Cover page
Cover page - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 05, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2020 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 000-25001 | ||
Entity Registrant Name | FedNat Holding Co | ||
Entity Incorporation, State or Country Code | FL | ||
Entity Tax Identification Number | 65-0248866 | ||
Entity Address, Address Line One | 14050 N.W. 14th Street | ||
Entity Address, Address Line Two | Suite 180 | ||
Entity Address, City or Town | Sunrise | ||
Entity Address, State or Province | FL | ||
Entity Address, Postal Zip Code | 33323 | ||
City Area Code | 800 | ||
Local Phone Number | 293-2532 | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | FNHC | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 139,671,662 | ||
Entity Common Stock, Shares Outstanding | 13,717,908 | ||
Entity Central Index Key | 0001069996 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Investments [Abstract] | ||
Debt securities, available-for-sale, at fair value (amortized cost of $473,126 and $512,645, respectively) | $ 488,210 | $ 526,265 |
Debt securities, held-to-maturity, at amortized cost | 0 | 4,337 |
Equity securities, at fair value | 3,157 | 20,039 |
Total investments | 491,367 | 550,641 |
Cash and cash equivalents | 102,367 | 133,361 |
Prepaid reinsurance premiums | 278,272 | 145,659 |
Premiums receivable, net of allowance of $233 and $159, respectively | 50,803 | 41,422 |
Reinsurance recoverable, net of allowance of $65 and $0, respectively | 413,026 | 209,615 |
Deferred acquisition costs and value of business acquired, net | 25,405 | 56,136 |
Current and deferred income taxes, net | 35,035 | 2,552 |
Goodwill | 0 | 10,997 |
Other assets | 32,262 | 28,633 |
Total assets | 1,428,537 | 1,179,016 |
Liabilities [Abstract] | ||
Loss and loss adjustment expense reserves | 540,367 | 324,362 |
Unearned premiums | 366,789 | 360,870 |
Reinsurance payable and funds withheld liabilities | 202,827 | 102,467 |
Long-term debt, net of deferred financing costs of $1,317 and $1,478, respectively | 98,683 | 98,522 |
Deferred revenue | 7,187 | 6,856 |
Other liabilities | 54,524 | 37,246 |
Total liabilities | 1,270,377 | 930,323 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest [Abstract] | ||
Preferred stock, $0.01 par value: 1,000,000 shares authorized | 0 | 0 |
Common stock, $0.01 par value: 25,000,000 shares authorized; 13,717,908 and 14,414,821 shares issued and outstanding, respectively | 137 | 144 |
Additional paid-in capital | 169,298 | 167,677 |
Accumulated other comprehensive income (loss) | 11,386 | 10,281 |
Retained earnings (deficit) | (22,661) | 70,591 |
Total shareholders’ equity attributable to FedNat Holding Company shareholders | 158,160 | 248,693 |
Total liabilities and shareholders' equity | $ 1,428,537 | $ 1,179,016 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Assets [Abstract] | ||
Debt securities, available-for-sale, at amortized cost | $ 473,126 | $ 512,645 |
Premiums receivable, allowance | 233 | 159 |
Reinsurance recoverable, allowance for credit loss | 65 | 0 |
Liabilities and Equity [Abstract] | ||
Debt issuance costs, net | $ 1,317 | $ 1,478 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest [Abstract] | ||
Preferred stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock shares authorized (in shares) | 1,000,000 | 1,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock, shares, issued (in shares) | 13,717,908 | 14,414,821 |
Common stock, shares, outstanding (in shares) | 13,717,908 | 14,414,821 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues: | |||
Net premiums earned | $ 364,134 | $ 363,652 | $ 355,257 |
Net investment income | 11,786 | 15,901 | 12,460 |
Net realized and unrealized investment gains (losses) | 18,032 | 7,084 | (4,144) |
Direct written policy fees | 13,970 | 10,200 | 13,366 |
Other income | 23,941 | 18,124 | 19,154 |
Total revenues | 431,863 | 414,961 | 396,093 |
Costs and expenses: | |||
Losses and loss adjustment expenses | 376,449 | 273,080 | 228,416 |
Commissions and other underwriting expenses | 124,288 | 107,189 | 121,109 |
General and administrative expenses | 23,420 | 23,203 | 22,183 |
Interest expense | 7,661 | 10,776 | 4,177 |
Impairment of intangibles | 11,699 | 0 | 0 |
Total costs and expenses | 543,517 | 414,248 | 375,885 |
Income (loss) before income taxes | (111,654) | 713 | 20,208 |
Income tax expense (benefit) | (33,496) | (298) | 5,498 |
Net income (loss) | (78,158) | 1,011 | 14,710 |
Net income (loss) attributable to non-controlling interest | 0 | 0 | (218) |
Net income (loss) attributable to FedNat Holding Company shareholders | $ (78,158) | $ 1,011 | $ 14,928 |
Net Income (Loss) Per Common Share | |||
Basic (in dollars per share) | $ (5.64) | $ 0.08 | $ 1.17 |
Diluted (in dollars per share) | $ (5.64) | $ 0.08 | $ 1.16 |
Weighted Average Number of Shares of Common Stock Outstanding | |||
Basic (in shares) | 13,846 | 12,977 | 12,775 |
Diluted (in shares) | 13,846 | 13,023 | 12,867 |
Dividends declared per share of common stock (in dollars per share) | $ 0.36 | $ 0.33 | $ 0.24 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (78,158) | $ 1,011 | $ 14,710 |
Change in net unrealized gains (losses) on investments, available-for-sale, net of tax | 1,105 | 14,031 | (5,444) |
Comprehensive income (loss) | (77,053) | 15,042 | 9,266 |
Less: comprehensive income (loss) attributable to non-controlling interest, net of tax | 0 | 0 | (447) |
Comprehensive income (loss) attributable to FedNat Holding Company shareholders | $ (77,053) | $ 15,042 | $ 9,713 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Total Shareholders' Equity Attributable to Federated National Holding Company Shareholders | Total Shareholders' Equity Attributable to Federated National Holding Company ShareholdersCumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-in Capital | AOCI Attributable to Parent | AOCI Attributable to ParentCumulative Effect, Period of Adoption, Adjustment | Retained Earnings (Deficit) | Retained Earnings (Deficit)Cumulative Effect, Period of Adoption, Adjustment | Noncontrolling Interest |
Balance (in shares) at Dec. 31, 2017 | 12,988,247 | ||||||||||
Balance, beginning of period at Dec. 31, 2017 | $ 227,459 | $ 0 | $ 211,637 | $ 130 | $ 139,728 | $ 1,770 | $ (994) | $ 70,009 | $ 994 | $ 15,822 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | 14,710 | 14,928 | 14,928 | (218) | |||||||
Other comprehensive income (loss) | (4,450) | (4,221) | (4,221) | (229) | |||||||
Dividends declared | (3,120) | (3,120) | (3,120) | ||||||||
Shares issued for acquisition (in shares) | 122,905 | ||||||||||
Shares issued for acquisition | 39 | 39 | $ 1 | 38 | |||||||
Repurchases of common stock (in shares) | (326,708) | ||||||||||
Repurchases of common stock | (5,061) | (5,061) | $ (3) | (5,058) | |||||||
Share-based compensation | 2,367 | 2,367 | 2,367 | ||||||||
Balance (in shares) at Dec. 31, 2018 | 12,784,444 | ||||||||||
Balance, end of period at Dec. 31, 2018 | 215,259 | 215,259 | $ 128 | 141,128 | (3,750) | 77,753 | 0 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | 1,011 | 1,011 | 1,011 | ||||||||
Other comprehensive income (loss) | 14,031 | 14,031 | 14,031 | ||||||||
Dividends declared | (4,309) | (4,309) | (4,309) | ||||||||
Acquisition of non-controlling interest | (16,685) | (1,310) | (1,005) | (305) | (15,375) | ||||||
Shares issued for acquisition (in shares) | 1,773,102 | ||||||||||
Shares issued for acquisition | 24,391 | 24,391 | $ 18 | 24,373 | |||||||
Shares issued under share-based compensation plans (in shares) | 94,922 | ||||||||||
Shares issued under share-based compensation plans | 1 | 1 | $ 1 | ||||||||
Repurchases of common stock (in shares) | (237,647) | ||||||||||
Repurchases of common stock | (3,867) | (3,867) | $ (3) | (3,864) | |||||||
Share-based compensation | 2,176 | 2,176 | 2,176 | ||||||||
Balance (in shares) at Dec. 31, 2019 | 14,414,821 | ||||||||||
Balance, end of period at Dec. 31, 2019 | 248,693 | $ (25) | 248,693 | $ (25) | $ 144 | 167,677 | 10,281 | 70,591 | $ (25) | 0 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | (78,158) | (78,158) | (78,158) | ||||||||
Other comprehensive income (loss) | 1,105 | 1,105 | 1,105 | ||||||||
Dividends declared | (5,077) | (5,077) | (5,077) | ||||||||
Shares issued for acquisition (in shares) | 103,322 | ||||||||||
Shares issued for acquisition | 42 | 42 | $ 1 | 41 | |||||||
Repurchases of common stock (in shares) | (800,235) | ||||||||||
Repurchases of common stock | (10,000) | (10,000) | $ (8) | (9,992) | |||||||
Share-based compensation | 1,580 | 1,580 | 1,580 | ||||||||
Balance (in shares) at Dec. 31, 2020 | 13,717,908 | ||||||||||
Balance, end of period at Dec. 31, 2020 | $ 158,160 | $ 158,160 | $ 137 | $ 169,298 | $ 11,386 | $ (22,661) | $ 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flow from operating activities: | |||
Net income (loss) | $ (78,158) | $ 1,011 | $ 14,710 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Net realized and unrealized investment (gains) losses | (18,032) | (7,084) | 4,144 |
Impairment of intangibles | 11,699 | 0 | 0 |
Loss (gain) on early extinguishment of debt | 0 | 3,575 | 0 |
Amortization of investment premium or discount, net | 3,740 | 916 | 1,546 |
Depreciation and amortization | 1,904 | 1,477 | 1,385 |
Share-based compensation | 1,580 | 2,176 | 2,367 |
Changes in operating assets and liabilities: | |||
Prepaid reinsurance premiums | (132,613) | (11,803) | 26,915 |
Premiums receivable, net | (9,381) | (8,654) | 16,602 |
Reinsurance recoverable, net | (203,443) | 9,412 | (86,823) |
Deferred acquisition costs and value of business acquired, net | 30,731 | (7,979) | 1,457 |
Current and deferred income taxes, net | (32,835) | (3,723) | 6,109 |
Deferred revenue | 331 | 756 | (1,637) |
Loss and loss adjustment expense reserves | 216,005 | 11,472 | 65,715 |
Unearned premiums | 5,919 | 28,365 | (12,431) |
Reinsurance payable and funds withheld liabilities | 100,360 | 14,797 | (8,345) |
Other | 10,285 | 602 | (1,444) |
Net cash provided by (used in) operating activities | (91,908) | 35,316 | 30,270 |
Cash flow from investing activities: | |||
Proceeds from sales of equity securities | 22,050 | 9,203 | 10,639 |
Proceeds from sales of debt securities | 556,463 | 164,196 | 228,777 |
Purchases of equity securities | (4,727) | (6,565) | (13,542) |
Purchases of debt securities | (580,876) | (228,132) | (337,776) |
Maturities and redemptions of debt securities | 86,814 | 43,925 | 92,744 |
Payment for acquisition, net of cash acquired | 0 | 10,402 | 0 |
Purchases of property and equipment | (3,357) | (2,040) | (2,026) |
Net cash provided by (used in) investing activities | 76,367 | (9,011) | (21,184) |
Cash flow from financing activities: | |||
Proceeds from issuance of long-term debt, net of issuance costs | 0 | 98,390 | 0 |
Payment of long-term debt and prepayment penalties | 0 | (48,000) | (5,000) |
Purchase of non-controlling interest | 0 | 0 | (16,685) |
Purchases of FedNat Holding Company common stock | (10,418) | (3,449) | (5,061) |
Issuance of common stock for share-based awards | 42 | 1 | 39 |
Dividends paid | (5,077) | (4,309) | (4,184) |
Net cash provided by (used in) financing activities | (15,453) | 42,633 | (30,891) |
Net increase (decrease) in cash and cash equivalents | (30,994) | 68,938 | (21,805) |
Cash and cash equivalents at beginning-of-period | 133,361 | 64,423 | 86,228 |
Cash and cash equivalents at end-of-period | 102,367 | 133,361 | 64,423 |
Supplemental disclosure of cash flow information: | |||
Cash paid (received) during the period for income taxes | 7,500 | 4,860 | 4,266 |
Cash paid (received) during the period for income taxes | (635) | 3,504 | (1,104) |
Significant non-cash investing and financing transactions: | |||
Right-of-use asset | (7,430) | (8,096) | 0 |
Lease liability | $ 7,430 | $ 8,096 | $ 0 |
ORGANIZATION, CONSOLIDATION AND
ORGANIZATION, CONSOLIDATION AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION, CONSOLIDATION AND BASIS OF PRESENTATION | 1. ORGANIZATION, CONSOLIDATION AND BASIS OF PRESENTATION Organization FedNat Holding Company (“FNHC,” the “Company,” “we,” “us,” or “our”) is a regional insurance holding company that controls substantially all aspects of the insurance underwriting, distribution and claims processes through our subsidiaries and contractual relationships with independent agents and general agents. We, through our wholly owned subsidiaries, are authorized to underwrite and/or place homeowners multi-peril (“homeowners”), federal flood and other lines of insurance in Florida and other states. We market, distribute and service our own and third-party insurers’ products and other services through a network of independent and general agents. FedNat Insurance Company (“FNIC”), our largest wholly owned insurance subsidiary, is licensed as an admitted carrier to write homeowners property and casualty insurance by the state’s insurance departments in Florida, Louisiana, Texas, Georgia, South Carolina, Alabama and Mississippi. Maison Insurance Company ("MIC"), an insurance subsidiary, is licensed as an admitted carrier to write homeowners property and casualty insurance as well as wind/hail-only exposures by the state's insurance departments in Louisiana, Texas and Florida. Monarch National Insurance Company (“MNIC”), an insurance subsidiary, is licensed as an admitted carrier to write homeowners property and casualty insurance in Florida. Material Distribution Relationships Ivantage Select Agency, Inc. The Company is a party to an insurance agency master agreement with Ivantage Select Agency, Inc. (“ISA”), an affiliate of Allstate Insurance Company (“Allstate”), pursuant to which the Company has been authorized by ISA to appoint Allstate agents to offer our FNIC homeowners insurance products to consumers in Florida. As a percentage of the total homeowners premiums we underwrote, 20.7%, 23.2% and 23.8%, were from Allstate’s network of Florida agents, for the years ended December 31, 2020, 2019 and 2018, respectively. SageSure Insurance Managers, LLC The Company is a party to a managing general underwriting agreement with SageSure Insurance Managers, LLC (“SageSure”) to facilitate growth in our FNIC homeowners business outside of Florida. As a percentage of the total homeowners premiums, 25.5%, 23.1% and 15.0% of the Company’s premiums were underwritten by SageSure, for the years ended December 31, 2020, 2019, and 2018, respectively. As part of our partnership with SageSure, previously we entered into a profit share agreement, whereby we shared 50% of net profits of this line of business through June 30, 2020, as calculated per the terms of the agreement, subject to certain limitations, which included limits on the net losses that SageSure could realize. The limit was based on the amount of inception to date profits within the profit share agreement. In addition, refer to Note 6 for information regarding a fully collateralized quota-share treaty on this book of business that became effective July 1, 2020. Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include the accounts of FNHC and its wholly-owned subsidiaries and all entities in which the Company has a controlling financial interest and any variable interest entity (“VIE”) of which the Company is the primary beneficiary. The Company’s management believes the consolidated financial statements reflect all material adjustments, including normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows of the Company for the periods presented. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company identifies a VIE as an entity that does not have sufficient equity to finance its own activities without additional financial support or where the equity investors lack certain characteristics of a controlling financial interest. The Company assesses its contractual, ownership or other interests in a VIE to determine if the Company’s interest participates in the variability the VIE was designed to absorb and pass onto variable interest holders. The Company performs an ongoing qualitative assessment of its variable interests in a VIE to determine whether the Company has a controlling financial interest and would therefore be considered the primary beneficiary of the VIE. If the Company determines it is the primary beneficiary of a VIE, the Company consolidates the assets and liabilities of the VIE in its consolidated financial statements. We completed our acquisition of MNIC in February 2018 by acquiring the membership interests in MNIC’s indirect parent, Monarch Delaware Holdings LLC (“Monarch Delaware”), held by our joint venture partners. As such, the Company consolidated Monarch Delaware in its consolidated financial statements. In accordance with the accounting standard on consolidation, a primary beneficiary that acquires additional ownership of the previously controlled and consolidated subsidiaries is accounted for as an equity transaction and re-measurement of assets and liabilities of previously controlled and consolidated subsidiaries is not permitted. As a result, we accounted for this transaction by eliminating the carrying value of the non-controlling interest to reflect our 100% ownership interest in MNIC as of February 21, 2018. The difference between the consideration paid and the amount by which the non-controlling interest was eliminated has been recognized in additional paid-in capital. Following the closing, Monarch Delaware and Monarch Holdings were merged into MNIC. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies and Practices | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES Accounting Estimates and Assumptions The Company prepares the accompanying consolidated financial statements in accordance with GAAP, which requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results may materially differ from those estimates. Similar to other property and casualty insurers, the Company’s liability for loss and loss adjustment expenses ("LAE") reserves, although supported by actuarial projections and other data, is ultimately based on management’s reasoned expectations of future events. Although considerable variability is inherent in these estimates, the Company believes that the liability and LAE reserve is adequate. The Company reviews and evaluates its estimates and assumptions regularly and makes adjustments, reflected in current operations, as necessary, on an ongoing basis. Business Combinations We use the acquisition method of accounting for all business combination transactions, and accordingly, recognize the fair values of assets acquired, liabilities assumed and any non-controlling interests in our consolidated financial statements. The allocation of fair values may be subject to adjustment after the initial allocation for up to a one-year period as more information becomes available relative to the fair values as of the acquisition date. The consolidated financial statements include the results of operations of any acquired company since the acquisition date. Fair Value Fair value is the price that would be received to sell an asset or paid to transfer a liability between market participants in the principal market or in the most advantageous market when no principal market exists. Adjustments to transaction prices or quoted market prices may be required in illiquid or disorderly markets in order to estimate fair value. Alternative valuation techniques may be appropriate under the circumstances to determine the value that would be received to sell an asset or pay to transfer a liability in an orderly transaction. Market participants are assumed to be independent, knowledgeable, able and willing to transact an exchange and not acting under duress. Our nonperformance or credit risk is considered in determining the fair value of liabilities. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized in a current or future market exchange. Refer to Note 4 below for additional information regarding fair value. Investments Investments consist of debt and equity securities. Debt securities consist of securities with an initial fixed maturity of more than three months, including corporate bonds, municipal bonds and United States government bonds. Equity securities generally consist of securities that represent ownership interests in an enterprise. The Company determines the appropriate classification of investments in debt and equity securities at the acquisition date and re-evaluates the classification at each balance sheet date. Held-to-maturity debt securities are recorded at the amortized cost, reflecting the ability and intent to hold the securities to maturity. All other debt securities are classified as available-for-sale and recorded at fair value. Unrealized gains and losses during the year, net of the related tax effect applicable to available-for-sale, are excluded from income and reflected in other comprehensive income (loss) as a separate component of shareholders' equity. Prior to January 1, 2020, if a decline in fair value was deemed to be other-than-temporary, the investment was written down to its fair value and the amount of the write-down is recorded as an other-than-temporary impairment ("OTTI") loss on the statement of operations. As the result of the adoption of Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument ("ASU 2016-13") beginning on January 1, 2020, we instead record an allowance for credit loss. Refer to Note 7 below for additional information regarding allowances for credit loss. Any portion of the market decline related to debt securities that is believed to arise from factors other than credit is recorded as a component of other comprehensive income (loss) rather than against income. Equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are measured at fair value with changes in fair value recognized in net income (loss). When we invest in certain companies, such as limited partnerships and limited liability companies, and if we determine we are not the primary beneficiary, we account for them using the equity method to determine the carry value, which is included in other assets on our Consolidated Balance Sheets. Our maximum exposure to loss is limited to the capital we invest. Net realized gains and losses on investments are determined in accordance with the specific identification method. Net investment income consists primarily of interest income from debt securities, cash and cash equivalents, including any premium amortization or discount accretion and dividend income from equity securities; less expenses related to investments. Refer to Note 5 below for additional information regarding investments. Cash and Cash Equivalents Cash and cash equivalents consist of all deposit or deposit in transit balances with a bank that are available for withdrawal. The Company considers all highly liquid investments with an original maturity of three months or less at the date of the purchase to be cash equivalents. Premiums and Unearned Premiums The Company recognizes premiums as revenue on a pro-rata basis over the term of the insurance policy. Unearned premiums represent the portion of gross premiums written, related to the unexpired terms of such coverage. Premium receivable balances, which include any outstanding receivable from the SageSure profit sharing agreement, are reported net of an allowance for estimated uncollectible premium amounts. Such allowance is based upon an ongoing review of amounts outstanding, length of collection periods, the creditworthiness of the insured and other relevant factors. Amounts deemed to be uncollectible are written off against the allowance. Refer to Note 7 below for additional information regarding allowances for credit loss. Reinsurance Reinsurance is used to mitigate the exposure to losses, manage capacity and protect capital resources. Reinsuring loss exposures does not relieve a ceding entity from its obligations to policyholders and cedants. Reinsurance recoverables (including amounts related to claims incurred but not reported) and ceded unearned premiums are reported as assets. To minimize exposure to losses from a reinsurer’s inability to pay, the financial condition of such reinsurer is evaluated initially upon placement of the reinsurance and periodically thereafter. In addition to considering the financial condition of the reinsurer, the collectability of the reinsurance recoverables is evaluated (and where appropriate, whether an allowance for estimated uncollectible reinsurance recoverables is to be established) based upon a number of other factors. Such factors include the amounts outstanding, length of collection periods, disputes, any collateral or letters of credit held and other relevant factors. To the extent that an allowance for uncollectible reinsurance recoverable is established, amounts deemed to be uncollectible are written off against the allowance for estimated uncollectible reinsurance recoverables. Refer to Note 7 below for additional information regarding allowances for credit loss. Ceded premiums written are recorded in accordance with applicable terms of the various reinsurance contracts and ceded premiums earned are charged against revenue over the period of the various reinsurance contracts. This also generally applies to reinstatement premiums paid to a reinsurer, which arise when contractually-specified ceded loss triggers have been breached. Ceded commissions reduce commissions and other underwriting expenses and ceded losses incurred reduce net losses and LAE incurred over the applicable periods of the various reinsurance contracts with third party reinsurers. If premiums or commissions are subject to adjustment (for example, retrospectively-rated or experience-rated), the Company records adjustments to the premiums or ceding commission in the period that changes in the estimated losses are determined. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured business and consistent with the terms of the underlying reinsurance contract. Reinsurance payable and funds withheld liabilities represents the unpaid reinsurance premiums or reinstatement premiums due to reinsurers, or in the case of certain reinsurance agreements amounts withheld as collateral by us. Refer to Note 6 below for additional information regarding reinsurance. Deferred Acquisition Costs and Value of Business Acquired Deferred acquisition costs represent those costs that are incremental and directly related to the successful acquisition of new or renewal of existing insurance contracts. The Company defers incremental costs that result directly from, and are essential to, the acquisition or renewal of an insurance contract. Such deferred acquisition costs generally include agent or broker commissions, referral fees, premium taxes, medical and inspection fees that would not have been incurred if the insurance contract had not been acquired or renewed. Each cost is analyzed to assess whether it is fully deferrable. The Company also defers a portion of the employee total compensation and payroll-related fringe benefits directly related to time spent performing specific acquisition or renewal activities, including costs associated with the time spent on underwriting, policy issuance and processing, and sales force contract selling. The acquisition costs are deferred and amortized over the period in which the related premiums written are earned, generally twelve months for homeowners policies. Deferred acquisition cost balances are grouped consistent with the manner in which the insurance contracts are acquired, serviced and measured for profitability and is reviewed for recoverability based on the profitability of the underlying insurance contracts. Investment income is anticipated in assessing the recoverability of deferred acquisition costs. The Company assesses the recoverability of deferred acquisition costs on an annual basis or more frequently if circumstances indicate impairment may have occurred. Value of business acquired ("VOBA") is an asset that reflects the estimated fair value of in-force contracts in an acquisition and represents the portion of the purchase price that is allocated to the value of the right to receive future cash flows from the business in-force at the acquisition date. VOBA is amortized over the period in which the related premiums written are earned, generally twelve months or less for property insurance business. VOBA amortization is reported within commissions and other underwriting expenses on our consolidated statements of operations. VOBA is reviewed to ensure that the unamortized portion does not exceed the expected recoverable amount as of October 1 and more frequently if circumstances indicate impairment may have occurred. Goodwill We recognize the excess of the purchase price, plus the fair value of any non-controlling interest in the acquiree, over the fair value of identifiable net assets acquired at the acquisition date as goodwill. Goodwill is not amortized but is reviewed for impairment annually as of October 1 and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We perform a quantitative goodwill impairment test where the fair value of the reporting unit is determined and compared to the carrying value of the reporting unit. If the fair value of the reporting unit is greater than the reporting unit’s carrying value, then the carrying value of the reporting unit is deemed to be recoverable. If the carrying value of the reporting unit is greater than the reporting unit’s fair value, goodwill is impaired and written down to the reporting unit’s fair value; and a charge is reported in impairment of intangibles on our consolidated statements of operations. Refer to Note 8 below for additional information regarding goodwill. Other Assets Other assets consist primarily of identifiable intangible assets, property and equipment owned, right-of-use assets for our long-term leases, receivables resulting from sales of securities that had not yet settled as of the balance sheet date and prepaid expenses. Property and equipment is stated at cost, net of accumulated depreciation and amortization. Depreciation is calculated using a straight-line method over the estimated useful lives, ranging from 3 to 15 years. Repairs and maintenance are charged to expense as incurred. The Company accounts for internal-use software development costs in accordance with accounting guidelines which state that software costs, including internal payroll costs, incurred in connection with the development or acquisition of software for internal use is charged to expense as incurred until the project enters the application development phase. Costs incurred in the application development phase are capitalized and are depreciated using the straight-line method over an estimated useful life of 3 years, beginning when the software is ready for use. We recognize the estimated fair value of identifiable intangibles such as trade names and non-compete agreements acquired through a business combination at the acquisition date. Identifiable intangible assets are amortized on a straight-line basis over their identified useful life, if applicable. The carrying values of identifiable intangible assets are reviewed at least annually for indicators of impairment in value that are other-than-temporary, including unexpected or adverse changes in the following: the economic or competitive environments in which the company operates; profitability analysis; cash flow analysis; and the fair value of the relevant business operation. If there is an indication of impairment, then the discounted cash flow method would be used to measure the impairment, and the carrying value would be adjusted as necessary and reported in impairment of intangibles on our consolidated statements of operations. Refer to Note 8 below for additional information regarding identifiable intangible assets. Direct Written Policy Fees Policy fees represent a non-refundable application fee for insurance coverage. These policy fees are deferred over the related policy term in a manner consistent with how the related premiums are earned. Other Income Other income represents brokerage, commission related income from the Company’s agency operations, fees generated from the exited personal automobile line of business as well as recognition of equity method investment results. Brokerage income is recognized over the term of the reinsurance period, typically one year. Commission income from agency operations are recognized up-front upon policy inception. In applying the equity method, the Company records its initial investment at cost, and subsequently increases or decreases the carrying amount of the investment by its proportionate share of the net earnings or losses with any dividends or distributions received are recorded as a decrease in the carrying value of the investment. Losses and Loss Adjustment Expenses The reserves for losses and LAE represent management’s best estimate of the ultimate cost of all reported and unreported losses incurred through the balance sheet date. Such liabilities are determined based upon the Company’s assessment of claims pending and the development of prior years’ loss liability, including liabilities based upon individual case estimates for reported losses and LAE and estimates of such amounts that are incurred but not yet reported ("IBNR”). Changes in the estimated liability are charged or credited to operations as the losses and LAE are settled. The estimates of the liability for loss and LAE reserves are subject to the effect of trends in claims severity and frequency and are continually reviewed. As part of this process, the Company review historical data and consider various factors, including known and anticipated legal developments, inflation and economic conditions. As experience develops and other data become available, these estimates are revised, as required, resulting in increases or decreases to the existing liability for loss and LAE reserves. Adjustments are reflected in the results of operations in the period in which they are made and the liabilities may deviate substantially from prior estimates. Refer to Note 9 below for additional information regarding reserves for losses and LAE. Long-Term Debt, Net of Deferred Financing Costs The Company records long-term debt, net in the consolidated balance sheets at carrying value. The Company incurs specific incremental costs, other than those paid to lenders, in connection with the issuance of the Company’s debt instruments. These deferred financing costs include loan origination costs, issue costs and other direct costs payable to third parties and are recorded as a direct deduction from the carrying value of the associated debt liability in the consolidated balance sheets, when the debt liability is recorded. The Company amortizes the deferred financing costs as interest expense over the term of the related debt using the effective interest method in the consolidated statements of operations. Refer to Note 10 below for additional information regarding long-term debt. Income Taxes The Company applies the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss, capital loss and tax-credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income or expense in the period that includes the enactment date. The Company will establish a valuation allowance if management determines, based on available information, that it is more likely than not that deferred income tax assets will not be realized. Significant judgment is required in determining whether valuation allowances should be established and the amount of such allowances. The Company’s management makes assumptions, estimates and judgments, which are subject to change, in accounting for income taxes. The Company’s management also considers events and transactions on an on-going basis and the laws enacted as of the Company’s reporting date. Refer to Note 11 below for further information regarding income taxes. Share-Based Compensation We expense the fair value of stock awards included in our stock incentive compensation plans. The Company grants awards and amortizes them on a straight-line over the vesting term using the straight-line basis for service awards and over successive one-year requisite service periods for performance based awards. For all restricted stock awards (“RSAs”), excluding grants based on relative total shareholder return ("TSR"), the fair value is determined based on the closing market price on the date of grant. For grants based on TSR, grant date fair value is determined using a Monte Carlo simulation and, unlike the performance condition awards, the expense is not reversed if the performance condition is not met. Non-employee directors are treated as employees for accounting purposes. The non-cash share-based compensation expense is reflected in commissions and other underwriting and general and administrative expense on our Consolidated Statements of Operations and is recognized as an increase to additional paid-in capital on our Consolidated Balance Sheets. Basic and Diluted Net Income (Loss) per Share Basic net income per share is computed by dividing net income available to common shareholders by the weighted average number of common shares, while diluted net income per share is computed by dividing net income available to common shareholders by the weighted average number of such common shares and dilutive share equivalents result from the assumed exercise of employee stock options and vesting of restricted common stock and are calculated using the treasury stock method. Recently Issued Accounting Pronouncements, Adopted In January 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-01 , which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . Most notably, the combined new guidance required equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The Company adopted the guidance effective January 1, 2018, by reflecting a cumulative adjustment, which increased retained earnings (deficit) and decreased accumulated other comprehensive income (loss) by $1.0 million. This adjustment represented the level of net unrealized gains and losses associated with our equity investments with readily determinable market values as of January 1, 2018. The adoption also resulted in the recognition of $(1.2) million in our consolidated statements of operations and statements of comprehensive income (loss), which represented the change in net unrealized gains and losses on our equity securities for 2018. This new guidance increases our earnings volatility compared to the prior accounting rules. In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The update allowed a reclassification from accumulated other comprehensive income (loss) to retained earnings (deficit) for stranded tax effects resulting from the Tax Cuts and Job Act of 2017 ("Tax Act"). Guidance had previously required the effect of a change in tax laws or rates on deferred tax balances to be reported in income from continuing operations in the accounting period that includes the period of enactment, even if the related income tax effects were originally charged or credited directly to accumulated other comprehensive income. The Company adopted the guidance effective January 1, 2018, by reflecting a cumulative effect adjustment to retained earnings (deficit) with an off-setting adjustment to accumulated other comprehensive income (loss) for less than $0.1 million. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The update superseded the prior lease guidance in Topic 840, Leases and lessees were required to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis. Additionally, lessees are required to recognize a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The Company adopted the guidance effective January 1, 2019, by reflecting a $6.1 million right-of-use asset, after-tax, and $6.1 million lease liability, after-tax, on our consolidated balance sheets for our leases in existence as of that date. All of the Company's leases were classified as operating leases and we elected the practical expedient, therefore no adjustment to comparative prior periods presented have been made. The provisions of this ASU did not have an impact on our pattern of lease expense recognition on our consolidated statements of operations. Refer to Note 12 below for additional information regarding leases. In June 2016, the FASB issued ASU 2016-13 , which significantly changes the measurement of credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The update requires entities to record allowances for available-for-sale debt securities rather than reduce the carrying amount, as currently performed under the other-than-temporary impairment ("OTTI") model. The update also requires enhanced disclosures for financial assets measured at amortized cost and available-for-sale debt securities to help the financial statement users better understand significant judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. The Company adopted the guidance effective January 1, 2020, by reflecting a cumulative effect adjustment of less than $0.1 million, after-tax, which decreased retained earnings (deficit), held-to-maturity debt securities and reinsurance recoverable. Refer to Note 7 for additional information regarding allowances for credit loss. In January 2017, the FASB issued ASU 2017-04, S implifying the Test for Goodwill Impairment . ASU 2017-04 eliminated the requirement to perform Step 2 of the goodwill impairment test in favor of only applying a quantitative test (referred to in previous guidance as Step 1). As part of the quantitative test, the fair value of the reporting unit is compared with its carrying value, and an impairment charge is recognized when the carrying value exceeds the reporting unit’s fair value. An entity still has the option to first perform a qualitative assessment of an individual reporting unit to determine if the quantitative assessment is necessary. The Company adopted the guidance effective January 1, 2020. Refer to Note 8 for information regarding our goodwill impairment assessment. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification 350-40 to determine which implementation costs to defer and recognize as an asset. The Company adopted the guidance effective January 1, 2020, which did not have any impact on the Company’s consolidated financial condition or results of operations. Recently Issued Accounting Pronouncements, Not Yet Adopted In January 2020, the FASB issued ASU 2020-1, Accounting for Equity Securities and Equity Investments, which clarifies the interaction between accounting standards related to equity securities (Topic 321), equity method investments (Topic 323), and certain derivatives (Topic 815). The update clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The update is effective for interim and annual reporting periods beginning |
ACQUISITION
ACQUISITION | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisition | 3. ACQUISITION On December 2, 2019, the Company completed its acquisition of the insurance operations of 1347 Property Insurance Holdings, Inc. ("PIH"). Specifically, the Company purchased from PIH all of the outstanding equity of MIC, Maison Managers, Inc., and ClaimCor LLC (collectively, the "Maison Companies"). The Maison Companies provide multi-peril and wind/hail only coverage to personal residential dwellings and manufactured/mobile homes in Louisiana, Texas and Florida. The acquisition enables us to increase geographic diversification of our book of business outside Florida and generate additional business with operating synergies and general and administrative expense savings. The purchase price was $51.0 million, which includes $25.5 million in cash and shares of the Company’s common stock equal to $25.5 million, which amounted to 1,773,102 shares of the Company's common stock. The number of shares was determined by the closing price of 20 trading days immediately preceding the closing date, December 2, 2019. The resale of these shares was registered and are subject to a standstill agreement. We recognized the fair value of the shares as of the acquisition date, net of issuance costs, by increasing shareholders' equity by $24.4 million In addition to the purchase price, PIH received five-year right of first refusal to provide reinsurance of up to 7.5% of any layer in FNHC’s catastrophe reinsurance program. PIH also agreed to a non-compete for five years following the closing with respect to residential property insurance in Alabama, Florida, Georgia, Louisiana, South Carolina and Texas. Subsequent to the effective acquisition date, the revenues and net income of the business acquired were $4.4 million and $1.4 million, respectively, for the year ended December 31, 2019. We recognized $1.3 million of acquisition-related costs, pre-tax, for the twelve months ended December 31, 2019. These costs are included in the general and administrative expenses line item of the consolidated statement of operations. We also capitalized $0.5 million in application development costs to property and equipment included in the other asset line item on the consolidated balance sheet. The acquisition date fair values of certain assets and liabilities, including VOBA and intangible assets, were not adjusted during the one year following the December 2, 2019 acquisition date. The following presents (in thousands) the acquisition date fair values of the net assets acquired related to the Maison Companies as of December 2, 2019: Fair Value Assets: Debt securities, available-for-sale $ 56,929 Cash and cash equivalents 35,968 Prepaid reinsurance premium 25,279 Premiums receivable 2,977 Reinsurance recoverable 7,603 Deferred acquisition costs and value of business acquired, net 8,721 Other assets 3,507 Total assets acquired 140,984 Liabilities: Loss and adjustment expense reserves 16,660 Unearned premiums 50,513 Reinsurance payable 24,071 Income taxes, net 1,778 Deferred revenue 1,515 Other liabilities 7,487 Total liabilities assumed 102,024 Net specifically identifiable assets acquired 38,960 Goodwill 10,997 Net assets acquired $ 49,957 All the gross contractual amounts of acquired receivables have been fully collected. The enti re $8.7 million acquired VOBA balance was fully amortized as of December 31, 2020. The goodwill recorded as part of the acquisition included the expected synergies and other benefits that resulted from the acquisition including reinsurance savings and reduction in operating and general and administrative expenses. Refer to Note 8 below for additional information regarding goodwill and identifiable intangible assets. Pro Forma Financial Information The following unaudited pro forma condensed consolidated statements of operations of the Company assume that the acquisition of the Maison Companies was completed on January 1, 2018: Year Ended December 31, 2019 2018 (In thousands) Revenue $ 471,438 $ 454,469 Net income (loss) (9,025) 17,432 Pro forma adjustments include the revenue and net income (loss) of the Maison Companies for each period as well as estimates for amortization of identifiable intangible assets acquired and fair value adjustments associated with investments, VOBA (different than deferred acquisition costs) and reinsurance recoverable. Other pro forma adjustments include the incremental increase to interest expense attributable to financing the acquisition and the impact of reflecting acquisition and integration costs in 2018, instead of 2019. |
FAIR VALUE
FAIR VALUE | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | 4. FAIR VALUE Fair Value Disclosures of Financial Instruments The Company accounts for financial instruments at fair value or the price 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. Fair value measurements are generally based upon observable and unobservable inputs. Observable inputs are based on market data from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. All assets and liabilities that are recorded at fair value are classified and disclosed in one of the following three categories: • Level 1 — Quoted market prices (unadjusted) for identical assets or liabilities in active markets is defined as a market where transactions for the financial statement occur with sufficient frequency and volume to provide pricing information on an ongoing basis, or observable inputs; • Level 2 — Quoted market prices for similar assets or liabilities and valuations, using models or other valuation techniques using observable market data. Significant other observable that can be corroborated by observable market data; and • Level 3 — Instruments that use non-binding broker quotes or model driven valuations that do not have observable market data or those that are estimated based on an ownership interest to which a proportionate share of net assets is attributed. If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. The Company’s financial instruments measured at fair value on a recurring basis and the level of the fair value hierarchy of inputs used consisted of the following: December 31, 2020 Level 1 Level 2 Level 3 Total (In thousands) Debt securities - available-for-sale, at fair value: United States government obligations and authorities $ 38,511 $ 133,264 $ — $ 171,775 Obligations of states and political subdivisions — 22,264 — 22,264 Corporate securities — 266,528 — 266,528 International securities — 27,643 — 27,643 Debt securities, at fair value 38,511 449,699 — 488,210 Equity securities, at fair value 1,881 1,276 — 3,157 Total investments, at fair value $ 40,392 $ 450,975 $ — $ 491,367 December 31, 2019 Level 1 Level 2 Level 3 Total (In thousands) Debt securities - available-for-sale, at fair value: United States government obligations and authorities $ 83,764 $ 110,429 $ — $ 194,193 Obligations of states and political subdivisions — 24,020 — 24,020 Corporate securities — 278,302 — 278,302 International securities — 29,750 — 29,750 Debt securities, at fair value 83,764 442,501 — 526,265 Equity securities, at fair value 17,361 2,678 — 20,039 Total investments, at fair value $ 101,125 $ 445,179 $ — $ 546,304 Held-to-maturity debt securities reported on the consolidated balance sheets at amortized cost and disclosed at fair value below (and in Note 5) and the level of fair value hierarchy of inputs used consisted of the following: Level 1 Level 2 Level 3 Total (In thousands) December 31, 2020 $ — $ — $ — $ — December 31, 2019 3,453 878 — 4,331 We measure the fair value of our securities based on assumptions used by market participants in pricing the security. The most appropriate valuation methodology is selected based on the specific characteristics of the security, and we consistently apply the valuation methodology to measure the security’s fair value. Our fair value measurement is based on a market approach that utilizes prices and other relevant information generated by market transactions involving identical or comparable securities. We review the third party pricing methodologies on a quarterly basis and validate the fair value prices to a separate independent data service and ensure there are no material differences. Additionally, market indicators, industry and economic events are monitored. A summary of the significant valuation techniques and market inputs for each financial instrument carried at fair value includes the following: • United States Government Obligations and Authorities: In determining the fair value for United States government securities in Level 1, the Company uses quoted prices (unadjusted) in active markets for identical or similar assets. In determining the fair value for United States government securities in Level 2, the Company uses the market approach utilizing primary valuation inputs including reported trades, dealer quotes for identical or similar assets in markets that are not active, benchmark yields, credit spreads, reference data and industry and economic events. • Obligations of States and Political Subdivisions: In determining the fair value for state and municipal securities, the Company uses the market approach utilizing primary valuation inputs including reported trades, dealer quotes for identical or similar assets in markets that are not active, benchmark yields, credit spreads, reference data and industry and economic events. • Corporate and International Securities: In determining the fair value for corporate securities the Company uses the market approach utilizing primary valuation inputs including reported trades, dealer quotes for identical or similar assets in markets that are not active, benchmark yields, credit spreads (for investment grade securities), observations of equity and credit default swap curves (for high-yield corporates), reference data and industry and economic events. • Equity Securities: In determining the fair value for equity securities in Level 1, the Company uses quoted prices (unadjusted) in active markets for identical or similar assets. In determining the fair value for equity securities in Level 2, the Company uses the market approach utilizing primary valuation inputs including reported trades, dealer quotes for identical or similar assets in markets that are not active, benchmark yields, credit spreads, reference data and industry and economic events. We did not have securities trading in less liquid or illiquid markets with limited or no pricing information, therefore we did not use unobservable inputs to measure fair value as of December 31, 2020 and 2019. Additionally, we did not have any assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2020 and 2019, and we noted no significant changes in our valuation methodologies between those periods. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2020 | |
Investments [Abstract] | |
INVESTMENTS | 5. INVESTMENTS Unrealized Gains and Losses The difference between amortized cost or cost and estimated fair value and gross unrealized gains and losses, by major investment category, consisted of the following: Amortized Gross Gross Cost Unrealized Unrealized or Cost Gains Losses Fair Value (In thousands) December 31, 2020 Debt securities - available-for-sale: United States government obligations and authorities $ 169,947 $ 1,866 $ 38 $ 171,775 Obligations of states and political subdivisions 21,560 704 — 22,264 Corporate 254,618 11,989 79 266,528 International 27,001 659 17 27,643 $ 473,126 $ 15,218 $ 134 $ 488,210 Amortized Gross Gross Cost Unrealized Unrealized or Cost Gains Losses Fair Value (In thousands) December 31, 2019 Debt securities - available-for-sale: United States government obligations and authorities $ 191,546 $ 3,073 $ 426 $ 194,193 Obligations of states and political subdivisions 23,748 294 22 24,020 Corporate 268,182 10,252 132 278,302 International 29,169 593 12 29,750 512,645 14,212 592 526,265 Debt securities - held-to-maturity: United States government obligations and authorities 3,585 12 39 3,558 Corporate 697 20 — 717 International 55 1 — 56 4,337 33 39 4,331 Total investments, excluding equity securities $ 516,982 $ 14,245 $ 631 $ 530,596 Net Realized and Unrealized Gains and Losses The Company calculates the gain or loss realized on the sale of investments by comparing the sales price (fair value) to the cost or amortized cost of the security sold. Net realized gains and losses on investments are determined in accordance with the specific identification method. Net realized and unrealized gains (losses) recognized in earnings, by major investment category, consisted of the following: Year Ended December 31, 2020 2019 2018 (In thousands) Gross realized and unrealized gains: Debt securities $ 20,470 $ 2,829 $ 423 Equity securities 8,587 5,928 2,374 Total gross realized and unrealized gains 29,057 8,757 2,797 Gross realized and unrealized losses: Debt securities (2,879) (664) (3,990) Equity securities (8,146) (1,009) (2,951) Total gross realized and unrealized losses (11,025) (1,673) (6,941) Net realized and unrealized gains (losses) on investments $ 18,032 $ 7,084 $ (4,144) The above line item, net realized and unrealized gains (losses) on investments, includes the following equity securities gains (losses) recognized in earnings: Year Ended December 31, 2020 2019 2018 (In thousands) Net gains (losses) on equity securities: Realized $ 4,555 $ 803 $ 591 Unrealized (4,114) 4,116 (1,168) 441 4,919 (577) Less: Net realized and unrealized gains (losses) on securities sold 309 672 732 Net unrealized gains (losses) still held as of the end-of-period $ 132 $ 4,247 $ (1,309) Contractual Maturity Actual maturities may differ from contractual maturities because issuers may have the right to call or pre-pay obligations. Amortized cost and estimated fair value of debt securities, by contractual maturity, consisted of the following: December 31, 2020 Amortized Cost Fair Value (In thousands) Securities with Maturity Dates Debt securities, available-for-sale: One year or less $ 21,454 $ 21,573 Over one through five years 137,378 142,457 Over five through ten years 144,296 149,674 Over ten years 169,998 174,506 Total $ 473,126 $ 488,210 Net Investment Income Net investment income consisted of the following: Year Ended December 31, 2020 2019 2018 (In thousands) Interest income $ 11,563 $ 15,605 $ 12,253 Dividends income 223 296 207 Net investment income $ 11,786 $ 15,901 $ 12,460 Aging of Gross Unrealized Losses Gross unrealized losses and related fair values for debt securities, grouped by duration of time in a continuous unrealized loss position, consisted of the following: Less than 12 months 12 months or longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (In thousands) December 31, 2020 Debt securities - available-for-sale: United States government obligations and authorities $ 25,521 $ 38 $ — $ — $ 25,521 $ 38 Corporate 7,989 79 — — 7,989 79 International 2,175 16 132 1 2,307 17 $ 35,685 $ 133 $ 132 $ 1 $ 35,817 $ 134 Less than 12 months 12 months or longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (In thousands) December 31, 2019 Debt securities - available-for-sale: United States government obligations and authorities $ 49,833 $ 409 $ 2,218 $ 17 $ 52,051 $ 426 Obligations of states and political subdivisions 6,810 22 — — 6,810 22 Corporate 15,872 94 7,694 38 23,566 132 International 3,856 10 179 2 4,035 12 76,371 535 10,091 57 86,462 592 Debt securities, held-to-maturity: United States government obligations and authorities — — 2,287 39 2,287 39 — — 2,287 39 2,287 39 Total investments, excluding equity securities $ 76,371 $ 535 $ 12,378 $ 96 $ 88,749 $ 631 As of December 31, 2020, the Company held a total of 47 debt securities that were in an unrealized loss position, of which 2 securities were in an unrealized loss position continuously for 12 months or more. As of December 31, 2019, the Company held a total of 203 debt securities that were in an unrealized loss position, of which 24 securities were in an unrealized loss position continuously for 12 months or more. The unrealized losses associated with these securities consisted primarily of losses related to corporate securities. The Company did not have any OTTI losses on its available-for-sale securities for the years ended December 31, 2020, 2019 and 2018, respectively. Refer to Note 7 below for information regarding allowances for credit loss. Collateral Deposits Cash and cash equivalents and investments, the majority of which were debt securities, with fair values of $11.5 million and $11.2 million were deposited with governmental authorities and into custodial bank accounts as required by law or contractual obligations, as of December 31, 2020 and 2019, respectively. The Company sold held-to-maturity securities with a carrying value of $70 thousand and realized a loss of less than $1 thousand during the second quarter of 2020 due to credit concerns for certain securities. The Company, as of the date of the aforementioned sales, reclassified its remaining held-to-maturity securities to available-for-sale. The held-to-maturity securities transferred had an amortized cost of $4.2 million and fair value of $4.3 million and resulted in $58 thousand of unrealized gains, pre-tax, recognized in other comprehensive income (loss) in the year ended |
REINSURANCE
REINSURANCE | 12 Months Ended |
Dec. 31, 2020 | |
Reinsurance Disclosures [Abstract] | |
REINSURANCE | 6. REINSURANCE Overview Reinsurance is used to mitigate the exposure to losses, manage capacity and protect capital resources. The Company reinsures (cedes) a portion of written premiums on an excess of loss or a quota-share basis in order to limit the Company’s loss exposure. To the extent that reinsuring companies are unable to meet their obligations assumed under these reinsurance agreements, the Company remains primarily liable to its policyholders. The Company is selective in choosing reinsurers and considers numerous factors, the most important of which is the financial stability of the reinsurer or capital specifically pledged to uphold the contract, its history of responding to claims and its overall reputation. In an effort to minimize the Company’s exposure to the insolvency of a reinsurer, the Company evaluates the acceptability and review the financial condition of the reinsurer at least annually with the assistance of the Company’s reinsurance broker. Significant Reinsurance Contracts 2019-2020 Catastrophe Excess of Loss Reinsurance Program Given the December 2, 2019 acquisition of the Maison Companies, the Company and PIH agreed to combine FNIC, MIC and MNIC under a single reinsurance program allowing the carriers to capitalize on efficiencies, spread of risk and scale. The combined reinsurance treaties provide approximately $1.3 billion of single-event reinsurance coverage in excess of a $27 million retention for catastrophic losses on the first event (and $15 million on the second and third events), including hurricanes, and aggregate coverage of $1.9 billion, at an approximate total cost of $224.3 million. The combined FNIC, MIC and MNIC private market excess of loss treaties, covering both Florida and non-Florida exposures, became effective July 1, 2019 and all private layers have prepaid automatic reinstatement protection, which affords the carriers additional coverage for subsequent events. This private market excess of loss treaty structure breaks coverage into layers, with a cascading feature such that substantially all layers attach after $20 million in losses for FNIC, $2 million in losses for MNIC and $5 million in losses for MIC. For FNIC and MNIC, the second and third event attaches at $10 million per event, on a combined basis. If the aggregate limit of the preceding layer is exhausted, the next layer drops down (cascades) in its place. Additionally, any unused layer protection drops down for subsequent events until exhausted. The overall reinsurance program is with reinsurers that currently have an A.M. Best Company or Standard & Poor’s rating of “A-” or better, or have fully collateralized their maximum potential obligations in dedicated trusts. As indicated above, FNIC, MIC and MNIC’s combined 2019-2020 reinsurance program is estimated to cost $224.3 million. This amount includes approximately $178.5 million for private reinsurance for the carriers’ exposure described above, including prepaid automatic premium reinstatement protection, along with approximately $45.8 million payable to the FHCF. The combination of private and FHCF reinsurance treaties affords FNIC, MIC and MNIC approximately $1.9 billion of aggregate coverage with a maximum single event coverage totaling approximately $1.3 billion, exclusive of retentions. Each carrier will pay directly its allocated portion of the aggregate reinsurance ceded premium cost. The allocation methodology by which FNIC, MIC and MNIC determines their share of the premium and distribution of reinsurance recoveries under the combined reinsurance tower is based on catastrophe loss modeling of the separate books of business. Each carrier shares the combined program cost in proportion to its contribution to the total expected loss in each reinsurance layer. Each carrier's reinsurance recoveries will be based on that carrier's contributing share of a given event's total loss. Both FNIC and MNIC maintained their FHCF participation at 75% for the 2019 hurricane season, and MIC increased its FHCF participation to 90%. FNIC’s non-Florida excess of loss reinsurance treaty affords us an additional $18 million of coverage for a second event, which applies to hurricane losses only. The result is a non-Florida retention of $20 million for FNIC for the first event and $2 million for the second event, although these retentions are reduced to $10 million and $1 million after taking into account the profit-sharing agreement that FNIC has with the non-affiliated managing general underwriter that writes FNIC’s non-Florida property business. FNIC’s non-Florida reinsurance program cost for the above specific coverage approximates $1.8 million for this private reinsurance. The insurance carriers’ cost and amounts of reinsurance are based on current analysis of exposure to catastrophic risk. The data is subjected to exposure level analysis at various dates through December 31, 2019. This analysis of the carriers’ exposure level in relation to the total exposures to the FHCF and excess of loss treaties may produce changes in retentions, limits and reinsurance premiums in total, and by carrier, as a result of increases or decreases in the carriers’ exposure levels. 2020-2021 Catastrophe Excess of Loss Reinsurance Program The Company’s excess of loss catastrophe reinsurance program for 2020-2021 (the “Program”), which covers the Company and its wholly-owned insurance subsidiaries, FNIC, MIC and MNIC was renewed effective July 1, 2020. FNIC, MIC and MNIC are collectively referred to herein as the “carriers”. The Program provides up to approximately $1.3 billion of single-event reinsurance coverage in excess of up to a $31 million retention for catastrophic losses, including hurricanes, and aggregate coverage up to $1.9 billion, at an approximate total cost of $286.0 million, subject to adjustments based on actual exposure or premium of policies at different points in time in the coming months. The Company will retain 100% of the first $25 million retention on each event plus up to an additional $6 million in retention on the first event by retaining an approximate 9.1% co-participation of the next $70 million of limit after the first $25 million. More specifically, the Program includes up to approximately $1.3 billion in aggregate private reinsurance for coverage in all states in which the Company operates, of which up to approximately $650 million is limited to any one event, plus an additional $650 million of reinsurance provided by the Florida Hurricane Catastrophe Fund (“FHCF”), that responds on both a per occurrence and in the aggregate basis, and which coverage is exclusive to the state of Florida. The private layers of the Program, covering both Florida and non-Florida exposures have prepaid automatic reinstatement protection, which affords the carriers additional coverage for subsequent events. The private reinsurance market continued to harden this year due to a number of factors, including issues unique to the U.S. coastal catastrophe reinsurance marketplace generally and the Florida market specifically. These factors resulted in more restrictive terms by some of our individual reinsurers. The change in terms from the prior year’s program includes some portion of the program having a single aggregate retention for our carriers taken as a whole, versus each carrier’s own individual retention, plus some portions of the program not “cascading”, which provides less broad coverage for multiple event scenarios generating gaps in coverage that need to be filled with additional post renewal reinsurance protection or be retained net by the Company. As of December 31, 2020, the overall reinsurance Program was placed with reinsurers with an A.M. Best Company or Standard & Poor’s rating of “A-” or better, or that have fully collateralized their maximum potential obligations in dedicated trusts. For the purpose of debt covenant compliance, if any reinsurer on the program is not collateralized or has a rating lower than “A-” by A.M. Best Company or Standard & Poor’s then the Company treats that reinsurer’s participation as if it was part of the Company’s net retention. Refer to "Part II, Item 1A., Risk Factors” for more information. The total Program cost includes approximately $238.2 million for private reinsurance for the carriers’ exposure described above, including prepaid automatic reinstatement premium protection, along with approximately $47.8 million payable to the FHCF. The combination of private and FHCF reinsurance treaties will afford the carriers up to approximately $1.9 billion of aggregate coverage within Florida and $1.3 billion in states outside Florida with a maximum single event coverage totaling up to approximately $1.3 billion within Florida and approximately $650 million outside Florida, exclusive of retentions. Each carrier will share the combined program cost in proportion to its contribution to the total expected loss in each reinsurance layer. Each carrier’s reinsurance recoveries will be based on that carrier’s contributing share of a given event’s total loss and each carrier will be responsible for its portion of the Program’s $25 million per event retention ($31 million for the first event only) based on a specific allocation formula. Both FNIC and MNIC increased their FHCF participation to 90% for the 2020 hurricane season, and MIC maintained its FHCF participation at 90%. In addition, the Company purchased subsequent event reinsurance coverage that has a lower retention than the first event. Under the Program, FNIC’s non-Florida book of business as written by SageSure has excess of loss reinsurance treaties which afford this specific book of business additional protection through an additional $16 million of coverage for a second event, which applies to hurricane losses only. This additional reinsurance coverage is specific to FNIC's non-Florida business and does not afford coverage to MIC's non-Florida business. The result is a retention of approximately $18 million for FNIC's book with SageSure for the first event and approximately $2 million for the second event, although these retentions are reduced to approximately $9 million and approximately $1 million after taking into account the quota-share reinsurance agreement that FNIC has with Anchor Re, Inc. ("Anchor Re"). Furthermore, for Florida only losses, the carriers purchased second and third event coverage of 71.5% of $15 million excess of $10 million that reduces the second and third event retention for the carriers, from $25 million to $14.3 million per event, on a combined basis, which could be reduced further by an additional 28.5% placed on a parametric basis with an Excess and Surplus lines carrier that will provide coverage for the second and third Florida hurricane loss, if the first event loss criteria has been satisfied to the carriers after the inception of treaty. The amount of recovery with the parametric product is based on the magnitude of the hurricane and the proximity of the individual insured risk to the hurricane path. This coverage terminates on May 31, 2021. Furthermore, on September 3, 2020, the Company secured $39.2 million of reinsurance limit at an approximate cost of $11.2 million. This limit is available for Hurricane Delta and any subsequent events that occur during the remainder of the current treaty year. In addition, on October 13, 2020, the Company secured 50% of $10 million excess of $8 million of reinsurance limit at an approximate cost of $875 thousand to lower its retention and further protect FNIC’s non-Florida book of business written by SageSure. This limit was available for any named storm event during the remainder of 2020. On November 4, 2020, the Company secured an additional $13.5 million of reinsurance limit at an approximate cost of $2.0 million. This limit was available for any subsequent events that occurred for the remainder of 2020, except for Hurricane Eta. Effective January 1, 2021, the Company entered into a new aggregate excess of loss agreement on its MIC book of business. This new agreement provides reinsurance coverage on non-named storms, of 65% of $15 million excess of $10 million with a $0.9 million occurrence deductible and a $4.2 million occurrence limit at an approximate cost of $2.3 million. The carriers’ cost and amounts of reinsurance are based on current analysis of exposure to catastrophic risk. The data is subjected to exposure level analysis at various dates through December 31, 2020. This analysis of the carriers’ exposure levels in relation to the total exposures to the FHCF and excess of loss treaties may produce changes in retentions, limits and reinsurance premiums in total, and by carrier, as a result of increases or decreases in the carriers’ exposure levels. Quota-Share Reinsurance Programs FNIC's reinsurance programs also include quota-share treaties. One such treaty for 30% became effective July 1, 2014, and another for 10% became effective on July 1, 2015 with each running for two years. The combined treaties provided up to a 40% quota-share reinsurance on covered losses for the homeowners’ property and liability insurance program in Florida. The treaties are accounted for as retrospectively rated contracts whereby the estimated ultimate premium or commission is recognized over the period of the contracts. On July 1, 2016, the 30% quota-share treaty expired on a cut-off basis, which means as of that date the Company retained an incremental 30% of its unearned premiums and losses. On July 1, 2017, the 10% quota-share treaty expired on a cut-off basis, which means as of that date we retained an incremental 10% of the underlying unearned premiums and losses. The reinsurers remain liable for the paid losses occurring during the terms of the treaties, until each treaty is commuted. On July 1, 2017, FNIC bound a 10% quota-share on its Florida homeowners book of business, which excluded named storms, subject to certain limitations. This treaty is not subject to accounting as a retrospectively rated contract. This treaty expired on July 1, 2018 on a cut-off basis, meaning that the reinsurer will not be liable (under this agreement) for losses as a result of occurrences taking place after the date of termination, and the unearned premium previously ceded was returned to FNIC. On July 1, 2018, FNIC renewed the quota-share treaty on its Florida homeowners book of business, on an in-force, new and renewal basis, excluding named storms, which was initially set at a 2% cession, and is subject to certain limitations. In addition, this quota-share allowed FNIC to prospectively increase or decrease the cession percentage up to three times during the term of the agreement. Effective October 1, 2018, FNIC elected to increase the cession percentage from 2% to 10% on an in-force, new and renewal basis. The treaty expired on July 1, 2019 on a cut-off basis, meaning that the reinsurer will not be liable (under this agreement) for losses as a result of occurrences taking place after the date of termination, and the unearned premium previously ceded was returned to FNIC. On July 1, 2019, FNIC renewed the quota-share treaty on its Florida homeowners book of business, on an in-force, new and renewal basis, excluding named storms, which was set at a 10% cession and is subject to certain limitations. In addition, this quota-share allows FNIC the flexibility to prospectively increase or decrease the cession percentage up to three times during the term of the agreement. The treaty expired on July 1, 2020 on a cut-off basis, meaning that the reinsurer will not be liable (under this agreement) for losses as a result of occurrences taking place after the date of termination, and the unearned premium previously ceded was returned to FNIC. On July 1, 2020, FNIC renewed the quota-share treaty on its Florida homeowners book of business, on an in-force, new and renewal basis, excluding named storms, which was set at a 10% cession and is subject to certain limitations. In addition, this quota-share allows FNIC the flexibility to prospectively increase or decrease the cession percentage up to three times during the term of the agreement. On July 1, 2020, FNIC entered into a quota-share treaty on its non-Florida homeowners book of business with Anchor Re, an Arizona captive reinsurance entity that is an affiliate of SageSure. The treaty provides 50% quota-share reinsurance protection on claims incurred subsequent to July 1, 2020 on in-force, new and renewal business through June 30, 2021, subject to certain limitations, which include limits on the net losses that Anchor Re can realize during the treaty year. The treaty arrangement is fully collateralized through Anchor Re. The financial economics of this treaty substantially mirror the 50% profit-sharing arrangement that was previously in place. Thus, this treaty is not expected to have any impact on the pre-tax operating results of the Company, though the components of the combined ratio will be affected by the ceding of premiums, claims and commissions. On November 3, 2020, FNIC, with the agreement of Anchor Re, increased its cession percentage in this treaty from 50% to 80%, effective December 1, 2020, on claims incurred subsequent to December 1, 2020 on in-force, new and renewal basis. Effective October 1, 2020, FNIC, with the agreement of Swiss Re, increased its cession percentage on this treaty from 10% to 20% on an in-force, new and renewal basis. This treaty excludes named storms and includes a cap on non-named storm catastrophe losses (as discussed above). Effective November 15, 2020, FNIC entered into a new 10% quota-share reinsurance treaty through November 15, 2021 on its Florida homeowners book of business on an in-force, new and renewal basis. This treaty excludes all catastrophe losses and provides coverage only on attritional losses and is subject to certain limitations. Effective December 31, 2020, FNIC entered into an additional new 10% quota-share reinsurance treaty through December 31, 2021 on its Florida homeowners book of business on an in-force, new and renewal basis. This treaty excludes named storms, but otherwise contains no caps with respect to non-named storm catastrophe losses. As a result of these three actions, the Company now has 40% quota-share coverage in place through June 30, 2021, at which point 20% of this coverage will be up for renewal. It is the Company’s current intent to seek such renewal. Associated Trust Agreements Certain reinsurance agreements require FNIC to secure the credit, regulatory and business risk. Fully funded trust agreements securing these risks totaled less than $0.1 million as of December 31, 2020 and 2019. Reinsurance Recoverable, Net Amounts recoverable from reinsurers are recognized in a manner consistent with the claims liabilities associated with the reinsurance placement and presented on the consolidated balance sheet as reinsurance recoverable. Reinsurance recoverable, net consisted of the following: December 31, 2020 2019 (In thousands) Reinsurance recoverable on paid losses $ 54,898 $ 45,186 Reinsurance recoverable on unpaid losses 358,193 164,429 Allowance for credit loss (65) — Reinsurance recoverable, net $ 413,026 $ 209,615 As of December 31, 2020 and 2019, the Company had reinsurance recoverable of $304.3 million (as a result of Hurricanes Irma, Laura, Sally, Michael and Delta) and $163.7 million (as a result of Hurricanes Irma and Michael). Hurricane Delta made landfall in Louisiana on October 9, 2020 as a Category 2 hurricane impacting both Texas and Louisiana. Hurricane Sally made landfall in Alabama on September 16, 2020 as a Category 2 hurricane impacting both Alabama and the Florida panhandle. Hurricane Laura made landfall in Louisiana on August 27, 2020 as a Category 4 hurricane impacting both Louisiana and eastern Texas. Net Premiums Written and Net Premiums Earned Net premiums written and net premiums earned consisted of the following: Year Ended December 31, 2020 2019 2018 (In thousands) Net Premiums Written Direct $ 726,885 $ 610,608 $ 567,764 Ceded (490,262) (232,729) (202,732) $ 236,623 $ 377,879 $ 365,032 Net Premiums Earned Direct $ 720,967 $ 582,334 $ 580,020 Ceded (356,833) (218,682) (224,763) $ 364,134 $ 363,652 $ 355,257 |
ALLOWANCE FOR CREDIT LOSS
ALLOWANCE FOR CREDIT LOSS | 12 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
ALLOWANCES FOR CREDIT LOSS | 7. ALLOWANCES FOR CREDIT LOSS Overview There is significant risk and judgment involved in determining estimates of our allowances for credit loss, which reduce the amortized cost of an asset to produce an estimate of the net amount that will be collected over the asset's contractual life. Longer time horizons generally present more uncertainty in expected cash flow. We evaluate the expected credit loss of assets on an individual basis, except in cases where assets collectively share similar risk characteristics where we pool them together. We evaluate and estimate our allowances for credit loss by considering reasonable, relevant and supportable available information. Activity in the allowances for credit loss, by asset line item on the consolidated balance sheet, is summarized as follows: Debt Securities Reinsurance Held-to- Premiums Recoverable, Maturity Receivable Net Total (In thousands) Balance as of December 31, 2019 $ — $ 159 $ — $ 159 Cumulative effect of new accounting standard (1) 1 — 32 33 Credit loss expense (recovery) (2) (1) 74 33 106 Balance as of December 31, 2020 $ — $ 233 $ 65 $ 298 (1) Refer to Note 2 above about our adoption of ASU 2016-13 on January 1, 2020. (2) Reflected in commissions and other underwriting expenses on the consolidated statements of comprehensive income (loss). Accrued investment income is included in other assets on the consolidated balance sheet. We immediately write-off accrued investment income if it becomes uncollectible, therefore we do not measure or record an allowance for credit losses. Investments Our investment policy is established by the Board of Directors’ Investment Committee and is reviewed on a regular basis. This policy currently limits investment in non-investment-grade debt securities (including high-yield bonds), and limits total investments in preferred stock, common stock and mortgage notes receivable. We also comply with applicable laws and regulations that further restrict the type, quality and concentration of our investments. We do not use any swaps, options, futures or forward contracts to hedge or enhance our investment portfolio. Our investment portfolio has inherent risks because it contains volatility associated with market pricing and interest rate sensitive instruments, such as bonds, which may be adversely affected by changes in interest rates or credit worthiness. The effects of market volatility, declining economic conditions, such as a U.S. or global economic slowdown, whether due to COVID-19, or other factors, could adversely impact the credit quality of securities in our portfolio and may have unforeseen consequences on the liquidity and financial stability of the issuers of securities we hold. Our debt securities portfolio includes securities that: • Are explicitly guaranteed by a sovereign entity that can print its own currency; • The currency is routinely held by central banks, used in international commerce and commonly viewed as a reserve currency; and • Have experienced a consistent high credit rating by rating agencies and a long history with no credit losses. We believe if these governments were to technically default it is reasonable to assume an expectation of immaterial losses, even in the current strained market conditions. Refer to Note 5 above for the balances of these sovereign debt securities, which are reported in the following investment categories: • United States government obligations and authorities; • Obligations of states and political subdivisions; and • International. For our debt securities, available-for-sale, the fact that a security’s fair value is below its amortized cost is not a decisive indicator of credit loss. In many cases, a security’s fair value may decline due to factors that are unrelated to the issuer’s ability to pay. For this reason, we consider the extent to which fair value is below amortized cost in determining whether a credit-related loss exists. The Company also considers the credit quality rating of the security, with a special emphasis on securities downgraded below investment grade. A comparison is made between the present value of expected future cash flows for a security and its amortized cost. If the present value of future expected cash flows is less than amortized cost, a credit loss is presumed to exist and an allowance for credit loss is established. Management may conclude that a qualitative analysis is sufficient to support its conclusion that the present value of the expected cash flows equals or exceeds a security’s amortized cost. As a result of this review, management concluded that there were no credit-related impairments of our available-for-sale securities as of January 1, 2020, and December 31, 2020. Management does not intend to sell available-for-sale securities in an unrealized loss position, and it is not “more likely than not” that the Company will be required to sell these securities before a recovery in their value to their amortized cost basis occurs. Our equity investments are measured at fair value through net income (loss), therefore they do not require an allowance for credit loss. Premiums Receivable We do have collectability risk, but our homeowners policy terms are one year or less and our policyholders are dispersed throughout the southeast United States, although the majority of our policyholders are located in Florida. We write-off premiums receivable if the individual policy becomes uncollectible. Because collectively our premiums receivable share similar risk characteristics, we pool them to measure our valuation allowance for credit losses using an aging method approach. This method applies historical loss rates to levels of delinquency for our policy terms that are one year or less. Based upon historical collectability, adjusted for current and future economic conditions, we have measured and recorded our valuation allowances for premiums receivable. The aging of our premiums receivable and associated allowance for credit loss as of December 31, 2020 was as follows: Days Past Due Current 1-29 30-59 60-89 90 plus Total (In thousands) Amortized cost $ 46,376 $ 4,253 $ 159 $ 94 $ 154 $ 51,036 Allowance for credit loss — (43) (8) (28) (154) (233) Net $ 46,376 $ 4,210 $ 151 $ 66 $ — $ 50,803 Reinsurance Recoverable Refer to Note 6 above for details of our efforts to minimize our exposure to losses from a reinsurer’s inability to pay. We measure and record our valuation allowances for credit losses on our reinsurance recoverables asset by multiplying the probability the asset would default within a given timeframe (“PD”) by the percentage of the asset not expected to be collected upon default, or loss given default (“LGD”) and multiplying the result by the amortized cost of the asset. We use market observable data for our PD and LGD assumptions, and in cases where we are unable to observe LGD, we assume it is 100%. |
GOODWILL AND IDENTIFIABLE INTAN
GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS | 8. GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS The changes in carrying amount of goodwill were as follows: Gross Accumulated Goodwill Impairment Net as of as of Acquisition Goodwill Beginning- Beginning- Accounting as of End- of-Year of-Year Adjustments Impairment of-Year (In thousands) For the year ended December 31,: 2019 $ — $ — $ 10,997 $ — $ 10,997 2020 10,997 — — (10,997) — Related to our annual quantitative goodwill impairment assessment performed on October 1, our reporting unit is defined as consolidated FNHC. The fair value of the reporting unit, which we consider a Level 3 fair value estimate, is comprised of the value of in-force (i.e., existing) business and the value of new business. Specifically, new business is representative of cash flows and profitability associated with policies or contracts we expect to issue in the future, reflecting our forecasts of volume and product mix over a 10-year period. To determine the value of in-force and new business, we use a discounted cash flows technique that applies a discount rate reflecting the market expected, weighted-average rate of return adjusted for the risk factors associated with our operations to the projected future cash flow for our reporting unit. Coinciding with the preparation of the financial statements for the year ended December 31, 2020, the Company’s annual goodwill impairment testing has resulted in the conclusion that the goodwill intangible asset established in conjunction with the acquisition of the Maison Companies in December 2019 is impaired. Therefore, during the fourth quarter of 2020, we recorded a non-cash impairment charge of $11.0 million, against which there is no tax offset, representing the write-off of the full amount of our goodwill asset. The Company’s impairment analysis considered the earnings and share price of the Company and comparable companies, as well as projected cash flows. Continued adverse storm activity, higher excess of loss catastrophe reinsurance costs and the continued unfavorable claims environment in the state of Florida reduced the previously modeled fair value of the Company. These impacts, along with other information relevant to the estimated fair value of the Company, including the trading price of our shares, resulted in the impairment conclusion. The gross carrying amounts and accumulated amortization for each major specifically identifiable intangible asset class were as follows: December 31, 2020 December 31, 2019 Weighted- Gross Gross Average- Carrying Accumulated Carrying Accumulated Amortization Amount Amortization Amount Amortization Period (In thousands) Trade name (1) $ 1,100 $ — $ 1,800 $ — 0 Non-compete agreements (2) 300 162 300 13 2 Insurance licenses (3) 180 — 182 — 0 Total $ 1,580 $ 162 $ 2,282 $ 13 (1) This intangible has an indefinite useful life. We recorded impairment of $0.7 million in the year ended December 31, 2020, due primarily to a higher discount rate, which lowered the fair value. (2) Will become fully amortized during the year ended December 31, 2021. (3) This intangible has an indefinite useful life. We recorded impairment of $2 thousand for the year ended December 31, 2020, due primarily to a higher discount rate, which lowered the fair value. |
LOSS AND LOSS ADJUSTMENT RESERV
LOSS AND LOSS ADJUSTMENT RESERVES | 12 Months Ended |
Dec. 31, 2020 | |
Liability for Future Policy Benefit, before Reinsurance [Abstract] | |
LOSS AND LOSS ADJUSTMENT RESERVES | 9. LOSS AND LOSS ADJUSTMENT RESERVES The liability for loss and LAE reserves is determined on an individual-case basis for all claims reported. The liability also includes amounts for unallocated expenses, anticipated future claim development and IBNR. Activity in the liability for loss and LAE reserves is summarized as follows: Year Ended December 31, 2020 2019 2018 (In thousands) Gross reserves, beginning-of-period $ 324,362 $ 296,230 $ 230,515 Less: reinsurance recoverable (1) (164,429) (166,396) (98,345) Net reserves, beginning-of-period 159,933 129,834 132,170 Net reserves from the Maison Companies acquisition — 11,825 — Incurred loss, net of reinsurance, related to: Current year 358,952 262,118 231,133 Prior year loss development (redundancy) (2) 18,367 13,460 2,166 Ceded losses subject to offsetting experience account adjustments (3) (816) (2,489) (4,883) Prior years 17,551 10,971 (2,717) Amortization of acquisition fair value adjustment (54) (9) — Total incurred loss and LAE, net of reinsurance 376,449 273,080 228,416 Paid loss, net of reinsurance, related to: Current year 253,344 173,313 155,462 Prior years 100,799 81,493 75,290 Total paid loss and LAE, net of reinsurance 354,143 254,806 230,752 Net reserves, end-of-period 182,239 159,933 129,834 Plus: reinsurance recoverable (1) 358,128 164,429 166,396 Gross reserves, end-of-period $ 540,367 $ 324,362 $ 296,230 (1) Reinsurance recoverable in this table includes only ceded loss and LAE reserves. (2) Reflects loss development from prior accident years impacting pre-tax net income. Excludes losses ceded under retrospective reinsurance treaties to the extent there is an offsetting experience account adjustment. (3) Reflects losses ceded under retrospective reinsurance treaties to the extent there is an offsetting experience account adjustment, such that there is no impact on pre-tax net income (loss). The establishment of loss reserves is an inherently uncertain process and changes in loss reserve estimates are expected as such estimates are subject to the outcome of future events. The factors influencing changes in claim costs are often difficult to isolate or quantify and developments in paid and incurred losses from historical trends are frequently subject to multiple interpretations. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such adjustments are made. During the year ended December 31, 2020, the Company experienced $18.4 million of net unfavorable loss and LAE reserve development on prior accident years, primarily in its commercial general liability line of business as a result of higher than expected late reported claims across a number of accident years during 2020. During the year ended December 31, 2019, the Company experienced $13.5 million of net unfavorable loss and LAE reserve development on prior accident years, primarily in its personal automobile and commercial general liability lines of business. The development in commercial general liability was driven by late reported claims as well as large losses that drove up the overall severity metrics. Additionally, the unfavorable automobile development primarily related to 2017 accident year from our auto programs in the states of Georgia and Texas, and was driven by claims reopening and higher severity. During the year ended December 31, 2018, the Company experienced $2.2 million of net unfavorable loss and LAE reserve development on prior accident years, primarily driven by net development in our personal automobile line of business, partially offset by net redundancy in our homeowners line of business. The unfavorable development on automobile primarily related to the 2016 accident year in the state of Georgia. The favorable net redundancy on homeowners was primarily driven by lower LAE expenses associated with Hurricane Irma, partially offset by continued adverse impact from assignment of benefits (“AOB”) and related litigation costs in the state of Florida. As previously disclosed, the Company entered into 30% and 10% retrospectively-rated Florida-only property quota-share treaties, which ended on July 1, 2016 and 2017, respectively. These agreements included a profit share (experience account) provision, under which the Company will receive ceded premium adjustments at the end of the treaty to the extent there is a positive balance in the experience account. This experience account is based on paid losses rather than incurred losses. Due to the retrospectively-rated nature of this treaty, when the experience account is positive we cede losses under these treaties as the claims are paid with an equal and offsetting adjustment to ceded premiums (in recognition of the related change to the experience account receivable), with no impact on net income. Conversely, when the experience account is negative, the Company cedes losses on an incurred basis with no offsetting adjustment to ceded premiums, which impacts net income. Loss development can be either favorable or unfavorable regardless of whether the experience account is in a positive or negative position. AOB is a legal construct that allows a third party to step into the shoes of the insured and is then paid directly by an insurance company for services rendered on behalf of the insured for a covered loss. Absent an AOB, the insured would pay the third party and those costs would be reimbursed by the insurance company to the insured. AOB is commonly used when a homeowner experiences a water loss, for example a leaky pipe, an overflow from a sink, or a damaged appliance, and contacts a contractor or water remediation company. Misuse of this legal construct has led to contractors over inflating costs of claims and/or submitting improper claims, causing insurance companies to have to either pay the overinflated claim, fight the claim in court, or both. In all cases, AOB claims cost the insurance company, on average, more than five times the cost to settle non-AOB claims, which has been a primary driver the increase to our overall loss and loss adjustment in comparison to historical severity averages. The following tables provide incurred losses and allocated LAE ("ALAE") and cumulative paid losses and ALAE, net of reinsurance, for the prior 10 accident years, and the total of IBNR reserves plus expected development on reported claims and the cumulative number of reported claims (in thousands, except number of reported claims), as of the most recent reporting period, by the Company’s significant lines of business, which are homeowners, commercial general liability and automobile. IBNR & Expected Cumulative Homeowners Incurred Losses and ALAE, Net of Reinsurance Development on Number of For the Years Ended December 31, Reported Claims Reported Claims (1) (Unaudited) Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 2020 2011 $ 20,492 $ 21,344 $ 23,007 $ 23,932 $ 24,582 $ 25,957 $ 26,143 $ 26,394 $ 26,394 $ 26,375 $ 12 2,428 2012 23,032 23,301 24,186 24,468 25,889 26,356 26,836 26,951 26,984 85 2,694 2013 43,807 42,021 35,834 35,859 37,185 37,880 37,978 38,088 15 3,431 2014 64,312 63,300 61,770 62,206 61,817 62,043 62,535 378 7,606 2015 99,497 92,411 95,129 94,760 94,703 96,144 1,522 13,038 2016 171,264 162,043 158,764 157,880 156,316 1,394 22,614 2017 202,844 192,769 188,548 179,327 47,728 67,165 2018 210,158 213,128 216,570 20,849 35,817 2019 257,644 261,541 23,909 19,661 2020 342,119 236,080 35,117 Total $ 1,405,999 (1) The cumulative number of reported claims is measured by individual claimant at a coverage level. Homeowners Cumulative Paid Losses and ALAE, Net of Reinsurance For the Years Ended December 31, (Unaudited) Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 $ 11,119 $ 19,250 $ 21,323 $ 22,723 $ 24,047 $ 25,580 $ 25,982 $ 26,287 $ 26,340 $ 26,342 2012 13,693 20,728 23,120 23,923 25,186 26,113 26,777 26,861 26,901 2013 19,986 31,606 33,867 35,123 35,803 37,473 37,688 37,915 2014 37,033 53,831 57,891 59,722 60,555 61,441 61,692 2015 52,214 79,359 86,647 90,415 92,327 93,405 2016 102,556 142,716 148,274 152,258 153,997 2017 135,589 176,580 179,327 178,013 2018 141,173 194,160 206,133 2019 157,768 236,090 2020 236,197 $ 1,256,685 All outstanding liabilities for unpaid claims and ALAE prior to 2011, net of reinsurance — Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance $ 149,314 The following table provides supplementary information about the average annual percentage payout of incurred losses and ALAE, net of reinsurance, for homeowners policies, as of December 31, 2020: Average Annual Payout of Losses and ALAE, Net of Reinsurance (Unaudited) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Homeowners 62.0 % 25.6 % 4.6 % 1.9 % 1.8 % 2.3 % 1.0 % 0.6 % 0.2 % — % IBNR & Expected Cumulative Commercial General Liability Incurred Losses and ALAE, Net of Reinsurance Development on Number of For the Years Ended December 31, Reported Claims Reported Claims (Unaudited) Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 2020 2011 $ 6,436 $ 5,854 $ 4,749 $ 4,603 $ 4,760 $ 5,409 $ 6,254 $ 6,828 $ 7,817 $ 9,394 $ 1,572 1,367 2012 5,279 4,952 4,801 4,700 4,658 4,346 4,509 5,109 6,431 1,209 817 2013 7,095 5,069 5,221 5,502 5,704 5,580 5,984 7,588 1,245 759 2014 7,475 7,709 6,384 6,620 6,348 6,697 9,028 1,549 1,016 2015 8,082 7,008 6,020 5,377 7,947 9,141 2,043 877 2016 10,727 5,809 6,561 8,502 12,267 3,086 845 2017 8,289 7,853 6,558 8,519 3,369 639 2018 6,553 6,233 7,280 4,281 420 2019 1,604 2,535 1,826 114 2020 37 — 6 Total $ 72,220 Commercial General Liability Cumulative Paid Losses and ALAE, Net of Reinsurance For the Years Ended December 31, (Unaudited) Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 $ 764 $ 2,763 $ 3,366 $ 3,673 $ 4,246 $ 4,866 $ 5,831 $ 6,349 $ 7,365 $ 7,693 2012 871 1,714 2,632 3,342 3,686 3,841 4,098 4,521 4,790 2013 882 2,233 3,366 3,867 4,606 5,033 5,467 5,847 2014 717 2,593 3,855 4,375 5,130 6,270 6,901 2015 798 2,296 3,249 3,827 5,866 6,566 2016 1,515 3,657 5,088 6,606 8,382 2017 1,592 2,478 3,293 4,225 2018 963 1,554 2,604 2019 147 424 2020 5 Total $ 47,437 All outstanding liabilities for unpaid claims and ALAE prior to 2011, net of reinsurance 3,545 Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance $ 28,328 The following table provides supplementary information about the average annual percentage payout of incurred losses and ALAE, net of reinsurance, for commercial general liability policies, as of December 31, 2020: Average Annual Payout of Losses and ALAE, Net of Reinsurance (Unaudited) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Commercial general liability 10.2 % 14.1 % 10.4 % 7.2 % 10.3 % 6.5 % 6.3 % 5.0 % 7.2 % 4.7 % IBNR & Expected Cumulative Automobile Incurred Losses and ALAE, Net of Reinsurance Development on Number of For the Years Ended December 31, Reported Claims Reported Claims (Unaudited) Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 2020 2011 $ 3,580 $ 3,350 $ 2,954 $ 2,912 $ 2,762 $ 2,848 $ 2,796 $ 2,756 $ 2,762 $ 2,760 $ — 789 2012 1,735 1,741 1,717 1,424 1,455 1,491 1,448 1,444 1,448 4 824 2013 1,517 1,863 1,826 1,829 2,161 2,123 2,127 2,127 6 3,471 2014 2,038 3,213 3,551 4,315 4,379 4,417 4,413 4 6,019 2015 3,045 2,882 2,781 2,878 2,915 2,944 14 6,553 2016 13,414 20,205 24,346 25,918 25,923 251 67,655 2017 20,411 22,472 24,579 24,669 740 52,885 2018 3,513 4,623 4,439 887 9,604 2019 (3) — 2 101 2020 — — 1 Total $ 68,723 Automobile Cumulative Paid Losses and ALAE, Net of Reinsurance For the Years Ended December 31, (Unaudited) Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 $ 1,417 $ 2,381 $ 2,562 $ 2,644 $ 2,726 $ 2,755 $ 2,755 $ 2,755 $ 2,755 $ 2,755 2012 867 1,293 1,333 1,384 1,393 1,430 1,444 1,447 1,449 2013 907 1,609 1,906 2,069 2,109 2,112 2,116 2,116 2014 1,455 3,120 3,678 4,122 4,291 4,383 4,396 2015 1,393 2,293 2,670 2,807 2,890 2,897 2016 8,084 17,258 23,053 25,582 26,132 2017 12,821 20,762 23,860 24,468 2018 2,331 3,626 3,137 2019 (5) — 2020 — Total $ 67,350 All outstanding liabilities for unpaid claims and ALAE prior to 2011, net of reinsurance 15 Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance $ 1,388 The following table provides supplementary information about the average annual percentage payout of incurred losses and ALAE, net of reinsurance, for automobile policies, as of December 31, 2020: Average Annual Payout of Losses and ALAE, Net of Reinsurance (Unaudited) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Automobile 42.3 % 33.5 % 14.2 % 6.2 % 2.3 % 1.2 % 0.3 % — % — % — % The reconciliation of the net incurred and paid development tables to the liability for unpaid losses and LAE in the consolidated balance sheets is as follows: December 31, 2020 2019 (In thousands) Liabilities for unpaid losses and ALAE: Homeowners $ 149,314 $ 137,168 Commercial general liability 28,328 17,014 Automobile 1,388 2,142 Flood — — Total liabilities for unpaid losses and ALAE, net of reinsurance 179,030 156,324 Reinsurance recoverables: Homeowners 353,741 160,578 Commercial general liability — 500 Automobile 1,424 3,228 Flood 2,963 123 Total reinsurance recoverables 358,128 164,429 Unallocated loss adjustment expenses 3,209 3,609 Gross liability for unpaid losses and LAE $ 540,367 $ 324,362 Management establishes a liability on an aggregate basis to provide for the estimated IBNR. The estimates of the liability for loss and LAE reserves are subject to the effect of trends in claims severity and frequency and are continually reviewed. As part of this process, we review historical data and consider various factors, including known and anticipated legal developments, inflation and economic conditions. As experience develops and other data become available, these estimates are revised, as required, resulting in increases or decreases to the existing liability for loss and LAE reserves. Adjustments are reflected in results of operations in the period in which they are made and the liabilities may deviate substantially from prior estimates. Various actuarial methods are utilized to determine the reserves that are booked to our financial statements. Weightings of tests and methods at a detailed level may change from evaluation to evaluation based on a number of observations, measures and time elements. On an overall basis, changes to methods and/or assumptions underlying reserve estimations and selections as of December 31, 2020 and 2019, were not considered material, except for our commercial general liability line of business. For this line of business, we updated our actuarial assumptions to reflect the new, emerging trend relating to the increased level of new claims being reported related to construction defects, as the new development patterns are different than the historical patterns. IBNR reserves are established for the quarter and year-end based on a quarterly reserve analysis by our actuarial staff. Various standard actuarial tests are applied to subsets of the business at a line of business and coverage basis. Included in the analyses are the following: • Reported Loss Development Method : A reported loss development pattern is calculated based on historical loss development data, and this pattern is then used to project the latest evaluation of cumulative reported losses for each accident year or underwriting year, as appropriate, to ultimate levels; • Paid Development Method : A paid loss development pattern is calculated based on historical paid loss development data, and this pattern is then used to project the latest evaluation of cumulative paid losses for each accident year or underwriting year, as appropriate, to ultimate levels; • Expected Loss Ratio Method : Expected loss ratios are applied to premiums earned, based on historical company experience, or historical insurance industry results when company experience is deemed not to be sufficient; and • Bornhuetter-Ferguson Method : The results from the Expected Loss Ratio Method are essentially blended with either the Reported Loss Development Method or the Paid Development Method. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | 10. LONG-TERM DEBT Long-term debt consisted of the following: December 31, 2020 2019 (In thousands) Senior unsecured fixed rate notes, due March 15, 2029, net of deferred financing costs of $1,317 and $1,478, respectively $ 98,683 $ 98,522 Total long-term debt, net $ 98,683 $ 98,522 As of December 31, 2020, the Company’s estimated annual aggregate amount of debt maturities includes the following: Aggregate Debt For the Years Ending December 31, Maturities (In thousands) 2021 $ — 2022 — 2023 — 2024 — 2025 — Thereafter 100,000 Total debt maturities 100,000 Less: deferred financing costs 1,317 Total debt maturities, net $ 98,683 Senior Unsecured Notes On March 5, 2019, the Company completed a private placement offering and issued $100.0 million in principal amount of Senior Unsecured Fixed Rate Notes due 2029 (the "Notes"), pursuant to an indenture dated as of March 5, 2029 (the "Indenture"). The Notes mature on March 15, 2029 and bear interest at a fixed rate of 7.5% per year, payable semi-annually in arrears, subject to increases in the interest rate payable in the event of a downgrade below "BBB-" in the credit rating assigned to the Notes. The Notes are not convertible or exchangeable for any equity securities, other securities or assets of the Company or any subsidiary. A portion of the cash from the offering was used to redeem all $45.0 million of the Company's Senior Unsecured Fixed Rate Notes Due 2022 and the Company's Senior Notes Due 2027. We recognized $3.6 million as interest expense in our consolidated statements of operations for the year ended 2019, for prepayment fees, including the write-off unamortized debt issuance costs on the repayment. The Company may redeem the Notes under certain circumstances as set forth in the Indenture. Prior to March 15, 2024, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100.00% of the principal amount of the Notes to be redeemed, plus the “Applicable Premium,” plus accrued and unpaid interest on such Notes, if any, on the Notes redeemed, to the applicable redemption date. The “Applicable Premium” is defined in the Indenture to mean, with respect to any Note on any applicable redemption date, the greater of (1) 1.0% of the then-outstanding principal amount of such Note and (2) the excess (if any) of: (A) the present value at such redemption date of (i) the applicable redemption price of such Note at March 15, 2024 (excluding any accrued but unpaid interest), plus (ii) all required interest payments due on such Note through March 15, 2024 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate (as defined in the Indenture) on such redemption date plus 50 basis points; over (B) the then-outstanding principal amount of such Note. On and after March 15, 2024, the Company may redeem the Notes, in whole or in part, at 103.750% in 2024, 101.875% in 2025, and 100% in 2026 and thereafter, together with any accrued and unpaid interest on the Notes being redeemed to but excluding the date of redemption. If a change in control of the Company, as defined in the Indenture, occurs, the holders of the Notes will have the right to require the Company to purchase all or a portion of their Notes at a price in cash equal to 101% of the principal amount thereof, plus any accrued but unpaid interest. The Notes are senior unsecured obligations of the Company and will rank equally with all of the Company’s other future senior unsecured indebtedness. The Indenture includes customary covenants and events of default. Among other things, the covenants restrict the ability of the Company and its subsidiaries to incur additional indebtedness or make restricted payments, including dividends, and under certain circumstances, the Company is required to maintain certain levels of reinsurance coverage while the Notes remain outstanding, and maintain certain other financial covenants. These covenants are subject to important exceptions and qualifications set forth in the Indenture. Principal and interest on the Notes are subject to acceleration in the event of certain events of default, including automatic acceleration upon certain bankruptcy-related events. The Company's debt to capital ratio exceeds 35%, therefore the Company is precluded from incurring additional debt, repurchasing shares of our common stock or paying common stock dividends. No acceleration of the related debt is mandated due to the fact that catastrophic weather events drove the ratio over 35% rather than specific actions taken by the Company. The Company's actual debt to capital ratio as of December 31, 2020 was approximately 38.4%. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 11. INCOME TAXES The components of income tax expense (benefit) include the following: Year Ended December 31, 2020 2019 2018 (In thousands) Federal: Current $ (29,449) $ (982) $ 5,162 Deferred (3,494) 567 (751) Federal income tax expense (benefit) (32,943) (415) 4,411 State: Current (403) 241 1,383 Deferred (150) (124) (296) State income tax expense (benefit) (553) 117 1,087 Total income tax expense (benefit) $ (33,496) $ (298) $ 5,498 The actual income tax expense (benefit) differs from the “expected” income tax expense (benefit) (computed by applying the combined applicable effective federal and state tax rates to income before income tax expense) as follows: Year Ended December 31, 2020 2019 2018 (In thousands) Computed expected tax expense provision, at federal rate $ (23,447) $ 150 $ 4,244 State tax, net of federal tax benefit (3,157) (122) 761 Tax-exempt interest (5) (3) (134) Income subject to dividends-received deduction (26) (34) (13) Goodwill impairment 2,309 — — Return to provision (3,407) (307) 158 Executive compensation 41 230 436 Meals and entertainment 13 43 28 Uncertain tax position (179) (203) — Rate difference on NOL carryback (8,785) (113) — Change in valuation allowance 2,968 — — Other 179 61 18 Total income tax expense (benefit) $ (33,496) $ (298) $ 5,498 In response to COVID-19, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act contains several relief provisions for corporations and lifts certain deduction limitations originally imposed by the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”) signed into law on December 22, 2017. The CARES Act, among other things, includes temporary changes regarding the prior and future utilization of net operating losses (“NOL”), temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes and the creation of certain refundable employee retention credits. The Company utilized the NOL provision in the current year. Our effective income tax rate is the ratio of income tax expense (benefit) over our income (loss) before income taxes. For the years ended December 31, 2020, 2019 and 2018, the effective income tax rate was 30.0%, (41.8)% and 27.2%, respectively. Differences in the effective tax and the statutory Federal income tax rate of 21% in 2020, 2019 and 2018, are driven by state income taxes and anticipated annual permanent differences, including estimates for tax-exempt interest, dividends received deduction, executive compensation as well as the NOL provision in the current year, as discussed above. As of December 31, 2020, we had NOL carryforwards for Federal tax purposes of $11.1 million. As of December 31, 2020, we had NOL carryforwards for state tax purposes of $73.0 million expiring between 2037 and 2040 and $12.0 million that do not expire. The amount and timing of realizing these NOL carryforwards depend on future taxable income and limitations imposed by tax laws. The Company has a valuation allowance of $3.0 million and $0 on its deferred income tax asset as of December 31, 2020 and 2019, respectively. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense (benefit) in the consolidated statements of operations and statements of comprehensive income (loss). A reconciliation of these uncertain tax positions was as follows: Year Ended December 31, 2020 2019 2018 (In thousands) Balance at January 1 $ 382 $ 585 $ 585 Increases/(decreases) for uncertain tax positions taken during the prior years (179) (203) — Balance at December 31 $ 203 $ 382 $ 585 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. Significant components of the Company’s deferred income tax asset (liability), net include the following: As of December 31, 2020 2019 (In thousands) Deferred income tax assets: Unearned premiums $ 5,611 $ 10,232 Unpaid losses and loss adjustment expenses 581 1,596 Accrued expenses 236 216 Net operating loss carryforwards 5,350 2,095 Share-based compensation 232 161 Depreciation and amortization 412 — Lease liability 1,783 1,655 Other 69 23 Gross deferred income tax assets 14,274 15,978 Valuation allowance (2,968) — Total deferred income tax assets 11,306 15,978 Deferred income tax liabilities: Deferred acquisition costs and other (6,387) (12,703) Depreciation and amortization — (1,679) Unrealized gains on investment securities (2,865) (3,270) Lease asset (1,783) (1,655) Other (213) (257) Total deferred income tax liabilities (11,248) (19,564) Deferred income tax asset (liability), net $ 58 $ (3,586) The deferred income tax asset (liability), net along with income tax receivable, net is included in current and deferred income taxes, net on our Consolidated Balance Sheets. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES Litigation and Legal Proceedings In the ordinary course of business, the Company is involved in various legal proceedings, specifically claims litigation. The Company’s insurance subsidiaries participate in most of these proceedings by either defending third-party claims brought against insureds or litigating first-party coverage claims. The Company accounts for such activity through the establishment of loss and LAE reserves. The Company’s management believes that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and costs of defense, is immaterial to the Company’s consolidated financial statements. The Company is also occasionally involved in other legal and regulatory proceedings, some of which may assert claims for substantial amounts, making the Company party to individual actions in which extra contractual damages, punitive damages or penalties, such as claims alleging bad faith in the handling of insurance claims, are sought. The Company reviews the outstanding matters, if any, on a quarterly basis. The Company accrues for estimated losses and contingent obligations in the consolidated financial statements if and when the obligation or potential loss from any litigation, legal proceeding or claim is considered probable and the amount of the potential exposure is reasonably estimable. The Company records such probable and estimable losses, through the establishment of legal expense reserves. As events evolve, facts concerning litigation and contingencies become known and as additional information becomes available, the Company’s management reassesses its potential liabilities related to pending claims and litigation and may revise its previous estimates and make appropriate adjustment to the financial statements. Estimates that require judgment are subject to change and are based on management’s assessment, including the advice of legal counsel, the expected outcome of litigation and legal proceedings or other dispute resolution proceedings or the expected resolution of contingencies. The Company’s management believes that the Company’s accruals for probable and estimable losses are reasonable and that the amounts accrued do not have a material effect on the Company’s consolidated financial statements. Regarding the matter involving the Co-Existence Agreement effective as of August 30, 2013 with Federated Mutual Insurance Company ("Mutual") and the related arbitration (please see Note 9 of our 2018 Form 10-K for more information), the Company and Mutual have exchanged releases and all remaining pending proceedings have been resolved by an agreed order entered by the U.S. District Court for the Northern District of Illinois on November 22, 2019. Assessment Related Activity The Company operates in a regulatory environment where certain entities and organizations have the authority to require us to participate in assessments. Currently these entities and organizations include: Florida Insurance Guaranty Association (“FIGA”), Citizens Property Insurance Corporation (“Citizens”), FHCF, Georgia Insurers Insolvency Pool (“GIIP”), Special Insurance Fraud Fund (“SIIF”), Fair Access to Insurance Requirements Plan (“FAIRP”), Property Insurance Association of Louisiana (“PIAL”), South Carolina Property & Casualty Insurance Guaranty Association (“SCPCIGA”), Texas Property and Casualty Insurance Guaranty Association (“TPCIGA”), Texas Windstorm Insurance Association (“TWIA”), Alabama Insurance Guaranty Association (“AIGA”), and Alabama Insurance Underwriters Association (“AIUA”). As a direct premium writer, we are required to participate in certain insurer solvency associations under the applicable laws in the states which we do business. One form of assessment requires us to collect the assessment from our policyholders and then remit the collected amounts to the assessing entity, which does not have any impact on our financial results. We are also subject to assessments that require us to pay the full amount of the assessment to the assessing entity and then we are permitted to make rate filings to allow us to recoup the amount of the assessment from our policyholders over time. In connection with its automobile line of business, which is currently winding down, FNIC is also required to participate in an insurance apportionment plan under Florida law, which is referred to as a JUA Plan. The JUA Plan provides for the equitable apportionment of any profits realized, or losses and expenses incurred, among participating automobile insurers. In the event of an underwriting deficit incurred by the JUA Plan, which is not recovered through the policyholders in the JUA Plan, such deficit shall be recovered from the companies participating in the JUA Plan in the proportion that the net direct written premiums of each such member during the preceding calendar year bear to the aggregate net direct premiums written in this state by all members of the JUA Plan. There were no material assessments by the JUA Plan as of December 31, 2020. Future assessments by the JUA and the JUA Plan are indeterminable at this time. Leases The Company is committed under various operating lease agreements for office space. FNHC and its subsidiaries lease certain facilities, furniture and equipment under long-term lease agreements. Rental expense for the years ended December 31, 2020, 2019 and 2018 was $1.1 million, $1.0 million and $0.7 million, respectively. Future minimum lease payments under these agreements are as follows: Aggregate Minimum Year Ended December 31, Lease Payments (In thousands) 2021 $ 1,066 2022 1,098 2023 1,131 2024 1,164 2025 1,115 Thereafter 3,318 Total $ 8,892 The right-of-use asset is reflected in other assets and the lease liability is reflected in other liabilities on our consolidated balance sheets. Lease expense, net of sublease income is reflected in general and administrative expenses on our consolidated statements of operations. Additional information related to our operating lease agreement for office space consisted of the following: December 31, 2020 2019 (In thousands) Right-of-use asset $ 7,430 $ 8,096 Accrued rent (259) (317) Right-of-use asset, net $ 7,171 $ 7,779 Lease liability $ 7,430 $ 8,096 Weighted average discount rate 4.70 % 4.70 % Weighted average remaining years of lease term 7.7 8.7 Year Ended December 31, 2020 2019 (In thousands) Lease expense $ 1,118 $ 1,046 Sublease income (466) (229) Lease expense, net $ 652 $ 817 Net cash provided by (used in) operating activities $ (555) $ (573) The interest rates implicit in our leases were not known, therefore the weighted-average discount rate above was determined by what FedNat would have had to pay to borrow the lease payments in a similar economic environment that existed at inception of our leases while considering our general credit and the theoretical collateral of the office space. In the event of a change to lease term, the Company would re-evaluate all inputs and assumptions, including the discount rate. Refer to Note 2 above for additional information regarding the implementation of new lease accounting rules on January 1, 2019. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | 13. SHAREHOLDERS’ EQUITY Common Stock Repurchases The Company has previously repurchased shares of its common stock in open market transactions complying with Rules 10b-18 and 10b5-1 under the Exchange Act. These repurchases were based on assessments of the Company’s capital needs at the time, the market prices of the Company’s common stock, and general market conditions. The amount and timing of such repurchases were subject to market conditions, applicable legal requirements and other factors. At the present time, the Company is prohibited from undertaking any share repurchases under the terms of its senior note indenture. In December 2017, the Company’s Board of Directors authorized an additional share repurchase program under which the Company may repurchase up to $10.0 million (plus $0.8 million remaining from previous authorization which was fully expended as of March 31, 2018) of its outstanding shares of common stock through December 31, 2018. The unused portion of this authorization expired on December 31, 2018. In December 2018, the Company’s Board of Directors authorized an additional share repurchase program under which the Company may repurchase up to $10.0 million of its outstanding shares of common stock through December 31, 2019. During the year ended December 31, 2019, the Company repurchased 237,647 shares of its common stock at a total cost of $3.9 million, which is an average price per share of $16.27. The unused portion of this authorization expired on December 31, 2019. In December 2019, the Company's Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $10 million of its outstanding shares of common stock from January 1, 2020 through December 31, 2020. In March 2020, the Company’s Board of Directors authorized an additional $10.0 million increase to the share repurchase program. This increased authorization allowed the Company to purchase up to $20 million of shares outstanding through December 31, 2020. During the year ended December 31, 2020, the Company repurchased 800,235 shares of its common stock at a total cost of $10.0 million, which is an average price per share of $12.50. The unused portion of this authorization expired on December 31, 2020. Securities Offerings In June 2018, the Company filed with the Securities and Exchange Commission (“SEC”) on Form S-3, a shelf registration statement enabling the Company to offer and sell, from time to time, up to an aggregate of $150.0 million of securities. Refer to Note 18 for information on securities that were recently sold under this registration statement. Stock Compensation Plan In June 2018, the Company filed with the SEC on Form S-8, a registration statement registering 800,000 shares of common stock reserved for issuance under the Company’s 2018 Omnibus Incentive Compensation Plan (the “2018 Plan”). The 2018 Plan, which was approved by the Company’s shareholders at the 2018 annual meeting is an equity compensation plan that may be used for our employees, non-employee directors, consultants and advisors. Share-Based Compensation Expense Share-based compensation arrangements include the following: Year Ended December 31, 2020 2019 2018 (In thousands) Restricted stock $ 1,409 $ 1,841 $ 2,134 Performance stock 171 335 233 Total share-based compensation expense $ 1,580 $ 2,176 $ 2,367 Recognized tax benefit $ 634 $ 534 $ 600 Intrinsic value of options exercised 110 2 229 Fair value of restricted stock vested 1,659 1,977 2,360 The intrinsic value of options exercised represents the difference between the stock option exercise price and the weighted-average closing stock price of FNHC common stock on the exercise dates, as reported on the NASDAQ Global Market. The unamortized share-based compensation expense is $3.4 million as of December 31, 2020, which will be recognized over the remaining weighted average vesting period of approximately 1.96 years. Stock Option Awards A summary of the Company’s stock option activity includes the following: Weighted Average Number of Option Shares Exercise Price Outstanding at January 1, 2018 50,351 $ 3.72 Granted — — Exercised (10,834) 3.47 Cancelled (500) 2.45 Outstanding at December 31, 2018 39,017 3.80 Granted — — Exercised (167) 2.45 Cancelled — — Outstanding at December 31, 2019 38,850 3.80 Granted — — Exercised (13,433) 3.16 Cancelled — — Outstanding at December 31, 2020 25,417 $ 4.01 Stock options outstanding and exercisable in a select price range is as follows: Options Outstanding and Exercisable Weighted Average Remaining Shares Outstanding Contractual Life Weighted Average Aggregate Range of Exercise Price and Exercisable (years) Exercise Price Intrinsic Value $2.45 - $4.40 25,417 1.14 $4.01 48,546 Restricted Stock Awards The Company recognizes share-based compensation expense for all RSAs held by the Company’s directors, executives and other key employees. For all RSA awards, excluding grants based on total relative shareholder return ("TSR"), the accounting charge is measured at the grant date as the fair value of FNHC common stock and expensed as non-cash compensation over the vesting term using the straight-line basis for service awards and over successive one-year requisite service periods for performance-based awards. Our expense for our performance awards depends on achievement of specified results; therefore the ultimate expense can range from 0% to 250% of target. Our TSR-based cliff vesting awards contain performance criteria which are tied to the achievement of certain market conditions. The TSR grant date fair value was determined using a Monte Carlo simulation and, unlike the performance condition awards, the expense is not reversed if the performance condition is not met. This value is recognized as expense over the requisite service period using the straight-line recognition method. During the years ended December 31, 2020 and 2019, the Board of Directors granted 210,272 and 140,156 RSAs, respectively, vesting over three RSA activity includes the following: Weighted Average Number of Grant Date Shares Fair Value Outstanding at January 1, 2018 297,543 $ 20.54 Granted 133,060 16.31 Vested (112,071) 21.06 Cancelled (56,198) 17.87 Outstanding at December 31, 2018 262,334 18.78 Granted 140,156 18.03 Vested (94,755) 20.87 Cancelled (52,390) 17.66 Outstanding at December 31, 2019 255,345 17.82 Granted 210,272 11.82 Vested (89,889) 18.46 Cancelled — — Outstanding at December 31, 2020 375,728 $ 14.32 The weighted average grant date fair value is measured using the closing price of FNHC common stock on the grant date, as reported on the NASDAQ Global Market. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) associated with debt securities - available-for-sale consisted of the following: Year Ended December 31, 2020 2019 Before Income Net Before Income Net (In thousands) Accumulated other comprehensive income (loss), beginning-of-period $ 13,621 $ (3,340) $ 10,281 $ (5,023) $ 1,273 $ (3,750) Other comprehensive income (loss) due to debt securities - held to maturity reclassified to available-for-sale (58) 14 (44) — — — Other comprehensive income (loss) before reclassification 19,114 (4,688) 14,426 20,809 (5,144) 15,665 Reclassification adjustment for realized losses (gains) included in net income (17,591) 4,314 (13,277) (2,165) 531 (1,634) 1,523 (374) 1,149 18,644 (4,613) 14,031 Accumulated other comprehensive income (loss), end-of-period $ 15,086 $ (3,700) $ 11,386 $ 13,621 $ (3,340) $ 10,281 |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLAN | 14. EMPLOYEE BENEFIT PLAN The Company sponsors a profit sharing plan under Section 401(K) of the Internal Revenue Code, which is a defined contribution plan that allows employees to defer compensation through contributions to the 401(K) Plan. This plan covers substantially all employees who meet specified service requirements and includes a 100% match up to the first 6% of an employee’s salary, not to exceed statutory limits. Additionally, the Company may make additional profit-sharing contributions. For the years ended December 31, 2020, 2019 and 2018, the Company made no additional profit-sharing contribution. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 15. RELATED PARTY TRANSACTIONS Related to an equity method investment in Southeast Catastrophe Consulting Company, LLC, based in Mobile, Alabama, the Company recorded pre-tax claims adjustment service fees and other expenses of $6.7 million for the year ended December 31, 2018. Additionally, the Company recognized other income in the consolidated statements of operations, of $2.2 million, $0.3 million, $0.3 million for the years ended December 31, 2020, 2019 and 2018, respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 16. EARNINGS PER SHARE Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the period, including vested restricted stock awards during the period. Diluted EPS is computed by dividing net income by the weighted average number of shares outstanding, noted above, adjusted for the dilutive effect of stock options and unvested restricted stock awards. Dilutive securities are common stock equivalents that are freely exercisable into common stock at less than market prices or otherwise dilute earnings if converted. The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the assumed exercise of common stock options and the vesting of RSAs using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is antidilutive. The following table presents the calculation of basic and diluted EPS: Year Ended December 31, 2020 2019 2018 (In thousands, except per share data) Net income (loss) attributable to FedNat Holding Company shareholders $ (78,158) $ 1,011 $ 14,928 Weighted average number of common shares outstanding - basic 13,846 12,977 12,775 Net income (loss) per common share - basic ($5.64) $0.08 $1.17 Weighted average number of common shares outstanding - basic 13,846 12,977 12,775 Dilutive effect of stock compensation plans — 46 92 Weighted average number of common shares outstanding - diluted 13,846 13,023 12,867 Net income (loss) per common share - diluted $ (5.64) $ 0.08 $ 1.16 Dividends per share $ 0.36 $ 0.33 $ 0.24 Dividends Declared In February 2020, our Board of Directors declared a $0.09 per common share dividend, payable in March 2020, to shareholders of record on February 14, 2020. amounting to $1.3 million. In April 2020, our Board of Directors declared a $0.09 per common share dividend, payable in June 2020, to shareholders of record on May 15, 2020, amounting to $1.3 million. In July 2020, our Board of Directors declared a $0.09 per common share dividend, payable in September 2020, to shareholders of record on August 14, 2020, amounting to $1.2 million. In November 2020, our Board of Directors declared a $0.09 per common share dividend, payable in December 2020, to shareholders of record on November 16, 2020, amounting to $1.3 million. |
STATUTORY ACCOUNTING AND DIVIDE
STATUTORY ACCOUNTING AND DIVIDEND RESTRICTIONS | 12 Months Ended |
Dec. 31, 2020 | |
STATUTORY ACCOUNTING AND DIVIDEND RESTRICTIONS [Abstract] | |
STATUTORY ACCOUNTING AND DIVIDEND RESTRICTIONS | 17. STATUTORY ACCOUNTING AND DIVIDEND RESTRICTIONS The Company’s insurance companies are subject to regulations and standards of the Florida Office of Insurance Regulation (the "Florida OIR") and Louisiana Department of Insurance (the "LDI"). These standards require that insurance companies prepare statutory-basis financial statements in accordance with the National Association of Insurance Commissioners (“NAIC”) Accounting Practices and Procedures Manual. The Company did not use any prescribed or permitted statutory accounting practices that differed from the NAIC’s statutory accounting practices as of December 31, 2020. The Company’s insurance companies are required to report their risk-based capital (“RBC”) each December 31. Failure to maintain an adequate RBC could subject the Company to regulatory action and could restrict the payment of dividends. As of December 31, 2020, the RBC levels of the Company’s insurance companies did not subject them to any regulatory action. Additionally, Florida Statutes require the Company’s Florida domiciled insurance companies to maintain specified levels of statutory capital and restrict the timing and amount of dividends and other distributions that may be paid to the parent company. These standards require dividends to be paid only from statutory unassigned surplus. The maximum dividend that may be paid by the Company’s insurance companies to their parent company, without prior regulatory approval is limited to the lesser of statutory net income from operations of the preceding calendar year, not including realized capital gains, plus a 2 years carryforward or 10% of statutory unassigned surplus as of the preceding year end. A dividend may also be taken without prior regulatory approval if (a) the dividend is equal to or less than the greater of (i) 10% of the insurer’s surplus as to policyholders derived from realized net operating profits on its business and net realized capital gains; or (ii) the insurer’s entire net operating profits and realized net capital gains derived during the immediately preceding calendar year; (b) the insurer will have surplus as to policyholders equal to or exceeding 115 percent of the minimum required statutory surplus as to policyholders after the dividend or distribution is made; and (c) the insurer has filed notice with the Florida OIR at least 10 business days prior to the dividend payment or distribution, or such shorter period of time as approved by the Florida OIR on a case-by-case basis. These dividends are referred to as “ordinary dividends.” However, if a dividend, together with other dividends paid within the preceding 12 months, exceeds this statutory limit or is paid from sources other than earned surplus, the entire dividend is generally considered an “extraordinary dividend” and must receive prior regulatory approval before such dividend can be paid. With respect to the Company's Louisiana domiciled insurer, Louisiana law restricts a domestic insurer from declaring and paying any dividends to its stockholders unless its capital is fully paid in cash and is unimpaired and it has a surplus beyond its capital stock and the initial minimum surplus required and all other liabilities equal to fifteen percent of its capital stock, provided that this restriction shall not apply when an insurer's paid-in capital and surplus exceeds the minimum required by Louisiana law by one hundred percent or more. No extraordinary dividend or other extraordinary distribution to its shareholders may be made until 30 days after the commissioner of insurance has received notice of the declaration thereof and has not within that period disapproved the payment, or has approved the payment within the thirty-day period. An extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends or distributions made within the preceding twelve months exceeds the lesser of (a) 10% percent of the insurer's surplus as regards policyholders as of the 31st day of December next preceding; or (b) the net income, not including realized capital gains, for the twelve-month period ending the 31st day of December next preceding, but shall not include pro rata distributions of any class of the insurer's own securities. In determining whether a dividend or distribution is extraordinary, an insurer may carry forward net income from the previous two calendar years that has not already been paid out as dividends. This carryforward shall be computed by taking the net income from the second and third preceding calendar years, not including realized capital gains, less dividends paid in the second and immediate preceding calendar years. Notwithstanding the foregoing, an insurer may declare an extraordinary dividend or distribution which is conditional upon regulatory approval. and the declaration shall confer no rights upon shareholders until either the payment is approved or has not been disapproved within the 30-day period referred to above. As noted above, authorization to issue dividends from the insurance companies is based on achieving certain financial results and regulatory approvals. Due to the financial results, we have neither applied for regulatory approval nor are we authorized to issue dividends from the insurance carriers at this time. As of December 31, 2020 and 2019, on a combined statutory basis, the capital and surplus of the Company’s insurance companies was $145.2 million and $192.5 million, respectively. Combined statutory operational results of the Company’s insurance companies was a net loss of $57.5 million, net loss of $36.8 million and net income of $2.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. Statutory capital and surplus exceeds amounts necessary to satisfy regulatory requirements. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 18. SUBSEQUENT EVENTS Rate Increases The Company applied for and was approved by the LDI for a state-wide average rate increase of 9.9% for FNIC's Louisiana homeowners multiple-peril insurance policies, which became effective for new and renewal policies in January 2021. The Company applied for and was approved by the Texas Department of Insurance for a state-wide average rate increase of 12.3% for MIC's Texas homeowners multiple-peril insurance policies, which became effective for new and renewal policies in February 2021. The Company applied for and was approved by the Florida OIR for a state-wide average rate increase of 6.7% for Florida homeowners multiple-peril insurance policies, which is expected to become effective for new and renewal policies in March 2021. The Company applied for a "use and file" rate filing with the Florida OIR to implement a state-wide average increase of 7.0% for Florida homeowners multiple-peril insurance policies and 6.0% for dwelling fire insurance policies, which is expected to become effective for new and renewal policies in April 2021. The revised rates are not deemed approved or final until so affirmed by the Florida OIR, at their discretion. Reinsurance Effective January 1, 2021, the Company secured a new aggregate excess of loss reinsurance for calendar year 2021 for MIC, which provides non-named storm coverage of 65% of $15 million excess of $10 million with a $0.9 million occurrence deductible and a $4.2 million occurrence limit at an approximate annual cost of $2.3 million. Refer to Note 6 above for further information. Effective March 1, 2021, the Company secured additional reinsurance limit of 50% of $70 million excess of $25 million and 100% of $15 million excess of $10 million at an approximate cost of $13 million. This limit is available for any subsequent events through May 31, 2021 for all carriers and all states, with a portion excluding named storms. Winter Storm Uri On approximately February 13, 2021, Winter Storm Uri ("Uri") hit the Southern Plains causing heavy residential damage in Texas, primarily associated with freezing temperatures causing widespread instances of burst water pipes. The Company expects to incur claims in excess of its aggregate reinsurance retention, which is approximately $23 million for this event. In addition, the Company has a co-participation within its reinsurance tower which arose in early February 2021 when, in conjunction with year end 2020 financial reporting, we strengthened ultimate loss and LAE reserves for the five hurricane events that occurred in 2020. Due to this increase in hurricane reserves, the Company has a co-participation of approximately $18 million in excess of $61 million, which results from the portion of our reinsurance program that does not embody the cascading feature where unused limit drops down for subsequent events. Combined with the $23 million retention, the Company's total exposure to Uri including reinstatement premium is currently estimated to be $41 million, pre-tax, before anticipated quota share recoveries. Capital Raise |
Schedule II - Condensed Financi
Schedule II - Condensed Financial Information of Registrant | 12 Months Ended |
Dec. 31, 2020 | |
Condensed Financial Information Disclosure [Abstract] | |
Condensed Financial Information of Registrant Condensed Balance Sheets | Schedule II – Condensed Financial Information of Registrant Condensed Balance Sheets FEDNAT HOLDING COMPANY (Parent Company Only) December 31, 2020 and 2019 December 31, 2020 2019 (In thousands) ASSETS Investments in subsidiaries (1) $ 225,568 $ 268,767 Investment securities, available-for-sale, at fair value 20,646 24,951 Equity securities, at fair value 1,881 1,751 Cash and cash equivalents 18,170 21,031 Deferred income taxes, net 868 1,940 Income taxes receivable 7,969 13,850 Note receivable and accrued interest to subsidiary (1) 19,517 18,107 Right-of-use assets 7,108 7,716 Other assets 1,991 2,878 Total assets $ 303,718 $ 360,991 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Due to subsidiaries, net (1) $ 31,686 $ 1,779 Long-term debt 98,683 98,522 Lease liabilities 7,108 7,716 Other liabilities 8,081 4,281 Total liabilities 145,558 112,298 Shareholders' Equity Preferred stock — — Common stock 137 144 Additional paid-in capital 169,298 167,677 Accumulated other comprehensive income (loss) 11,386 10,281 Retained earnings (deficit) (22,661) 70,591 Total shareholders’ equity 158,160 248,693 Total liabilities and shareholders' equity $ 303,718 $ 360,991 (1) Eliminated in consolidation. The accompanying note is an integral part of the condensed financial statements. Schedule II – Condensed Financial Information of Registrant (Continued) Condensed Statements of Earnings FEDNAT HOLDING COMPANY (Parent Company Only) Year Ended December 31, 2020 2019 2018 (In thousands) Revenues: Management fees (1) $ 2,660 $ 2,160 $ 2,608 Interest from subsidiaries (1) 1,410 107 — Net investment income 477 1,757 843 Net realized and unrealized investment gains (losses) 972 448 (765) Equity in income (loss) of consolidated subsidiaries (94,363) 20,909 30,895 Total revenue (88,844) 25,381 33,581 Costs and expenses: General and administrative expenses 15,149 13,892 9,296 Interest expense 7,661 10,776 4,077 Total costs and expenses 22,810 24,668 13,373 Income (loss) before income taxes (111,654) 713 20,208 Income tax expense (benefit) (33,496) (298) 5,498 Net income (loss) (78,158) 1,011 14,710 Net income (loss) attributable to non-controlling interest — — (218) Net income (loss) attributable to FedNat Holding Company shareholders $ (78,158) $ 1,011 $ 14,928 (1) Eliminated in consolidation. The accompanying note is an integral part of the condensed financial statements. Schedule II – Condensed Financial Information of Registrant (Continued) Condensed Statements of Cash Flows FEDNAT HOLDING COMPANY (Parent Company Only) Year Ended December 31, 2020 2019 2018 (In thousands) Cash flow from operating activities: Net income (loss) $ (78,158) $ 1,011 $ 14,710 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Net realized and unrealized investment (gains) losses (972) (448) 765 Equity in undistributed income (loss) of consolidated subsidiaries (1) 94,363 (20,909) (30,895) Amortization of investment premium or discount, depreciation and amortization 430 369 141 Loss (gain) on early extinguishment of debt — 3,575 — Share-based compensation 790 1,050 1,183 Changes in operating assets and liabilities: Income taxes, net 6,900 (5,379) (2,371) Due to subsidiaries, net (1) (21,891) 3,044 (9,317) Other, net 3,564 998 1,497 Net cash provided by (used in) operating activities 5,026 (16,689) (24,287) Cash flow from investing activities: Capital contributions to consolidated subsidiaries (1) (11,000) — (30,000) Sales, maturities and redemptions of investments securities 31,300 11,276 54,543 Purchases of investment securities (25,089) (15,617) (61,009) Payment for acquisition — (25,566) — Issuance of note receivable to subsidiary (1) — (18,000) — Purchases of property and equipment (21) (289) (639) Net cash provided by (used in) investing activities (4,810) (48,196) (37,105) Cash flow from financing activities: Proceeds from issuance of long-term debt, net of issuance costs — 98,390 — Payment of long-term debt and prepayment penalties — (48,000) — Issuance of common stock for share-based awards 42 1 39 Purchases of FedNat Holding Company common stock (10,418) (3,449) (5,061) Dividends from consolidated subsidiaries 12,376 39,174 27,990 Dividends paid (5,077) (4,309) (4,184) Net cash provided by (used in) financing activities (3,077) 81,807 18,784 Net increase (decrease) in cash and cash equivalents (2,861) 16,922 (42,608) Cash and cash equivalents at beginning of period 21,031 4,109 46,717 Cash and cash equivalents at end of period $ 18,170 $ 21,031 $ 4,109 (1) Eliminated in consolidation. The accompanying note is an integral part of the condensed financial statements. Schedule II – Condensed Financial Information of Registrant (Continued) Note to Condensed Financial Statements FEDNAT HOLDING COMPANY (Parent Company Only) (1) ORGANIZATION AND BASIS OF PRESENTATION FedNat Holding Company (“FNHC”), the Parent Company, is an insurance holding company that controls substantially all steps in the insurance underwriting, distribution and claims processes through our subsidiaries and our contractual relationships with our independent agents and general agents. The accompanying condensed financial statements include the activity of the Parent Company and on an equity basis, its consolidated subsidiaries. Accordingly, these condensed financial statements have been presented for the parent company only. These condensed financial statements should be read in conjunction with the consolidated financial statements and related notes of FNHC and subsidiaries set forth in Part II, Item 8 Financial Statements and Supplemental Data of this Annual Report. In applying the equity method to our consolidated subsidiaries, we record the investment at cost and subsequently adjust for additional capital contributions, distributions and proportionate share of earnings or losses. |
Schedule V - Valuation and Qual
Schedule V - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2020 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Valuation and Qualifying Accounts | Schedule V – Valuation and Qualifying Accounts FEDNAT HOLDING COMPANY AND SUBSIDIARIES Charged to Balance at Costs and Balance at Year Description January 1, Expenses Deductions December 31, (in thousands) 2020 Allowance for uncollectible reinsurance recoverable $ — $ 65 $ — $ 65 Allowance for uncollectible premiums receivable $ 159 $ 74 $ — $ 233 2019 Allowance for uncollectible reinsurance recoverable $ — $ — $ — $ — Allowance for uncollectible premiums receivable $ 77 $ 82 $ — $ 159 2018 Allowance for uncollectible reinsurance recoverable $ — $ — $ — $ — Allowance for uncollectible premiums receivable $ 70 $ 7 $ — $ 77 |
Schedule VI - Supplemental Info
Schedule VI - Supplemental Information Concerning Insurance Operations | 12 Months Ended |
Dec. 31, 2020 | |
SEC Schedule, 12-18, Supplemental Information, Property-Casualty Insurance Underwriters [Abstract] | |
Supplemental Information Concerning Insurance Operations | Schedule VI – Supplemental Information Concerning Insurance Operations FEDNAT HOLDING COMPANY AND SUBSIDIARIES December 31, Year Ended December 31, Loss and Claim and Claim Loss Adjustment Expenses Amortization Paid Claims Deferred Adjustment Net Incurred Related to of Deferred and Claim Net Acquisition Expense Unearned Earned Investment Current Prior Acquisition Adjustment Premiums Year Line of Business Cost Reserves Premiums Premiums Income Year Year Costs Expenses Written (In thousands) 2020 Property and Casualty Insurance $ 25,405 $ 540,367 $ 366,789 $ 364,134 $ 11,786 $ 358,898 $ 17,551 $ 121,524 $ 354,143 $ 236,623 2019 Property and Casualty Insurance $ 56,136 $ 324,362 $ 360,870 $ 363,652 $ 15,901 $ 262,109 $ 10,971 $ 96,885 $ 254,806 $ 377,879 2018 Property and Casualty Insurance $ 39,436 $ 296,230 $ 281,992 $ 355,257 $ 12,460 $ 231,133 $ (2,717) $ 97,873 $ 230,752 $ 365,032 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Material Distribution Relationships | Material Distribution Relationships Ivantage Select Agency, Inc. The Company is a party to an insurance agency master agreement with Ivantage Select Agency, Inc. (“ISA”), an affiliate of Allstate Insurance Company (“Allstate”), pursuant to which the Company has been authorized by ISA to appoint Allstate agents to offer our FNIC homeowners insurance products to consumers in Florida. As a percentage of the total homeowners premiums we underwrote, 20.7%, 23.2% and 23.8%, were from Allstate’s network of Florida agents, for the years ended December 31, 2020, 2019 and 2018, respectively. SageSure Insurance Managers, LLC The Company is a party to a managing general underwriting agreement with SageSure Insurance Managers, LLC (“SageSure”) to facilitate growth in our FNIC homeowners business outside of Florida. As a percentage of the total homeowners premiums, 25.5%, 23.1% and 15.0% of the Company’s premiums were underwritten by SageSure, for the years ended December 31, 2020, 2019, and 2018, respectively. As part of our partnership with SageSure, previously we entered into a profit share agreement, whereby we shared 50% of net profits of this line of business through June 30, 2020, as calculated per the terms of the agreement, subject to certain limitations, which included limits on the net losses that SageSure could realize. The limit was based on the amount of inception to date profits within the profit share agreement. In addition, refer to Note 6 for information regarding a fully collateralized quota-share treaty on this book of business that became effective July 1, 2020. |
Basis of Presentation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include the accounts of FNHC and its wholly-owned subsidiaries and all entities in which the Company has a controlling financial interest and any variable interest entity (“VIE”) of which the Company is the primary beneficiary. The Company’s management believes the consolidated financial statements reflect all material adjustments, including normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows of the Company for the periods presented. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company identifies a VIE as an entity that does not have sufficient equity to finance its own activities without additional financial support or where the equity investors lack certain characteristics of a controlling financial interest. The Company assesses its contractual, ownership or other interests in a VIE to determine if the Company’s interest participates in the variability the VIE was designed to absorb and pass onto variable interest holders. The Company performs an ongoing qualitative assessment of its variable interests in a VIE to determine whether the Company has a controlling financial interest and would therefore be considered the primary beneficiary of the VIE. If the Company determines it is the primary beneficiary of a VIE, the Company consolidates the assets and liabilities of the VIE in its consolidated financial statements. We completed our acquisition of MNIC in February 2018 by acquiring the membership interests in MNIC’s indirect parent, Monarch Delaware Holdings LLC (“Monarch Delaware”), held by our joint venture partners. As such, the Company consolidated Monarch Delaware in its consolidated financial statements. In accordance with the accounting standard on consolidation, a primary beneficiary that acquires additional ownership of the previously controlled and consolidated subsidiaries is accounted for as an equity transaction and re-measurement of assets and liabilities of previously controlled and consolidated subsidiaries is not permitted. As a result, we accounted for this transaction by eliminating the carrying value of the non-controlling interest to reflect our 100% ownership interest in MNIC as of February 21, 2018. The difference between the consideration paid and the amount by which the non-controlling interest was eliminated has been recognized in additional paid-in capital. Following the closing, Monarch Delaware and Monarch Holdings were merged into MNIC. |
Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include the accounts of FNHC and its wholly-owned subsidiaries and all entities in which the Company has a controlling financial interest and any variable interest entity (“VIE”) of which the Company is the primary beneficiary. The Company’s management believes the consolidated financial statements reflect all material adjustments, including normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows of the Company for the periods presented. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company identifies a VIE as an entity that does not have sufficient equity to finance its own activities without additional financial support or where the equity investors lack certain characteristics of a controlling financial interest. The Company assesses its contractual, ownership or other interests in a VIE to determine if the Company’s interest participates in the variability the VIE was designed to absorb and pass onto variable interest holders. The Company performs an ongoing qualitative assessment of its variable interests in a VIE to determine whether the Company has a controlling financial interest and would therefore be considered the primary beneficiary of the VIE. If the Company determines it is the primary beneficiary of a VIE, the Company consolidates the assets and liabilities of the VIE in its consolidated financial statements. We completed our acquisition of MNIC in February 2018 by acquiring the membership interests in MNIC’s indirect parent, Monarch Delaware Holdings LLC (“Monarch Delaware”), held by our joint venture partners. As such, the Company consolidated Monarch Delaware in its consolidated financial statements. In accordance with the accounting standard on consolidation, a primary beneficiary that acquires additional ownership of the previously controlled and consolidated subsidiaries is accounted for as an equity transaction and re-measurement of assets and liabilities of previously controlled and consolidated subsidiaries is not permitted. As a result, we accounted for this transaction by eliminating the carrying value of the non-controlling interest to reflect our 100% ownership interest in MNIC as of February 21, 2018. The difference between the consideration paid and the amount by which the non-controlling interest was eliminated has been recognized in additional paid-in capital. Following the closing, Monarch Delaware and Monarch Holdings were merged into MNIC. |
Accounting Estimates and Assumptions | Accounting Estimates and Assumptions The Company prepares the accompanying consolidated financial statements in accordance with GAAP, which requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results may materially differ from those estimates. Similar to other property and casualty insurers, the Company’s liability for loss and loss adjustment expenses ("LAE") reserves, although supported by actuarial projections and other data, is ultimately based on management’s reasoned expectations of future events. Although considerable variability is inherent in these estimates, the Company believes that the liability and LAE reserve is adequate. The Company reviews and evaluates its estimates and assumptions regularly and makes adjustments, reflected in current operations, as necessary, on an ongoing basis. |
Business Combinations | Business Combinations We use the acquisition method of accounting for all business combination transactions, and accordingly, recognize the fair values of assets acquired, liabilities assumed and any non-controlling interests in our consolidated financial statements. The allocation of fair values may be subject to adjustment after the initial allocation for up to a one-year period as more information becomes available relative to the fair values as of the acquisition date. The consolidated financial statements include the results of operations of any acquired company since the acquisition date. |
Fair Value | Fair Value Fair value is the price that would be received to sell an asset or paid to transfer a liability between market participants in the principal market or in the most advantageous market when no principal market exists. Adjustments to transaction prices or quoted market prices may be required in illiquid or disorderly markets in order to estimate fair value. Alternative valuation techniques may be appropriate under the circumstances to determine the value that would be received to sell an asset or pay to transfer a liability in an orderly transaction. Market participants are assumed to be independent, knowledgeable, able and willing to transact an exchange and not acting under duress. Our nonperformance or credit risk is considered in determining the fair value of liabilities. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized in a current or future market exchange. Refer to Note 4 below for additional information regarding fair value. |
Investments | Investments Investments consist of debt and equity securities. Debt securities consist of securities with an initial fixed maturity of more than three months, including corporate bonds, municipal bonds and United States government bonds. Equity securities generally consist of securities that represent ownership interests in an enterprise. The Company determines the appropriate classification of investments in debt and equity securities at the acquisition date and re-evaluates the classification at each balance sheet date. Held-to-maturity debt securities are recorded at the amortized cost, reflecting the ability and intent to hold the securities to maturity. All other debt securities are classified as available-for-sale and recorded at fair value. Unrealized gains and losses during the year, net of the related tax effect applicable to available-for-sale, are excluded from income and reflected in other comprehensive income (loss) as a separate component of shareholders' equity. Prior to January 1, 2020, if a decline in fair value was deemed to be other-than-temporary, the investment was written down to its fair value and the amount of the write-down is recorded as an other-than-temporary impairment ("OTTI") loss on the statement of operations. As the result of the adoption of Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument ("ASU 2016-13") beginning on January 1, 2020, we instead record an allowance for credit loss. Refer to Note 7 below for additional information regarding allowances for credit loss. Any portion of the market decline related to debt securities that is believed to arise from factors other than credit is recorded as a component of other comprehensive income (loss) rather than against income. Equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are measured at fair value with changes in fair value recognized in net income (loss). When we invest in certain companies, such as limited partnerships and limited liability companies, and if we determine we are not the primary beneficiary, we account for them using the equity method to determine the carry value, which is included in other assets on our Consolidated Balance Sheets. Our maximum exposure to loss is limited to the capital we invest. Net realized gains and losses on investments are determined in accordance with the specific identification method. Net investment income consists primarily of interest income from debt securities, cash and cash equivalents, including any premium amortization or discount accretion and dividend income from equity securities; less expenses related to investments. Refer to Note 5 below for additional information regarding investments. |
Cash and Cash Equivalents | Cash and Cash EquivalentsCash and cash equivalents consist of all deposit or deposit in transit balances with a bank that are available for withdrawal. The Company considers all highly liquid investments with an original maturity of three months or less at the date of the purchase to be cash equivalents. |
Premiums and Unearned Premiums | Premiums and Unearned Premiums The Company recognizes premiums as revenue on a pro-rata basis over the term of the insurance policy. Unearned premiums represent the portion of gross premiums written, related to the unexpired terms of such coverage. Premium receivable balances, which include any outstanding receivable from the SageSure profit sharing agreement, are reported net of an allowance for estimated uncollectible premium amounts. Such allowance is based upon an ongoing review of amounts outstanding, length of collection periods, the creditworthiness of the insured and other relevant factors. Amounts deemed to be uncollectible are written off against the allowance. Refer to Note 7 below for additional information regarding allowances for credit loss. |
Reinsurance | Reinsurance Reinsurance is used to mitigate the exposure to losses, manage capacity and protect capital resources. Reinsuring loss exposures does not relieve a ceding entity from its obligations to policyholders and cedants. Reinsurance recoverables (including amounts related to claims incurred but not reported) and ceded unearned premiums are reported as assets. To minimize exposure to losses from a reinsurer’s inability to pay, the financial condition of such reinsurer is evaluated initially upon placement of the reinsurance and periodically thereafter. In addition to considering the financial condition of the reinsurer, the collectability of the reinsurance recoverables is evaluated (and where appropriate, whether an allowance for estimated uncollectible reinsurance recoverables is to be established) based upon a number of other factors. Such factors include the amounts outstanding, length of collection periods, disputes, any collateral or letters of credit held and other relevant factors. To the extent that an allowance for uncollectible reinsurance recoverable is established, amounts deemed to be uncollectible are written off against the allowance for estimated uncollectible reinsurance recoverables. Refer to Note 7 below for additional information regarding allowances for credit loss. Ceded premiums written are recorded in accordance with applicable terms of the various reinsurance contracts and ceded premiums earned are charged against revenue over the period of the various reinsurance contracts. This also generally applies to reinstatement premiums paid to a reinsurer, which arise when contractually-specified ceded loss triggers have been breached. Ceded commissions reduce commissions and other underwriting expenses and ceded losses incurred reduce net losses and LAE incurred over the applicable periods of the various reinsurance contracts with third party reinsurers. If premiums or commissions are subject to adjustment (for example, retrospectively-rated or experience-rated), the Company records adjustments to the premiums or ceding commission in the period that changes in the estimated losses are determined. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured business and consistent with the terms of the underlying reinsurance contract. Reinsurance payable and funds withheld liabilities represents the unpaid reinsurance premiums or reinstatement premiums due to reinsurers, or in the case of certain reinsurance agreements amounts withheld as collateral by us. |
Deferred Acquisition Costs and Value of Business Acquired | Deferred Acquisition Costs and Value of Business Acquired Deferred acquisition costs represent those costs that are incremental and directly related to the successful acquisition of new or renewal of existing insurance contracts. The Company defers incremental costs that result directly from, and are essential to, the acquisition or renewal of an insurance contract. Such deferred acquisition costs generally include agent or broker commissions, referral fees, premium taxes, medical and inspection fees that would not have been incurred if the insurance contract had not been acquired or renewed. Each cost is analyzed to assess whether it is fully deferrable. The Company also defers a portion of the employee total compensation and payroll-related fringe benefits directly related to time spent performing specific acquisition or renewal activities, including costs associated with the time spent on underwriting, policy issuance and processing, and sales force contract selling. The acquisition costs are deferred and amortized over the period in which the related premiums written are earned, generally twelve months for homeowners policies. Deferred acquisition cost balances are grouped consistent with the manner in which the insurance contracts are acquired, serviced and measured for profitability and is reviewed for recoverability based on the profitability of the underlying insurance contracts. Investment income is anticipated in assessing the recoverability of deferred acquisition costs. The Company assesses the recoverability of deferred acquisition costs on an annual basis or more frequently if circumstances indicate impairment may have occurred. Value of business acquired ("VOBA") is an asset that reflects the estimated fair value of in-force contracts in an acquisition and represents the portion of the purchase price that is allocated to the value of the right to receive future cash flows from the business in-force at the acquisition date. VOBA is amortized over the period in which the related premiums written are earned, generally twelve months or less for property insurance business. VOBA amortization is reported within commissions and other underwriting expenses on our consolidated statements of operations. VOBA is reviewed to ensure that the unamortized portion does not exceed the expected recoverable amount as of October 1 and more frequently if circumstances indicate impairment may have occurred. |
Goodwill | Goodwill We recognize the excess of the purchase price, plus the fair value of any non-controlling interest in the acquiree, over the fair value of identifiable net assets acquired at the acquisition date as goodwill. Goodwill is not amortized but is reviewed for impairment annually as of October 1 and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We perform a quantitative goodwill impairment test where the fair value of the reporting unit is determined and compared to the carrying value of the reporting unit. If the fair value of the reporting unit is greater than the reporting unit’s carrying value, then the carrying value of the reporting unit is deemed to be recoverable. If the carrying value of the reporting unit is greater than the reporting unit’s fair value, goodwill is impaired and written down to the reporting unit’s fair value; and a charge is reported in impairment of intangibles on our consolidated statements of operations. Refer to Note 8 below for additional information regarding goodwill. |
Other Assets | Other Assets Other assets consist primarily of identifiable intangible assets, property and equipment owned, right-of-use assets for our long-term leases, receivables resulting from sales of securities that had not yet settled as of the balance sheet date and prepaid expenses. Property and equipment is stated at cost, net of accumulated depreciation and amortization. Depreciation is calculated using a straight-line method over the estimated useful lives, ranging from 3 to 15 years. Repairs and maintenance are charged to expense as incurred. The Company accounts for internal-use software development costs in accordance with accounting guidelines which state that software costs, including internal payroll costs, incurred in connection with the development or acquisition of software for internal use is charged to expense as incurred until the project enters the application development phase. Costs incurred in the application development phase are capitalized and are depreciated using the straight-line method over an estimated useful life of 3 years, beginning when the software is ready for use. We recognize the estimated fair value of identifiable intangibles such as trade names and non-compete agreements acquired through a business combination at the acquisition date. Identifiable intangible assets are amortized on a straight-line basis over their identified useful life, if applicable. The carrying values of identifiable intangible assets are reviewed at least annually for indicators of impairment in value that are other-than-temporary, including unexpected or adverse changes in the following: the economic or competitive environments in which the company operates; profitability analysis; cash flow analysis; and the fair value of the relevant business operation. If there is an indication of impairment, then the discounted cash flow method would be used to measure the impairment, and the carrying value would be adjusted as necessary and reported in impairment of intangibles on our consolidated statements of operations. Refer to Note 8 below for additional information regarding identifiable intangible assets. |
Direct Written Policy Fees | Direct Written Policy FeesPolicy fees represent a non-refundable application fee for insurance coverage. These policy fees are deferred over the related policy term in a manner consistent with how the related premiums are earned. |
Other Income | Other IncomeOther income represents brokerage, commission related income from the Company’s agency operations, fees generated from the exited personal automobile line of business as well as recognition of equity method investment results. Brokerage income is recognized over the term of the reinsurance period, typically one year. Commission income from agency operations are recognized up-front upon policy inception. In applying the equity method, the Company records its initial investment at cost, and subsequently increases or decreases the carrying amount of the investment by its proportionate share of the net earnings or losses with any dividends or distributions received are recorded as a decrease in the carrying value of the investment. |
Losses and Loss Adjustment Expenses | Losses and Loss Adjustment Expenses The reserves for losses and LAE represent management’s best estimate of the ultimate cost of all reported and unreported losses incurred through the balance sheet date. Such liabilities are determined based upon the Company’s assessment of claims pending and the development of prior years’ loss liability, including liabilities based upon individual case estimates for reported losses and LAE and estimates of such amounts that are incurred but not yet reported ("IBNR”). Changes in the estimated liability are charged or credited to operations as the losses and LAE are settled. The estimates of the liability for loss and LAE reserves are subject to the effect of trends in claims severity and frequency and are continually reviewed. As part of this process, the Company review historical data and consider various factors, including known and anticipated legal developments, inflation and economic conditions. As experience develops and other data become available, these estimates are revised, as required, resulting in increases or decreases to the existing liability for loss and LAE reserves. Adjustments are reflected in the results of operations in the period in which they are made and the liabilities may deviate substantially from prior estimates. |
Long-Term Debt, Net of Deferred Financing Costs | Long-Term Debt, Net of Deferred Financing Costs The Company records long-term debt, net in the consolidated balance sheets at carrying value. |
Income Taxes | Income Taxes The Company applies the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss, capital loss and tax-credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income or expense in the period that includes the enactment date. The Company will establish a valuation allowance if management determines, based on available information, that it is more likely than not that deferred income tax assets will not be realized. Significant judgment is required in determining whether valuation allowances should be established and the amount of such allowances. |
Share-based Compensation | Share-Based CompensationWe expense the fair value of stock awards included in our stock incentive compensation plans. The Company grants awards and amortizes them on a straight-line over the vesting term using the straight-line basis for service awards and over successive one-year requisite service periods for performance based awards. For all restricted stock awards (“RSAs”), excluding grants based on relative total shareholder return ("TSR"), the fair value is determined based on the closing market price on the date of grant. For grants based on TSR, grant date fair value is determined using a Monte Carlo simulation and, unlike the performance condition awards, the expense is not reversed if the performance condition is not met. Non-employee directors are treated as employees for accounting purposes. The non-cash share-based compensation expense is reflected in commissions and other underwriting and general and administrative expense on our Consolidated Statements of Operations and is recognized as an increase to additional paid-in capital on our Consolidated Balance Sheets. |
Basic and Diluted Net Income (Loss) per Share | Basic and Diluted Net Income (Loss) per Share Basic net income per share is computed by dividing net income available to common shareholders by the weighted average number of common shares, while diluted net income per share is computed by dividing net income available to common shareholders by the weighted average number of such common shares and dilutive share equivalents result from the assumed exercise of employee stock options and vesting of restricted common stock and are calculated using the treasury stock method. |
New Accounting Pronouncements | Recently Issued Accounting Pronouncements, Adopted In January 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-01 , which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . Most notably, the combined new guidance required equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The Company adopted the guidance effective January 1, 2018, by reflecting a cumulative adjustment, which increased retained earnings (deficit) and decreased accumulated other comprehensive income (loss) by $1.0 million. This adjustment represented the level of net unrealized gains and losses associated with our equity investments with readily determinable market values as of January 1, 2018. The adoption also resulted in the recognition of $(1.2) million in our consolidated statements of operations and statements of comprehensive income (loss), which represented the change in net unrealized gains and losses on our equity securities for 2018. This new guidance increases our earnings volatility compared to the prior accounting rules. In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The update allowed a reclassification from accumulated other comprehensive income (loss) to retained earnings (deficit) for stranded tax effects resulting from the Tax Cuts and Job Act of 2017 ("Tax Act"). Guidance had previously required the effect of a change in tax laws or rates on deferred tax balances to be reported in income from continuing operations in the accounting period that includes the period of enactment, even if the related income tax effects were originally charged or credited directly to accumulated other comprehensive income. The Company adopted the guidance effective January 1, 2018, by reflecting a cumulative effect adjustment to retained earnings (deficit) with an off-setting adjustment to accumulated other comprehensive income (loss) for less than $0.1 million. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The update superseded the prior lease guidance in Topic 840, Leases and lessees were required to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis. Additionally, lessees are required to recognize a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The Company adopted the guidance effective January 1, 2019, by reflecting a $6.1 million right-of-use asset, after-tax, and $6.1 million lease liability, after-tax, on our consolidated balance sheets for our leases in existence as of that date. All of the Company's leases were classified as operating leases and we elected the practical expedient, therefore no adjustment to comparative prior periods presented have been made. The provisions of this ASU did not have an impact on our pattern of lease expense recognition on our consolidated statements of operations. Refer to Note 12 below for additional information regarding leases. In June 2016, the FASB issued ASU 2016-13 , which significantly changes the measurement of credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The update requires entities to record allowances for available-for-sale debt securities rather than reduce the carrying amount, as currently performed under the other-than-temporary impairment ("OTTI") model. The update also requires enhanced disclosures for financial assets measured at amortized cost and available-for-sale debt securities to help the financial statement users better understand significant judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. The Company adopted the guidance effective January 1, 2020, by reflecting a cumulative effect adjustment of less than $0.1 million, after-tax, which decreased retained earnings (deficit), held-to-maturity debt securities and reinsurance recoverable. Refer to Note 7 for additional information regarding allowances for credit loss. In January 2017, the FASB issued ASU 2017-04, S implifying the Test for Goodwill Impairment . ASU 2017-04 eliminated the requirement to perform Step 2 of the goodwill impairment test in favor of only applying a quantitative test (referred to in previous guidance as Step 1). As part of the quantitative test, the fair value of the reporting unit is compared with its carrying value, and an impairment charge is recognized when the carrying value exceeds the reporting unit’s fair value. An entity still has the option to first perform a qualitative assessment of an individual reporting unit to determine if the quantitative assessment is necessary. The Company adopted the guidance effective January 1, 2020. Refer to Note 8 for information regarding our goodwill impairment assessment. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification 350-40 to determine which implementation costs to defer and recognize as an asset. The Company adopted the guidance effective January 1, 2020, which did not have any impact on the Company’s consolidated financial condition or results of operations. Recently Issued Accounting Pronouncements, Not Yet Adopted In January 2020, the FASB issued ASU 2020-1, Accounting for Equity Securities and Equity Investments, which clarifies the interaction between accounting standards related to equity securities (Topic 321), equity method investments (Topic 323), and certain derivatives (Topic 815). The update clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The update is effective for interim and annual reporting periods beginning |
ACQUISITION (Tables)
ACQUISITION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The following presents (in thousands) the acquisition date fair values of the net assets acquired related to the Maison Companies as of December 2, 2019: Fair Value Assets: Debt securities, available-for-sale $ 56,929 Cash and cash equivalents 35,968 Prepaid reinsurance premium 25,279 Premiums receivable 2,977 Reinsurance recoverable 7,603 Deferred acquisition costs and value of business acquired, net 8,721 Other assets 3,507 Total assets acquired 140,984 Liabilities: Loss and adjustment expense reserves 16,660 Unearned premiums 50,513 Reinsurance payable 24,071 Income taxes, net 1,778 Deferred revenue 1,515 Other liabilities 7,487 Total liabilities assumed 102,024 Net specifically identifiable assets acquired 38,960 Goodwill 10,997 Net assets acquired $ 49,957 |
Business Acquisition, Pro Forma Information | The following unaudited pro forma condensed consolidated statements of operations of the Company assume that the acquisition of the Maison Companies was completed on January 1, 2018: Year Ended December 31, 2019 2018 (In thousands) Revenue $ 471,438 $ 454,469 Net income (loss) (9,025) 17,432 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets Measured on Recurring Basis | The Company’s financial instruments measured at fair value on a recurring basis and the level of the fair value hierarchy of inputs used consisted of the following: December 31, 2020 Level 1 Level 2 Level 3 Total (In thousands) Debt securities - available-for-sale, at fair value: United States government obligations and authorities $ 38,511 $ 133,264 $ — $ 171,775 Obligations of states and political subdivisions — 22,264 — 22,264 Corporate securities — 266,528 — 266,528 International securities — 27,643 — 27,643 Debt securities, at fair value 38,511 449,699 — 488,210 Equity securities, at fair value 1,881 1,276 — 3,157 Total investments, at fair value $ 40,392 $ 450,975 $ — $ 491,367 December 31, 2019 Level 1 Level 2 Level 3 Total (In thousands) Debt securities - available-for-sale, at fair value: United States government obligations and authorities $ 83,764 $ 110,429 $ — $ 194,193 Obligations of states and political subdivisions — 24,020 — 24,020 Corporate securities — 278,302 — 278,302 International securities — 29,750 — 29,750 Debt securities, at fair value 83,764 442,501 — 526,265 Equity securities, at fair value 17,361 2,678 — 20,039 Total investments, at fair value $ 101,125 $ 445,179 $ — $ 546,304 Held-to-maturity debt securities reported on the consolidated balance sheets at amortized cost and disclosed at fair value below (and in Note 5) and the level of fair value hierarchy of inputs used consisted of the following: Level 1 Level 2 Level 3 Total (In thousands) December 31, 2020 $ — $ — $ — $ — December 31, 2019 3,453 878 — 4,331 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investments [Abstract] | |
Unrealized Gain (Loss) on Investments | The difference between amortized cost or cost and estimated fair value and gross unrealized gains and losses, by major investment category, consisted of the following: Amortized Gross Gross Cost Unrealized Unrealized or Cost Gains Losses Fair Value (In thousands) December 31, 2020 Debt securities - available-for-sale: United States government obligations and authorities $ 169,947 $ 1,866 $ 38 $ 171,775 Obligations of states and political subdivisions 21,560 704 — 22,264 Corporate 254,618 11,989 79 266,528 International 27,001 659 17 27,643 $ 473,126 $ 15,218 $ 134 $ 488,210 Amortized Gross Gross Cost Unrealized Unrealized or Cost Gains Losses Fair Value (In thousands) December 31, 2019 Debt securities - available-for-sale: United States government obligations and authorities $ 191,546 $ 3,073 $ 426 $ 194,193 Obligations of states and political subdivisions 23,748 294 22 24,020 Corporate 268,182 10,252 132 278,302 International 29,169 593 12 29,750 512,645 14,212 592 526,265 Debt securities - held-to-maturity: United States government obligations and authorities 3,585 12 39 3,558 Corporate 697 20 — 717 International 55 1 — 56 4,337 33 39 4,331 Total investments, excluding equity securities $ 516,982 $ 14,245 $ 631 $ 530,596 |
Net Realized Gains (Losses) by Major Investment Category | Net realized and unrealized gains (losses) recognized in earnings, by major investment category, consisted of the following: Year Ended December 31, 2020 2019 2018 (In thousands) Gross realized and unrealized gains: Debt securities $ 20,470 $ 2,829 $ 423 Equity securities 8,587 5,928 2,374 Total gross realized and unrealized gains 29,057 8,757 2,797 Gross realized and unrealized losses: Debt securities (2,879) (664) (3,990) Equity securities (8,146) (1,009) (2,951) Total gross realized and unrealized losses (11,025) (1,673) (6,941) Net realized and unrealized gains (losses) on investments $ 18,032 $ 7,084 $ (4,144) |
Gain (Loss) on Securities | The above line item, net realized and unrealized gains (losses) on investments, includes the following equity securities gains (losses) recognized in earnings: Year Ended December 31, 2020 2019 2018 (In thousands) Net gains (losses) on equity securities: Realized $ 4,555 $ 803 $ 591 Unrealized (4,114) 4,116 (1,168) 441 4,919 (577) Less: Net realized and unrealized gains (losses) on securities sold 309 672 732 Net unrealized gains (losses) still held as of the end-of-period $ 132 $ 4,247 $ (1,309) |
Investments Classified by Contractual Maturity Date | Amortized cost and estimated fair value of debt securities, by contractual maturity, consisted of the following: December 31, 2020 Amortized Cost Fair Value (In thousands) Securities with Maturity Dates Debt securities, available-for-sale: One year or less $ 21,454 $ 21,573 Over one through five years 137,378 142,457 Over five through ten years 144,296 149,674 Over ten years 169,998 174,506 Total $ 473,126 $ 488,210 |
Summary of Net Investment Income | Net investment income consisted of the following: Year Ended December 31, 2020 2019 2018 (In thousands) Interest income $ 11,563 $ 15,605 $ 12,253 Dividends income 223 296 207 Net investment income $ 11,786 $ 15,901 $ 12,460 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Fair Value | Gross unrealized losses and related fair values for debt securities, grouped by duration of time in a continuous unrealized loss position, consisted of the following: Less than 12 months 12 months or longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (In thousands) December 31, 2020 Debt securities - available-for-sale: United States government obligations and authorities $ 25,521 $ 38 $ — $ — $ 25,521 $ 38 Corporate 7,989 79 — — 7,989 79 International 2,175 16 132 1 2,307 17 $ 35,685 $ 133 $ 132 $ 1 $ 35,817 $ 134 Less than 12 months 12 months or longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (In thousands) December 31, 2019 Debt securities - available-for-sale: United States government obligations and authorities $ 49,833 $ 409 $ 2,218 $ 17 $ 52,051 $ 426 Obligations of states and political subdivisions 6,810 22 — — 6,810 22 Corporate 15,872 94 7,694 38 23,566 132 International 3,856 10 179 2 4,035 12 76,371 535 10,091 57 86,462 592 Debt securities, held-to-maturity: United States government obligations and authorities — — 2,287 39 2,287 39 — — 2,287 39 2,287 39 Total investments, excluding equity securities $ 76,371 $ 535 $ 12,378 $ 96 $ 88,749 $ 631 |
REINSURANCE (Tables)
REINSURANCE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance Recoverables | Reinsurance recoverable, net consisted of the following: December 31, 2020 2019 (In thousands) Reinsurance recoverable on paid losses $ 54,898 $ 45,186 Reinsurance recoverable on unpaid losses 358,193 164,429 Allowance for credit loss (65) — Reinsurance recoverable, net $ 413,026 $ 209,615 |
Premiums Written and Earned | Net premiums written and net premiums earned consisted of the following: Year Ended December 31, 2020 2019 2018 (In thousands) Net Premiums Written Direct $ 726,885 $ 610,608 $ 567,764 Ceded (490,262) (232,729) (202,732) $ 236,623 $ 377,879 $ 365,032 Net Premiums Earned Direct $ 720,967 $ 582,334 $ 580,020 Ceded (356,833) (218,682) (224,763) $ 364,134 $ 363,652 $ 355,257 |
ALLOWANCES FOR CREDIT LOSS (Tab
ALLOWANCES FOR CREDIT LOSS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
Debt Securities, Held-to-maturity, Allowance for Credit Loss | Activity in the allowances for credit loss, by asset line item on the consolidated balance sheet, is summarized as follows: Debt Securities Reinsurance Held-to- Premiums Recoverable, Maturity Receivable Net Total (In thousands) Balance as of December 31, 2019 $ — $ 159 $ — $ 159 Cumulative effect of new accounting standard (1) 1 — 32 33 Credit loss expense (recovery) (2) (1) 74 33 106 Balance as of December 31, 2020 $ — $ 233 $ 65 $ 298 (1) Refer to Note 2 above about our adoption of ASU 2016-13 on January 1, 2020. (2) Reflected in commissions and other underwriting expenses on the consolidated statements of comprehensive income (loss). |
Premium Receivable, Allowance for Credit Loss | The aging of our premiums receivable and associated allowance for credit loss as of December 31, 2020 was as follows: Days Past Due Current 1-29 30-59 60-89 90 plus Total (In thousands) Amortized cost $ 46,376 $ 4,253 $ 159 $ 94 $ 154 $ 51,036 Allowance for credit loss — (43) (8) (28) (154) (233) Net $ 46,376 $ 4,210 $ 151 $ 66 $ — $ 50,803 |
GOODWILL AND IDENTIFIABLE INT_2
GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in carrying amount of goodwill were as follows: Gross Accumulated Goodwill Impairment Net as of as of Acquisition Goodwill Beginning- Beginning- Accounting as of End- of-Year of-Year Adjustments Impairment of-Year (In thousands) For the year ended December 31,: 2019 $ — $ — $ 10,997 $ — $ 10,997 2020 10,997 — — (10,997) — |
Schedule of Finite-Lived Intangible Assets | The gross carrying amounts and accumulated amortization for each major specifically identifiable intangible asset class were as follows: December 31, 2020 December 31, 2019 Weighted- Gross Gross Average- Carrying Accumulated Carrying Accumulated Amortization Amount Amortization Amount Amortization Period (In thousands) Trade name (1) $ 1,100 $ — $ 1,800 $ — 0 Non-compete agreements (2) 300 162 300 13 2 Insurance licenses (3) 180 — 182 — 0 Total $ 1,580 $ 162 $ 2,282 $ 13 (1) This intangible has an indefinite useful life. We recorded impairment of $0.7 million in the year ended December 31, 2020, due primarily to a higher discount rate, which lowered the fair value. (2) Will become fully amortized during the year ended December 31, 2021. (3) This intangible has an indefinite useful life. We recorded impairment of $2 thousand for the year ended December 31, 2020, due primarily to a higher discount rate, which lowered the fair value. |
Schedule of Indefinite-Lived Intangible Assets | The gross carrying amounts and accumulated amortization for each major specifically identifiable intangible asset class were as follows: December 31, 2020 December 31, 2019 Weighted- Gross Gross Average- Carrying Accumulated Carrying Accumulated Amortization Amount Amortization Amount Amortization Period (In thousands) Trade name (1) $ 1,100 $ — $ 1,800 $ — 0 Non-compete agreements (2) 300 162 300 13 2 Insurance licenses (3) 180 — 182 — 0 Total $ 1,580 $ 162 $ 2,282 $ 13 (1) This intangible has an indefinite useful life. We recorded impairment of $0.7 million in the year ended December 31, 2020, due primarily to a higher discount rate, which lowered the fair value. (2) Will become fully amortized during the year ended December 31, 2021. (3) This intangible has an indefinite useful life. We recorded impairment of $2 thousand for the year ended December 31, 2020, due primarily to a higher discount rate, which lowered the fair value. |
LOSS AND LOSS ADJUSTMENT RESE_2
LOSS AND LOSS ADJUSTMENT RESERVES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Liability for Future Policy Benefit, before Reinsurance [Abstract] | |
Activity in Liability for Loss and LAE Reserves | Activity in the liability for loss and LAE reserves is summarized as follows: Year Ended December 31, 2020 2019 2018 (In thousands) Gross reserves, beginning-of-period $ 324,362 $ 296,230 $ 230,515 Less: reinsurance recoverable (1) (164,429) (166,396) (98,345) Net reserves, beginning-of-period 159,933 129,834 132,170 Net reserves from the Maison Companies acquisition — 11,825 — Incurred loss, net of reinsurance, related to: Current year 358,952 262,118 231,133 Prior year loss development (redundancy) (2) 18,367 13,460 2,166 Ceded losses subject to offsetting experience account adjustments (3) (816) (2,489) (4,883) Prior years 17,551 10,971 (2,717) Amortization of acquisition fair value adjustment (54) (9) — Total incurred loss and LAE, net of reinsurance 376,449 273,080 228,416 Paid loss, net of reinsurance, related to: Current year 253,344 173,313 155,462 Prior years 100,799 81,493 75,290 Total paid loss and LAE, net of reinsurance 354,143 254,806 230,752 Net reserves, end-of-period 182,239 159,933 129,834 Plus: reinsurance recoverable (1) 358,128 164,429 166,396 Gross reserves, end-of-period $ 540,367 $ 324,362 $ 296,230 (1) Reinsurance recoverable in this table includes only ceded loss and LAE reserves. (2) Reflects loss development from prior accident years impacting pre-tax net income. Excludes losses ceded under retrospective reinsurance treaties to the extent there is an offsetting experience account adjustment. (3) Reflects losses ceded under retrospective reinsurance treaties to the extent there is an offsetting experience account adjustment, such that there is no impact on pre-tax net income (loss). The following tables provide incurred losses and allocated LAE ("ALAE") and cumulative paid losses and ALAE, net of reinsurance, for the prior 10 accident years, and the total of IBNR reserves plus expected development on reported claims and the cumulative number of reported claims (in thousands, except number of reported claims), as of the most recent reporting period, by the Company’s significant lines of business, which are homeowners, commercial general liability and automobile. IBNR & Expected Cumulative Homeowners Incurred Losses and ALAE, Net of Reinsurance Development on Number of For the Years Ended December 31, Reported Claims Reported Claims (1) (Unaudited) Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 2020 2011 $ 20,492 $ 21,344 $ 23,007 $ 23,932 $ 24,582 $ 25,957 $ 26,143 $ 26,394 $ 26,394 $ 26,375 $ 12 2,428 2012 23,032 23,301 24,186 24,468 25,889 26,356 26,836 26,951 26,984 85 2,694 2013 43,807 42,021 35,834 35,859 37,185 37,880 37,978 38,088 15 3,431 2014 64,312 63,300 61,770 62,206 61,817 62,043 62,535 378 7,606 2015 99,497 92,411 95,129 94,760 94,703 96,144 1,522 13,038 2016 171,264 162,043 158,764 157,880 156,316 1,394 22,614 2017 202,844 192,769 188,548 179,327 47,728 67,165 2018 210,158 213,128 216,570 20,849 35,817 2019 257,644 261,541 23,909 19,661 2020 342,119 236,080 35,117 Total $ 1,405,999 (1) The cumulative number of reported claims is measured by individual claimant at a coverage level. Homeowners Cumulative Paid Losses and ALAE, Net of Reinsurance For the Years Ended December 31, (Unaudited) Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 $ 11,119 $ 19,250 $ 21,323 $ 22,723 $ 24,047 $ 25,580 $ 25,982 $ 26,287 $ 26,340 $ 26,342 2012 13,693 20,728 23,120 23,923 25,186 26,113 26,777 26,861 26,901 2013 19,986 31,606 33,867 35,123 35,803 37,473 37,688 37,915 2014 37,033 53,831 57,891 59,722 60,555 61,441 61,692 2015 52,214 79,359 86,647 90,415 92,327 93,405 2016 102,556 142,716 148,274 152,258 153,997 2017 135,589 176,580 179,327 178,013 2018 141,173 194,160 206,133 2019 157,768 236,090 2020 236,197 $ 1,256,685 All outstanding liabilities for unpaid claims and ALAE prior to 2011, net of reinsurance — Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance $ 149,314 The following table provides supplementary information about the average annual percentage payout of incurred losses and ALAE, net of reinsurance, for homeowners policies, as of December 31, 2020: Average Annual Payout of Losses and ALAE, Net of Reinsurance (Unaudited) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Homeowners 62.0 % 25.6 % 4.6 % 1.9 % 1.8 % 2.3 % 1.0 % 0.6 % 0.2 % — % IBNR & Expected Cumulative Commercial General Liability Incurred Losses and ALAE, Net of Reinsurance Development on Number of For the Years Ended December 31, Reported Claims Reported Claims (Unaudited) Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 2020 2011 $ 6,436 $ 5,854 $ 4,749 $ 4,603 $ 4,760 $ 5,409 $ 6,254 $ 6,828 $ 7,817 $ 9,394 $ 1,572 1,367 2012 5,279 4,952 4,801 4,700 4,658 4,346 4,509 5,109 6,431 1,209 817 2013 7,095 5,069 5,221 5,502 5,704 5,580 5,984 7,588 1,245 759 2014 7,475 7,709 6,384 6,620 6,348 6,697 9,028 1,549 1,016 2015 8,082 7,008 6,020 5,377 7,947 9,141 2,043 877 2016 10,727 5,809 6,561 8,502 12,267 3,086 845 2017 8,289 7,853 6,558 8,519 3,369 639 2018 6,553 6,233 7,280 4,281 420 2019 1,604 2,535 1,826 114 2020 37 — 6 Total $ 72,220 Commercial General Liability Cumulative Paid Losses and ALAE, Net of Reinsurance For the Years Ended December 31, (Unaudited) Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 $ 764 $ 2,763 $ 3,366 $ 3,673 $ 4,246 $ 4,866 $ 5,831 $ 6,349 $ 7,365 $ 7,693 2012 871 1,714 2,632 3,342 3,686 3,841 4,098 4,521 4,790 2013 882 2,233 3,366 3,867 4,606 5,033 5,467 5,847 2014 717 2,593 3,855 4,375 5,130 6,270 6,901 2015 798 2,296 3,249 3,827 5,866 6,566 2016 1,515 3,657 5,088 6,606 8,382 2017 1,592 2,478 3,293 4,225 2018 963 1,554 2,604 2019 147 424 2020 5 Total $ 47,437 All outstanding liabilities for unpaid claims and ALAE prior to 2011, net of reinsurance 3,545 Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance $ 28,328 The following table provides supplementary information about the average annual percentage payout of incurred losses and ALAE, net of reinsurance, for commercial general liability policies, as of December 31, 2020: Average Annual Payout of Losses and ALAE, Net of Reinsurance (Unaudited) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Commercial general liability 10.2 % 14.1 % 10.4 % 7.2 % 10.3 % 6.5 % 6.3 % 5.0 % 7.2 % 4.7 % IBNR & Expected Cumulative Automobile Incurred Losses and ALAE, Net of Reinsurance Development on Number of For the Years Ended December 31, Reported Claims Reported Claims (Unaudited) Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 2020 2011 $ 3,580 $ 3,350 $ 2,954 $ 2,912 $ 2,762 $ 2,848 $ 2,796 $ 2,756 $ 2,762 $ 2,760 $ — 789 2012 1,735 1,741 1,717 1,424 1,455 1,491 1,448 1,444 1,448 4 824 2013 1,517 1,863 1,826 1,829 2,161 2,123 2,127 2,127 6 3,471 2014 2,038 3,213 3,551 4,315 4,379 4,417 4,413 4 6,019 2015 3,045 2,882 2,781 2,878 2,915 2,944 14 6,553 2016 13,414 20,205 24,346 25,918 25,923 251 67,655 2017 20,411 22,472 24,579 24,669 740 52,885 2018 3,513 4,623 4,439 887 9,604 2019 (3) — 2 101 2020 — — 1 Total $ 68,723 Automobile Cumulative Paid Losses and ALAE, Net of Reinsurance For the Years Ended December 31, (Unaudited) Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 $ 1,417 $ 2,381 $ 2,562 $ 2,644 $ 2,726 $ 2,755 $ 2,755 $ 2,755 $ 2,755 $ 2,755 2012 867 1,293 1,333 1,384 1,393 1,430 1,444 1,447 1,449 2013 907 1,609 1,906 2,069 2,109 2,112 2,116 2,116 2014 1,455 3,120 3,678 4,122 4,291 4,383 4,396 2015 1,393 2,293 2,670 2,807 2,890 2,897 2016 8,084 17,258 23,053 25,582 26,132 2017 12,821 20,762 23,860 24,468 2018 2,331 3,626 3,137 2019 (5) — 2020 — Total $ 67,350 All outstanding liabilities for unpaid claims and ALAE prior to 2011, net of reinsurance 15 Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance $ 1,388 The following table provides supplementary information about the average annual percentage payout of incurred losses and ALAE, net of reinsurance, for automobile policies, as of December 31, 2020: Average Annual Payout of Losses and ALAE, Net of Reinsurance (Unaudited) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Automobile 42.3 % 33.5 % 14.2 % 6.2 % 2.3 % 1.2 % 0.3 % — % — % — % |
Reconciliation of Claims Development To Liability | The reconciliation of the net incurred and paid development tables to the liability for unpaid losses and LAE in the consolidated balance sheets is as follows: December 31, 2020 2019 (In thousands) Liabilities for unpaid losses and ALAE: Homeowners $ 149,314 $ 137,168 Commercial general liability 28,328 17,014 Automobile 1,388 2,142 Flood — — Total liabilities for unpaid losses and ALAE, net of reinsurance 179,030 156,324 Reinsurance recoverables: Homeowners 353,741 160,578 Commercial general liability — 500 Automobile 1,424 3,228 Flood 2,963 123 Total reinsurance recoverables 358,128 164,429 Unallocated loss adjustment expenses 3,209 3,609 Gross liability for unpaid losses and LAE $ 540,367 $ 324,362 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following: December 31, 2020 2019 (In thousands) Senior unsecured fixed rate notes, due March 15, 2029, net of deferred financing costs of $1,317 and $1,478, respectively $ 98,683 $ 98,522 Total long-term debt, net $ 98,683 $ 98,522 |
Schedule of Maturities of Long-term Debt | As of December 31, 2020, the Company’s estimated annual aggregate amount of debt maturities includes the following: Aggregate Debt For the Years Ending December 31, Maturities (In thousands) 2021 $ — 2022 — 2023 — 2024 — 2025 — Thereafter 100,000 Total debt maturities 100,000 Less: deferred financing costs 1,317 Total debt maturities, net $ 98,683 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The components of income tax expense (benefit) include the following: Year Ended December 31, 2020 2019 2018 (In thousands) Federal: Current $ (29,449) $ (982) $ 5,162 Deferred (3,494) 567 (751) Federal income tax expense (benefit) (32,943) (415) 4,411 State: Current (403) 241 1,383 Deferred (150) (124) (296) State income tax expense (benefit) (553) 117 1,087 Total income tax expense (benefit) $ (33,496) $ (298) $ 5,498 We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense (benefit) in the consolidated statements of operations and statements of comprehensive income (loss). A reconciliation of these uncertain tax positions was as follows: Year Ended December 31, 2020 2019 2018 (In thousands) Balance at January 1 $ 382 $ 585 $ 585 Increases/(decreases) for uncertain tax positions taken during the prior years (179) (203) — Balance at December 31 $ 203 $ 382 $ 585 |
Schedule of Effective Income Tax Rate Reconciliation | The actual income tax expense (benefit) differs from the “expected” income tax expense (benefit) (computed by applying the combined applicable effective federal and state tax rates to income before income tax expense) as follows: Year Ended December 31, 2020 2019 2018 (In thousands) Computed expected tax expense provision, at federal rate $ (23,447) $ 150 $ 4,244 State tax, net of federal tax benefit (3,157) (122) 761 Tax-exempt interest (5) (3) (134) Income subject to dividends-received deduction (26) (34) (13) Goodwill impairment 2,309 — — Return to provision (3,407) (307) 158 Executive compensation 41 230 436 Meals and entertainment 13 43 28 Uncertain tax position (179) (203) — Rate difference on NOL carryback (8,785) (113) — Change in valuation allowance 2,968 — — Other 179 61 18 Total income tax expense (benefit) $ (33,496) $ (298) $ 5,498 |
Significant Components of Net Deferred Tax Liability | Significant components of the Company’s deferred income tax asset (liability), net include the following: As of December 31, 2020 2019 (In thousands) Deferred income tax assets: Unearned premiums $ 5,611 $ 10,232 Unpaid losses and loss adjustment expenses 581 1,596 Accrued expenses 236 216 Net operating loss carryforwards 5,350 2,095 Share-based compensation 232 161 Depreciation and amortization 412 — Lease liability 1,783 1,655 Other 69 23 Gross deferred income tax assets 14,274 15,978 Valuation allowance (2,968) — Total deferred income tax assets 11,306 15,978 Deferred income tax liabilities: Deferred acquisition costs and other (6,387) (12,703) Depreciation and amortization — (1,679) Unrealized gains on investment securities (2,865) (3,270) Lease asset (1,783) (1,655) Other (213) (257) Total deferred income tax liabilities (11,248) (19,564) Deferred income tax asset (liability), net $ 58 $ (3,586) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lessee, Operating Lease, Liability, Maturity | Future minimum lease payments under these agreements are as follows: Aggregate Minimum Year Ended December 31, Lease Payments (In thousands) 2021 $ 1,066 2022 1,098 2023 1,131 2024 1,164 2025 1,115 Thereafter 3,318 Total $ 8,892 |
Schedule of Additional Information Related to Operating Lease Agreement for Office Space | Additional information related to our operating lease agreement for office space consisted of the following: December 31, 2020 2019 (In thousands) Right-of-use asset $ 7,430 $ 8,096 Accrued rent (259) (317) Right-of-use asset, net $ 7,171 $ 7,779 Lease liability $ 7,430 $ 8,096 Weighted average discount rate 4.70 % 4.70 % Weighted average remaining years of lease term 7.7 8.7 |
Schedule of Lease Cost | Year Ended December 31, 2020 2019 (In thousands) Lease expense $ 1,118 $ 1,046 Sublease income (466) (229) Lease expense, net $ 652 $ 817 Net cash provided by (used in) operating activities $ (555) $ (573) |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | Share-based compensation arrangements include the following: Year Ended December 31, 2020 2019 2018 (In thousands) Restricted stock $ 1,409 $ 1,841 $ 2,134 Performance stock 171 335 233 Total share-based compensation expense $ 1,580 $ 2,176 $ 2,367 Recognized tax benefit $ 634 $ 534 $ 600 Intrinsic value of options exercised 110 2 229 Fair value of restricted stock vested 1,659 1,977 2,360 |
Schedule of Stock Options Roll Forward | A summary of the Company’s stock option activity includes the following: Weighted Average Number of Option Shares Exercise Price Outstanding at January 1, 2018 50,351 $ 3.72 Granted — — Exercised (10,834) 3.47 Cancelled (500) 2.45 Outstanding at December 31, 2018 39,017 3.80 Granted — — Exercised (167) 2.45 Cancelled — — Outstanding at December 31, 2019 38,850 3.80 Granted — — Exercised (13,433) 3.16 Cancelled — — Outstanding at December 31, 2020 25,417 $ 4.01 |
Summary Information about Stock Options Outstanding and Exercisable | Stock options outstanding and exercisable in a select price range is as follows: Options Outstanding and Exercisable Weighted Average Remaining Shares Outstanding Contractual Life Weighted Average Aggregate Range of Exercise Price and Exercisable (years) Exercise Price Intrinsic Value $2.45 - $4.40 25,417 1.14 $4.01 48,546 |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | RSA activity includes the following: Weighted Average Number of Grant Date Shares Fair Value Outstanding at January 1, 2018 297,543 $ 20.54 Granted 133,060 16.31 Vested (112,071) 21.06 Cancelled (56,198) 17.87 Outstanding at December 31, 2018 262,334 18.78 Granted 140,156 18.03 Vested (94,755) 20.87 Cancelled (52,390) 17.66 Outstanding at December 31, 2019 255,345 17.82 Granted 210,272 11.82 Vested (89,889) 18.46 Cancelled — — Outstanding at December 31, 2020 375,728 $ 14.32 |
Schedule of Accumulated Other Comprehensive Income (Loss) | Accumulated other comprehensive income (loss) associated with debt securities - available-for-sale consisted of the following: Year Ended December 31, 2020 2019 Before Income Net Before Income Net (In thousands) Accumulated other comprehensive income (loss), beginning-of-period $ 13,621 $ (3,340) $ 10,281 $ (5,023) $ 1,273 $ (3,750) Other comprehensive income (loss) due to debt securities - held to maturity reclassified to available-for-sale (58) 14 (44) — — — Other comprehensive income (loss) before reclassification 19,114 (4,688) 14,426 20,809 (5,144) 15,665 Reclassification adjustment for realized losses (gains) included in net income (17,591) 4,314 (13,277) (2,165) 531 (1,634) 1,523 (374) 1,149 18,644 (4,613) 14,031 Accumulated other comprehensive income (loss), end-of-period $ 15,086 $ (3,700) $ 11,386 $ 13,621 $ (3,340) $ 10,281 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the calculation of basic and diluted EPS: Year Ended December 31, 2020 2019 2018 (In thousands, except per share data) Net income (loss) attributable to FedNat Holding Company shareholders $ (78,158) $ 1,011 $ 14,928 Weighted average number of common shares outstanding - basic 13,846 12,977 12,775 Net income (loss) per common share - basic ($5.64) $0.08 $1.17 Weighted average number of common shares outstanding - basic 13,846 12,977 12,775 Dilutive effect of stock compensation plans — 46 92 Weighted average number of common shares outstanding - diluted 13,846 13,023 12,867 Net income (loss) per common share - diluted $ (5.64) $ 0.08 $ 1.16 Dividends per share $ 0.36 $ 0.33 $ 0.24 |
ORGANIZATION, CONSOLIDATION A_2
ORGANIZATION, CONSOLIDATION AND BASIS OF PRESENTATION - (Narrative) (Details) | Feb. 21, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Premiums Written, Net | Homeowners' Insurance Product Line | Customer Concentration Risk | ISA | ||||
Organization, Consolidation, And Basis of Preparation [Line Items] | ||||
Concentration risk, percentage | 20.70% | 23.20% | 23.80% | |
Premiums Written, Net | Homeowners' Insurance Product Line | Customer Concentration Risk | SageSure Insurance Managers LLC | ||||
Organization, Consolidation, And Basis of Preparation [Line Items] | ||||
Concentration risk, percentage | 25.50% | 23.10% | 15.00% | |
Monarch National Insurance Company | ||||
Organization, Consolidation, And Basis of Preparation [Line Items] | ||||
VIE ownership percentage | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - (Narrative) (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2020 | Dec. 31, 2018 | Jan. 01, 2020 | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2017 |
Accounting Policies [Line Items] | |||||||
Brokerage income recognition, reinsurance period | 1 year | ||||||
Award requisite service period | 1 year | ||||||
Total shareholders’ equity | $ 158,160 | $ 215,259 | $ 248,693 | $ 227,459 | |||
Operating lease right-of-use | 7,430 | 8,096 | |||||
Operating lease liability | 7,430 | 8,096 | |||||
Retained earnings (less than) | $ 22,661 | (70,591) | |||||
Cumulative Effect, Period of Adoption, Adjustment | |||||||
Accounting Policies [Line Items] | |||||||
Total shareholders’ equity | (25) | 0 | |||||
Minimum | |||||||
Accounting Policies [Line Items] | |||||||
Estimated useful life of property and equipment | 3 years | ||||||
Maximum | |||||||
Accounting Policies [Line Items] | |||||||
Estimated useful life of property and equipment | 15 years | ||||||
Software Development | |||||||
Accounting Policies [Line Items] | |||||||
Estimated useful life of property and equipment | 3 years | ||||||
Accounting Standards Update 2018-03 | |||||||
Accounting Policies [Line Items] | |||||||
Recognition of income (loss) due to net unrealized gains and losses on equity securities | (1,200) | ||||||
Accounting Standards Update 2018-02 | |||||||
Accounting Policies [Line Items] | |||||||
Reclassification from AOCI to retained earnings, tax effect (less than) | $ 100 | ||||||
Accounting Standards Update 2016-02 | |||||||
Accounting Policies [Line Items] | |||||||
Operating lease right-of-use | $ 6,100 | ||||||
Operating lease liability | $ 6,100 | ||||||
Accounting Standards Update 2016-13 | |||||||
Accounting Policies [Line Items] | |||||||
Retained earnings (less than) | $ 100 | ||||||
Retained Earnings (Deficit) | |||||||
Accounting Policies [Line Items] | |||||||
Total shareholders’ equity | $ (22,661) | $ 77,753 | 70,591 | 70,009 | |||
Retained Earnings (Deficit) | Cumulative Effect, Period of Adoption, Adjustment | |||||||
Accounting Policies [Line Items] | |||||||
Total shareholders’ equity | $ (25) | $ 994 | |||||
Retained Earnings (Deficit) | Accounting Standards Update 2018-03 | Cumulative Effect, Period of Adoption, Adjustment | |||||||
Accounting Policies [Line Items] | |||||||
Total shareholders’ equity | $ 1,000 |
ACQUISITION - Narrative (Detail
ACQUISITION - Narrative (Details) - USD ($) $ in Thousands | Dec. 02, 2019 | Dec. 31, 2019 | Dec. 31, 2020 |
Senior Unsecured Fixed Rate Notes, Due 2029 | |||
Business Acquisition [Line Items] | |||
Interest rate percentage | 7.50% | ||
1347 Property Insurance Holdings, Inc | |||
Business Acquisition [Line Items] | |||
Consideration transferred | $ 51,000 | ||
Cash payments made in acquisition | 25,500 | ||
Equity interests issued | $ 25,500 | ||
Equity interest issued (in shares) | 1,773,102 | ||
Increase in Stockholders' Equity from acquisition | $ 24,400 | ||
Noncompete term | 5 years | ||
Revenue of acquiree since acquisition date | 4,400 | ||
Net income of acquiree since acquisition date | $ 1,400 | ||
Total assets acquired | $ 140,984 | ||
VOBA balance to be amortized | $ 8,700 | ||
1347 Property Insurance Holdings, Inc | Property, Plant and Equipment | |||
Business Acquisition [Line Items] | |||
Total assets acquired | 500 | ||
1347 Property Insurance Holdings, Inc | General and Administrative Expense | |||
Business Acquisition [Line Items] | |||
Acquisition related costs | $ 1,300 |
ACQUISITION - Schedule of Asset
ACQUISITION - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 02, 2019 | Dec. 31, 2018 |
Liabilities [Abstract] | ||||
Goodwill | $ 0 | $ 10,997 | $ 0 | |
1347 Property Insurance Holdings, Inc | ||||
Assets [Abstract] | ||||
Debt securities, available-for-sale | $ 56,929 | |||
Cash and cash equivalents | 35,968 | |||
Prepaid reinsurance premium | 25,279 | |||
Premiums receivable | 2,977 | |||
Reinsurance recoverable | 7,603 | |||
Deferred acquisition costs and value of business acquired, net | 8,721 | |||
Other assets | 3,507 | |||
Total assets acquired | 140,984 | |||
Liabilities [Abstract] | ||||
Loss and adjustment expense reserves | 16,660 | |||
Unearned premiums | 50,513 | |||
Reinsurance payable | 24,071 | |||
Income taxes, net | 1,778 | |||
Deferred revenue | 1,515 | |||
Other liabilities | 7,487 | |||
Total liabilities assumed | 102,024 | |||
Net specifically identifiable assets acquired | 38,960 | |||
Goodwill | 10,997 | |||
Net assets acquired | $ 49,957 |
ACQUISITION - Pro Forma Informa
ACQUISITION - Pro Forma Information (Details) - 1347 Property Insurance Holdings, Inc - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Business Acquisition [Line Items] | ||
Revenue | $ 471,438 | $ 454,469 |
Net income (loss) | $ (9,025) | $ 17,432 |
FAIR VALUE - (Financial Instrum
FAIR VALUE - (Financial Instruments Measured at Fair Value) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | $ 488,210 | $ 526,265 | |
Equity securities, at fair value | 3,157 | 20,039 | |
Total investments, at fair value | 491,367 | 546,304 | |
Fair value transfers | 0 | 0 | $ 0 |
United States government obligations and authorities | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 171,775 | 194,193 | |
Obligations of states and political subdivisions | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 22,264 | 24,020 | |
Corporate securities | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 266,528 | 278,302 | |
International securities | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 27,643 | 29,750 | |
Level 1 | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 38,511 | 83,764 | |
Equity securities, at fair value | 1,881 | 17,361 | |
Total investments, at fair value | 40,392 | 101,125 | |
Level 1 | United States government obligations and authorities | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 38,511 | 83,764 | |
Level 1 | Obligations of states and political subdivisions | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 0 | 0 | |
Level 1 | Corporate securities | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 0 | 0 | |
Level 1 | International securities | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 0 | 0 | |
Level 2 | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 449,699 | 442,501 | |
Equity securities, at fair value | 1,276 | 2,678 | |
Total investments, at fair value | 450,975 | 445,179 | |
Level 2 | United States government obligations and authorities | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 133,264 | 110,429 | |
Level 2 | Obligations of states and political subdivisions | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 22,264 | 24,020 | |
Level 2 | Corporate securities | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 266,528 | 278,302 | |
Level 2 | International securities | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 27,643 | 29,750 | |
Level 3 | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 0 | 0 | |
Equity securities, at fair value | 0 | 0 | |
Total investments, at fair value | 0 | 0 | |
Level 3 | United States government obligations and authorities | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 0 | 0 | |
Level 3 | Obligations of states and political subdivisions | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 0 | 0 | |
Level 3 | Corporate securities | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | 0 | 0 | |
Level 3 | International securities | |||
Investments, Debt and Equity Securities [Abstract] | |||
Fair value | $ 0 | $ 0 |
FAIR VALUE - (Held-to-Maturity
FAIR VALUE - (Held-to-Maturity Financial Instruments Measured at Fair Value) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | $ 4,300 | |
Us Government Obligations And Authorities Corporate And International Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | $ 4,331 |
Us Government Obligations And Authorities Corporate And International Securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 3,453 |
Us Government Obligations And Authorities Corporate And International Securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 878 |
Us Government Obligations And Authorities Corporate And International Securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | $ 0 | $ 0 |
INVESTMENTS - (Narrative) (Deta
INVESTMENTS - (Narrative) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($)security | Dec. 31, 2019USD ($)security | |
Investments [Abstract] | |||
Number of positions held in unrealized loss position | security | 47 | 203 | |
Number of positions held for more than twelve months | security | 2 | 24 | |
Fair value of investments deposited with governmental authorities required by law | $ 11,500 | $ 11,200 | |
Debt securities, held-to-maturity, sold, amount | $ 70 | ||
Debt securities, held-to-maturity, sold, realized loss (Less than) | $ 1 | ||
Debt securities, held-to-maturity, transfer, amount | 4,200 | ||
Fair Value | 4,300 | ||
Debt securities, held-to-maturity, transfer, unrealized gain | $ 58 |
INVESTMENTS - (Summary of Amort
INVESTMENTS - (Summary of Amortized Cost and Fair Value of Debt and Equity Securities) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Debt securities - available-for-sale: | ||
Amortized Cost or Cost | $ 473,126 | $ 512,645 |
Fair value | 488,210 | 526,265 |
Debt securities - held-to-maturity: | ||
Amortized Cost or Cost | 0 | 4,337 |
Fair Value | 4,300 | |
Total investments, excluding equity securities | ||
Total investments, amortized cost | 516,982 | |
Investments, accumulated unrealized gain | 14,245 | |
Investments, accumulated unrealized loss | 631 | |
Fair value | 530,596 | |
United States government obligations and authorities | ||
Debt securities - available-for-sale: | ||
Amortized Cost or Cost | 169,947 | 191,546 |
Gross Unrealized Gains | 1,866 | 3,073 |
Gross Unrealized Losses | 38 | 426 |
Fair value | 171,775 | 194,193 |
Debt securities - held-to-maturity: | ||
Amortized Cost or Cost | 3,585 | |
Gross Unrealized Gains | 12 | |
Gross Unrealized Losses | 39 | |
Fair Value | 3,558 | |
Obligations of states and political subdivisions | ||
Debt securities - available-for-sale: | ||
Amortized Cost or Cost | 21,560 | 23,748 |
Gross Unrealized Gains | 704 | 294 |
Gross Unrealized Losses | 0 | 22 |
Fair value | 22,264 | 24,020 |
Corporate securities | ||
Debt securities - available-for-sale: | ||
Amortized Cost or Cost | 254,618 | 268,182 |
Gross Unrealized Gains | 11,989 | 10,252 |
Gross Unrealized Losses | 79 | 132 |
Fair value | 266,528 | 278,302 |
Debt securities - held-to-maturity: | ||
Amortized Cost or Cost | 697 | |
Gross Unrealized Gains | 20 | |
Gross Unrealized Losses | 0 | |
Fair Value | 717 | |
International securities | ||
Debt securities - available-for-sale: | ||
Amortized Cost or Cost | 27,001 | 29,169 |
Gross Unrealized Gains | 659 | 593 |
Gross Unrealized Losses | 17 | 12 |
Fair value | 27,643 | 29,750 |
Debt securities - held-to-maturity: | ||
Amortized Cost or Cost | 55 | |
Gross Unrealized Gains | 1 | |
Gross Unrealized Losses | 0 | |
Fair Value | 56 | |
Debt securities | ||
Debt securities - available-for-sale: | ||
Amortized Cost or Cost | 473,126 | 512,645 |
Gross Unrealized Gains | 15,218 | 14,212 |
Gross Unrealized Losses | 134 | 592 |
Fair value | $ 488,210 | 526,265 |
Debt securities - held-to-maturity: | ||
Amortized Cost or Cost | 4,337 | |
Gross Unrealized Gains | 33 | |
Gross Unrealized Losses | 39 | |
Fair Value | $ 4,331 |
INVESTMENTS - (Net Realized Gai
INVESTMENTS - (Net Realized Gains (Losses) by Major Investment Category (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Gross realized and unrealized gains: | |||
Total gross realized and unrealized gains | $ 29,057 | $ 8,757 | $ 2,797 |
Total gross realized and unrealized losses | (11,025) | (1,673) | (6,941) |
Net realized and unrealized gains (losses) on investments | 18,032 | 7,084 | (4,144) |
Debt securities | |||
Gross realized and unrealized gains: | |||
Total gross realized and unrealized gains | 20,470 | 2,829 | 423 |
Total gross realized and unrealized losses | (2,879) | (664) | (3,990) |
Equity securities | |||
Gross realized and unrealized gains: | |||
Total gross realized and unrealized gains | 8,587 | 5,928 | 2,374 |
Total gross realized and unrealized losses | $ (8,146) | $ (1,009) | $ (2,951) |
INVESTMENTS - (Net Unrealized G
INVESTMENTS - (Net Unrealized Gains (Losses) Still Held (Details) - Equity securities - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of Investments [Line Items] | |||
Net gains (losses) on equity securities: Realized | $ 4,555 | $ 803 | $ 591 |
Net gains (losses) on equity securities: Unrealized | (4,114) | 4,116 | (1,168) |
Net gains (losses) on equity securities: | 441 | 4,919 | (577) |
Less: Net realized and unrealized gains (losses) on securities sold | 309 | 672 | 732 |
Net unrealized gains (losses) still held as of the end-of-period | $ 132 | $ 4,247 | $ (1,309) |
INVESTMENTS - (Amortized Cost a
INVESTMENTS - (Amortized Cost and Estimated Fair Value of Debt Securities by Contractual Maturity) (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Available-for-sale Securities, Debt maturities, Amortized cost: | |
One year or less | $ 21,454 |
Over one through five years | 137,378 |
Over five through ten years | 144,296 |
Over ten years | 169,998 |
Amortized cost | 473,126 |
Available-for-sale Securities, Debt maturities, Fair value: | |
One year or less | 21,573 |
Over one through five years | 142,457 |
Over five through ten years | 149,674 |
Over ten years | 174,506 |
Amortized cost | $ 488,210 |
INVESTMENTS - (Summary of Net I
INVESTMENTS - (Summary of Net Investment Income) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Investment Income, Interest and Dividend [Abstract] | |||
Interest income | $ 11,563 | $ 15,605 | $ 12,253 |
Dividends income | 223 | 296 | 207 |
Net investment income | $ 11,786 | $ 15,901 | $ 12,460 |
INVESTMENTS - (Aging of Gross U
INVESTMENTS - (Aging of Gross Unrealized Losses) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Fair value [Abstract] | ||
Less than 12 months | $ 35,685 | $ 76,371 |
12 months or longer | 132 | 10,091 |
Total | 35,817 | 86,462 |
Gross unrealized losses [Abstract] | ||
Less than 12 months | 133 | 535 |
12 months or longer | 1 | 57 |
Total | 134 | 592 |
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 months | 0 | |
12 months or longer | 2,287 | |
Total | 2,287 | |
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Less than 12 months | 0 | |
12 months or longer | 39 | |
Total | 39 | |
Total investments, excluding equity securities, Fair Value, Less than 12 months | 76,371 | |
Total investments, excluding equity securities, Gross Unrealized Losses, Less than 12 months | 535 | |
Total investments, excluding equity securities, Fair Value, 12 months or longer | 12,378 | |
Total investments, excluding equity securities, Gross Unrealized Losses, 12 months or longer | 96 | |
Total investments, excluding equity securities, Fair Value | 88,749 | |
Total investments, excluding equity securities, Gross Unrealized Losses | 631 | |
United States government obligations and authorities | ||
Fair value [Abstract] | ||
Less than 12 months | 25,521 | 49,833 |
12 months or longer | 0 | 2,218 |
Total | 25,521 | 52,051 |
Gross unrealized losses [Abstract] | ||
Less than 12 months | 38 | 409 |
12 months or longer | 0 | 17 |
Total | 38 | 426 |
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 months | 0 | |
12 months or longer | 2,287 | |
Total | 2,287 | |
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Less than 12 months | 0 | |
12 months or longer | 39 | |
Total | 39 | |
Obligations of states and political subdivisions | ||
Fair value [Abstract] | ||
Less than 12 months | 6,810 | |
12 months or longer | 0 | |
Total | 6,810 | |
Gross unrealized losses [Abstract] | ||
Less than 12 months | 22 | |
12 months or longer | 0 | |
Total | 22 | |
Corporate securities | ||
Fair value [Abstract] | ||
Less than 12 months | 7,989 | 15,872 |
12 months or longer | 0 | 7,694 |
Total | 7,989 | 23,566 |
Gross unrealized losses [Abstract] | ||
Less than 12 months | 79 | 94 |
12 months or longer | 0 | 38 |
Total | 79 | 132 |
International securities | ||
Fair value [Abstract] | ||
Less than 12 months | 2,175 | 3,856 |
12 months or longer | 132 | 179 |
Total | 2,307 | 4,035 |
Gross unrealized losses [Abstract] | ||
Less than 12 months | 16 | 10 |
12 months or longer | 1 | 2 |
Total | $ 17 | $ 12 |
REINSURANCE (Narrative) (Detail
REINSURANCE (Narrative) (Details) - USD ($) $ in Thousands | Mar. 01, 2021 | Jan. 01, 2021 | Dec. 31, 2020 | Nov. 15, 2020 | Nov. 04, 2020 | Nov. 03, 2020 | Nov. 02, 2020 | Oct. 13, 2020 | Sep. 03, 2020 | Jul. 01, 2020 | Jul. 01, 2018 | Jul. 01, 2017 | Jul. 31, 2017 | Jul. 31, 2016 | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Jul. 01, 2016 |
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Reinsurance payable and funds withheld liabilities | $ 202,827 | $ 202,827 | $ 102,467 | |||||||||||||||
Reinsurance premium paid | 413,026 | 413,026 | 209,615 | |||||||||||||||
Hurricane Irma | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Reinsurance premium paid | 304,300 | 304,300 | 163,700 | |||||||||||||||
Federated Nationals Insurance Company Non Florida Reinsurance Program 2018-2019 | Maximum | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Reinsurance payable and funds withheld liabilities | 1,800 | 1,800 | ||||||||||||||||
2019-2020 Catastrophe Excess Loss Reinsurance Programs | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Reinsurance payable and funds withheld liabilities | 224,300 | 224,300 | ||||||||||||||||
2019-2020 Catastrophe Excess Loss Reinsurance Programs | Maximum | First Event Coverage | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Reinsurance retention amount | 20,000 | |||||||||||||||||
Reinsurance amount retained on net basis with profit share agreement | 10,000 | |||||||||||||||||
2019-2020 Catastrophe Excess Loss Reinsurance Programs | Maximum | Second Event Coverage | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Additional coverage amount | 18,000 | 18,000 | ||||||||||||||||
Reinsurance retention amount | 2,000 | |||||||||||||||||
Reinsurance amount retained on net basis with profit share agreement | 1,000 | |||||||||||||||||
Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Reinsurance payable and funds withheld liabilities | 286,000 | 286,000 | ||||||||||||||||
Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | Maximum | First Event Coverage | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Reinsurance retention amount | 18,000 | |||||||||||||||||
Reinsurance amount retained on net basis with profit share agreement | 9,000 | |||||||||||||||||
Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | Maximum | Second Event Coverage | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Additional coverage amount | 16,000 | 16,000 | ||||||||||||||||
Federated National's Florida Exposure | Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Reinsurance payable and funds withheld liabilities | 238,200 | 238,200 | ||||||||||||||||
FHCF | 2019-2020 Catastrophe Excess Loss Reinsurance Programs | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Reinsurance payable and funds withheld liabilities | 45,800 | $ 45,800 | ||||||||||||||||
FHCF | 2019-2020 Catastrophe Excess Loss Reinsurance Programs | Maximum | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share reinsurance treaty | 90.00% | |||||||||||||||||
FHCF | Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Maximum single event coverage | 650,000 | $ 650,000 | ||||||||||||||||
Reinsurance payable and funds withheld liabilities | 47,800 | $ 47,800 | ||||||||||||||||
FNIC | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Quota share reinsurance treaty, period | 2 years | |||||||||||||||||
FNIC | Maximum | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Trust agreement for loss exposure (less than) | 100 | $ 100 | $ 100 | |||||||||||||||
FNIC | 2019-2020 Catastrophe Excess Loss Reinsurance Programs | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Excess retention, amount reinsured | 27,000 | |||||||||||||||||
Additional coverage amount | $ 20,000 | $ 20,000 | ||||||||||||||||
FNIC | Quota Share One | Property Insurance Product Line | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share expired on cut off basis | 10.00% | |||||||||||||||||
FNIC | Quota Share One | Florida Homeowners Book of Business | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share reinsurance treaty | 10.00% | 10.00% | 2.00% | 30.00% | ||||||||||||||
FNIC | Quota Share One | Florida Homeowners Book of Business | Forecast | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share reinsurance treaty | 40.00% | |||||||||||||||||
Percentage of quota share up for renewal | 20.00% | |||||||||||||||||
FNIC | Quota Share One | Non-Florida Homeowners Book Of Business | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share reinsurance treaty | 80.00% | 50.00% | ||||||||||||||||
FNIC | Quota Share One | Federated Nationals Insurance Company Non Florida Reinsurance Program 2018-2019 | SageSure LLP | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share reinsurance treaty | 50.00% | |||||||||||||||||
Profit sharing percent | 50.00% | |||||||||||||||||
FNIC | Quota Share Two | Florida Homeowners Book of Business | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share reinsurance treaty | 10.00% | 10.00% | ||||||||||||||||
FNIC | Quota Share Two | Florida Homeowners Book of Business | Minimum | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share reinsurance treaty | 10.00% | |||||||||||||||||
FNIC | Quota Share Two | Florida Homeowners Book of Business | Maximum | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share reinsurance treaty | 20.00% | |||||||||||||||||
FNIC | Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Excess retention, amount reinsured | $ 25,000 | |||||||||||||||||
Excess retention, retention percentage | 100.00% | |||||||||||||||||
Excess retention, amount reinsured, co-participation | $ 6,000 | |||||||||||||||||
Excess retention, retention percentage, co-participation | 9.10% | |||||||||||||||||
Excess retention, threshold limit above initial insured amount | $ 70,000 | |||||||||||||||||
Potential decrease for parametric basis with excess and surplus lines carrier, percent | 28.50% | 28.50% | ||||||||||||||||
FNIC | Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | Second and Third Event Coverage | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Excess retention, amount reinsured | $ 10,000 | |||||||||||||||||
Excess retention, retention percentage, co-participation | 71.50% | |||||||||||||||||
Excess retention, threshold limit above initial insured amount | $ 15,000 | |||||||||||||||||
Second and third event retention, combined basis | 14,300 | |||||||||||||||||
FNIC | Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | Second and Third Event Coverage | Hurricane Delta and Subsequent Events | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Excess retention, amount reinsured | $ 13,500 | $ 8,000 | $ 39,200 | |||||||||||||||
Reinsurance payable and funds withheld liabilities | $ 2,000 | $ 875 | $ 11,200 | |||||||||||||||
Excess retention, retention percentage, co-participation | 50.00% | |||||||||||||||||
Excess retention, threshold limit above initial insured amount | $ 10,000 | |||||||||||||||||
FNIC | Maison Insurance Company (MIC) | Hurricane Delta and Subsequent Events | Subsequent Event | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Reinsurance payable and funds withheld liabilities | $ 13,000 | $ 2,300 | ||||||||||||||||
Excess retention, retention percentage, co-participation | 65.00% | |||||||||||||||||
FNIC | Maison Insurance Company (MIC) | First Event Coverage | Hurricane Delta and Subsequent Events | Subsequent Event | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Excess retention, amount reinsured | $ 25,000 | $ 10,000 | ||||||||||||||||
Excess retention, retention percentage, co-participation | 50.00% | 65.00% | ||||||||||||||||
Excess retention, threshold limit above initial insured amount | $ 70,000 | $ 15,000 | ||||||||||||||||
Excess retention, occurrence deductible | 900 | |||||||||||||||||
FNIC | Maison Insurance Company (MIC) | Second Event Coverage | Hurricane Delta and Subsequent Events | Subsequent Event | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Excess retention, amount reinsured | $ 10,000 | $ 4,200 | ||||||||||||||||
Excess retention, retention percentage, co-participation | 100.00% | |||||||||||||||||
Excess retention, threshold limit above initial insured amount | $ 15,000 | |||||||||||||||||
Private and FHCF Reinsurance | 2019-2020 Catastrophe Excess Loss Reinsurance Programs | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Maximum single event coverage | $ 1,300,000 | 1,300,000 | ||||||||||||||||
Maximum second and third event coverage | 15,000 | 15,000 | ||||||||||||||||
Liability for catastrophe claims | 1,900,000 | $ 1,900,000 | ||||||||||||||||
Private and FHCF Reinsurance | 2019-2020 Catastrophe Excess Loss Reinsurance Programs | Maximum | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share reinsurance treaty | 75.00% | |||||||||||||||||
Private and FHCF Reinsurance | Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Maximum single event coverage | 650,000 | $ 650,000 | ||||||||||||||||
Excess retention, amount reinsured | 25,000 | |||||||||||||||||
Aggregate maximum single event coverage | 1,300,000 | 1,300,000 | ||||||||||||||||
Private and FHCF Reinsurance | Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | First Event Coverage | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Excess retention, amount reinsured | $ 31,000 | |||||||||||||||||
Private and FHCF Reinsurance | Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | Maximum | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share reinsurance treaty | 90.00% | |||||||||||||||||
Monarch National S Florida | 2019-2020 Catastrophe Excess Loss Reinsurance Programs | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Maximum second and third event coverage | 10,000 | $ 10,000 | ||||||||||||||||
Additional coverage amount | 2,000 | 2,000 | ||||||||||||||||
Maison | 2019-2020 Catastrophe Excess Loss Reinsurance Programs | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Additional coverage amount | 5,000 | 5,000 | ||||||||||||||||
Florida | Quota Share Treaties | Property Insurance Product Line | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share reinsurance treaty | 10.00% | 30.00% | ||||||||||||||||
Florida | Quota Share One | Property Insurance Product Line | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share expired on cut off basis | 30.00% | |||||||||||||||||
Percentage of unearned premiums and losses retained | 30.00% | |||||||||||||||||
Florida | Federated National's Florida Exposure | 2019-2020 Catastrophe Excess Loss Reinsurance Programs | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Reinsurance payable and funds withheld liabilities | $ 178,500 | $ 178,500 | ||||||||||||||||
Florida | FNIC | Quota Share Treaties | Property Insurance Product Line | ||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | ||||||||||||||||||
Percentage of property quota share reinsurance treaty | 40.00% |
REINSURANCE (Reinsurance Recove
REINSURANCE (Reinsurance Recoverables) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Reinsurance Disclosures [Abstract] | ||
Reinsurance recoverable on paid losses | $ 54,898 | $ 45,186 |
Reinsurance recoverable on unpaid losses | 358,193 | 164,429 |
Reinsurance recoverable, allowance for credit loss | (65) | 0 |
Reinsurance premium paid | $ 413,026 | $ 209,615 |
REINSURANCE (Premiums Written a
REINSURANCE (Premiums Written and Earned) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net Premiums Written | |||
Direct | $ 726,885 | $ 610,608 | $ 567,764 |
Ceded | (490,262) | (232,729) | (202,732) |
Net premiums written | 236,623 | 377,879 | 365,032 |
Net Premiums Earned | |||
Direct | 720,967 | 582,334 | 580,020 |
Ceded | (356,833) | (218,682) | (224,763) |
Net premiums earned | $ 364,134 | $ 363,652 | $ 355,257 |
ALLOWANCES FOR CREDIT LOSS (Sch
ALLOWANCES FOR CREDIT LOSS (Schedule of allowance for credit loss) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Premium Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at the beginning of the period | $ 159 |
Balance at the end of the period | 233 |
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | |
Balance at the beginning of the peroid | 0 |
Balance at the end of the period | 65 |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at the beginning of the period | 159 |
Credit loss, expense (recovery) | 106 |
Balance at the end of the period | 298 |
Cumulative Effect, Period of Adoption, Adjustment | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at the end of the period | 33 |
Debt Securities, Held-to-Maturity | |
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward] | |
Balance at the beginning of the period | 0 |
Credit loss expense (recovery) | (1) |
Balance at the end of the period | 0 |
Debt Securities, Held-to-Maturity | Cumulative Effect, Period of Adoption, Adjustment | |
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward] | |
Balance at the end of the period | 1 |
Premiums Receivable | |
Premium Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at the beginning of the period | 159 |
Credit loss expense (recovery) | 74 |
Balance at the end of the period | 233 |
Premiums Receivable | Cumulative Effect, Period of Adoption, Adjustment | |
Premium Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at the end of the period | 0 |
Reinsurance Recoverable, Net | |
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | |
Balance at the beginning of the peroid | 0 |
Credit loss expense (recovery) | 33 |
Balance at the end of the period | 65 |
Reinsurance Recoverable, Net | Cumulative Effect, Period of Adoption, Adjustment | |
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | |
Balance at the end of the period | $ 32 |
ALLOWANCES FOR CREDIT LOSS (Pre
ALLOWANCES FOR CREDIT LOSS (Premium Receivable Past Due) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Financing Receivable, Past Due [Line Items] | ||
Amortized cost | $ 51,036 | |
Allowance for credit loss | (233) | $ (159) |
Net | 50,803 | |
Current | ||
Financing Receivable, Past Due [Line Items] | ||
Amortized cost | 46,376 | |
Allowance for credit loss | 0 | |
Net | 46,376 | |
1 to 29 Days Past Due | ||
Financing Receivable, Past Due [Line Items] | ||
Amortized cost | 4,253 | |
Allowance for credit loss | (43) | |
Net | 4,210 | |
30 to 59 Days Past Due | ||
Financing Receivable, Past Due [Line Items] | ||
Amortized cost | 159 | |
Allowance for credit loss | (8) | |
Net | 151 | |
60 to 89 Days Past Due | ||
Financing Receivable, Past Due [Line Items] | ||
Amortized cost | 94 | |
Allowance for credit loss | (28) | |
Net | 66 | |
90 Plus Days Past Due | ||
Financing Receivable, Past Due [Line Items] | ||
Amortized cost | 154 | |
Allowance for credit loss | (154) | |
Net | $ 0 |
GOODWILL AND IDENTIFIABLE INT_3
GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS - Schedule of Goodwill Roll Forward (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill [Roll Forward] | ||||
Goodwill beginning of the period | $ 10,997 | $ 0 | ||
Accumulated impairment as of beginning of year | 0 | $ 0 | ||
Acquisition accounting adjustments | 0 | 10,997 | ||
Impairment | $ (11,000) | (10,997) | 0 | |
Goodwill end of the period | $ 0 | $ 0 | $ 10,997 |
GOODWILL AND IDENTIFIABLE INT_4
GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Impairment | $ 11,000 | $ 10,997 | $ 0 |
GOODWILL AND IDENTIFIABLE INT_5
GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Intangible asset, accumulated amortization | $ 162 | $ 13 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Total | 1,580 | 2,282 |
Trade Names | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Intangible asset, gross | 1,100 | 1,800 |
Impairment of intangible assets | 700 | |
Insurance Licenses | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Intangible asset, gross | 180 | 182 |
Impairment of intangible assets | $ 2 | |
Noncompete Agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in years) | 2 years | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Non-compete agreements | $ 300 | 300 |
Intangible asset, accumulated amortization | $ 162 | $ 13 |
LOSS AND LOSS ADJUSTMENT RESE_3
LOSS AND LOSS ADJUSTMENT RESERVES - (Schedule of Activity in Liability for Loss and LAE Reserves) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Gross reserves, beginning-of-period | $ 324,362 | $ 296,230 | $ 230,515 |
Less: reinsurance recoverable | (164,429) | (166,396) | (98,345) |
Net reserves, beginning-of-period | 159,933 | 129,834 | 132,170 |
Net reserves from the Maison Companies acquisition | 0 | 11,825 | 0 |
Incurred loss, net of reinsurance, related to: | |||
Current year | 358,952 | 262,118 | 231,133 |
Prior year loss development | 18,367 | 13,460 | 2,166 |
Ceded losses under retrospectively rated quota-share | (816) | (2,489) | (4,883) |
Prior years | 17,551 | 10,971 | (2,717) |
Amortization of acquisition fair value adjustment | (54) | (9) | 0 |
Total incurred loss and LAE, net of reinsurance | 376,449 | 273,080 | 228,416 |
Paid loss, net of reinsurance, related to: | |||
Current year | 253,344 | 173,313 | 155,462 |
Prior years | 100,799 | 81,493 | 75,290 |
Total paid loss and LAE, net of reinsurance | 354,143 | 254,806 | 230,752 |
Net reserves, end-of-period | 182,239 | 159,933 | 129,834 |
Plus: reinsurance recoverable | 358,128 | 164,429 | 166,396 |
Gross reserves, end-of-period | $ 540,367 | $ 324,362 | $ 296,230 |
LOSS AND LOSS ADJUSTMENT RESE_4
LOSS AND LOSS ADJUSTMENT RESERVES - (Narrative) (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Jul. 31, 2017 | Jul. 31, 2016 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Liability for Catastrophe Claims [Line Items] | |||||
Current year | $ 358,952 | $ 262,118 | $ 231,133 | ||
Federated National Reinsurance Programs | Florida | |||||
Liability for Catastrophe Claims [Line Items] | |||||
Current year | $ 18,400 | $ 13,500 | $ 2,200 | ||
Quota Share Treaties | Property Insurance Product Line | Florida | |||||
Liability for Catastrophe Claims [Line Items] | |||||
Percentage of quota share reinsurance treaty | 10.00% | 30.00% |
LOSS AND LOSS ADJUSTMENT RESE_5
LOSS AND LOSS ADJUSTMENT RESERVES - (Schedule of Incurred Losses and ALAE, Net of Reinsurance) (Details) $ in Thousands | Dec. 31, 2020USD ($)reported_claim | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($) | Dec. 31, 2011USD ($) |
Homeowners | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 1,405,999 | |||||||||
Homeowners | 2011 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | 26,375 | $ 26,394 | $ 26,394 | $ 26,143 | $ 25,957 | $ 24,582 | $ 23,932 | $ 23,007 | $ 21,344 | $ 20,492 |
IBNR & development on reported claims | $ 12 | |||||||||
Cumulative number of reported claims | reported_claim | 2,428,000 | |||||||||
Homeowners | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 26,984 | 26,951 | 26,836 | 26,356 | 25,889 | 24,468 | 24,186 | 23,301 | 23,032 | |
IBNR & development on reported claims | $ 85 | |||||||||
Cumulative number of reported claims | reported_claim | 2,694,000 | |||||||||
Homeowners | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 38,088 | 37,978 | 37,880 | 37,185 | 35,859 | 35,834 | 42,021 | 43,807 | ||
IBNR & development on reported claims | $ 15 | |||||||||
Cumulative number of reported claims | reported_claim | 3,431,000 | |||||||||
Homeowners | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 62,535 | 62,043 | 61,817 | 62,206 | 61,770 | 63,300 | 64,312 | |||
IBNR & development on reported claims | $ 378 | |||||||||
Cumulative number of reported claims | reported_claim | 7,606,000 | |||||||||
Homeowners | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 96,144 | 94,703 | 94,760 | 95,129 | 92,411 | 99,497 | ||||
IBNR & development on reported claims | $ 1,522 | |||||||||
Cumulative number of reported claims | reported_claim | 13,038,000 | |||||||||
Homeowners | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 156,316 | 157,880 | 158,764 | 162,043 | 171,264 | |||||
IBNR & development on reported claims | $ 1,394 | |||||||||
Cumulative number of reported claims | reported_claim | 22,614,000 | |||||||||
Homeowners | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 179,327 | 188,548 | 192,769 | 202,844 | ||||||
IBNR & development on reported claims | $ 47,728 | |||||||||
Cumulative number of reported claims | reported_claim | 67,165,000 | |||||||||
Homeowners | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 216,570 | 213,128 | 210,158 | |||||||
IBNR & development on reported claims | $ 20,849 | |||||||||
Cumulative number of reported claims | reported_claim | 35,817,000 | |||||||||
Homeowners | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 261,541 | 257,644 | ||||||||
IBNR & development on reported claims | $ 23,909 | |||||||||
Cumulative number of reported claims | reported_claim | 19,661,000 | |||||||||
Homeowners | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 342,119 | |||||||||
IBNR & development on reported claims | $ 236,080 | |||||||||
Cumulative number of reported claims | reported_claim | 35,117,000 | |||||||||
Commercial general liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 72,220 | |||||||||
Commercial general liability | 2011 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | 9,394 | 7,817 | 6,828 | 6,254 | 5,409 | 4,760 | 4,603 | 4,749 | 5,854 | 6,436 |
IBNR & development on reported claims | $ 1,572 | |||||||||
Cumulative number of reported claims | reported_claim | 1,367 | |||||||||
Commercial general liability | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 6,431 | 5,109 | 4,509 | 4,346 | 4,658 | 4,700 | 4,801 | 4,952 | 5,279 | |
IBNR & development on reported claims | $ 1,209 | |||||||||
Cumulative number of reported claims | reported_claim | 817 | |||||||||
Commercial general liability | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 7,588 | 5,984 | 5,580 | 5,704 | 5,502 | 5,221 | 5,069 | 7,095 | ||
IBNR & development on reported claims | $ 1,245 | |||||||||
Cumulative number of reported claims | reported_claim | 759 | |||||||||
Commercial general liability | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 9,028 | 6,697 | 6,348 | 6,620 | 6,384 | 7,709 | 7,475 | |||
IBNR & development on reported claims | $ 1,549 | |||||||||
Cumulative number of reported claims | reported_claim | 1,016 | |||||||||
Commercial general liability | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 9,141 | 7,947 | 5,377 | 6,020 | 7,008 | 8,082 | ||||
IBNR & development on reported claims | $ 2,043 | |||||||||
Cumulative number of reported claims | reported_claim | 877 | |||||||||
Commercial general liability | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 12,267 | 8,502 | 6,561 | 5,809 | 10,727 | |||||
IBNR & development on reported claims | $ 3,086 | |||||||||
Cumulative number of reported claims | reported_claim | 845 | |||||||||
Commercial general liability | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 8,519 | 6,558 | 7,853 | 8,289 | ||||||
IBNR & development on reported claims | $ 3,369 | |||||||||
Cumulative number of reported claims | reported_claim | 639 | |||||||||
Commercial general liability | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 7,280 | 6,233 | 6,553 | |||||||
IBNR & development on reported claims | $ 4,281 | |||||||||
Cumulative number of reported claims | reported_claim | 420 | |||||||||
Commercial general liability | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 2,535 | 1,604 | ||||||||
IBNR & development on reported claims | $ 1,826 | |||||||||
Cumulative number of reported claims | reported_claim | 114 | |||||||||
Commercial general liability | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 37 | |||||||||
IBNR & development on reported claims | $ 0 | |||||||||
Cumulative number of reported claims | reported_claim | 6 | |||||||||
Automobile | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 68,723 | |||||||||
Automobile | 2011 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | 2,760 | 2,762 | 2,756 | 2,796 | 2,848 | 2,762 | 2,912 | 2,954 | 3,350 | $ 3,580 |
IBNR & development on reported claims | $ 0 | |||||||||
Cumulative number of reported claims | reported_claim | 789 | |||||||||
Automobile | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 1,448 | 1,444 | 1,448 | 1,491 | 1,455 | 1,424 | 1,717 | 1,741 | $ 1,735 | |
IBNR & development on reported claims | $ 4 | |||||||||
Cumulative number of reported claims | reported_claim | 824 | |||||||||
Automobile | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 2,127 | 2,127 | 2,123 | 2,161 | 1,829 | 1,826 | 1,863 | $ 1,517 | ||
IBNR & development on reported claims | $ 6 | |||||||||
Cumulative number of reported claims | reported_claim | 3,471 | |||||||||
Automobile | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 4,413 | 4,417 | 4,379 | 4,315 | 3,551 | 3,213 | $ 2,038 | |||
IBNR & development on reported claims | $ 4 | |||||||||
Cumulative number of reported claims | reported_claim | 6,019 | |||||||||
Automobile | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 2,944 | 2,915 | 2,878 | 2,781 | 2,882 | $ 3,045 | ||||
IBNR & development on reported claims | $ 14 | |||||||||
Cumulative number of reported claims | reported_claim | 6,553 | |||||||||
Automobile | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 25,923 | 25,918 | 24,346 | 20,205 | $ 13,414 | |||||
IBNR & development on reported claims | $ 251 | |||||||||
Cumulative number of reported claims | reported_claim | 67,655 | |||||||||
Automobile | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 24,669 | 24,579 | 22,472 | $ 20,411 | ||||||
IBNR & development on reported claims | $ 740 | |||||||||
Cumulative number of reported claims | reported_claim | 52,885 | |||||||||
Automobile | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 4,439 | 4,623 | $ 3,513 | |||||||
IBNR & development on reported claims | $ 887 | |||||||||
Cumulative number of reported claims | reported_claim | 9,604 | |||||||||
Automobile | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 0 | $ (3) | ||||||||
IBNR & development on reported claims | $ 2 | |||||||||
Cumulative number of reported claims | reported_claim | 101 | |||||||||
Automobile | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 0 | |||||||||
IBNR & development on reported claims | $ 0 | |||||||||
Cumulative number of reported claims | reported_claim | 1 |
LOSS AND LOSS ADJUSTMENT RESE_6
LOSS AND LOSS ADJUSTMENT RESERVES - (Schedule of Cumulative Paid Losses and ALAE, Net of Reinsurance Recoverable) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Claims Development [Line Items] | ||||||||||
Unfavorable loss and LAE reserve | $ 540,367 | $ 324,362 | $ 296,230 | $ 230,515 | ||||||
Homeowners | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 1,256,685 | |||||||||
Unfavorable loss and LAE reserve | 149,314 | |||||||||
Homeowners | 2011 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 26,342 | 26,340 | 26,287 | 25,982 | $ 25,580 | $ 24,047 | $ 22,723 | $ 21,323 | $ 19,250 | $ 11,119 |
Homeowners | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 26,901 | 26,861 | 26,777 | 26,113 | 25,186 | 23,923 | 23,120 | 20,728 | 13,693 | |
Homeowners | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 37,915 | 37,688 | 37,473 | 35,803 | 35,123 | 33,867 | 31,606 | 19,986 | ||
Homeowners | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 61,692 | 61,441 | 60,555 | 59,722 | 57,891 | 53,831 | 37,033 | |||
Homeowners | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 93,405 | 92,327 | 90,415 | 86,647 | 79,359 | 52,214 | ||||
Homeowners | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 153,997 | 152,258 | 148,274 | 142,716 | 102,556 | |||||
Homeowners | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 178,013 | 179,327 | 176,580 | 135,589 | ||||||
Homeowners | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 206,133 | 194,160 | 141,173 | |||||||
Homeowners | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 236,090 | 157,768 | ||||||||
Homeowners | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 236,197 | |||||||||
Homeowners | All outstanding liabilities for unpaid claims and ALAE prior to 2011, net of reinsurance | ||||||||||
Claims Development [Line Items] | ||||||||||
Unfavorable loss and LAE reserve | 0 | |||||||||
Commercial general liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 47,437 | |||||||||
Unfavorable loss and LAE reserve | 28,328 | |||||||||
Commercial general liability | 2011 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 7,693 | 7,365 | 6,349 | 5,831 | 4,866 | 4,246 | 3,673 | 3,366 | 2,763 | 764 |
Commercial general liability | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 4,790 | 4,521 | 4,098 | 3,841 | 3,686 | 3,342 | 2,632 | 1,714 | 871 | |
Commercial general liability | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 5,847 | 5,467 | 5,033 | 4,606 | 3,867 | 3,366 | 2,233 | 882 | ||
Commercial general liability | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 6,901 | 6,270 | 5,130 | 4,375 | 3,855 | 2,593 | 717 | |||
Commercial general liability | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 6,566 | 5,866 | 3,827 | 3,249 | 2,296 | 798 | ||||
Commercial general liability | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 8,382 | 6,606 | 5,088 | 3,657 | 1,515 | |||||
Commercial general liability | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 4,225 | 3,293 | 2,478 | 1,592 | ||||||
Commercial general liability | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 2,604 | 1,554 | 963 | |||||||
Commercial general liability | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 424 | 147 | ||||||||
Commercial general liability | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 5 | |||||||||
Commercial general liability | All outstanding liabilities for unpaid claims and ALAE prior to 2011, net of reinsurance | ||||||||||
Claims Development [Line Items] | ||||||||||
Unfavorable loss and LAE reserve | 3,545 | |||||||||
Automobile | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 67,350 | |||||||||
Unfavorable loss and LAE reserve | 1,388 | |||||||||
Automobile | 2011 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 2,755 | 2,755 | 2,755 | 2,755 | 2,755 | 2,726 | 2,644 | 2,562 | 2,381 | $ 1,417 |
Automobile | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 1,449 | 1,447 | 1,444 | 1,430 | 1,393 | 1,384 | 1,333 | 1,293 | $ 867 | |
Automobile | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 2,116 | 2,116 | 2,112 | 2,109 | 2,069 | 1,906 | 1,609 | $ 907 | ||
Automobile | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 4,396 | 4,383 | 4,291 | 4,122 | 3,678 | 3,120 | $ 1,455 | |||
Automobile | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 2,897 | 2,890 | 2,807 | 2,670 | 2,293 | $ 1,393 | ||||
Automobile | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 26,132 | 25,582 | 23,053 | 17,258 | $ 8,084 | |||||
Automobile | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 24,468 | 23,860 | 20,762 | $ 12,821 | ||||||
Automobile | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 3,137 | 3,626 | $ 2,331 | |||||||
Automobile | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 0 | $ (5) | ||||||||
Automobile | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 0 | |||||||||
Automobile | All outstanding liabilities for unpaid claims and ALAE prior to 2011, net of reinsurance | ||||||||||
Claims Development [Line Items] | ||||||||||
Unfavorable loss and LAE reserve | $ 15 |
LOSS AND LOSS ADJUSTMENT RESE_7
LOSS AND LOSS ADJUSTMENT RESERVES - (Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance) (Details) | Dec. 31, 2020 |
Homeowners | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 1 | 62.00% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 2 | 25.60% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 3 | 4.60% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 4 | 1.90% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 5 | 1.80% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 6 | 2.30% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 7 | 1.00% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 8 | 0.60% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 9 | 0.20% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 10 | 0.00% |
Commercial general liability | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 1 | 10.20% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 2 | 14.10% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 3 | 10.40% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 4 | 7.20% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 5 | 10.30% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 6 | 6.50% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 7 | 6.30% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 8 | 5.00% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 9 | 7.20% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 10 | 4.70% |
Automobile | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 1 | 42.30% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 2 | 33.50% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 3 | 14.20% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 4 | 6.20% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 5 | 2.30% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 6 | 1.20% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 7 | 0.30% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 8 | 0.00% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 9 | 0.00% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 10 | 0.00% |
LOSS AND LOSS ADJUSTMENT RESE_8
LOSS AND LOSS ADJUSTMENT RESERVES - (Schedule of Reconciliation of Net Incurred and Paid Development) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Liability for Claims and Claims Adjustment Expense [Abstract] | ||||
Total liabilities for unpaid losses and LAE, net of reinsurance | $ 179,030 | $ 156,324 | ||
Reinsurance Recoverables on Unpaid Losses, Gross to Net [Abstract] | ||||
Total reinsurance recoverables | 358,128 | 164,429 | ||
Unallocated loss adjustment expenses | 3,209 | 3,609 | ||
Unfavorable loss and LAE reserve | 540,367 | 324,362 | $ 296,230 | $ 230,515 |
Homeowners | ||||
Liability for Claims and Claims Adjustment Expense [Abstract] | ||||
Total liabilities for unpaid losses and LAE, net of reinsurance | 149,314 | 137,168 | ||
Reinsurance Recoverables on Unpaid Losses, Gross to Net [Abstract] | ||||
Total reinsurance recoverables | 353,741 | 160,578 | ||
Unfavorable loss and LAE reserve | 149,314 | |||
Commercial general liability | ||||
Liability for Claims and Claims Adjustment Expense [Abstract] | ||||
Total liabilities for unpaid losses and LAE, net of reinsurance | 28,328 | 17,014 | ||
Reinsurance Recoverables on Unpaid Losses, Gross to Net [Abstract] | ||||
Total reinsurance recoverables | 0 | 500 | ||
Unfavorable loss and LAE reserve | 28,328 | |||
Automobile | ||||
Liability for Claims and Claims Adjustment Expense [Abstract] | ||||
Total liabilities for unpaid losses and LAE, net of reinsurance | 1,388 | 2,142 | ||
Reinsurance Recoverables on Unpaid Losses, Gross to Net [Abstract] | ||||
Total reinsurance recoverables | 1,424 | 3,228 | ||
Unfavorable loss and LAE reserve | 1,388 | |||
Flood | ||||
Liability for Claims and Claims Adjustment Expense [Abstract] | ||||
Total liabilities for unpaid losses and LAE, net of reinsurance | 0 | 0 | ||
Reinsurance Recoverables on Unpaid Losses, Gross to Net [Abstract] | ||||
Total reinsurance recoverables | $ 2,963 | $ 123 |
LONG-TERM DEBT - (Schedule of D
LONG-TERM DEBT - (Schedule of Debt) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Total debt maturities | $ 98,683 | $ 98,522 |
Senior Unsecured Floating Rate Notes, Due December 31, 2027 | ||
Debt Instrument [Line Items] | ||
Deferred financing costs | 1,478 | 1,317 |
Unsecured Debt | Senior Unsecured Floating Rate Notes, Due December 31, 2027 | ||
Debt Instrument [Line Items] | ||
Total debt maturities | $ 98,683 | $ 98,522 |
LONG-TERM DEBT - (Schedule of M
LONG-TERM DEBT - (Schedule of Maturities of Long-term Debt) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
2021 | $ 0 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
Thereafter | 100,000 | |
Total debt maturities | 100,000 | |
Less: deferred financing costs | 1,317 | $ 1,478 |
Total debt maturities, net | $ 98,683 | $ 98,522 |
LONG-TERM DEBT - (Narrative) (D
LONG-TERM DEBT - (Narrative) (Details) - USD ($) | Mar. 05, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||||
Repayments of promissory note | $ 0 | $ 48,000,000 | $ 5,000,000 | |
Covenant compliance, debt to capital ratio threshold | 35.00% | |||
Debt to capital ratio, actual | 0.384 | |||
Senior Unsecured Fixed Rate Notes, Due March 15, 2029 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt instrument face amount | $ 100,000,000 | |||
Stated interest rate | 7.50% | |||
Redemption price, percentage | 100.00% | |||
Redemption premium, percentage | 1.00% | |||
Senior Unsecured Fixed Rate Notes, Due March 15, 2029 | Unsecured Debt | After March 15, 2024 | ||||
Debt Instrument [Line Items] | ||||
Redemption price, percentage | 103.75% | |||
Senior Unsecured Fixed Rate Notes, Due March 15, 2029 | Unsecured Debt | March 15, 2025 through March 14, 2026 | ||||
Debt Instrument [Line Items] | ||||
Redemption price, percentage | 101.875% | |||
Senior Unsecured Fixed Rate Notes, Due March 15, 2029 | Unsecured Debt | March 15, 2026 and thereafter | ||||
Debt Instrument [Line Items] | ||||
Redemption price, percentage | 100.00% | |||
Senior Unsecured Fixed Rate Notes, Due March 15, 2029 | Unsecured Debt | Change in Control | ||||
Debt Instrument [Line Items] | ||||
Redemption price, percentage | 101.00% | |||
Senior Unsecured Fixed Rate Notes, Due July 1, 2022 | ||||
Debt Instrument [Line Items] | ||||
Interest expense, debt | $ 3,600,000 | |||
Senior Unsecured Fixed Rate Notes, Due July 1, 2022 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Default rate, increase in fixed rate (basis points) | 0.50% | |||
1347 Property Insurance Holdings, Inc | Senior Unsecured Fixed Rate Notes, Due July 1, 2022 | ||||
Debt Instrument [Line Items] | ||||
Repayments of promissory note | $ 45,000,000 |
INCOME TAXES - (Summary of Prov
INCOME TAXES - (Summary of Provision for Income Tax Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Federal: | |||
Current | $ (29,449) | $ (982) | $ 5,162 |
Deferred | (3,494) | 567 | (751) |
Federal income tax expense (benefit) | (32,943) | (415) | 4,411 |
State: | |||
Current | (403) | 241 | 1,383 |
Deferred | (150) | (124) | (296) |
State income tax expense (benefit) | (553) | 117 | 1,087 |
Total income tax expense (benefit) | $ (33,496) | $ (298) | $ 5,498 |
INCOME TAXES - (Effective Feder
INCOME TAXES - (Effective Federal and State Tax Rates to Income before Income Tax Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Computed expected tax expense provision, at federal rate | $ (23,447) | $ 150 | $ 4,244 |
State tax, net of federal tax benefit | (3,157) | (122) | 761 |
Tax-exempt interest | (5) | (3) | (134) |
Income subject to dividends-received deduction | (26) | (34) | (13) |
Goodwill impairment | 2,309 | 0 | 0 |
Return to provision | (3,407) | (307) | 158 |
Executive compensation | 41 | 230 | 436 |
Meals and entertainment | 13 | 43 | 28 |
Uncertain tax position | (179) | (203) | 0 |
Rate difference on NOL carryback | (8,785) | (113) | 0 |
Change in valuation allowance | 2,968 | 0 | 0 |
Other | 179 | 61 | 18 |
Total income tax expense (benefit) | $ (33,496) | $ (298) | $ 5,498 |
INCOME TAXES - (Narrative) (Det
INCOME TAXES - (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Contingency [Line Items] | |||
Effective income tax rate | 30.00% | (41.80%) | 27.20% |
Change in valuation allowance | $ 2,968 | $ 0 | $ 0 |
Domestic Tax Authority | |||
Income Tax Contingency [Line Items] | |||
Operating loss carryforwards | 11,100 | ||
State and Local Jurisdiction | |||
Income Tax Contingency [Line Items] | |||
Operating loss carryforwards | 73,000 | ||
Operating loss carryforwards, not subject to expiration | $ 12,000 |
INCOME TAXES - (Reconciliation
INCOME TAXES - (Reconciliation of Tax Positions Taken During the Year) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of Unrecognized Tax Benefits [Roll Forward] | |||
Balance at January 1 | $ 382 | $ 585 | $ 585 |
Increases/(decreases) for uncertain tax positions taken during the prior years | (179) | (203) | 0 |
Balance at the end of the period | $ 203 | $ 382 | $ 585 |
INCOME TAXES - (Significant Com
INCOME TAXES - (Significant Components of Net Deferred Tax Liability) (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred income tax assets: | ||
Unearned premiums | $ 5,611 | $ 10,232 |
Unpaid losses and loss adjustment expenses | 581 | 1,596 |
Accrued expenses | 236 | 216 |
Net operating loss carryforwards | 5,350 | 2,095 |
Share-based compensation | 232 | 161 |
Depreciation and amortization | 412 | 0 |
Lease liability | 1,783 | 1,655 |
Other | 69 | 23 |
Gross deferred income tax assets | 14,274 | 15,978 |
Valuation allowance | (2,968) | 0 |
Total deferred income tax assets | 11,306 | 15,978 |
Deferred income tax liabilities: | ||
Deferred acquisition costs and other | (6,387) | (12,703) |
Depreciation and amortization | 0 | (1,679) |
Unrealized gains on investment securities | (2,865) | (3,270) |
Lease asset | (1,783) | (1,655) |
Other | (213) | (257) |
Total deferred income tax liabilities | (11,248) | (19,564) |
Deferred tax assets, net | $ 58 | |
Deferred tax liability, net | $ (3,586) |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Operating lease cost | $ 1.1 | $ 1 | |
Rent expense | $ 0.7 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - (Schedule of Future Minimum Lease Payments) (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2021 | $ 1,066 |
2022 | 1,098 |
2023 | 1,131 |
2024 | 1,164 |
2025 | 1,115 |
Thereafter | 3,318 |
Total | $ 8,892 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Additional Lease Information (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Right-of-use asset | $ 7,430 | $ 8,096 |
Accrued rent | (259) | (317) |
Right-of-use asset, net | $ 7,171 | $ 7,779 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Other liabilities | Other liabilities |
Lease liability | $ 7,430 | $ 8,096 |
Weighted average discount rate (as a percent) | 4.70% | 4.70% |
Weighted average remaining lease term (in years) | 7 years 8 months 12 days | 8 years 8 months 12 days |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES - Lease Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Lease expense | $ 1,118 | $ 1,046 |
Sublease income | (466) | (229) |
Lease expense, net | 652 | 817 |
Net cash provided by (used in) operating activities | $ (555) | $ (573) |
SHAREHOLDERS' EQUITY - (Narrati
SHAREHOLDERS' EQUITY - (Narrative) (Details) - USD ($) | 12 Months Ended | ||||||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2020 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Remaining authorized repurchase amount | $ 800,000 | ||||||
Repurchases of common stock | $ 10,000,000 | $ 3,867,000 | $ 5,061,000 | ||||
Average cost per share (in dollars per share) | $ 12.50 | $ 16.27 | |||||
Stock repurchased (in shares) | 800,235 | ||||||
Stock repurchased, amount | $ 10,000,000 | ||||||
Value reserved for future issuance | $ 150,000,000 | ||||||
Capital shares reserved for future issuance (in shares) | 800,000 | ||||||
Award requisite service period | 1 year | ||||||
Vesting period | 5 years | ||||||
Restricted Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unamortized share-based compensation expense not yet recognized | $ 3,400,000 | ||||||
Unamortized share-based compensation remaining weighted average vesting period | 1 year 11 months 15 days | ||||||
Granted (in shares) | 210,272 | 140,156 | 133,060 | ||||
Minimum | Restricted Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Ultimate expense range, percent of target | 0.00% | ||||||
Vesting period | 3 years | ||||||
Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Amount authorized to repurchase common stock | $ 20,000,000 | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 | ||
Maximum | Restricted Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Ultimate expense range, percent of target | 250.00% |
SHAREHOLDERS' EQUITY - (Schedul
SHAREHOLDERS' EQUITY - (Schedule of Share-based Compensation Arrangements) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total share-based compensation expense | $ 1,580 | $ 2,176 | $ 2,367 |
Recognized tax benefit | 634 | 534 | 600 |
Intrinsic value of options exercised | 110 | 2 | 229 |
Fair value of restricted stock vested | 1,659 | 1,977 | 2,360 |
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total share-based compensation expense | 1,409 | 1,841 | 2,134 |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total share-based compensation expense | $ 171 | $ 335 | $ 233 |
SHAREHOLDERS' EQUITY - (Summary
SHAREHOLDERS' EQUITY - (Summary of Stock Option Activity) (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Outstanding, end of period (in dollars per share) | $ 4.01 | ||
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding, beginning of period (in shares) | 38,850 | 39,017 | 50,351 |
Granted (in shares) | 0 | 0 | 0 |
Exercised (in shares) | (13,433) | (167) | (10,834) |
Cancelled (in shares) | 0 | 0 | (500) |
Outstanding, end of period (in shares) | 25,417 | 38,850 | 39,017 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Outstanding, beginning of period (in dollars per share) | $ 3.80 | $ 3.80 | $ 3.72 |
Weighted Average Option Exercise Price, Granted (in dollars per share) | 0 | 0 | 0 |
Weighted Average Option Exercise Price, Exercised (in dollars per share) | 3.16 | 2.45 | 3.47 |
Weighted Average Option Exercise Price, Cancelled (in dollars per share) | 0 | 0 | 2.45 |
Outstanding, end of period (in dollars per share) | $ 4.01 | $ 3.80 | $ 3.80 |
SHAREHOLDERS' EQUITY - (Summa_2
SHAREHOLDERS' EQUITY - (Summary Information about Stock Options Outstanding and Exercisable) (Details) | 12 Months Ended |
Dec. 31, 2020USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share outstanding and exercisable (in shares) | shares | 25,417 |
Weighted Average Remaining Contractual Term (in years) | 1 year 1 month 20 days |
Weighted average exercise price (in dollars per share) | $ 4.01 |
Aggregate intrinsic value | $ | $ 48,546 |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price range lower limit (in dollars per share) | $ 2.45 |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price range upper limit (in dollars per share) | $ 4.40 |
SHAREHOLDERS' EQUITY - (Summa_3
SHAREHOLDERS' EQUITY - (Summary of Restricted Stock Activity) (Details) - Restricted Stock - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||
Outstanding, beginning of period (in shares) | 255,345 | 262,334 | 297,543 |
Granted (in shares) | 210,272 | 140,156 | 133,060 |
Vested (in shares) | (89,889) | (94,755) | (112,071) |
Cancelled (in shares) | 0 | (52,390) | (56,198) |
Outstanding, end of period (in shares) | 375,728 | 255,345 | 262,334 |
Restricted Shares, Weighted Average Option Exercise Price [Roll Forward] | |||
Outstanding, beginning of period (in dollars per share) | $ 17.82 | $ 18.78 | $ 20.54 |
Granted (in dollars per share) | 11.82 | 18.03 | 16.31 |
Vested (in dollars per share) | 18.46 | 20.87 | 21.06 |
Cancelled (in dollars per share) | 0 | 17.66 | 17.87 |
Outstanding, end of period (in dollars per share) | $ 14.32 | $ 17.82 | $ 18.78 |
SHAREHOLDERS' EQUITY -(Reconcil
SHAREHOLDERS' EQUITY -(Reconciliation of Changes in Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Net | ||
Accumulated other comprehensive income (loss), net of tax | $ 10,281 | |
Accumulated other comprehensive income (loss), net of tax | 11,386 | $ 10,281 |
AOCI Attributable to Parent | ||
Before Tax | ||
AOCI including portion attributable to noncontrolling interest, before tax | 13,621 | (5,023) |
Other comprehensive income (loss) due to debt securities - held to maturity reclassified to available-for-sale, before Tax | (58) | 0 |
Other comprehensive income (loss), before reclassifications, before tax | 19,114 | 20,809 |
Reclassification from accumulated other comprehensive income, current period, before tax | (17,591) | (2,165) |
Comprehensive income (loss) | 1,523 | 18,644 |
AOCI Including Portion Attributable to Noncontrolling Interest, before Tax | 15,086 | 13,621 |
Income Tax | ||
AOCI including portion attributable to noncontrolling interest, tax | (3,340) | 1,273 |
Other comprehensive income (loss) due to debt securities - held to maturity reclassified to available-for-sale, tax | 14 | 0 |
Other comprehensive income (loss) before reclassifications, tax | (4,688) | (5,144) |
Reclassification from AOCI, Current Period, tax | 4,314 | 531 |
Other comprehensive income (loss), tax | (374) | (4,613) |
AOCI including portion attributable to noncontrolling interest, tax | (3,700) | (3,340) |
Net | ||
Accumulated other comprehensive income (loss), net of tax | 10,281 | (3,750) |
Other comprehensive income (loss) due to debt securities - held to maturity reclassified to available-for-sale, net of tax | (44) | 0 |
Other comprehensive income (loss), before reclassifications, net of tax | 14,426 | 15,665 |
Reclassification adjustment for realized losses (gains) included in net income, net | (13,277) | (1,634) |
Other comprehensive income (loss), net of tax, portion attributable to parent | 1,149 | 14,031 |
Accumulated other comprehensive income (loss), net of tax | $ 11,386 | $ 10,281 |
EMPLOYEE BENEFIT PLAN - (Detail
EMPLOYEE BENEFIT PLAN - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Percent of employees gross pay eligible for matching | 100.00% | ||
Percentage of first elective contributions | 6.00% | ||
Discretionary contribution amount | $ 1,200 | $ 900 | $ 1,000 |
Profit Sharing | |||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||
Additional profit sharing compensation expense | $ 0 | $ 0 | $ 0 |
RELATED PARTY TRANSACTIONS - (D
RELATED PARTY TRANSACTIONS - (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Other Income | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | $ 2.2 | $ 0.3 | $ 0.3 |
Southeast Catastrophe Consulting Company | |||
Related Party Transaction [Line Items] | |||
Expenses from transactions with related party | $ 6.7 |
EARNINGS PER SHARE - (Schedule
EARNINGS PER SHARE - (Schedule of Calculation of Basic and Diluted Net Income Per Common Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Nov. 30, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Feb. 29, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Earnings Per Share [Abstract] | |||||||
Net Income (loss) attributable to FedNat holding company shareholders | $ (78,158) | $ 1,011 | $ 14,928 | ||||
Basic (in shares) | 13,846 | 12,977 | 12,775 | ||||
Net income (loss) per share - basic (in dollars per share) | $ (5.64) | $ 0.08 | $ 1.17 | ||||
Dilutive effect of stock compensation plans | 0 | 46 | 92 | ||||
Diluted (in shares) | 13,846 | 13,023 | 12,867 | ||||
Net income per share - diluted (in dollars per share) | $ (5.64) | $ 0.08 | $ 1.16 | ||||
Dividends declared per share of common stock (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.36 | $ 0.33 | $ 0.24 |
EARNINGS PER SHARE - (Narrative
EARNINGS PER SHARE - (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | Nov. 30, 2020 | Jul. 31, 2020 | Apr. 30, 2020 | Feb. 29, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Earnings Per Share [Abstract] | |||||||
Dividends declared per share of common stock (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.36 | $ 0.33 | $ 0.24 |
Payments of ordinary dividends | $ 1.3 | $ 1.2 | $ 1.3 | $ 1.3 |
STATUTORY ACCOUNTING AND DIVI_2
STATUTORY ACCOUNTING AND DIVIDEND RESTRICTIONS - (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statutory Accounting Practices [Line Items] | |||
Statutory capital and surplus | $ 145.2 | $ 192.5 | |
Statutory net income (loss) amount | $ (57.5) | $ (36.8) | $ 2.9 |
Florida | |||
Statutory Accounting Practices [Line Items] | |||
Carryforward period for statutory unassigned surplus included in consideration of dividend to be paid | 2 years | ||
Percentage of statutory unassigned surplus as of preceding year included in consideration of dividend to be paid | 10.00% | ||
Percentage of insurers capital surplus considered for dividend distribution | 10.00% | ||
Percentage of minimum statutory capital surplus after the dividend or distribution | 115.00% | ||
Number of business days prior to dividend payment | 10 days | ||
Louisiana | |||
Statutory Accounting Practices [Line Items] | |||
Percentage of insurers capital surplus considered for dividend distribution | 10.00% | ||
Percentage of initial minimum surplus beyond capital stock required to declare and pay dividends | 15.00% | ||
Percentage of insurer's paid-in-capital and surplus minimum to bypass initial minimum surplus restriction | 100.00% | ||
Notice period for extraordinary dividend / distribution to shareholders | 30 days |
SUBSEQUENT EVENTS - (Narrative)
SUBSEQUENT EVENTS - (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 15, 2021 | Mar. 01, 2021 | Feb. 13, 2021 | Jan. 01, 2021 | Dec. 31, 2020 | Mar. 08, 2021 | Feb. 28, 2021 | Jan. 31, 2021 | Dec. 31, 2019 |
Subsequent Event [Line Items] | |||||||||
Reinsurance payable and funds withheld liabilities | $ 202,827 | $ 102,467 | |||||||
2019-2020 Catastrophe Excess Loss Reinsurance Programs | |||||||||
Subsequent Event [Line Items] | |||||||||
Reinsurance payable and funds withheld liabilities | 224,300 | ||||||||
Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | |||||||||
Subsequent Event [Line Items] | |||||||||
Reinsurance payable and funds withheld liabilities | 286,000 | ||||||||
FNIC | 2019-2020 Catastrophe Excess Loss Reinsurance Programs | |||||||||
Subsequent Event [Line Items] | |||||||||
Excess retention, amount reinsured | 27,000 | ||||||||
Additional coverage amount | $ 20,000 | ||||||||
FNIC | Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | |||||||||
Subsequent Event [Line Items] | |||||||||
Excess retention, retention percentage, co-participation | 9.10% | ||||||||
Excess retention, threshold limit above initial insured amount | $ 70,000 | ||||||||
Excess retention, amount reinsured | 25,000 | ||||||||
Second Event Coverage | 2019-2020 Catastrophe Excess Loss Reinsurance Programs | Maximum | |||||||||
Subsequent Event [Line Items] | |||||||||
Additional coverage amount | 18,000 | ||||||||
Second Event Coverage | Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | Maximum | |||||||||
Subsequent Event [Line Items] | |||||||||
Additional coverage amount | $ 16,000 | ||||||||
Subsequent Event | Public Stock Offering | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of shares issued (in shares) | 3,500,000 | ||||||||
Price per share (in dollars per share) | $ 4.75 | ||||||||
Gross proceeds from sale of stock | $ 16,600 | ||||||||
Net proceeds to the company from sale of stock | $ 15,200 | ||||||||
Subsequent Event | Winter Storm Uri | |||||||||
Subsequent Event [Line Items] | |||||||||
Estimated loss from catastrophes | $ 41,000 | ||||||||
Subsequent Event | FNIC | Hurricane Delta and Subsequent Events | Maison Insurance Company (MIC) | |||||||||
Subsequent Event [Line Items] | |||||||||
Excess retention, retention percentage, co-participation | 65.00% | ||||||||
Reinsurance payable and funds withheld liabilities | $ 13,000 | $ 2,300 | |||||||
Subsequent Event | First Event Coverage | FNIC | Hurricane Delta and Subsequent Events | Maison Insurance Company (MIC) | |||||||||
Subsequent Event [Line Items] | |||||||||
Excess retention, retention percentage, co-participation | 50.00% | 65.00% | |||||||
Excess retention, threshold limit above initial insured amount | $ 70,000 | $ 15,000 | |||||||
Excess retention, amount reinsured | $ 25,000 | 10,000 | |||||||
Excess retention, occurrence deductible | 900 | ||||||||
Subsequent Event | Second Event Coverage | Winter Storm Uri | 2019-2020 Catastrophe Excess Loss Reinsurance Programs | Maximum | |||||||||
Subsequent Event [Line Items] | |||||||||
Excess retention, threshold limit above initial insured amount | 61,000 | ||||||||
Additional coverage amount | 18,000 | ||||||||
Subsequent Event | Second Event Coverage | FNIC | Hurricane Delta and Subsequent Events | Maison Insurance Company (MIC) | |||||||||
Subsequent Event [Line Items] | |||||||||
Excess retention, retention percentage, co-participation | 100.00% | ||||||||
Excess retention, threshold limit above initial insured amount | $ 15,000 | ||||||||
Excess retention, amount reinsured | $ 10,000 | $ 4,200 | |||||||
Subsequent Event | Florida | FNIC | Homeowners Multiple-Peril Insurance Policies | |||||||||
Subsequent Event [Line Items] | |||||||||
Approved rate increase, percent | 6.70% | ||||||||
Application for rate increase, pending approval, percent | 7.00% | ||||||||
Subsequent Event | Florida | FNIC | Dwelling Fire Insurance Policies | |||||||||
Subsequent Event [Line Items] | |||||||||
Application for rate increase, pending approval, percent | 6.00% | ||||||||
Subsequent Event | Louisiana | FNIC | Homeowners Multiple-Peril Insurance Policies | |||||||||
Subsequent Event [Line Items] | |||||||||
Approved rate increase, percent | 9.90% | ||||||||
Subsequent Event | Texas | FNIC | Homeowners Multiple-Peril Insurance Policies | |||||||||
Subsequent Event [Line Items] | |||||||||
Approved rate increase, percent | 12.30% | ||||||||
Subsequent Event | Texas | FNIC | Winter Storm Uri | Combined FNIC, MIC and MNIC Twenty Twenty to Twenty Twenty-one Catastrophe Excess Loss Reinsurance Programs | |||||||||
Subsequent Event [Line Items] | |||||||||
Excess retention, amount reinsured | $ 23,000 |
Schedule II - Condensed Finan_2
Schedule II - Condensed Financial Information of Registrant - Condensed Balance Shsets (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Assets [Abstract] | ||||
Fair value | $ 488,210 | $ 526,265 | ||
Equity securities, at fair value | 3,157 | 20,039 | ||
Total assets acquired | 102,367 | 133,361 | ||
Deferred income taxes, net | 58 | |||
Current and deferred income taxes, net | 35,035 | 2,552 | ||
Right-of-use assets | 7,430 | 8,096 | ||
Reinsurance payable | 32,262 | 28,633 | ||
Total assets | 1,428,537 | 1,179,016 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
Long-term debt | 98,683 | 98,522 | ||
Lease liabilities | 7,430 | 8,096 | ||
Other liabilities | 54,524 | 37,246 | ||
Total liabilities | 1,270,377 | 930,323 | ||
Preferred stock | 0 | 0 | ||
Common stock | 137 | 144 | ||
Additional paid-in capital | 169,298 | 167,677 | ||
Accumulated other comprehensive income (loss) | 11,386 | 10,281 | ||
Retained earnings (deficit) | (22,661) | 70,591 | ||
Total shareholders’ equity | 158,160 | 248,693 | $ 215,259 | $ 227,459 |
Total liabilities and shareholders' equity | 1,428,537 | 1,179,016 | ||
Parent Company | ||||
Assets [Abstract] | ||||
Investments in subsidiaries | 225,568 | 268,767 | ||
Fair value | 20,646 | 24,951 | ||
Equity securities, at fair value | 1,881 | 1,751 | ||
Total assets acquired | 18,170 | 21,031 | ||
Deferred income taxes, net | 868 | 1,940 | ||
Current and deferred income taxes, net | 7,969 | 13,850 | ||
Note receivable and accrued interest to subsidiary | 19,517 | 18,107 | ||
Right-of-use assets | 7,108 | 7,716 | ||
Reinsurance payable | 1,991 | 2,878 | ||
Total assets | 303,718 | 360,991 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
Due to subsidiaries, net | 31,686 | 1,779 | ||
Long-term debt | 98,683 | 98,522 | ||
Lease liabilities | 7,108 | 7,716 | ||
Other liabilities | 8,081 | 4,281 | ||
Total liabilities | 145,558 | 112,298 | ||
Preferred stock | 0 | 0 | ||
Common stock | 137 | 144 | ||
Additional paid-in capital | 169,298 | 167,677 | ||
Accumulated other comprehensive income (loss) | 11,386 | 10,281 | ||
Retained earnings (deficit) | (22,661) | 70,591 | ||
Total shareholders’ equity | 158,160 | 248,693 | ||
Total liabilities and shareholders' equity | $ 303,718 | $ 360,991 |
Schedule II - Condensed Finan_3
Schedule II - Condensed Financial Information of Registrant - Condensed Statements of Earnings (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues: | |||
Net investment income | $ 11,786 | $ 15,901 | $ 12,460 |
Net realized and unrealized investment gains (losses) | 18,032 | 7,084 | (4,144) |
Total revenues | 431,863 | 414,961 | 396,093 |
Costs and expenses [Abstract] | |||
General and administrative expenses | 23,420 | 23,203 | 22,183 |
Interest expense | 7,661 | 10,776 | 4,177 |
Total costs and expenses | 543,517 | 414,248 | 375,885 |
Income (loss) before income taxes | (111,654) | 713 | 20,208 |
Income tax expense (benefit) | (33,496) | (298) | 5,498 |
Net income (loss) | (78,158) | 1,011 | 14,710 |
Net income (loss) attributable to non-controlling interest | 0 | 0 | (218) |
Net income (loss) attributable to FedNat Holding Company shareholders | (78,158) | 1,011 | 14,928 |
Parent Company | |||
Revenues: | |||
Management fees | 2,660 | 2,160 | 2,608 |
Interest from subsidiaries | 1,410 | 107 | 0 |
Net investment income | 477 | 1,757 | 843 |
Net realized and unrealized investment gains (losses) | 972 | 448 | (765) |
Equity in income (loss) of consolidated subsidiaries | (94,363) | 20,909 | 30,895 |
Total revenues | (88,844) | 25,381 | 33,581 |
Costs and expenses [Abstract] | |||
General and administrative expenses | 15,149 | 13,892 | 9,296 |
Interest expense | 7,661 | 10,776 | 4,077 |
Total costs and expenses | 22,810 | 24,668 | 13,373 |
Income (loss) before income taxes | (111,654) | 713 | 20,208 |
Income tax expense (benefit) | (33,496) | (298) | 5,498 |
Net income (loss) | (78,158) | 1,011 | 14,710 |
Net income (loss) attributable to non-controlling interest | 0 | 0 | (218) |
Net income (loss) attributable to FedNat Holding Company shareholders | $ (78,158) | $ 1,011 | $ 14,928 |
Schedule II - Condensed Finan_4
Schedule II - Condensed Financial Information of Registrant - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flow from operating activities [Abstract] | |||
Net income (loss) | $ (78,158) | $ 1,011 | $ 14,710 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 1,904 | 1,477 | 1,385 |
Amortization of investment premium or discount, net | 3,740 | 916 | 1,546 |
Loss (gain) on early extinguishment of debt | 0 | 3,575 | 0 |
Share-based compensation | 1,580 | 2,176 | 2,367 |
Changes in operating assets and liabilities [Abstract] | |||
Current and deferred income taxes, net | (32,835) | (3,723) | 6,109 |
Other | 10,285 | 602 | (1,444) |
Net cash provided by (used in) operating activities | (91,908) | 35,316 | 30,270 |
Cash flow from investing activities [Abstract] | |||
Payment for acquisition | 0 | 10,402 | 0 |
Purchases of property and equipment | (3,357) | (2,040) | (2,026) |
Net cash provided by (used in) investing activities | 76,367 | (9,011) | (21,184) |
Net Cash Provided by (Used in) Financing Activities, Continuing Operations [Abstract] | |||
Proceeds from issuance of long-term debt, net of issuance costs | 0 | 98,390 | 0 |
Payment of long-term debt and prepayment penalties | 0 | (48,000) | (5,000) |
Issuance of common stock for share-based awards | 42 | 1 | 39 |
Purchases of FedNat Holding Company common stock | (10,418) | (3,449) | (5,061) |
Dividends paid | (5,077) | (4,309) | (4,184) |
Net cash provided by (used in) financing activities | (15,453) | 42,633 | (30,891) |
Net increase (decrease) in cash and cash equivalents | (30,994) | 68,938 | (21,805) |
Cash and cash equivalents at beginning-of-period | 133,361 | 64,423 | 86,228 |
Cash and cash equivalents at end-of-period | 102,367 | 133,361 | 64,423 |
Parent Company | |||
Cash flow from operating activities [Abstract] | |||
Net income (loss) | (78,158) | 1,011 | 14,710 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Net realized and unrealized investment (gains) losses | (972) | (448) | 765 |
Depreciation and amortization | 94,363 | (20,909) | (30,895) |
Amortization of investment premium or discount, net | 430 | 369 | 141 |
Loss (gain) on early extinguishment of debt | 0 | 3,575 | 0 |
Share-based compensation | 790 | 1,050 | 1,183 |
Changes in operating assets and liabilities [Abstract] | |||
Current and deferred income taxes, net | 6,900 | (5,379) | (2,371) |
Due to subsidiaries | (21,891) | 3,044 | (9,317) |
Other | 3,564 | 998 | 1,497 |
Net cash provided by (used in) operating activities | 5,026 | (16,689) | (24,287) |
Cash flow from investing activities [Abstract] | |||
Capital contributions to consolidated subsidiaries | (11,000) | 0 | (30,000) |
Sales, maturities and redemptions of investments securities | 31,300 | 11,276 | 54,543 |
Purchases of investment securities | (25,089) | (15,617) | (61,009) |
Payment for acquisition | 0 | (25,566) | 0 |
Issuance of note receivable to subsidiary | 0 | (18,000) | 0 |
Purchases of property and equipment | (21) | (289) | (639) |
Net cash provided by (used in) investing activities | (4,810) | (48,196) | (37,105) |
Net Cash Provided by (Used in) Financing Activities, Continuing Operations [Abstract] | |||
Proceeds from issuance of long-term debt, net of issuance costs | 0 | 98,390 | 0 |
Payment of long-term debt and prepayment penalties | 0 | (48,000) | 0 |
Issuance of common stock for share-based awards | 42 | 1 | 39 |
Purchases of FedNat Holding Company common stock | (10,418) | (3,449) | (5,061) |
Dividends from consolidated subsidiaries | 12,376 | 39,174 | 27,990 |
Dividends paid | (5,077) | (4,309) | (4,184) |
Net cash provided by (used in) financing activities | (3,077) | 81,807 | 18,784 |
Net increase (decrease) in cash and cash equivalents | (2,861) | 16,922 | (42,608) |
Cash and cash equivalents at beginning-of-period | 21,031 | 4,109 | 46,717 |
Cash and cash equivalents at end-of-period | $ 18,170 | $ 21,031 | $ 4,109 |
Schedule V - Valuation and Qu_2
Schedule V - Valuation and Qualifying Accounts - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Allowance for uncollectible reinsurance recoverable | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance, beginning of period | $ 0 | $ 0 | $ 0 |
Valuation Allowances and Reserves, Additions for Charges to Cost and Expense | 65 | 0 | 0 |
Deductions | 0 | 0 | 0 |
Balance, end of period | 65 | 0 | 0 |
Allowance for uncollectible premiums receivable | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance, beginning of period | 159 | 77 | 70 |
Valuation Allowances and Reserves, Additions for Charges to Cost and Expense | 74 | 82 | 7 |
Deductions | 0 | 0 | 0 |
Balance, end of period | $ 233 | $ 159 | $ 77 |
Schedule VI - Supplemental In_2
Schedule VI - Supplemental Information Concerning Insurance Operations - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Supplemental Information for Property, Casualty Insurance Underwriters [Line Items] | |||
Claim and claim adjustment expenses incurred related to current year | $ 358,952 | $ 262,118 | $ 231,133 |
Claim and claim adjustment expenses incurred related to prior year | 17,551 | 10,971 | (2,717) |
Property and Casualty Insurance | |||
Supplemental Information for Property, Casualty Insurance Underwriters [Line Items] | |||
Deferred acquisition costs | 25,405 | 56,136 | 39,436 |
Loss and loss adjustment expense reserves | 540,367 | 324,362 | 296,230 |
Unearned premiums | 366,789 | 360,870 | 281,992 |
Earned premiums | 364,134 | 363,652 | 355,257 |
Net investment income | 11,786 | 15,901 | 12,460 |
Claim and claim adjustment expenses incurred related to current year | 358,898 | 262,109 | 231,133 |
Claim and claim adjustment expenses incurred related to prior year | 17,551 | 10,971 | (2,717) |
Supplemental Information for Property, Casualty Insurance Underwriters, Amortization of Deferred Policy Acquisition Costs | 121,524 | 96,885 | 97,873 |
Paid claims and claims adjustment expense | 354,143 | 254,806 | 230,752 |
Supplemental Information for Property, Casualty Insurance Underwriters, Premiums Written | $ 236,623 | $ 377,879 | $ 365,032 |