoverable on both paid and unpaid losses and loss adjustment expenses, respectively. Amounts recoverable
from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. Crusader
evaluates each of its ceded reinsurance contracts at its inception to determine if there is sufficient risk transfer to allow the
contract to be accounted for as reinsurance under current accounting literature. As of December 31, 2015, all such ceded contracts
are accounted for as risk transfer reinsurance. Crusader evaluates and monitors the financial
condition of its reinsurers and factors such as collection periods, disputes, applicable coverage defenses and other factors to
assess the need for any allowance against anticipated reinsurance recoveries. No such allowance was considered necessary at December
31, 2015 or 2014. |
| Segment Reporting | Segment Reporting ASC Topic 280, “Segment Reporting,”
establishes standards for the way information about operating segments are reported in financial statements. The Company has identified
its insurance company operation as its primary reporting segment. Revenues from this segment comprised 91% of consolidated revenues
for the year ended December 31, 2015, 90% of consolidated revenues for the year ended December 31, 2014, and 89% of consolidated
revenues for the year ended December 31, 2013. The CompanyÂ’s remaining operations constitute a variety of specialty insurance
services, each with unique characteristics and individually insignificant to consolidated revenues. The insurance company operation is conducted
through Crusader, which as of December 31, 2015, was licensed as an admitted insurance carrier in the states of Arizona, California,
Nevada, Oregon, and Washington. Crusader is a multi-line property and casualty insurance company, which began transacting business
on January 1, 1985. For the year ended December 31, 2015, 98% of CrusaderÂ’s business was commercial multi-peril (CMP) insurance
policies. CMP policies provide a combination of property and liability coverage for businesses. Commercial property coverage insures
against loss or damage to buildings, inventory and equipment from natural disasters, including hurricanes, windstorms, hail, water,
explosions, severe winter weather, and other events such as theft and vandalism, fires and storms and financial loss due to business
interruption resulting from covered property damage. However, Crusader does not write earthquake coverage. Commercial liability
coverage insures against third party liability from accidents occurring on the insuredÂ’s premises or arising out of its operations,
such as injuries sustained from products sold or the operation of the insuredÂ’s premises. In addition to CMP policies, Crusader
also writes separate policies to insure commercial property and commercial liability risks on a mono-line basis. Revenues, income before income taxes and
assets by segment are as follows:
Year ended December 31
2015 2014 2013
Revenues
Insurance company operation $ 30,420,988 $ 27,466,597 $ 27,806,086
Other insurance operations 12,811,385 11,991,554 11,874,171
Intersegment eliminations (1) (9,967,734 ) (8,987,911 ) (8,549,365 )
Total other insurance operations 2,843,651 3,003,643 3,324,806
Total revenues $ 33,264,639 $ 30,470,240 $ 31,130,892
Income (loss) before income taxes
Insurance company operation $ 1,161,930 $ 3,552,323 $ 3,276,209
Other insurance operations (2,896,888 ) (2,255,818 ) (2,035,434 )
Total income (loss) before income taxes $ (1,734,958 ) $ 1,296,505 $ 1,240,775
Assets
Insurance company operation $ 118,482,261 $ 123,048,404 $ 118,996,312
Intersegment eliminations (2) (1,409,797 ) (1,657,750 ) (482,624 )
Total insurance company operation 117,072,464 121,390,654 118,513,688
Other insurance operations 23,097,971 14,624,915 14,339,500
Total assets $ 140,170,435 $ 136,015,569 $ 132,853,188 (1) Intersegment
revenue eliminations reflect commissions paid by Crusader to Unifax Insurance Systems, Inc. (Unifax), a wholly owned subsidiary
of Unico. (2) Intersegment
asset eliminations reflect the elimination of Crusader receivables from Unifax and Unifax payables to Crusader. |
| Concentration of Risk | Concentration of Risks In 2015 and 2014, 99.5% and 99.8%, respectively,
of CrusaderÂ’s direct written premium was derived from California. In 2015, approximately 39% and 40% of the $960,670 commission
income from the CompanyÂ’s health insurance program was from Guardian Life Insurance Company of America dental and group life
plan programs and the Blue Shield Care Trust, health and life insurance programs, respectively. In 2014, approximately 38% and
39% of the $1,082,412 commission income from the CompanyÂ’s health insurance program was from Guardian Life Insurance Company
of America dental and group life plan programs and the Blue Shield Care Trust, health and life insurance programs, respectively. CrusaderÂ’s reinsurance recoverable
on paid and unpaid losses and loss adjustment expenses is as follows:
Name of Reinsurer A.M. Best Rating Amount Recoverable as of December 31, 2015 Amount Recoverable as of December 31, 2014
Platinum Underwriters Reinsurance, Inc. A $ 5,835,678 $ 2,880,171
Hannover Ruckversicherungs AG A+ 2,813,283 1,914,641
Partners Reinsurance Company of the U.S. A (30 ) (30 )
General Reinsurance Corporation A++ (29 ) (29 )
TOA Reinsurance A+ 1,739,410 544,535
QBE Reinsurance Corporation A (28 ) 24,494
Total $ 10,388,284 $ 5,363,782 |
| Stock Based Compensation | Stock-Based Compensation Share-based compensation expense for all share-based
payment awards granted or modified on or after January 1, 2006, is based on the grant-date fair value estimated in accordance
with the provisions of ASC 718, “Compensation - Stock Compensation” using the modified prospective transition method. |
| Recently Issued Accounting Standards | Recently Issued Accounting Standards In May 2015, the Financial Accounting
Standards Board issued Accounting Standards Update (ASU) 2015-09 “Disclosures About Short-Duration Contracts.” The
objective of this ASU is to increase transparency about significant estimates in unpaid losses and loss adjustment expenses and
provide additional information about amount, timing and uncertainty of cash flows related to unpaid losses and loss adjustment
expenses. ASU 2015-09 is not expected to have any impact on the CompanyÂ’s consolidated financial statements. The disclosure
mandated by ASU 2015-09 will become effective for annual and quarterly reporting periods ended on and after December 31, 2016. |
