Cover page
Cover page - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 04, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
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 | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 68,298,592 | ||
Entity Common Stock, Shares Outstanding | 17,446,930 | ||
Documents incorporated by reference | DOCUMENTS INCORPORATED BY REFERENCE Certain information required by Part III of this Form 10-K will be incorporated by reference from the Registrant's definitive proxy statement or included in an amendment on Form 10-K/A that will be filed not later than 120 days after the end of the fiscal year ended December 31, 2021. | ||
Entity Central Index Key | 0001069996 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Auditor Information [Abstract] | |
Auditor Firm ID | 42 |
Auditor Name | Ernst & Young LLP |
Auditor Location | Charlotte, North Carolina |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Investments [Abstract] | ||
Debt securities, available-for-sale, at fair value (amortized cost of $324,861 and $473,126, respectively) | $ 327,532 | $ 488,210 |
Equity securities, at fair value | 5,905 | 3,157 |
Total investments | 333,437 | 491,367 |
Cash and cash equivalents | 83,526 | 102,367 |
Prepaid reinsurance premiums | 242,537 | 278,272 |
Premiums receivable, net of allowance of $125 and $233, respectively | 41,174 | 50,803 |
Reinsurance recoverable, net of allowance of $249 and $65, respectively | 613,203 | 413,026 |
Deferred acquisition costs, net | 18,829 | 25,405 |
Current and deferred income taxes, net | 30,014 | 35,035 |
Other assets | 49,950 | 32,262 |
Total assets | 1,412,670 | 1,428,537 |
Liabilities [Abstract] | ||
Loss and loss adjustment expense reserves | 738,794 | 540,367 |
Unearned premiums | 342,747 | 366,789 |
Reinsurance payable and funds withheld liabilities | 102,748 | 202,827 |
Long-term debt, net of deferred financing costs of $2,195 and $1,317, respectively | 118,805 | 98,683 |
Deferred revenue | 5,240 | 7,187 |
Other liabilities | 44,950 | 54,524 |
Total liabilities | 1,353,284 | 1,270,377 |
Commitments and Contingencies | ||
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: 50,000,000 shares authorized; 17,446,930 and 13,717,908 shares issued and outstanding, respectively | 174 | 137 |
Additional paid-in capital | 186,007 | 169,298 |
Accumulated other comprehensive income (loss) | (1,034) | 11,386 |
Retained earnings (deficit) | (125,761) | (22,661) |
Total shareholders’ equity attributable to FedNat Holding Company shareholders | 59,386 | 158,160 |
Total liabilities and shareholders' equity | $ 1,412,670 | $ 1,428,537 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Assets [Abstract] | ||
Debt securities, available-for-sale, at amortized cost | $ 324,861 | $ 473,126 |
Premiums receivable, allowance | 125 | 233 |
Reinsurance recoverable, allowance for credit loss | 249 | 65 |
Liabilities and Equity [Abstract] | ||
Debt issuance costs, net | $ 2,195 | $ 1,317 |
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) | 50,000,000 | 50,000,000 |
Common stock, shares, issued (in shares) | 17,446,930 | 13,717,908 |
Common stock, shares, outstanding (in shares) | 17,446,930 | 13,717,908 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | |||
Net premiums earned | $ 183,303 | $ 364,134 | $ 363,652 |
Net investment income | 6,770 | 11,786 | 15,901 |
Net realized and unrealized gains (losses) | 11,017 | 18,032 | 7,084 |
Direct written policy fees | 13,051 | 13,970 | 10,200 |
Other income | 31,408 | 23,941 | 18,124 |
Total revenues | 245,549 | 431,863 | 414,961 |
Costs and expenses: | |||
Losses and loss adjustment expenses | 232,760 | 376,449 | 273,080 |
Commissions and other underwriting expenses | 81,180 | 124,288 | 107,189 |
General and administrative expenses | 24,355 | 23,420 | 23,203 |
Interest expense | 8,758 | 7,661 | 10,776 |
Impairment of intangibles | 1,280 | 11,699 | 0 |
Total costs and expenses | 348,333 | 543,517 | 414,248 |
Income (loss) before income taxes | (102,784) | (111,654) | 713 |
Income tax expense (benefit) | 316 | (33,496) | (298) |
Net income (loss) | $ (103,100) | $ (78,158) | $ 1,011 |
Net Income (Loss) Per Common Share | |||
Basic (in dollars per share) | $ (6.18) | $ (5.64) | $ 0.08 |
Diluted (in dollars per share) | $ (6.18) | $ (5.64) | $ 0.08 |
Weighted Average Number of Shares of Common Stock Outstanding | |||
Basic (in shares) | 16,675 | 13,846 | 12,977 |
Diluted (in shares) | 16,675 | 13,846 | 13,023 |
Dividends declared per share of common stock (in dollars per share) | $ 0 | $ 0.36 | $ 0.33 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (103,100) | $ (78,158) | $ 1,011 |
Change in net unrealized gains (losses) on investments, available-for-sale, net of tax | (12,420) | 1,105 | 14,031 |
Comprehensive income (loss) | $ (115,520) | $ (77,053) | $ 15,042 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Preferred Stock | Common Stock | Additional Paid-in Capital | AOCI Attributable to Parent | Retained Earnings (Deficit) | Retained Earnings (Deficit)Cumulative Effect, Period of Adoption, Adjustment |
Balance (in shares) at Dec. 31, 2018 | 12,784,444 | |||||||
Balance, Beginning of the period at Dec. 31, 2018 | $ 215,259 | $ 0 | $ 128 | $ 141,128 | $ (3,750) | $ 77,753 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | 1,011 | 1,011 | ||||||
Other comprehensive income (loss) | 14,031 | 14,031 | ||||||
Dividends declared | (4,309) | (4,309) | ||||||
Shares issued for acquisition (in shares) | 1,773,102 | |||||||
Shares issued for acquisition | 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 | ||||||
Repurchases of common stock (in shares) | (237,647) | |||||||
Repurchases of common stock | (3,867) | $ (3) | (3,864) | |||||
Share-based compensation | 2,176 | 2,176 | ||||||
Balance (in shares) at Dec. 31, 2019 | 14,414,821 | |||||||
Balance, End of the period at Dec. 31, 2019 | 248,693 | $ (25) | 0 | $ 144 | 167,677 | 10,281 | 70,591 | $ (25) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | (78,158) | (78,158) | ||||||
Other comprehensive income (loss) | 1,105 | 1,105 | ||||||
Dividends declared | (5,077) | (5,077) | ||||||
Shares issued under share-based compensation plans (in shares) | 103,322 | |||||||
Shares issued under share-based compensation plans | 42 | $ 1 | 41 | |||||
Repurchases of common stock (in shares) | (800,235) | |||||||
Repurchases of common stock | (10,000) | $ (8) | (9,992) | |||||
Share-based compensation | 1,580 | 1,580 | ||||||
Balance (in shares) at Dec. 31, 2020 | 13,717,908 | |||||||
Balance, End of the period at Dec. 31, 2020 | 158,160 | 0 | $ 137 | 169,298 | 11,386 | (22,661) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | (103,100) | (103,100) | ||||||
Other comprehensive income (loss) | (12,420) | (12,420) | ||||||
Issuance of common stock (in shares) | 3,600,650 | |||||||
Issuance of common stock | 15,571 | $ 36 | 15,535 | |||||
Shares issued under share-based compensation plans (in shares) | 128,372 | |||||||
Shares issued under share-based compensation plans | 11 | $ 1 | 10 | |||||
Share-based compensation | 1,164 | 1,164 | ||||||
Balance (in shares) at Dec. 31, 2021 | 17,446,930 | |||||||
Balance, End of the period at Dec. 31, 2021 | $ 59,386 | $ 0 | $ 174 | $ 186,007 | $ (1,034) | $ (125,761) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flow from operating activities: | |||
Net income (loss) | $ (103,100) | $ (78,158) | $ 1,011 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Net realized and unrealized (gains) losses | (11,017) | (18,032) | (7,084) |
Impairment of intangibles | 1,280 | 11,699 | 0 |
Loss (gain) on early extinguishment of debt | 0 | 0 | 3,575 |
Amortization of investment premium or discount, net | 3,645 | 3,740 | 916 |
Depreciation and amortization | 1,916 | 1,904 | 1,477 |
Share-based compensation | 1,164 | 1,580 | 2,176 |
Changes in operating assets and liabilities: | |||
Prepaid reinsurance premiums | 35,735 | (132,613) | (11,803) |
Premiums receivable, net | 9,629 | (9,381) | (8,654) |
Reinsurance recoverable, net | (200,177) | (203,443) | 9,412 |
Deferred acquisition costs and value of business acquired, net | 6,576 | 30,731 | (7,979) |
Current and deferred income taxes, net | 5,016 | (32,835) | (3,723) |
Deferred revenue | (1,947) | 331 | 756 |
Loss and loss adjustment expense reserves | 198,427 | 216,005 | 11,472 |
Unearned premiums | (24,042) | 5,919 | 28,365 |
Reinsurance payable and funds withheld liabilities | (100,079) | 100,360 | 14,797 |
Other | (14,197) | 10,285 | 602 |
Net cash provided by (used in) operating activities | (191,171) | (91,908) | 35,316 |
Cash flow from investing activities: | |||
Proceeds from sales of equity securities | 0 | 22,050 | 9,203 |
Proceeds from sales of debt securities | 240,141 | 556,463 | 164,196 |
Purchases of equity securities | (2,745) | (4,727) | (6,565) |
Purchases of debt securities | (173,581) | (580,876) | (228,132) |
Maturities and redemptions of debt securities | 74,951 | 86,814 | 43,925 |
Payment for acquisition, net of cash acquired | 0 | 0 | 10,402 |
Purchases of property and equipment | (1,836) | (3,357) | (2,040) |
Net cash provided by (used in) investing activities | 136,930 | 76,367 | (9,011) |
Cash flow from financing activities: | |||
Proceeds from issuance of long-term debt, net of issuance costs | 19,818 | 0 | 98,390 |
Payment of long-term debt and prepayment penalties | 0 | 0 | (48,000) |
Issuance of common stock | 15,571 | 0 | 0 |
Purchases of FedNat Holding Company common stock | 0 | (10,418) | (3,449) |
Issuance of common stock for share-based awards | 11 | 42 | 1 |
Dividends paid | 0 | (5,077) | (4,309) |
Net cash provided by (used in) financing activities | 35,400 | (15,453) | 42,633 |
Net increase (decrease) in cash and cash equivalents | (18,841) | (30,994) | 68,938 |
Cash and cash equivalents at beginning-of-period | 102,367 | 133,361 | 64,423 |
Cash and cash equivalents at end-of-period | 83,526 | 102,367 | 133,361 |
Supplemental disclosure of cash flow information: | |||
Cash paid (received) during the period for income taxes | 8,138 | 7,500 | 4,860 |
Cash paid (received) during the period for income taxes | (4,211) | (635) | 3,504 |
Significant non-cash investing and financing transactions: | |||
Right-of-use asset | (6,693) | (7,430) | (8,096) |
Lease liability | $ 6,693 | $ 7,430 | $ 8,096 |
ORGANIZATION, CONSOLIDATION AND
ORGANIZATION, CONSOLIDATION AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2021 | |
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. In November 2021, the Company made the decision to commence an orderly runoff of MIC's insurance operations. 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, 19.3%, 20.7% and 23.2%, were from Allstate’s network of Florida agents, for the years ended December 31, 2021, 2020 and 2019, 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, 24.6%, 25.5% and 23.1% of the Company’s premiums were underwritten by SageSure, for the years ended December 31, 2021, 2020, and 2019, 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 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies and Practices | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES Going Concern The Company recently received notification from Demotech that FNIC’s “A” (“Exceptional”) rating has been downgraded to “S” (“Substantial”). MNIC’s “A” rating was reaffirmed. The Company believes that the downgrade of FNIC’s Demotech rating will adversely impact the Company's ability to obtain excess-of-loss reinsurance for coverage beginning July 1, 2022. Absent such coverage, the Company will not be in compliance with requirements communicated by the Office of Insurance Regulation of the state of Florida regarding such coverage, which could ultimately result in the Company being placed into receivership. Additionally, being placed into receivership and/or failing to obtain excess-of-loss reinsurance each represent potential defaults under our debt indentures that could result in acceleration of repayment of our debt. Such conditions raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company continues to explore strategic alternatives in an effort to increase its capital resources to support its insurance carriers and preserve value for the Company’s stakeholders. These alternatives include raising additional capital and restructuring of our insurance carriers, as well as other reinsurance and capital options; however, there can be no assurance that we will be able to execute on all or any of the strategic alternatives, successfully raise additional capital or obtain excess-of-loss reinsurance. These financial statements do not include any adjustments relating to the recoverability and classification of assets, carrying amounts or the amount and classification of liabilities that may be required should the Company be unable to continue as a going concern. 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. Our 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 carrying 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 costs 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. As of December 31, 2021 and 2020, we had no value of business acquired ("VOBA”) reflected on our consolidated balance sheets as during the year ended December 31, 2020, our VOBA balance became fully amortized. 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. Goodwill As of December 31, 2021 and 2020, we had no goodwill reflected on our consolidated balance sheets. 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 and Other Liabilities Other assets consist primarily of property and equipment owned, right-of-use assets for our long-term leases, embedded derivative instruments, identifiable intangible assets, receivables resulting from sales of securities that had not yet settled as of the balance sheet date and prepaid expenses. Other liabilities consist primarily of premiums collected in advance, operating lease liabilities, commissions and premium taxes payable, accrued interest expense on long-term debt, employee benefit liabilities, payables resulting from purchases of securities that had not yet settled as of the balance sheet date and other accrued 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. When we enter into contracts containing embedded derivative instruments that possess economic characteristics not clearly and closely related to the economic characteristics of the host, and a separate instrument with the same terms would qualify as a derivative instrument, we bifurcate the embedded derivative from the host for measurement purposes. The embedded derivative is carried at fair value on our consolidated balance sheets and changes in fair value are recognized in net realized and unrealized gain (loss) on our consolidated statements of operations as they occur. The fair value of the embedded derivative is measured based upon the best estimates of current settlement values, using present value of projected cash flows. As of December 31, 2021, we had no other intangible assets reflected on our consolidated balance sheets. 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. 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. 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 reviews 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, including a valuation allowance that has been established against the Company's deferred tax assets. Contingencies and Commitments Contingencies arising from environmental remediation costs, regulatory judgments, claims, assessments, guarantees, litigation, recourse reserves, fines, penalties and other sources are recorded when deemed probable and reasonably estimable. 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 (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares, while diluted net income (loss) 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 conversion of convertible long-term debt (if not antidilutive, the associated interest expense reflected in net income (loss) available to common shareholders, would be excluded as well), exercise of employee stock options and vesting of restricted common stock and are calculated using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is antidilutive. Recently Issued Accounting Pronouncements, Adopted In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which removes certain exceptions to the general principles in ASC Topic 740. The guidance also clarifies and amends existing guidance to improve consistent application. The Company adopted the guidance effective January 1, 2021, which did not have a material 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 after December 15, 2021, with early adoption permitted. The Company is in the early stage of evaluating the impact that the update will have on the Company’s consolidated financial position or results of operations. In August 2020, the FASB issued ASU 2020-6, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-6"), which simplifies an issuer's accounting for convertible instruments by eliminating two of the three models in the current guidance that requires separate accounting for certain embedded conversion features. The new guidance simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. ASU 2020-6 requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of potential share settlement (if the effect is more dilutive) for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This new guidance requires disclosures about events that occur during the reporting period and cause conversion contingencies to be met and about the fair value of convertible debt at the instrument level, among other things. ASU 2020-6 is effective for interim and annual reporting periods beginning after December 15, 2021, with early adoption permitted. The Company is in the early stage of evaluating the impact that the update will have on the Company's consolidated financial position or results of operations. |
ACQUISITION
ACQUISITION | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [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 was intended 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 a 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. Refer to Note 8 below for information regarding goodwill and identifiable intangible assets, which were zero as of December 31, 2021. |
FAIR VALUE
FAIR VALUE | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 Level 1 Level 2 Level 3 Total (In thousands) Debt securities - available-for-sale, at fair value: United States government obligations and authorities $ 41,125 $ 49,567 $ — $ 90,692 Obligations of states and political subdivisions — 19,278 — 19,278 Corporate securities — 188,980 — 188,980 International securities 901 27,681 — 28,582 Debt securities, at fair value 42,026 285,506 — 327,532 Equity securities, at fair value 1,879 4,026 — 5,905 Total investments, at fair value $ 43,905 $ 289,532 $ — $ 333,437 Other assets - embedded derivative, at fair value $ — $ — $ 10,725 $ 10,725 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 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. During the first six months of 2021, we purchased additional reinsurance limit for our 2020-2021 excess of loss catastrophe reinsurance program, which we determined had an embedded derivative. As of December 31, 2021, this embedded derivative is carried at $10.7 million included in other assets on our consolidated balance sheets. For the year ended December 31, 2021, the Company recognized $9.4 million in realized and unrealized gain (loss) related to this item on our consolidated statements of operations. Also, there is no contractual maturity date. There is no collateral posted for this embedded derivative; however, the related contract is with excess-of-loss reinsurers that have an S&P A rating or are collateralized. 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. • Other Assets Embedded Derivative - In determining the fair value of the embedded derivative in Level 3, the Company uses the best estimates of current settlement values, using present value of projected cash flows. The assumptions, at each valuation date, are those we view to be appropriate for a hypothetical market participant and include assumptions for the non-performance risk, which is added to the discount rates used in determining the fair value from the net cash flows and reflects the credit risk of either our counter-party for our assets or us for our liabilities of not fulfilling the obligations of an underlying amounts due to us or amounts we owe. Changes in the fair value of this embedded derivative results primarily from changes in market conditions or the credit risk associated with us or our counterparties. 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, 2021 and 2020. Additionally, we did not have any assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2021 and 2020, and we noted no significant changes in our valuation methodologies between those periods. Our long-term debt is a financial instrument and we disclose its fair value in Note 10. The fair value of long-term debt is based on quoted market prices. The inputs used to measure the fair value of long-term debt are classified as Level 2 within the fair value hierarchy. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 Debt securities - available-for-sale: United States government obligations and authorities $ 90,750 $ 625 $ 683 $ 90,692 Obligations of states and political subdivisions 19,031 391 144 19,278 Corporate 186,489 4,413 1,922 188,980 International 28,591 212 221 28,582 $ 324,861 $ 5,641 $ 2,970 $ 327,532 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 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, 2021 2020 2019 (In thousands) Gross realized and unrealized gains: Debt securities $ 3,426 $ 20,470 $ 2,829 Equity securities 35 8,587 5,928 Total gross realized and unrealized gains 3,461 29,057 8,757 Gross realized and unrealized losses: Debt securities (1,837) (2,879) (664) Equity securities (32) (8,146) (1,009) Total gross realized and unrealized losses (1,869) (11,025) (1,673) Net realized and unrealized gains (losses) on investments $ 1,592 $ 18,032 $ 7,084 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, 2021 2020 2019 (In thousands) Net gains (losses) on equity securities: Realized $ — $ 4,555 $ 803 Unrealized 3 (4,114) 4,116 3 441 4,919 Less: Net realized and unrealized gains (losses) on securities sold — 309 672 Net unrealized gains (losses) still held as of the end-of-period $ 3 $ 132 $ 4,247 In addition, for the twelve months ended December 31, 2021, the Company recognized $9.4 million in realized and unrealized embedded derivative gains. Refer to Note 4 above for information regarding the embedded derivative. 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, 2021 Amortized Cost Fair Value (In thousands) Securities with Maturity Dates Debt securities, available-for-sale: One year or less $ 27,550 $ 28,094 Over one through five years 85,585 86,559 Over five through ten years 118,136 118,352 Over ten years 93,590 94,527 Total $ 324,861 $ 327,532 Net Investment Income Net investment income consisted of the following: Year Ended December 31, 2021 2020 2019 (In thousands) Interest income $ 6,600 $ 11,563 $ 15,605 Dividends income 170 223 296 Net investment income $ 6,770 $ 11,786 $ 15,901 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, 2021 Debt securities - available-for-sale: United States government obligations and authorities $ 46,038 $ 672 $ 881 $ 11 $ 46,919 $ 683 Obligations of states and political subdivisions 7,322 144 — — 7,322 144 Corporate 86,423 1,875 860 47 87,283 1,922 International 15,345 221 — — 15,345 221 $ 155,128 $ 2,912 $ 1,741 $ 58 $ 156,869 $ 2,970 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 As of December 31, 2021, the Company held a total of 351 debt securities that were in an unrealized loss position, of which 5 securities were in an unrealized loss position continuously for 12 months or more. 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. 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, 2021, 2020 and 2019, respectively. Refer to Note 7 below for information regarding the assessment of allowances for credit losses. Collateral Deposits Cash and cash equivalents and investments, the majority of which were debt securities, with fair values of $9.3 million and $11.5 million were deposited with governmental authorities and into custodial bank accounts as required by law or contractual obligations, as of December 31, 2021 and 2020, respectively. Reclassification of Held-to-Maturity Securities to Available-for-Sale 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, 2021 | |
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 2020-2021 Catastrophe Excess of Loss Reinsurance Program The Company’s excess of loss catastrophe reinsurance program for 2020-2021 (the “2020-2021 Program”), which covers the Company and its wholly-owned insurance subsidiaries, FNIC, MIC and MNIC became effective July 1, 2020 through June 30, 2021. FNIC, MIC and MNIC are collectively referred to herein as the “carriers”. The 2020-2021 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 $306.1 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 2020-2021 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 2020-2021 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, 2021, the 2020-2021 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 2020-2021 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. The total 2020-2021 Program cost includes approximately $258.3 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 affords 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 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 and each carrier will be responsible for its portion of the 2020-2021 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 2020-2021 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 may be reduced 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 terminated 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 all subsequent events that occur during the remainder of the 2020-2021 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 an aggregate excess of loss agreement on its MIC book of business through the end of the calendar year. This new agreement provides reinsurance coverage on non-named storms, of 65% of $15 million excess of $10 million with a $0.85 million occurrence deductible and a $4.15 million occurrence limit at an approximate cost of $2.3 million. Subsequent to a significant loss event in February 2021, the Company purchased $50 million of additional reinsurance limit to provide further protection for any future events through May 31, 2021. The additional protection was secured in two layers for an approximate cost of $13 million with the lowest layer responding at a retention level of $10 million. This additional limit contained overlapping coverage on certain portions of this purchase, resulting in the determination that the additional coverage contained an embedded derivative. While the economic substance is similar to as a typical reinsurance recovery, the embedded derivative is carried at fair value on our consolidated balance sheets and changes in fair value are recognized in net realized and unrealized gain (loss) on our consolidated statements of operations as they occur. Refer to Notes 2 and 3 for further information. Lastly, the Company secured additional reinsurance limit of 50% of $70 million excess of $25 million, at an approximate cost of $2.8 million, which were recognized as ceded premium over the period from June 1, 2021 through June 30, 2021. This limit is available for events occurring during this period for all carriers and all states. The carriers’ cost and amounts of reinsurance are based on current analysis of exposure to catastrophic risk. Most of 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. 2021-2022 Catastrophe Excess of Loss Reinsurance Program The Company’s excess of loss catastrophe reinsurance program for 2021-2022 (the “2021-2022 Program”), which covers the Company and its wholly-owned insurance subsidiaries, FNIC, MIC and MNIC became effective July 1, 2021. The 2021-2022 Program provides the carriers up to approximately $1.4 billion of single event reinsurance coverage in excess of up to a $18.25 million pre-tax retention for certain catastrophic losses, including hurricanes, and aggregate coverage up to $2.25 billion, at an approximate total cost of $274.2 million, subject to adjustments based on actual exposure or premium of policies at different points in time in the coming months. Due to non-Florida exposures becoming a larger portion of the overall book of business, the Company broadened its approach to its reinsurance purchases for this treaty year by separating the program into two reinsurance towers. The first tower includes all exposures for FNIC Florida, MIC in all states and MNIC and includes ground up first event limit protection up to approximately $982 million (“Primary Tower”), subject to a maximum first-event retention of $10 million. The second tower provides ground up first event limit up to $450 million for all FNIC’s non-Florida business produced by its managing general underwriter partner (“FNIC SageSure Tower”), subject to a first-event retention of $8.25 million. The $18.25 million combined towers maximum retention is a reduction in the first event retention of approximately 41% compared to up to $31 million in last year’s program. The combination of these separate towers provides the Company with an increase in aggregate catastrophe reinsurance protection of approximately $345 million compared to the previous treaty year original purchase. More specifically, the 2021-2022 Program includes up to approximately $2.25 billion in aggregate reinsurance across all states in which the Company operates, including $504 million of reinsurance provided by the Florida Hurricane Catastrophe Fund (“FHCF”). Up to approximately $972 million is available for a first event within Florida, including $468 million of private coverage plus the FHCF coverage. Up to approximately $910 million of coverage is available for a first event outside of Florida, including the $468 million of private coverage from the Primary Tower, which is available to cover catastrophe losses in MIC’s book of business located in Louisiana and Texas. FHCF coverage responds on both a per occurrence and aggregate basis and is exclusive to the state of Florida. Additionally, the 2021-2022 Program provides $831 million of private reinsurance across the combined towers for second and subsequent events, subject to individual retentions within each tower and the aggregate limit. All layers above a $30 million attachment point have prepaid automatic reinstatement protection, which affords the carriers additional coverage for subsequent events without additional cost. Most of the privately placed layers of the 2021-2022 Program are effective July 1, 2021, with certain agreements effective for June 2021. The portion of the 2021-2022 Program placed with private reinsurers is with partners that as of December 31, 2021 had 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 2021-2022 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. The private reinsurance market continued to harden this year due to a number of factors, including the elevated number of catastrophic events impacting U.S. coastal areas in recent years. These factors have resulted in more restrictive terms for the upcoming reinsurance treaty year. The change in terms includes a further reduction in the availability of cascading coverage, which automatically “drops-down” coverage for subsequent events and prevents gaps in reinsurance protection when multiple events occur during the same treaty year. In addition, there was limited open market capacity available for lower layer attachment points on an “all perils” basis. As a result, a vast majority of the first layer for the Primary Tower ($20 million excess of $10 million), which includes one automatic reinstatement, covers “all perils” only through November 30, 2021, after which coverage includes only named storms such as tropical depressions, tropical storms and hurricanes, and excludes tornado or hail events. The first layer in the FNIC SageSure Tower ($22 million excess of $8 million) provides both per occurrence and aggregate protection and was placed with Anchor Re, an affiliate of SageSure (the non-affiliated managing general underwriter that writes FNIC’s non-Florida property business) on a fully-collateralized basis. In addition, 40% of the reinstatement premium protection ($6 million) for the layer that attaches above $30 million of the FNIC SageSure Tower provides protection on an “all perils” basis whereas the remaining 60% ($12 million) provides protection following only a hurricane. As indicated above, the carriers’ combined 2021-2022 Program is estimated to cost $274.2 million, consisting of $204.8 million for the Primary Tower and $69.4 million for FNIC SageSure Tower after consideration of 19% downward premium adjustment resulting from the September 30, 2021 exposure adjustment, driven by our exposure management initiatives. This amount includes approximately $237.9 million for private reinsurance for the carriers’ exposure described above, including prepaid automatic premium reinstatement protection, along with approximately $36.3 million, within the Primary Tower, payable to the FHCF. All carriers maintained their 90% FHCF participation for the upcoming wind season. In the Primary Tower, each carrier will share the combined 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 2021-2022 Program’s per event retention based on a specific allocation formula. In addition to the coverage stated above, under the FNIC SageSure Tower, the Company purchased additional protection that lowers the second event named-storm retention, inclusive of co-participation, to approximately $9.75 million, with certain limitations as described below. For a third event, the named storm retention would be approximately $17.3 million. More specifically, this additional coverage consists of 75% of $27 million of coverage for a second event and 47% of $27 million of coverage for a third event, which applies to named storm losses only. These retentions may be reduced after taking into account the 80% quota-share agreement that was in place with Anchor Re up through December 31, 2021, which is discussed further below in " FNIC Homeowners non-Florida ". Whether such catastrophe losses can be ceded into this treaty will be dependent on capacity to do so pursuant to the loss caps in that quota-share treaty. As discussed above, the lower layers of each tower of the 2021-2022 reinsurance program exclude severe convective storm coverage (tornado and hail) after December 1, 2021, resulting in approximately $30 million of single event exposure to the Company under each tower, subject to potential coverage under certain quota-share reinsurance treaties. 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, 2021. 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 Homeowners Florida 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 bases, 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 bases, 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 its quota-share treaty, which was initially set at 10%, on its Florida homeowners book of business, on an in-force, new and renewal basis, excluding named storms and subject to certain limitations. Effective October 1, 2020, this treaty increases the cession percentage from 10% to 20% on an in-force, new and renewal basis. On November 15, 2020, FNIC entered into a 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. On December 31, 2020, FNIC entered into a 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 and is subject to certain limitations. On July 1, 2021, FNIC renewed its 20% quota-share treaty on its Florida homeowners book of business, on an in-force, new and renewal basis, excluding named storms and subject to certain limitations. In addition, this quota-share allows FNIC the flexibility to prospectively increase (we are currently at the maximum) or decrease the cession percentage up to three times during the term of the agreement. On November 15, 2021, FNIC renewed its 10% quota-share treaty through November 15, 2022 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. On December 31, 2021, FNIC entered into a new 7.5% quota-share reinsurance treaty through December 31, 2022 on its Florida homeowners book of business on a new and renewal basis. This treaty excludes named storms and is subject to certain limitations. FNIC elected to runoff the expiring 10% participation through the policies natural expirations. FNIC Homeowners non-Florida 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 provided 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 was 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 was 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 and Anchor Re agreed to increase the cession percentage in this treaty from 50% to 80%, effective December 1, 2020 on in-force, new and renewal basis. Effective January 31, 2021, the Company terminated its existing 80% quota-share reinsurance treaty with Anchor Re and commuted the agreement. In April 2021, the Company received $7.2 million from Anchor Re as settlement of the commutation. Immediately after the commutation, the Company entered into an 80% quota-share treaty with Anchor Re on February 1, 2021 on an in-force, new and renewal basis, which covers the thirteen-month period through February 28, 2022, subject to certain limitations, which include limits on the net losses that Anchor Re can realize during the treaty year. Effective December 31, 2021, the Company terminated its existing 80% quota-share reinsurance treaty with Anchor Re and commuted the agreement. Immediately after the commutation, the Company entered into a 100% quota-share treaty with Anchor Re on December 31, 2021 on an in-force, new and renewal basis, which covers the six month period through June 30, 2022, subject to certain limitations which include limits on the net losses that Anchor Re can realize during the treaty year. The new treaty excludes catastrophe losses, involves a funded trust and is fully collateralized through Anchor Re. The Company recorded a pre-tax loss of $2.5 million in the fourth quarter of 2021 related to the settlement of the managing general underwriting and profit share agreements with SageSure through December 31, 2021. 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, 2021 and 2020. 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, 2021 2020 (In thousands) Reinsurance recoverable on paid losses $ 59,096 $ 54,898 Reinsurance recoverable on unpaid losses 554,356 358,193 Allowance for credit loss (249) (65) Reinsurance recoverable, net $ 613,203 $ 413,026 As of December 31, 2021 and 2020, the Company had reinsurance recoverable of $504.8 million (as a result of Hurricanes Ida, Irma, Laura, April 2021 Storms and Hurricane Sally) and $304.3 million (as a result of Hurricanes Irma, Laura, Sally, Michael and Delta). Hurricane Ida made landfall in Louisiana on August 29, 2021 as a Category 4 hurricane impacting Louisiana and other states. April 2021 Storms were a collection of severe weather events impacting Texas, Florida, Louisiana and other states over a six-day period starting approximately April 10, 2021. Refer to Note 7 below for information regarding the assessment and amounts of allowances for credit losses. Net Premiums Written and Net Premiums Earned Net premiums written and net premiums earned consisted of the following: Year Ended December 31, 2021 2020 2019 (In thousands) Net Premiums Written Direct $ 684,777 $ 726,885 $ 610,608 Ceded (501,070) (490,262) (232,729) $ 183,707 $ 236,623 $ 377,879 Net Premiums Earned Direct $ 708,820 $ 720,967 $ 582,334 Ceded (525,517) (356,833) (218,682) $ 183,303 $ 364,134 $ 363,652 |
ALLOWANCE FOR CREDIT LOSS
ALLOWANCE FOR CREDIT LOSS | 12 Months Ended |
Dec. 31, 2021 | |
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 Credit loss expense (recovery) (2) — (108) 184 76 Balance as of December 31, 2021 $ — $ 125 $ 249 $ 374 (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. 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 December 31, 2021 and 2020. Management does not have any current intent 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 was as follows: Days Past Due Current 1-29 30-59 60-89 90 plus Total December 31, 2021 (In thousands) Amortized cost $ 39,287 $ 1,670 $ 233 $ 16 $ 93 $ 41,299 Allowance for credit loss — (15) (12) (5) (93) (125) Net $ 39,287 $ 1,655 $ 221 $ 11 $ — $ 41,174 Days Past Due Current 1-29 30-59 60-89 90 plus Total December 31, 2020 (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. |
GOODWILL AND IDENTIFIABLE INTAN
GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
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,: 2020 $ 10,997 $ — $ — $ (10,997) $ — 2021 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 resulted in the conclusion that the goodwill intangible asset established in conjunction with the acquisition of the Maison Companies in December 2019 was 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, 2021 December 31, 2020 Weighted- Gross Gross Average- Carrying Accumulated Carrying Accumulated Amortization Amount Amortization Amount Amortization Period (In thousands) Trade name (1) $ — $ — $ 1,100 $ — 0 Non-compete agreements (2) 300 300 300 162 2 Insurance licenses (3) — — 180 — 0 Total $ 300 $ 300 $ 1,580 $ 162 (1) This intangible had an indefinite useful life. We recorded impairment of $1.1 million in the year ended December 31, 2021, due primarily to the lowering of revenue forecasts. as a result of the to the Company's plan to execute an orderly runoff of MIC's insurance operations, and a higher discount rate, which lowered the fair value. 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) Became fully amortized during the year ended December 31, 2021. |
LOSS AND LOSS ADJUSTMENT RESERV
LOSS AND LOSS ADJUSTMENT RESERVES | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 2020 2019 (In thousands) Gross reserves, beginning-of-period $ 540,367 $ 324,362 $ 296,230 Less: reinsurance recoverable (1) (358,128) (164,429) (166,396) Net reserves, beginning-of-period 182,239 159,933 129,834 Net reserves from the Maison Companies acquisition — — 11,825 Incurred loss, net of reinsurance, related to: Current year 226,537 358,952 262,118 Prior year loss development (redundancy) (2) 6,305 18,367 13,460 Ceded losses subject to offsetting experience account adjustments (3) (68) (816) (2,489) Prior years 6,237 17,551 10,971 Amortization of acquisition fair value adjustment (14) (54) (9) Total incurred loss and LAE, net of reinsurance 232,760 376,449 273,080 Paid loss, net of reinsurance, related to: Current year 105,017 253,344 173,313 Prior years 125,295 100,799 81,493 Total paid loss and LAE, net of reinsurance 230,312 354,143 254,806 Net reserves, end-of-period 184,687 182,239 159,933 Plus: reinsurance recoverable (1) 554,107 358,128 164,429 Gross reserves, end-of-period $ 738,794 $ 540,367 $ 324,362 (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, 2021, the Company experienced $6.3 million of net unfavorable loss and LAE reserve development on prior accident years, primarily in its homeowners line of business as a result of higher than expected catastrophe loss development from accident year 2020. 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 lines 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 line 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. 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. Effective February 28, 2021, the Company commuted the 30% agreement and subsequently received $11.2 million as settlement. 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 gross IBNR reserves plus expected gross 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 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021 2021 2012 $ 23,032 $ 23,301 $ 24,186 $ 24,468 $ 25,889 $ 26,356 $ 26,836 $ 26,951 $ 26,984 $ 26,935 $ 27 2,692 2013 43,807 42,021 35,834 35,859 37,185 37,880 37,978 38,088 38,141 28 3,443 2014 64,312 63,300 61,770 62,206 61,817 62,043 62,535 62,533 488 7,656 2015 99,497 92,411 95,129 94,760 94,703 96,144 96,189 1,203 13,228 2016 171,264 162,043 158,764 157,880 156,316 156,493 2,180 23,996 2017 202,844 192,769 188,548 179,327 178,890 48,811 67,453 2018 210,158 213,128 216,570 218,267 19,174 38,289 2019 257,644 261,541 260,089 10,861 22,774 2020 342,119 349,456 125,767 71,508 2021 227,685 302,033 23,296 Total $ 1,614,678 (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 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012 $ 13,693 $ 20,728 $ 23,120 $ 23,923 $ 25,186 $ 26,113 $ 26,777 $ 26,861 $ 26,901 $ 26,909 2013 19,986 31,606 33,867 35,123 35,803 37,473 37,688 37,915 37,952 2014 37,033 53,831 57,891 59,722 60,555 61,441 61,692 62,039 2015 52,214 79,359 86,647 90,415 92,327 93,405 94,281 2016 102,556 142,716 148,274 152,258 153,997 155,152 2017 135,589 176,580 179,327 178,013 179,102 2018 141,173 194,160 206,133 212,935 2019 157,768 236,090 252,608 2020 236,197 330,656 2021 105,969 $ 1,457,603 All outstanding liabilities for unpaid claims and ALAE prior to 2012, net of reinsurance 68 Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance $ 157,143 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, 2021: 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 61.9 % 26.5 % 5.1 % 2.2 % 1.3 % 1.5 % 0.9 % 0.5 % 0.1 % — % 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 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021 2021 2012 $ 5,279 $ 4,952 $ 4,801 $ 4,700 $ 4,658 $ 4,346 $ 4,509 $ 5,109 $ 6,431 $ 6,430 $ 926 854 2013 7,095 5,069 5,221 5,502 5,704 5,580 5,984 7,588 7,588 913 967 2014 7,475 7,709 6,384 6,620 6,348 6,697 9,028 9,027 694 1,012 2015 8,082 7,008 6,020 5,377 7,947 9,141 9,141 1,597 966 2016 10,727 5,809 6,561 8,502 12,267 11,903 4,525 922 2017 8,289 7,853 6,558 8,519 8,518 2,675 642 2018 6,553 6,233 7,280 7,276 2,801 456 2019 1,604 2,535 2,487 944 79 2020 37 68 — 8 2021 17 — 4 Total $ 62,455 Commercial General Liability Cumulative Paid Losses and ALAE, Net of Reinsurance For the Years Ended December 31, (Unaudited) Accident Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012 $ 871 $ 1,714 $ 2,632 $ 3,342 $ 3,686 $ 3,841 $ 4,098 $ 4,521 $ 4,790 $ 5,047 2013 882 2,233 3,366 3,867 4,606 5,033 5,467 5,847 6,112 2014 717 2,593 3,855 4,375 5,130 6,270 6,901 7,316 2015 798 2,296 3,249 3,827 5,866 6,566 6,840 2016 1,515 3,657 5,088 6,606 8,382 8,841 2017 1,592 2,478 3,293 4,225 4,643 2018 963 1,554 2,604 2,928 2019 147 424 598 2020 5 52 2021 2 Total $ 42,379 All outstanding liabilities for unpaid claims and ALAE prior to 2012, net of reinsurance 3,561 Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance $ 23,637 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, 2021: 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 10.9 % 13.9 % 11.3 % 7.7 % 10.5 % 6.0 % 4.5 % 4.8 % 3.5 % 5.4 % 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 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021 2021 2012 $ 1,735 $ 1,741 $ 1,717 $ 1,424 $ 1,455 $ 1,491 $ 1,448 $ 1,444 $ 1,448 $ 1,447 $ 4 824 2013 1,517 1,863 1,826 1,829 2,161 2,123 2,127 2,127 2,128 6 3,472 2014 2,038 3,213 3,551 4,315 4,379 4,417 4,413 4,410 4 6,021 2015 3,045 2,882 2,781 2,878 2,915 2,944 2,945 10 6,561 2016 13,414 20,205 24,346 25,918 25,923 25,930 34 76,660 2017 20,411 22,472 24,579 24,669 24,253 169 61,751 2018 3,513 4,623 4,439 4,062 104 10,937 2019 (3) — — 2 103 2020 — — — 6 2021 — — 6 Total $ 65,175 Automobile Cumulative Paid Losses and ALAE, Net of Reinsurance For the Years Ended December 31, (Unaudited) Accident Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012 $ 867 $ 1,293 $ 1,333 $ 1,384 $ 1,393 $ 1,430 $ 1,444 $ 1,447 $ 1,449 $ 1,449 2013 907 1,609 1,906 2,069 2,109 2,112 2,116 2,116 2,116 2014 1,455 3,120 3,678 4,122 4,291 4,383 4,396 4,396 2015 1,393 2,293 2,670 2,807 2,890 2,897 2,897 2016 8,084 17,258 23,053 25,582 26,132 26,294 2017 12,821 20,762 23,860 24,468 24,599 2018 2,331 3,626 3,137 3,076 2019 (5) — — 2020 — — 2021 — Total $ 64,827 All outstanding liabilities for unpaid claims and ALAE prior to 2012, net of reinsurance 20 Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance $ 368 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, 2021: 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 66.8 % 37.1 % (14.0) % 6.9 % 1.9 % 0.9 % 0.3 % — % 0.1 % — % 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, 2021 2020 (In thousands) Liabilities for unpaid losses and ALAE: Homeowners $ 157,143 $ 149,314 Commercial general liability 23,637 28,328 Automobile 368 1,388 Flood — — Total liabilities for unpaid losses and ALAE, net of reinsurance 181,148 179,030 Reinsurance recoverables: Homeowners 553,689 353,741 Commercial general liability — — Automobile 352 1,424 Flood 66 2,963 Total reinsurance recoverables 554,107 358,128 Unallocated loss adjustment expenses 3,539 3,209 Gross liability for unpaid losses and LAE $ 738,794 $ 540,367 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, 2021 and 2020, were not considered material, except for our commercial general liability line of business during 2020. 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, 2021 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | 10. LONG-TERM DEBT Long-term debt consisted of the following: December 31, 2021 2020 (In thousands) Senior unsecured fixed rate notes, due March 15, 2029, net of deferred financing costs of $1,170 and $1,317, respectively $ 98,830 $ 98,683 Convertible senior unsecured fixed rate notes, due April 19, 2026, net of deferred financing costs of $1,025 19,975 — Total long-term debt, net $ 118,805 $ 98,683 As of December 31, 2021, the Company’s estimated annual aggregate amount of debt maturities (assuming the holders of the convertible debt do not convert into shares of the Company's common stock) includes the following: Aggregate Debt For the Years Ending December 31, Maturities (In thousands) 2022 $ — 2023 — 2024 — 2025 — 2026 21,000 Thereafter 100,000 Total debt maturities 121,000 Less: deferred financing costs 2,195 Total debt maturities, net $ 118,805 Convertible Senior Unsecured Notes due 2026 On April 20, 2021, the Company closed an offering and issued $21.0 million in aggregate principal amount of Convertible Senior Unsecured Notes due 2026 (the “2026 Notes”) pursuant to an indenture dated as of April 19, 2021 (the "2021 Indenture"). This offering is part of an authorization by the Company’s Board of Directors to offer and issue from time to time up to $35.0 million of 2026 Notes under the 2021 Indenture. The 2026 Notes are not redeemable at the option of the Company, mature on April 19, 2026 and bear interest at a fixed rate of 5.0% per year, payable semi-annually in cash. The 2026 Notes are convertible into shares of the Company’s common stock at an initial conversion rate of 166.6667 shares per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of $6.00 per share of our common stock, an approximately 33% premium to the closing price of the Company's common stock on April 19, 2021. The conversion rate is subject to adjustment upon the occurrence of certain pro rata capital events, such as stock splits or dividends. The 2026 Notes are convertible at the option of the holder at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2026 Notes. If a change in control of the Company, as defined in the 2021 Indenture, occurs, the holders of the 2026 Notes will have the right to require the Company to purchase all or a portion of their 2026 Notes at a price in cash equal to 101% of the principal amount thereof, plus any accrued but unpaid interest to, but excluding, the date of purchase. The 2026 Notes are senior unsecured obligations of the Company and rank equally with the Senior Unsecured Notes due 2029 ("2029 Notes") and other future senior unsecured indebtedness of the Company. The 2021 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, require the Company to maintain certain levels of reinsurance coverage while the 2026 Notes remain outstanding, and maintain certain financial covenants. These covenants are subject to important exceptions and qualifications set forth in the 2021 Indenture. Principal and interest on the 2026 Notes are subject to acceleration in the event of certain events of default, including a downgrade in the credit rating on the 2026 Notes down to the level of ‘BB-‘, being placed into receivership, failing to renew our excess-of-loss catastrophe reinsurance coverage, and certain bankruptcy-related events. The 2026 notes are currently rated ‘BBB,’ which is four notches higher than ‘BB-.’ The 2026 Notes fair value as of December 31, 2021 was $22.1 million. Refer to Note 4 for additional information. Senior Unsecured Notes due 2029 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 "2029 Notes"), pursuant to an indenture dated as of March 5, 2029 (the "2019 Indenture"). The 2029 Notes mature on March 15, 2029 and at issuance bore interest at the annual 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 2029 Notes. In connection with the amendment of the indenture covenants to increase the maximum debt-to-capital ratio applicable to the incurrence of debt to 60% and decreasing the maximum debt-to-capital ratio applicable to restricted payments, including cash dividends on our common stock, to 20%, the interest rate was increased by 0.25% to 7.75% per annum beginning March 15, 2021. The 2029 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 2029 Notes under certain circumstances as set forth in the 2019 Indenture. Prior to March 15, 2024, the Company may redeem the 2029 Notes, in whole or in part, at a redemption price equal to 100.00% of the principal amount of the 2029 Notes to be redeemed, plus the “Applicable Premium,” plus accrued and unpaid interest on such 2029 Notes, if any, on any applicable redemption date, the greater of (1) 1.0% of the then-outstanding principal amount and (2) the excess (if any) of: (A) the present value at such redemption date of (i) the applicable redemption price at March 15, 2024 (excluding any accrued but unpaid interest), plus (ii) all required interest payments due through March 15, 2024 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate (as defined in the 2019 Indenture) on such redemption date plus 50 basis points; over (B) the then-outstanding principal amount. On and after March 15, 2024, the Company may redeem the 2029 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 being redeemed to but excluding the date of redemption. If a change in control of the Company, as defined in the 2019 Indenture, occurs, the holders of the Notes will have the right to require the Company to purchase all or a portion of their 2029 Notes at a price in cash equal to 101% of the principal amount thereof, plus any accrued but unpaid interest. The 2029 Notes are senior unsecured obligations of the Company and will rank equally with all of the Company’s other future senior unsecured indebtedness. The 2019 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 2029 Notes remain outstanding, and maintain certain other financial covenants. These covenants are subject to important exceptions and qualifications set forth in the 2019 Indenture. Principal and interest on the 2029 Notes are subject to acceleration in the event of certain events of default, including a downgrade in the credit rating on the 2029 Notes down to the level of ‘BB-‘, being placed into receivership, failing to renew our excess-of-loss catastrophe reinsurance coverage, and certain bankruptcy-related events. The 2029 notes are currently rated ‘BBB,’ which is four notches higher than ‘BB-.’ The Company's debt to capital ratio exceeds 60%, therefore the Company is precluded from incurring additional debt (other than an incremental $10 million that is allowable under the Indenture), 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 60% rather than specific actions taken by the Company. The Company's actual debt to capital ratio as of December 31, 2021 was approximately 66.7%. The 2029 Notes fair values as of December 31, 2021 and December 31, 2020 was $106.5 million and $99.7 million, respectively. Refer to Note 4 for additional information. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 11. INCOME TAXES The components of income tax expense (benefit) include the following: Year Ended December 31, 2021 2020 2019 (In thousands) Federal: Current $ 258 $ (29,449) $ (982) Deferred 198 (3,494) 567 Federal income tax expense (benefit) 456 (32,943) (415) State: Current — (403) 241 Deferred (140) (150) (124) State income tax expense (benefit) (140) (553) 117 Total income tax expense (benefit) $ 316 $ (33,496) $ (298) 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, 2021 2020 2019 (In thousands) Computed expected tax expense provision, at federal rate $ (21,585) $ (23,447) $ 150 State tax, net of federal tax benefit (137) (3,157) (122) Tax-exempt interest (2) (5) (3) Income subject to dividends-received deduction (21) (26) (34) Goodwill impairment — 2,309 — Return to provision (2,036) (3,407) (307) Executive compensation 30 41 230 Meals and entertainment — 13 43 Uncertain tax position — (179) (203) Rate difference on NOL carryback 98 (8,785) (113) Change in valuation allowance 23,436 2,968 — Other 533 179 61 Total income tax expense (benefit) $ 316 $ (33,496) $ (298) In response to COVID-19, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020 and expires with tax years ending December 31, 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 availed itself of the net operating loss provisions of the CARES Act and carried back 2019 and 2020 taxable loss to prior tax years. The Company is carrying forward the NOL generated 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, 2021, 2020 and 2019, the effective income tax rate was (0.3)%, 30.0% and (41.8)%, respectively. Differences in the effective tax and the statutory Federal income tax rate of 21% in 2021, 2020 and 2019, 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 and change in the valuation allowance in the current year. The application of GAAP requires us to evaluate the recoverability of our net deferred income tax assets, including those associated with net operating loss ("NOL") carryforwards, and establish a valuation allowance, if necessary, to reduce our deferred income tax asset to an amount that is more likely than not to be realizable. Considerable judgment and the use of estimates are required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, we consider many factors, including: the nature and character of the deferred income tax assets and liabilities; taxable income in prior carryback years, if any; future reversals of existing temporary differences; the length of time carryovers can be utilized; and any tax planning strategies we would employ to avoid a tax benefit from expiring unused. Realization is never assured and based on available information, including the financial performance of the Company during the second quarter of 2021, we determined that it was more likely than not that the net deferred income tax asset would not be realized. Therefore, during 2021, we increased the income tax valuation allowance by $27.5 million. As of December 31, 2021, we had NOL carryforwards for Federal tax purposes of $88.8 million expiring between 2037 and 2041 and $12.7 million that do not expire. As of December 31, 2021, we had NOL carryforwards for state tax purposes of $127.7 million expiring between 2037 and 2041 and $20.8 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 $30.5 million and $3.0 million on its deferred income tax asset as of December 31, 2021 and 2020, 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, 2021 2020 2019 (In thousands) Balance at January 1 $ 203 $ 382 $ 585 Increases/(decreases) for uncertain tax positions taken during the prior years — (179) (203) Balance at December 31 $ 203 $ 203 $ 382 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, 2021 2020 (In thousands) Deferred income tax assets: Unearned premiums $ 5,419 $ 5,611 Unpaid losses and loss adjustment expenses 3,416 581 Accrued expenses 307 236 Net operating loss carryforwards 27,780 5,350 Share-based compensation 149 232 Depreciation and amortization 771 412 Lease liability 1,623 1,783 Other 45 69 Gross deferred income tax assets 39,510 14,274 Valuation allowance (30,481) (2,968) Total deferred income tax assets 9,029 11,306 Deferred income tax liabilities: Deferred acquisition costs and other (3,926) (6,387) Unrealized gains on investment securities (608) (2,865) Embedded derivative (2,601) — Lease asset (1,623) (1,783) Other (271) (213) Total deferred income tax liabilities (9,029) (11,248) Deferred income tax asset (liability), net $ — $ 58 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, 2021 | |
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, 2021. 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, 2021, 2020 and 2019 was $1.1 million, $1.1 million and $1.0 million, respectively. Future minimum lease payments under these agreements are as follows: Aggregate Minimum Year Ended December 31, Lease Payments (In thousands) 2022 $ 1,098 2023 1,131 2024 1,164 2025 1,115 2026 1,140 Thereafter 2,178 Total $ 7,826 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, 2021 2020 (In thousands) Right-of-use asset $ 6,693 $ 7,430 Accrued rent (482) (259) Right-of-use asset, net $ 6,211 $ 7,171 Lease liability $ 6,693 $ 7,430 Weighted average discount rate 4.70 % 4.70 % Weighted average remaining years of lease term 6.7 7.7 Year Ended December 31, 2021 2020 2019 (In thousands) Lease expense $ 1,118 $ 1,118 $ 1,046 Sublease income (479) (466) (229) Lease expense, net $ 639 $ 652 $ 817 Net cash provided by (used in) operating activities $ (587) $ (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. |
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, 2021. 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, 2021, 2020 and 2019 was $1.1 million, $1.1 million and $1.0 million, respectively. Future minimum lease payments under these agreements are as follows: Aggregate Minimum Year Ended December 31, Lease Payments (In thousands) 2022 $ 1,098 2023 1,131 2024 1,164 2025 1,115 2026 1,140 Thereafter 2,178 Total $ 7,826 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, 2021 2020 (In thousands) Right-of-use asset $ 6,693 $ 7,430 Accrued rent (482) (259) Right-of-use asset, net $ 6,211 $ 7,171 Lease liability $ 6,693 $ 7,430 Weighted average discount rate 4.70 % 4.70 % Weighted average remaining years of lease term 6.7 7.7 Year Ended December 31, 2021 2020 2019 (In thousands) Lease expense $ 1,118 $ 1,118 $ 1,046 Sublease income (479) (466) (229) Lease expense, net $ 639 $ 652 $ 817 Net cash provided by (used in) operating activities $ (587) $ (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. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2021 | |
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 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. On March 15, 2021, the Company closed on an underwritten public offering of 3,500,000 shares of its common stock at a price of $4.75 per share for gross proceeds of $16.6 million. The offering generated net proceeds to the Company of approximately $15.1 million, after deducting the underwriter's discount and offering expenses payable by the Company. In April 2021, the Company sold an additional 100,650 shares upon partial exercise of the underwriter's allotment option and received net proceeds of $0.4 million. 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, 2021 2020 2019 (In thousands) Restricted stock $ 1,079 $ 1,409 $ 1,841 Performance stock 85 171 335 Total share-based compensation expense $ 1,164 $ 1,580 $ 2,176 Recognized tax benefit $ — $ 634 $ 534 Intrinsic value of options exercised 2 110 2 Fair value of restricted stock vested 1,700 1,659 1,977 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 $2.5 million as of December 31, 2021, which will be recognized over the remaining weighted average vesting period of approximately 1.73 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, 2019 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 Granted — — Exercised (4,085) 2.45 Cancelled (1,500) 3.10 Outstanding at December 31, 2021 19,832 $ 4.40 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 $4.40 19,832 0.26 $4.40 — 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, 2021 and 2020, the Board of Directors granted 171,576 and 210,272 RSAs, respectively, vesting over three RSA activity includes the following: Weighted Average Number of Grant Date Shares Fair Value Outstanding at January 1, 2019 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 Granted 171,576 4.63 Vested (124,287) 13.68 Cancelled (79,334) 13.16 Outstanding at December 31, 2021 343,683 $ 9.98 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, 2021 2020 Before Income Net Before Income Net (In thousands) Accumulated other comprehensive income (loss), beginning-of-period $ 15,086 $ (3,700) $ 11,386 $ 13,621 $ (3,340) $ 10,281 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 (10,826) — (10,826) 19,114 (4,688) 14,426 Reclassification adjustment for realized losses (gains) included in net income (1,589) (5) (1,594) (17,591) 4,314 (13,277) (12,415) (5) (12,420) 1,523 (374) 1,149 Accumulated other comprehensive income (loss), end-of-period $ 2,671 $ (3,705) $ (1,034) $ 15,086 $ (3,700) $ 11,386 |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021, 2020 and 2019, the Company made no additional profit-sharing contribution. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
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 recognized total costs and expenses, primarily in losses and LAE expenses, in the consolidated statements of operations, of $3.6 million, $2.2 million, $0.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 16. EARNINGS PER SHARE Basic earnings per share (“EPS”) is computed by dividing net income (loss) 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 (loss) 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 conversion of convertible long-term debt (if not antidilutive, the associated interest expense reflected in net income (loss) available to common shareholders, would be excluded as well), 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, 2021 2020 2019 (In thousands, except per share data) Net income (loss) attributable to FedNat Holding Company shareholders $ (103,100) $ (78,158) $ 1,011 Weighted average number of common shares outstanding - basic 16,675 13,846 12,977 Net income (loss) per common share - basic ($6.18) ($5.64) $0.08 Weighted average number of common shares outstanding - basic 16,675 13,846 12,977 Dilutive effect of convertible debt — — — Dilutive effect of stock compensation plans — — 46 Weighted average number of common shares outstanding - diluted 16,675 13,846 13,023 Net income (loss) per common share - diluted $ (6.18) $ (5.64) $ 0.08 Dividends per share $ — $ 0.36 $ 0.33 For the year ended December 31, 2021, we excluded (in thousands) dilutive shares of 2,460 from our weighted average number of common shares outstanding - diluted above because their inclusion, as well as retaining the associated interest expense of $0.7 million currently reflected in net income (loss) available to common shareholders for the EPS numerator, would have been antidilutive. |
STATUTORY ACCOUNTING AND DIVIDE
STATUTORY ACCOUNTING AND DIVIDEND RESTRICTIONS | 12 Months Ended |
Dec. 31, 2021 | |
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 "OIR") and Louisiana Department of Insurance (the "LDI"). These standards require that insurance companies prepare statutory-basis financial statements in accordance with the 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, 2021. 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, 2021, 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 year 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 OIR at least 10 business days prior to the dividend payment or distribution, or such shorter period of time as approved by the 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 immediately 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 Company's 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, 2021 and 2020, on a combined statutory basis, the capital and surplus of the Company’s insurance companies was $113.1 million and $145.2 million, respectively. Combined statutory operational results of the Company’s insurance companies was a net loss of $124.6 million, net loss of $57.5 million and net loss of $36.8 million for the years ended December 31, 2021, 2020 and 2019, respectively. Statutory capital and surplus exceeds amounts necessary to satisfy regulatory requirements. |
Schedule II - Condensed Financi
Schedule II - Condensed Financial Information of Registrant | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 and 2020 December 31, 2021 2020 (In thousands) ASSETS Investments in subsidiaries (1) $ 237,872 $ 225,568 Investment securities, available-for-sale, at fair value 151 20,646 Equity securities, at fair value 2,049 1,881 Cash and cash equivalents 4,632 18,170 Deferred income taxes, net — 868 Income taxes receivable 5,142 7,969 Note receivable and accrued interest to subsidiary (1) — 19,517 Right-of-use assets 6,441 7,108 Other assets 1,719 1,991 Total assets $ 258,006 $ 303,718 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Due to subsidiaries, net (1) $ 68,349 $ 31,686 Long-term debt 118,805 98,683 Lease liabilities 6,441 7,108 Other liabilities 5,025 8,081 Total liabilities 198,620 145,558 Shareholders' Equity Preferred stock — — Common stock 174 137 Additional paid-in capital 186,007 169,298 Accumulated other comprehensive income (loss) (1,034) 11,386 Retained earnings (deficit) (125,761) (22,661) Total shareholders’ equity 59,386 158,160 Total liabilities and shareholders' equity $ 258,006 $ 303,718 (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, 2021 2020 2019 (In thousands) Revenues: Management fees (1) $ 2,667 $ 2,660 $ 2,160 Interest from subsidiaries (1) 1,515 1,410 107 Net investment income 378 477 1,757 Net realized and unrealized investment gains (losses) 506 972 448 Equity in income (loss) of consolidated subsidiaries (81,924) (94,363) 20,909 Total revenue (76,858) (88,844) 25,381 Costs and expenses: General and administrative expenses 17,168 15,149 13,892 Interest expense 8,758 7,661 10,776 Total costs and expenses 25,926 22,810 24,668 Income (loss) before income taxes (102,784) (111,654) 713 Income tax expense (benefit) 316 (33,496) (298) Net income (loss) $ (103,100) $ (78,158) $ 1,011 (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, 2021 2020 2019 (In thousands) Cash flow from operating activities: Net income (loss) $ (103,100) $ (78,158) $ 1,011 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Net realized and unrealized investment (gains) losses (506) (972) (448) Equity in undistributed income (loss) of consolidated subsidiaries (1) 81,924 94,363 (20,909) Amortization of investment premium or discount, depreciation and amortization 555 430 369 Loss (gain) on early extinguishment of debt — — 3,575 Share-based compensation 581 790 1,050 Changes in operating assets and liabilities: Note receivable and accrued interest to subsidiary (1) (1,515) (1,410) (107) Income taxes, net 3,730 6,900 (5,379) Due to subsidiaries, net (1) 40,254 (21,891) 3,044 Other, net 755 4,974 1,105 Net cash provided by (used in) operating activities 22,678 5,026 (16,689) Cash flow from investing activities: Capital contributions to consolidated subsidiaries (1) (65,271) (11,000) — Sales, maturities and redemptions of investments securities 8,458 31,300 11,276 Purchases of investment securities (14,768) (25,089) (15,617) Payment for acquisition — — (25,566) Issuance of note receivable to subsidiary (1) — — (18,000) Purchases of property and equipment (35) (21) (289) Net cash provided by (used in) investing activities (71,616) (4,810) (48,196) Cash flow from financing activities: Proceeds from issuance of long-term debt, net of issuance costs 19,818 — 98,390 Payment of long-term debt and prepayment penalties — — (48,000) Issuance of common stock 15,571 — — Issuance of common stock for share-based awards 11 42 1 Purchases of FedNat Holding Company common stock — (10,418) (3,449) Dividends from consolidated subsidiaries — 12,376 39,174 Dividends paid — (5,077) (4,309) Net cash provided by (used in) financing activities 35,400 (3,077) 81,807 Net increase (decrease) in cash and cash equivalents (13,538) (2,861) 16,922 Cash and cash equivalents at beginning of period 18,170 21,031 4,109 Cash and cash equivalents at end of period $ 4,632 $ 18,170 $ 21,031 (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, 2021 | |
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) 2021 Allowance for uncollectible reinsurance recoverable $ 65 $ 184 $ — $ 249 Allowance for uncollectible premiums receivable $ 233 $ (108) $ 125 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 |
Schedule VI - Supplemental Info
Schedule VI - Supplemental Information Concerning Insurance Operations | 12 Months Ended |
Dec. 31, 2021 | |
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) 2021 Property and Casualty Insurance $ 18,829 $ 738,794 $ 342,747 $ 183,303 $ 6,770 $ 226,523 $ 6,237 $ 124,374 $ 230,312 $ 183,707 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 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
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, 19.3%, 20.7% and 23.2%, were from Allstate’s network of Florida agents, for the years ended December 31, 2021, 2020 and 2019, 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, 24.6%, 25.5% and 23.1% of the Company’s premiums were underwritten by SageSure, for the years ended December 31, 2021, 2020, and 2019, 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 |
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 |
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. Our 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 carrying 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 costs 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. |
Goodwill | Goodwill As of December 31, 2021 and 2020, we had no goodwill reflected on our consolidated balance sheets. 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 |
Other Assets and Other Liabilities | Other Assets and Other Liabilities Other assets consist primarily of property and equipment owned, right-of-use assets for our long-term leases, embedded derivative instruments, identifiable intangible assets, receivables resulting from sales of securities that had not yet settled as of the balance sheet date and prepaid expenses. Other liabilities consist primarily of premiums collected in advance, operating lease liabilities, commissions and premium taxes payable, accrued interest expense on long-term debt, employee benefit liabilities, payables resulting from purchases of securities that had not yet settled as of the balance sheet date and other accrued 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. When we enter into contracts containing embedded derivative instruments that possess economic characteristics not clearly and closely related to the economic characteristics of the host, and a separate instrument with the same terms would qualify as a derivative instrument, we bifurcate the embedded derivative from the host for measurement purposes. The embedded derivative is carried at fair value on our consolidated balance sheets and changes in fair value are recognized in net realized and unrealized gain (loss) on our consolidated statements of operations as they occur. The fair value of the embedded derivative is measured based upon the best estimates of current settlement values, using present value of projected cash flows. As of December 31, 2021, we had no other intangible assets reflected on our consolidated balance sheets. 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. 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. |
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. |
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. |
Commitments and Contingencies | Contingencies and Commitments Contingencies arising from environmental remediation costs, regulatory judgments, claims, assessments, guarantees, litigation, recourse reserves, fines, penalties and other sources are recorded when deemed probable and reasonably estimable. |
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 (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares, while diluted net income (loss) 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 conversion of convertible long-term debt (if not antidilutive, the associated interest expense reflected in net income (loss) available to common shareholders, would be excluded as well), exercise of employee stock options and vesting of restricted common stock and are calculated using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is antidilutive. |
New Accounting Pronouncements | Recently Issued Accounting Pronouncements, Adopted In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which removes certain exceptions to the general principles in ASC Topic 740. The guidance also clarifies and amends existing guidance to improve consistent application. The Company adopted the guidance effective January 1, 2021, which did not have a material 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 after December 15, 2021, with early adoption permitted. The Company is in the early stage of evaluating the impact that the update will have on the Company’s consolidated financial position or results of operations. In August 2020, the FASB issued ASU 2020-6, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-6"), which simplifies an issuer's accounting for convertible instruments by eliminating two of the three models in the current guidance that requires separate accounting for certain embedded conversion features. The new guidance simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. ASU 2020-6 requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of potential share settlement (if the effect is more dilutive) for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This new guidance requires disclosures about events that occur during the reporting period and cause conversion contingencies to be met and about the fair value of convertible debt at the instrument level, among other things. ASU 2020-6 is effective for interim and annual reporting periods beginning after December 15, 2021, with early adoption permitted. The Company is in the early stage of evaluating the impact that the update will have on the Company's consolidated financial position or results of operations. |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 Level 1 Level 2 Level 3 Total (In thousands) Debt securities - available-for-sale, at fair value: United States government obligations and authorities $ 41,125 $ 49,567 $ — $ 90,692 Obligations of states and political subdivisions — 19,278 — 19,278 Corporate securities — 188,980 — 188,980 International securities 901 27,681 — 28,582 Debt securities, at fair value 42,026 285,506 — 327,532 Equity securities, at fair value 1,879 4,026 — 5,905 Total investments, at fair value $ 43,905 $ 289,532 $ — $ 333,437 Other assets - embedded derivative, at fair value $ — $ — $ 10,725 $ 10,725 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 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 Debt securities - available-for-sale: United States government obligations and authorities $ 90,750 $ 625 $ 683 $ 90,692 Obligations of states and political subdivisions 19,031 391 144 19,278 Corporate 186,489 4,413 1,922 188,980 International 28,591 212 221 28,582 $ 324,861 $ 5,641 $ 2,970 $ 327,532 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 |
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, 2021 2020 2019 (In thousands) Gross realized and unrealized gains: Debt securities $ 3,426 $ 20,470 $ 2,829 Equity securities 35 8,587 5,928 Total gross realized and unrealized gains 3,461 29,057 8,757 Gross realized and unrealized losses: Debt securities (1,837) (2,879) (664) Equity securities (32) (8,146) (1,009) Total gross realized and unrealized losses (1,869) (11,025) (1,673) Net realized and unrealized gains (losses) on investments $ 1,592 $ 18,032 $ 7,084 |
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, 2021 2020 2019 (In thousands) Net gains (losses) on equity securities: Realized $ — $ 4,555 $ 803 Unrealized 3 (4,114) 4,116 3 441 4,919 Less: Net realized and unrealized gains (losses) on securities sold — 309 672 Net unrealized gains (losses) still held as of the end-of-period $ 3 $ 132 $ 4,247 |
Investments Classified by Contractual Maturity Date | Amortized cost and estimated fair value of debt securities, by contractual maturity, consisted of the following: December 31, 2021 Amortized Cost Fair Value (In thousands) Securities with Maturity Dates Debt securities, available-for-sale: One year or less $ 27,550 $ 28,094 Over one through five years 85,585 86,559 Over five through ten years 118,136 118,352 Over ten years 93,590 94,527 Total $ 324,861 $ 327,532 |
Summary of Net Investment Income | Net investment income consisted of the following: Year Ended December 31, 2021 2020 2019 (In thousands) Interest income $ 6,600 $ 11,563 $ 15,605 Dividends income 170 223 296 Net investment income $ 6,770 $ 11,786 $ 15,901 |
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, 2021 Debt securities - available-for-sale: United States government obligations and authorities $ 46,038 $ 672 $ 881 $ 11 $ 46,919 $ 683 Obligations of states and political subdivisions 7,322 144 — — 7,322 144 Corporate 86,423 1,875 860 47 87,283 1,922 International 15,345 221 — — 15,345 221 $ 155,128 $ 2,912 $ 1,741 $ 58 $ 156,869 $ 2,970 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 |
REINSURANCE (Tables)
REINSURANCE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance Recoverables | Reinsurance recoverable, net consisted of the following: December 31, 2021 2020 (In thousands) Reinsurance recoverable on paid losses $ 59,096 $ 54,898 Reinsurance recoverable on unpaid losses 554,356 358,193 Allowance for credit loss (249) (65) Reinsurance recoverable, net $ 613,203 $ 413,026 |
Premiums Written and Earned | Net premiums written and net premiums earned consisted of the following: Year Ended December 31, 2021 2020 2019 (In thousands) Net Premiums Written Direct $ 684,777 $ 726,885 $ 610,608 Ceded (501,070) (490,262) (232,729) $ 183,707 $ 236,623 $ 377,879 Net Premiums Earned Direct $ 708,820 $ 720,967 $ 582,334 Ceded (525,517) (356,833) (218,682) $ 183,303 $ 364,134 $ 363,652 |
ALLOWANCES FOR CREDIT LOSS (Tab
ALLOWANCES FOR CREDIT LOSS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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 Credit loss expense (recovery) (2) — (108) 184 76 Balance as of December 31, 2021 $ — $ 125 $ 249 $ 374 (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 was as follows: Days Past Due Current 1-29 30-59 60-89 90 plus Total December 31, 2021 (In thousands) Amortized cost $ 39,287 $ 1,670 $ 233 $ 16 $ 93 $ 41,299 Allowance for credit loss — (15) (12) (5) (93) (125) Net $ 39,287 $ 1,655 $ 221 $ 11 $ — $ 41,174 Days Past Due Current 1-29 30-59 60-89 90 plus Total December 31, 2020 (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, 2021 | |
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,: 2020 $ 10,997 $ — $ — $ (10,997) $ — 2021 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, 2021 December 31, 2020 Weighted- Gross Gross Average- Carrying Accumulated Carrying Accumulated Amortization Amount Amortization Amount Amortization Period (In thousands) Trade name (1) $ — $ — $ 1,100 $ — 0 Non-compete agreements (2) 300 300 300 162 2 Insurance licenses (3) — — 180 — 0 Total $ 300 $ 300 $ 1,580 $ 162 (1) This intangible had an indefinite useful life. We recorded impairment of $1.1 million in the year ended December 31, 2021, due primarily to the lowering of revenue forecasts. as a result of the to the Company's plan to execute an orderly runoff of MIC's insurance operations, and a higher discount rate, which lowered the fair value. 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) Became fully amortized during the year ended December 31, 2021. |
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, 2021 December 31, 2020 Weighted- Gross Gross Average- Carrying Accumulated Carrying Accumulated Amortization Amount Amortization Amount Amortization Period (In thousands) Trade name (1) $ — $ — $ 1,100 $ — 0 Non-compete agreements (2) 300 300 300 162 2 Insurance licenses (3) — — 180 — 0 Total $ 300 $ 300 $ 1,580 $ 162 (1) This intangible had an indefinite useful life. We recorded impairment of $1.1 million in the year ended December 31, 2021, due primarily to the lowering of revenue forecasts. as a result of the to the Company's plan to execute an orderly runoff of MIC's insurance operations, and a higher discount rate, which lowered the fair value. 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) Became fully amortized during the year ended December 31, 2021. |
LOSS AND LOSS ADJUSTMENT RESE_2
LOSS AND LOSS ADJUSTMENT RESERVES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 2020 2019 (In thousands) Gross reserves, beginning-of-period $ 540,367 $ 324,362 $ 296,230 Less: reinsurance recoverable (1) (358,128) (164,429) (166,396) Net reserves, beginning-of-period 182,239 159,933 129,834 Net reserves from the Maison Companies acquisition — — 11,825 Incurred loss, net of reinsurance, related to: Current year 226,537 358,952 262,118 Prior year loss development (redundancy) (2) 6,305 18,367 13,460 Ceded losses subject to offsetting experience account adjustments (3) (68) (816) (2,489) Prior years 6,237 17,551 10,971 Amortization of acquisition fair value adjustment (14) (54) (9) Total incurred loss and LAE, net of reinsurance 232,760 376,449 273,080 Paid loss, net of reinsurance, related to: Current year 105,017 253,344 173,313 Prior years 125,295 100,799 81,493 Total paid loss and LAE, net of reinsurance 230,312 354,143 254,806 Net reserves, end-of-period 184,687 182,239 159,933 Plus: reinsurance recoverable (1) 554,107 358,128 164,429 Gross reserves, end-of-period $ 738,794 $ 540,367 $ 324,362 (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 gross IBNR reserves plus expected gross 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 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021 2021 2012 $ 23,032 $ 23,301 $ 24,186 $ 24,468 $ 25,889 $ 26,356 $ 26,836 $ 26,951 $ 26,984 $ 26,935 $ 27 2,692 2013 43,807 42,021 35,834 35,859 37,185 37,880 37,978 38,088 38,141 28 3,443 2014 64,312 63,300 61,770 62,206 61,817 62,043 62,535 62,533 488 7,656 2015 99,497 92,411 95,129 94,760 94,703 96,144 96,189 1,203 13,228 2016 171,264 162,043 158,764 157,880 156,316 156,493 2,180 23,996 2017 202,844 192,769 188,548 179,327 178,890 48,811 67,453 2018 210,158 213,128 216,570 218,267 19,174 38,289 2019 257,644 261,541 260,089 10,861 22,774 2020 342,119 349,456 125,767 71,508 2021 227,685 302,033 23,296 Total $ 1,614,678 (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 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012 $ 13,693 $ 20,728 $ 23,120 $ 23,923 $ 25,186 $ 26,113 $ 26,777 $ 26,861 $ 26,901 $ 26,909 2013 19,986 31,606 33,867 35,123 35,803 37,473 37,688 37,915 37,952 2014 37,033 53,831 57,891 59,722 60,555 61,441 61,692 62,039 2015 52,214 79,359 86,647 90,415 92,327 93,405 94,281 2016 102,556 142,716 148,274 152,258 153,997 155,152 2017 135,589 176,580 179,327 178,013 179,102 2018 141,173 194,160 206,133 212,935 2019 157,768 236,090 252,608 2020 236,197 330,656 2021 105,969 $ 1,457,603 All outstanding liabilities for unpaid claims and ALAE prior to 2012, net of reinsurance 68 Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance $ 157,143 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, 2021: 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 61.9 % 26.5 % 5.1 % 2.2 % 1.3 % 1.5 % 0.9 % 0.5 % 0.1 % — % 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 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021 2021 2012 $ 5,279 $ 4,952 $ 4,801 $ 4,700 $ 4,658 $ 4,346 $ 4,509 $ 5,109 $ 6,431 $ 6,430 $ 926 854 2013 7,095 5,069 5,221 5,502 5,704 5,580 5,984 7,588 7,588 913 967 2014 7,475 7,709 6,384 6,620 6,348 6,697 9,028 9,027 694 1,012 2015 8,082 7,008 6,020 5,377 7,947 9,141 9,141 1,597 966 2016 10,727 5,809 6,561 8,502 12,267 11,903 4,525 922 2017 8,289 7,853 6,558 8,519 8,518 2,675 642 2018 6,553 6,233 7,280 7,276 2,801 456 2019 1,604 2,535 2,487 944 79 2020 37 68 — 8 2021 17 — 4 Total $ 62,455 Commercial General Liability Cumulative Paid Losses and ALAE, Net of Reinsurance For the Years Ended December 31, (Unaudited) Accident Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012 $ 871 $ 1,714 $ 2,632 $ 3,342 $ 3,686 $ 3,841 $ 4,098 $ 4,521 $ 4,790 $ 5,047 2013 882 2,233 3,366 3,867 4,606 5,033 5,467 5,847 6,112 2014 717 2,593 3,855 4,375 5,130 6,270 6,901 7,316 2015 798 2,296 3,249 3,827 5,866 6,566 6,840 2016 1,515 3,657 5,088 6,606 8,382 8,841 2017 1,592 2,478 3,293 4,225 4,643 2018 963 1,554 2,604 2,928 2019 147 424 598 2020 5 52 2021 2 Total $ 42,379 All outstanding liabilities for unpaid claims and ALAE prior to 2012, net of reinsurance 3,561 Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance $ 23,637 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, 2021: 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 10.9 % 13.9 % 11.3 % 7.7 % 10.5 % 6.0 % 4.5 % 4.8 % 3.5 % 5.4 % 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 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021 2021 2012 $ 1,735 $ 1,741 $ 1,717 $ 1,424 $ 1,455 $ 1,491 $ 1,448 $ 1,444 $ 1,448 $ 1,447 $ 4 824 2013 1,517 1,863 1,826 1,829 2,161 2,123 2,127 2,127 2,128 6 3,472 2014 2,038 3,213 3,551 4,315 4,379 4,417 4,413 4,410 4 6,021 2015 3,045 2,882 2,781 2,878 2,915 2,944 2,945 10 6,561 2016 13,414 20,205 24,346 25,918 25,923 25,930 34 76,660 2017 20,411 22,472 24,579 24,669 24,253 169 61,751 2018 3,513 4,623 4,439 4,062 104 10,937 2019 (3) — — 2 103 2020 — — — 6 2021 — — 6 Total $ 65,175 Automobile Cumulative Paid Losses and ALAE, Net of Reinsurance For the Years Ended December 31, (Unaudited) Accident Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012 $ 867 $ 1,293 $ 1,333 $ 1,384 $ 1,393 $ 1,430 $ 1,444 $ 1,447 $ 1,449 $ 1,449 2013 907 1,609 1,906 2,069 2,109 2,112 2,116 2,116 2,116 2014 1,455 3,120 3,678 4,122 4,291 4,383 4,396 4,396 2015 1,393 2,293 2,670 2,807 2,890 2,897 2,897 2016 8,084 17,258 23,053 25,582 26,132 26,294 2017 12,821 20,762 23,860 24,468 24,599 2018 2,331 3,626 3,137 3,076 2019 (5) — — 2020 — — 2021 — Total $ 64,827 All outstanding liabilities for unpaid claims and ALAE prior to 2012, net of reinsurance 20 Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance $ 368 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, 2021: 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 66.8 % 37.1 % (14.0) % 6.9 % 1.9 % 0.9 % 0.3 % — % 0.1 % — % |
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, 2021 2020 (In thousands) Liabilities for unpaid losses and ALAE: Homeowners $ 157,143 $ 149,314 Commercial general liability 23,637 28,328 Automobile 368 1,388 Flood — — Total liabilities for unpaid losses and ALAE, net of reinsurance 181,148 179,030 Reinsurance recoverables: Homeowners 553,689 353,741 Commercial general liability — — Automobile 352 1,424 Flood 66 2,963 Total reinsurance recoverables 554,107 358,128 Unallocated loss adjustment expenses 3,539 3,209 Gross liability for unpaid losses and LAE $ 738,794 $ 540,367 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following: December 31, 2021 2020 (In thousands) Senior unsecured fixed rate notes, due March 15, 2029, net of deferred financing costs of $1,170 and $1,317, respectively $ 98,830 $ 98,683 Convertible senior unsecured fixed rate notes, due April 19, 2026, net of deferred financing costs of $1,025 19,975 — Total long-term debt, net $ 118,805 $ 98,683 |
Schedule of Maturities of Long-term Debt | As of December 31, 2021, the Company’s estimated annual aggregate amount of debt maturities (assuming the holders of the convertible debt do not convert into shares of the Company's common stock) includes the following: Aggregate Debt For the Years Ending December 31, Maturities (In thousands) 2022 $ — 2023 — 2024 — 2025 — 2026 21,000 Thereafter 100,000 Total debt maturities 121,000 Less: deferred financing costs 2,195 Total debt maturities, net $ 118,805 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 2020 2019 (In thousands) Federal: Current $ 258 $ (29,449) $ (982) Deferred 198 (3,494) 567 Federal income tax expense (benefit) 456 (32,943) (415) State: Current — (403) 241 Deferred (140) (150) (124) State income tax expense (benefit) (140) (553) 117 Total income tax expense (benefit) $ 316 $ (33,496) $ (298) 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, 2021 2020 2019 (In thousands) Balance at January 1 $ 203 $ 382 $ 585 Increases/(decreases) for uncertain tax positions taken during the prior years — (179) (203) Balance at December 31 $ 203 $ 203 $ 382 |
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, 2021 2020 2019 (In thousands) Computed expected tax expense provision, at federal rate $ (21,585) $ (23,447) $ 150 State tax, net of federal tax benefit (137) (3,157) (122) Tax-exempt interest (2) (5) (3) Income subject to dividends-received deduction (21) (26) (34) Goodwill impairment — 2,309 — Return to provision (2,036) (3,407) (307) Executive compensation 30 41 230 Meals and entertainment — 13 43 Uncertain tax position — (179) (203) Rate difference on NOL carryback 98 (8,785) (113) Change in valuation allowance 23,436 2,968 — Other 533 179 61 Total income tax expense (benefit) $ 316 $ (33,496) $ (298) |
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, 2021 2020 (In thousands) Deferred income tax assets: Unearned premiums $ 5,419 $ 5,611 Unpaid losses and loss adjustment expenses 3,416 581 Accrued expenses 307 236 Net operating loss carryforwards 27,780 5,350 Share-based compensation 149 232 Depreciation and amortization 771 412 Lease liability 1,623 1,783 Other 45 69 Gross deferred income tax assets 39,510 14,274 Valuation allowance (30,481) (2,968) Total deferred income tax assets 9,029 11,306 Deferred income tax liabilities: Deferred acquisition costs and other (3,926) (6,387) Unrealized gains on investment securities (608) (2,865) Embedded derivative (2,601) — Lease asset (1,623) (1,783) Other (271) (213) Total deferred income tax liabilities (9,029) (11,248) Deferred income tax asset (liability), net $ — $ 58 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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) 2022 $ 1,098 2023 1,131 2024 1,164 2025 1,115 2026 1,140 Thereafter 2,178 Total $ 7,826 |
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, 2021 2020 (In thousands) Right-of-use asset $ 6,693 $ 7,430 Accrued rent (482) (259) Right-of-use asset, net $ 6,211 $ 7,171 Lease liability $ 6,693 $ 7,430 Weighted average discount rate 4.70 % 4.70 % Weighted average remaining years of lease term 6.7 7.7 |
Schedule of Lease Cost | Year Ended December 31, 2021 2020 2019 (In thousands) Lease expense $ 1,118 $ 1,118 $ 1,046 Sublease income (479) (466) (229) Lease expense, net $ 639 $ 652 $ 817 Net cash provided by (used in) operating activities $ (587) $ (555) $ (573) |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 2020 2019 (In thousands) Restricted stock $ 1,079 $ 1,409 $ 1,841 Performance stock 85 171 335 Total share-based compensation expense $ 1,164 $ 1,580 $ 2,176 Recognized tax benefit $ — $ 634 $ 534 Intrinsic value of options exercised 2 110 2 Fair value of restricted stock vested 1,700 1,659 1,977 |
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, 2019 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 Granted — — Exercised (4,085) 2.45 Cancelled (1,500) 3.10 Outstanding at December 31, 2021 19,832 $ 4.40 |
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 $4.40 19,832 0.26 $4.40 — |
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, 2019 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 Granted 171,576 4.63 Vested (124,287) 13.68 Cancelled (79,334) 13.16 Outstanding at December 31, 2021 343,683 $ 9.98 |
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, 2021 2020 Before Income Net Before Income Net (In thousands) Accumulated other comprehensive income (loss), beginning-of-period $ 15,086 $ (3,700) $ 11,386 $ 13,621 $ (3,340) $ 10,281 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 (10,826) — (10,826) 19,114 (4,688) 14,426 Reclassification adjustment for realized losses (gains) included in net income (1,589) (5) (1,594) (17,591) 4,314 (13,277) (12,415) (5) (12,420) 1,523 (374) 1,149 Accumulated other comprehensive income (loss), end-of-period $ 2,671 $ (3,705) $ (1,034) $ 15,086 $ (3,700) $ 11,386 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 2020 2019 (In thousands, except per share data) Net income (loss) attributable to FedNat Holding Company shareholders $ (103,100) $ (78,158) $ 1,011 Weighted average number of common shares outstanding - basic 16,675 13,846 12,977 Net income (loss) per common share - basic ($6.18) ($5.64) $0.08 Weighted average number of common shares outstanding - basic 16,675 13,846 12,977 Dilutive effect of convertible debt — — — Dilutive effect of stock compensation plans — — 46 Weighted average number of common shares outstanding - diluted 16,675 13,846 13,023 Net income (loss) per common share - diluted $ (6.18) $ (5.64) $ 0.08 Dividends per share $ — $ 0.36 $ 0.33 For the year ended December 31, 2021, we excluded (in thousands) dilutive shares of 2,460 from our weighted average number of common shares outstanding - diluted above because their inclusion, as well as retaining the associated interest expense of $0.7 million currently reflected in net income (loss) available to common shareholders for the EPS numerator, would have been antidilutive. |
ORGANIZATION, CONSOLIDATION A_2
ORGANIZATION, CONSOLIDATION AND BASIS OF PRESENTATION - (Narrative) (Details) - Premiums Written, Net - Homeowners' Insurance Product Line - Customer Concentration Risk | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
ISA | ||||
Organization, Consolidation, And Basis of Preparation [Line Items] | ||||
Concentration risk, percentage | 19.30% | 20.70% | 23.20% | |
SageSure Insurance Managers LLC | ||||
Organization, Consolidation, And Basis of Preparation [Line Items] | ||||
Concentration risk, percentage | 24.60% | 25.50% | 23.10% | |
Profit sharing percent | 50.00% |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES - (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2020 | Jan. 01, 2019 | |
Accounting Policies [Line Items] | ||||
Brokerage income recognition, reinsurance period | 1 year | |||
Award requisite service period | 1 year | |||
Operating lease right-of-use | $ 6,693 | $ 7,430 | ||
Operating lease liability | 6,693 | 7,430 | ||
Retained earnings (less than) | $ 125,761 | $ 22,661 | ||
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 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 |
ACQUISITION - Narrative (Detail
ACQUISITION - Narrative (Details) - USD ($) $ in Millions | Dec. 02, 2019 | Dec. 31, 2019 | Dec. 31, 2019 |
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 | ||
Cash payments made in acquisition | 25.5 | ||
Equity interests issued | $ 25.5 | ||
Equity interest issued (in shares) | 1,773,102 | ||
Increase in Stockholders' Equity from acquisition | $ 24.4 | ||
Right of first refusal (in years) | 5 years | ||
Noncompete term | 5 years | ||
Revenue of acquiree since acquisition date | 4.4 | ||
Net income of acquiree since acquisition date | 1.4 | ||
1347 Property Insurance Holdings, Inc | Property, Plant and Equipment | |||
Business Acquisition [Line Items] | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets | $ 0.5 | $ 0.5 | |
1347 Property Insurance Holdings, Inc | General and Administrative Expense | |||
Business Acquisition [Line Items] | |||
Acquisition related costs | $ 1.3 |
FAIR VALUE - (Financial Instrum
FAIR VALUE - (Financial Instruments Measured at Fair Value) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Investments, Debt and Equity Securities [Abstract] | ||
Fair value | $ 327,532 | $ 488,210 |
Equity securities, at fair value | 5,905 | 3,157 |
Total investments, at fair value | 333,437 | 491,367 |
Embedded Derivative Financial Instruments | ||
Investments, Debt and Equity Securities [Abstract] | ||
Other assets - embedded derivative, at fair value | 10,725 | |
United States government obligations and authorities | ||
Investments, Debt and Equity Securities [Abstract] | ||
Fair value | 90,692 | 171,775 |
Obligations of states and political subdivisions | ||
Investments, Debt and Equity Securities [Abstract] | ||
Fair value | 19,278 | 22,264 |
Corporate securities | ||
Investments, Debt and Equity Securities [Abstract] | ||
Fair value | 188,980 | 266,528 |
International securities | ||
Investments, Debt and Equity Securities [Abstract] | ||
Fair value | 28,582 | 27,643 |
Level 1 | ||
Investments, Debt and Equity Securities [Abstract] | ||
Fair value | 42,026 | 38,511 |
Equity securities, at fair value | 1,879 | 1,881 |
Total investments, at fair value | 43,905 | 40,392 |
Level 1 | Embedded Derivative Financial Instruments | ||
Investments, Debt and Equity Securities [Abstract] | ||
Other assets - embedded derivative, at fair value | 0 | |
Level 1 | United States government obligations and authorities | ||
Investments, Debt and Equity Securities [Abstract] | ||
Fair value | 41,125 | 38,511 |
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 | 901 | 0 |
Level 2 | ||
Investments, Debt and Equity Securities [Abstract] | ||
Fair value | 285,506 | 449,699 |
Equity securities, at fair value | 4,026 | 1,276 |
Total investments, at fair value | 289,532 | 450,975 |
Level 2 | Embedded Derivative Financial Instruments | ||
Investments, Debt and Equity Securities [Abstract] | ||
Other assets - embedded derivative, at fair value | 0 | |
Level 2 | United States government obligations and authorities | ||
Investments, Debt and Equity Securities [Abstract] | ||
Fair value | 49,567 | 133,264 |
Level 2 | Obligations of states and political subdivisions | ||
Investments, Debt and Equity Securities [Abstract] | ||
Fair value | 19,278 | 22,264 |
Level 2 | Corporate securities | ||
Investments, Debt and Equity Securities [Abstract] | ||
Fair value | 188,980 | 266,528 |
Level 2 | International securities | ||
Investments, Debt and Equity Securities [Abstract] | ||
Fair value | 27,681 | 27,643 |
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 | Embedded Derivative Financial Instruments | ||
Investments, Debt and Equity Securities [Abstract] | ||
Other assets - embedded derivative, at fair value | 10,725 | |
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 - Narrative (Details
FAIR VALUE - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Embedded Derivative [Line Items] | |||
Realized and unrealized gain (loss) on embedded derivative | $ 9,400,000 | ||
Changes in valuation inputs or changes in assumptions | 0 | $ 0 | |
Fair value transfers | 0 | $ 0 | $ 0 |
Other Assets | |||
Embedded Derivative [Line Items] | |||
Embedded derivative, fair value | $ 10,700,000 |
INVESTMENTS (Narrative) (Detail
INVESTMENTS (Narrative) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2020USD ($) | Dec. 31, 2021USD ($)security | Dec. 31, 2020USD ($)security | |
Investments, Debt and Equity Securities [Abstract] | |||
Realized and unrealized gain (loss) on embedded derivative | $ 9,400 | ||
Debt securities, available-for-sale, unrealized loss position, number of positions | security | 351 | 47 | |
Debt securities, available-for-sale, continuous unrealized loss position, 12 months or longer, number of positions | security | 5 | 2 | |
Fair value of investments deposited with governmental authorities required by law | $ 9,300 | $ 11,500 | |
Debt securities, held-to-maturity, sold, amount | $ 70 | ||
Held-to-maturity, sold, realized loss (less than) | $ 1 | ||
Held-to-maturity securities transferred, amount | 4,200 | ||
Debt securities, held-to-maturity, fair value | 4,300 | ||
Held-to-maturity securities, 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, 2021 | Dec. 31, 2020 |
Debt securities - available-for-sale: | ||
Amortized Cost or Cost | $ 324,861 | $ 473,126 |
Fair value | 327,532 | 488,210 |
United States government obligations and authorities | ||
Debt securities - available-for-sale: | ||
Amortized Cost or Cost | 90,750 | 169,947 |
Gross Unrealized Gains | 625 | 1,866 |
Gross Unrealized Losses | 683 | 38 |
Fair value | 90,692 | 171,775 |
Obligations of states and political subdivisions | ||
Debt securities - available-for-sale: | ||
Amortized Cost or Cost | 19,031 | 21,560 |
Gross Unrealized Gains | 391 | 704 |
Gross Unrealized Losses | 144 | 0 |
Fair value | 19,278 | 22,264 |
Corporate securities | ||
Debt securities - available-for-sale: | ||
Amortized Cost or Cost | 186,489 | 254,618 |
Gross Unrealized Gains | 4,413 | 11,989 |
Gross Unrealized Losses | 1,922 | 79 |
Fair value | 188,980 | 266,528 |
International securities | ||
Debt securities - available-for-sale: | ||
Amortized Cost or Cost | 28,591 | 27,001 |
Gross Unrealized Gains | 212 | 659 |
Gross Unrealized Losses | 221 | 17 |
Fair value | 28,582 | 27,643 |
Debt securities | ||
Debt securities - available-for-sale: | ||
Amortized Cost or Cost | 324,861 | 473,126 |
Gross Unrealized Gains | 5,641 | 15,218 |
Gross Unrealized Losses | 2,970 | 134 |
Fair value | $ 327,532 | $ 488,210 |
INVESTMENTS - (Net Realized Gai
INVESTMENTS - (Net Realized Gains (Losses) by Major Investment Category (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Gross realized and unrealized gains: | |||
Total gross realized and unrealized gains | $ 3,461 | $ 29,057 | $ 8,757 |
Total gross realized and unrealized losses | (1,869) | (11,025) | (1,673) |
Net realized and unrealized gains (losses) on investments | 1,592 | 18,032 | 7,084 |
Debt securities | |||
Gross realized and unrealized gains: | |||
Total gross realized and unrealized gains | 3,426 | 20,470 | 2,829 |
Total gross realized and unrealized losses | (1,837) | (2,879) | (664) |
Equity securities | |||
Gross realized and unrealized gains: | |||
Total gross realized and unrealized gains | 35 | 8,587 | 5,928 |
Total gross realized and unrealized losses | $ (32) | $ (8,146) | $ (1,009) |
INVESTMENTS - (Net Unrealized G
INVESTMENTS - (Net Unrealized Gains (Losses) Still Held (Details) - Equity securities - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of Investments [Line Items] | |||
Net gains (losses) on equity securities: Realized | $ 0 | $ 4,555 | $ 803 |
Net gains (losses) on equity securities: Unrealized | 3 | (4,114) | 4,116 |
Net gains (losses) on equity securities: | 3 | 441 | 4,919 |
Less: Net realized and unrealized gains (losses) on securities sold | 0 | 309 | 672 |
Net unrealized gains (losses) still held as of the end-of-period | $ 3 | $ 132 | $ 4,247 |
INVESTMENTS - (Amortized Cost a
INVESTMENTS - (Amortized Cost and Estimated Fair Value of Debt Securities by Contractual Maturity) (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Available-for-sale Securities, Debt maturities, Amortized cost: | |
One year or less | $ 27,550 |
Over one through five years | 85,585 |
Over five through ten years | 118,136 |
Over ten years | 93,590 |
Amortized cost | 324,861 |
Available-for-sale Securities, Debt maturities, Fair value: | |
One year or less | 28,094 |
Over one through five years | 86,559 |
Over five through ten years | 118,352 |
Over ten years | 94,527 |
Amortized cost | $ 327,532 |
INVESTMENTS - (Summary of Net I
INVESTMENTS - (Summary of Net Investment Income) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Investment Income, Interest and Dividend [Abstract] | |||
Interest income | $ 6,600 | $ 11,563 | $ 15,605 |
Dividends income | 170 | 223 | 296 |
Net investment income | $ 6,770 | $ 11,786 | $ 15,901 |
INVESTMENTS - (Aging of Gross U
INVESTMENTS - (Aging of Gross Unrealized Losses) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Fair value [Abstract] | ||
Less than 12 months | $ 155,128 | $ 35,685 |
12 months or longer | 1,741 | 132 |
Total | 156,869 | 35,817 |
Gross unrealized losses [Abstract] | ||
Less than 12 months | 2,912 | 133 |
12 months or longer | 58 | 1 |
Total | 2,970 | 134 |
United States government obligations and authorities | ||
Fair value [Abstract] | ||
Less than 12 months | 46,038 | 25,521 |
12 months or longer | 881 | 0 |
Total | 46,919 | 25,521 |
Gross unrealized losses [Abstract] | ||
Less than 12 months | 672 | 38 |
12 months or longer | 11 | 0 |
Total | 683 | 38 |
Obligations of states and political subdivisions | ||
Fair value [Abstract] | ||
Less than 12 months | 7,322 | |
12 months or longer | 0 | |
Total | 7,322 | |
Gross unrealized losses [Abstract] | ||
Less than 12 months | 144 | |
12 months or longer | 0 | |
Total | 144 | |
Corporate securities | ||
Fair value [Abstract] | ||
Less than 12 months | 86,423 | 7,989 |
12 months or longer | 860 | 0 |
Total | 87,283 | 7,989 |
Gross unrealized losses [Abstract] | ||
Less than 12 months | 1,875 | 79 |
12 months or longer | 47 | 0 |
Total | 1,922 | 79 |
International securities | ||
Fair value [Abstract] | ||
Less than 12 months | 15,345 | 2,175 |
12 months or longer | 0 | 132 |
Total | 15,345 | 2,307 |
Gross unrealized losses [Abstract] | ||
Less than 12 months | 221 | 16 |
12 months or longer | 0 | 1 |
Total | $ 221 | $ 17 |
REINSURANCE (Narrative) (Detail
REINSURANCE (Narrative) (Details) $ in Thousands | Dec. 31, 2021USD ($) | Nov. 15, 2021 | Jul. 01, 2021 | Mar. 01, 2021USD ($)layer | Feb. 01, 2021 | Jan. 01, 2021USD ($) | Dec. 31, 2020USD ($) | Nov. 15, 2020 | Nov. 04, 2020USD ($) | Nov. 03, 2020 | Nov. 02, 2020 | Oct. 13, 2020USD ($) | Oct. 01, 2020 | Sep. 03, 2020USD ($) | Jul. 01, 2020 | Jul. 01, 2019 | Oct. 01, 2018 | Jul. 01, 2018 | Apr. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2021USD ($)security |
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Reinsurance payable and funds withheld liabilities | $ 102,748 | $ 202,827 | $ 102,748 | $ 202,827 | $ 102,748 | ||||||||||||||||||
Reinsurance premium paid | 613,203 | 413,026 | 613,203 | 413,026 | 613,203 | ||||||||||||||||||
Hurricane | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Reinsurance premium paid | 504,800 | 304,300 | 504,800 | 304,300 | 504,800 | ||||||||||||||||||
FNIC | Maximum | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Trust agreement for loss exposure (Less than) | 100 | $ 100 | 100 | $ 100 | 100 | ||||||||||||||||||
Combined FNIC, MIC and MNIC 2020 to 2021 catastrophe excess loss reinsurance programs | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Reinsurance payable and funds withheld liabilities | 306,100 | 306,100 | 306,100 | ||||||||||||||||||||
Combined FNIC, MIC and MNIC 2020 to 2021 catastrophe excess loss reinsurance programs | Maximum | First Event Coverage | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Reinsurance retention amount | 18,000 | ||||||||||||||||||||||
Combined FNIC, MIC and MNIC 2020 to 2021 catastrophe excess loss reinsurance programs | Maximum | Second Event Coverage | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Additional coverage amount | 16,000 | 16,000 | 16,000 | ||||||||||||||||||||
Combined FNIC, MIC and MNIC 2020 to 2021 catastrophe excess loss reinsurance programs | Federated National's Florida Exposure | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Reinsurance payable and funds withheld liabilities | 258,300 | 258,300 | 258,300 | ||||||||||||||||||||
Combined FNIC, MIC and MNIC 2020 to 2021 catastrophe excess loss reinsurance programs | FHCF | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Maximum single event coverage | 650,000 | 650,000 | 650,000 | ||||||||||||||||||||
Reinsurance payable and funds withheld liabilities | $ 47,800 | $ 47,800 | 47,800 | ||||||||||||||||||||
Combined FNIC, MIC and MNIC 2020 to 2021 catastrophe excess loss reinsurance programs | FNIC | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 25,000 | ||||||||||||||||||||||
Retention percentage | 100.00% | ||||||||||||||||||||||
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 in retention if placed on parametric basis with an excess and surplus lines carrier | 28.50% | 28.50% | 28.50% | ||||||||||||||||||||
Combined FNIC, MIC and MNIC 2020 to 2021 catastrophe excess loss reinsurance programs | FNIC | 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 | ||||||||||||||||||||||
Combined FNIC, MIC and MNIC 2020 to 2021 catastrophe excess loss reinsurance programs | FNIC | 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 | ||||||||||||||||||||||
Combined FNIC, MIC and MNIC 2020 to 2021 catastrophe excess loss reinsurance programs | FNIC | Second and Third Event Coverage | Storm Events in 2020 | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 25,000 | ||||||||||||||||||||||
Reinsurance payable and funds withheld liabilities | $ 2,800 | $ 2,800 | 2,800 | ||||||||||||||||||||
Excess retention, retention percentage, co-participation | 50.00% | ||||||||||||||||||||||
Excess retention, threshold limit above initial insured amount | $ 70,000 | ||||||||||||||||||||||
Combined FNIC, MIC and MNIC 2020 to 2021 catastrophe excess loss reinsurance programs | Private and FHCF Reinsurance | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Maximum single event coverage | 650,000 | 650,000 | 650,000 | ||||||||||||||||||||
Excess retention, amount reinsured | 25,000 | ||||||||||||||||||||||
Aggregate maximum single event coverage | 1,300,000 | 1,300,000 | 1,300,000 | ||||||||||||||||||||
Increase in carrying amount | 345,000 | 345,000 | 345,000 | ||||||||||||||||||||
Combined FNIC, MIC and MNIC 2020 to 2021 catastrophe excess loss reinsurance programs | Private and FHCF Reinsurance | First Event Coverage | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 31,000 | ||||||||||||||||||||||
Combined FNIC, MIC and MNIC 2020 to 2021 catastrophe excess loss reinsurance programs | Private and FHCF Reinsurance | Maximum | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Percentage of quota share reinsurance treaty | 90.00% | ||||||||||||||||||||||
2021-2022 Catastrophe Excess of Loss Reinsurance Program | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Prepaid automatic reinstatement protection | 30,000 | 30,000 | $ 30,000 | ||||||||||||||||||||
2021-2022 Catastrophe Excess of Loss Reinsurance Program | Florida Homeowners Book of Business | First Event Coverage | Florida | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Aggregate maximum single event coverage | 972,000 | 972,000 | 972,000 | ||||||||||||||||||||
2021-2022 Catastrophe Excess of Loss Reinsurance Program | Non-Florida Homeowners Book Of Business | First Event Coverage | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Aggregate maximum single event coverage | 910,000 | 910,000 | 910,000 | ||||||||||||||||||||
2021-2022 Catastrophe Excess of Loss Reinsurance Program | Non-Florida Homeowners Book Of Business | Second and Third Event Coverage | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Aggregate maximum single event coverage | 831,000 | 831,000 | 831,000 | ||||||||||||||||||||
2021-2022 Catastrophe Excess of Loss Reinsurance Program | Federated National's Florida Exposure | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Reinsurance payable and funds withheld liabilities | 237,900 | 237,900 | $ 237,900 | ||||||||||||||||||||
2021-2022 Catastrophe Excess of Loss Reinsurance Program | FHCF | Maximum | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Percentage of quota share reinsurance treaty | 90.00% | ||||||||||||||||||||||
2021-2022 Catastrophe Excess of Loss Reinsurance Program | FHCF | Non-Florida Homeowners Book Of Business | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Aggregate maximum single event coverage | 504,000 | 504,000 | $ 504,000 | ||||||||||||||||||||
2021-2022 Catastrophe Excess of Loss Reinsurance Program | Private and FHCF Reinsurance | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Liability for catastrophe claims | 2,250,000 | 2,250,000 | 2,250,000 | ||||||||||||||||||||
Reinsurance payable and funds withheld liabilities | 274,200 | 274,200 | 274,200 | ||||||||||||||||||||
Aggregate maximum single event coverage | $ 1,400,000 | $ 1,400,000 | 1,400,000 | ||||||||||||||||||||
2021-2022 Catastrophe Excess of Loss Reinsurance Program | Private and FHCF Reinsurance | First Event Coverage | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 18,250 | ||||||||||||||||||||||
First event retention reduction, percent | 41.00% | 41.00% | 41.00% | ||||||||||||||||||||
2021-2022 Catastrophe Excess of Loss Reinsurance Program | Private and FHCF Reinsurance | Florida Homeowners Book of Business | First Event Coverage | Florida | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Aggregate maximum single event coverage | $ 468,000 | $ 468,000 | $ 468,000 | ||||||||||||||||||||
2021-2022 Catastrophe Excess of Loss Reinsurance Program | Private and FHCF Reinsurance | Non-Florida Homeowners Book Of Business | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Aggregate maximum single event coverage | 2,250,000 | 2,250,000 | 2,250,000 | ||||||||||||||||||||
Primary Tower | Non-Florida Homeowners Book Of Business | First Event Coverage | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Aggregate maximum single event coverage | 468,000 | 468,000 | 468,000 | ||||||||||||||||||||
Primary Tower | FHCF | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Reinsurance payable and funds withheld liabilities | 36,300 | 36,300 | 36,300 | ||||||||||||||||||||
Primary Tower | FNIC | First Event Coverage | Hurricane Delta and Subsequent Events | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | 10,000 | ||||||||||||||||||||||
Excess retention, threshold limit above initial insured amount | 20,000 | ||||||||||||||||||||||
Primary Tower | Private and FHCF Reinsurance | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Reinsurance payable and funds withheld liabilities | 204,800 | 204,800 | 204,800 | ||||||||||||||||||||
Primary Tower | Private and FHCF Reinsurance | Florida Homeowners Book of Business | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 10,000 | ||||||||||||||||||||||
Number of reinsurance towers | security | 2 | ||||||||||||||||||||||
Aggregate maximum single event coverage | 982,000 | 982,000 | $ 982,000 | ||||||||||||||||||||
FNIC SageSure Tower | FNIC | First Event Coverage | Hurricane Delta and Subsequent Events | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | 8,000 | ||||||||||||||||||||||
Excess retention, threshold limit above initial insured amount | 22,000 | ||||||||||||||||||||||
FNIC SageSure Tower | FNIC | Non-Florida Homeowners Book Of Business | Second Event Coverage | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 9,750 | ||||||||||||||||||||||
Excess retention, retention percentage, co-participation | 75.00% | ||||||||||||||||||||||
Excess retention, threshold limit above initial insured amount | $ 27,000 | ||||||||||||||||||||||
FNIC SageSure Tower | FNIC | Non-Florida Homeowners Book Of Business | Third Event Coverage | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 17,300 | ||||||||||||||||||||||
Excess retention, retention percentage, co-participation | 47.00% | ||||||||||||||||||||||
Excess retention, threshold limit above initial insured amount | $ 27,000 | ||||||||||||||||||||||
FNIC SageSure Tower | Private and FHCF Reinsurance | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Reinsurance payable and funds withheld liabilities | $ 69,400 | $ 69,400 | $ 69,400 | ||||||||||||||||||||
Downward premium exposure adjustment from exposure management initiatives, percent | 19.00% | 19.00% | 19.00% | ||||||||||||||||||||
FNIC SageSure Tower | Private and FHCF Reinsurance | All Perils | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 30,000 | ||||||||||||||||||||||
FNIC SageSure Tower | Private and FHCF Reinsurance | First Event Coverage | Hurricane | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 12,000 | ||||||||||||||||||||||
Retention percentage | 60.00% | ||||||||||||||||||||||
FNIC SageSure Tower | Private and FHCF Reinsurance | First Event Coverage | All Perils | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 6,000 | ||||||||||||||||||||||
Retention percentage | 40.00% | ||||||||||||||||||||||
FNIC SageSure Tower | Private and FHCF Reinsurance | Non-Florida Homeowners Book Of Business | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 8,250 | ||||||||||||||||||||||
Aggregate maximum single event coverage | $ 450,000 | $ 450,000 | $ 450,000 | ||||||||||||||||||||
Quota Share One | FNIC | Florida Homeowners Book of Business | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Percentage of quota share reinsurance treaty | 7.50% | 10.00% | 20.00% | 10.00% | 10.00% | 10.00% | 2.00% | ||||||||||||||||
Percentage of quota share reinsurance treaty terminated | 10.00% | 10.00% | 10.00% | ||||||||||||||||||||
Quota Share One | FNIC | Non-Florida Homeowners Book Of Business | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Percentage of quota share reinsurance treaty | 80.00% | 50.00% | |||||||||||||||||||||
Percentage of quota share reinsurance treaty terminated | 80.00% | ||||||||||||||||||||||
Pre-tax loss from settlement of managerial general underwriting and profit sharing agreements | $ 2,500 | ||||||||||||||||||||||
Quota Share One | FNIC | Non-Florida Homeowners Book Of Business | SageSure LLP | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Percentage of quota share reinsurance treaty terminated | 80.00% | 80.00% | 80.00% | 80.00% | |||||||||||||||||||
Proceeds from initial commutation agreement | $ 7,200 | ||||||||||||||||||||||
New percentage quota share reinsurance treaty | 100.00% | 80.00% | |||||||||||||||||||||
Quota Share One | FNIC | Federated Nationals Insurance Company Non Florida Reinsurance Program 2018-2019 | SageSure LLP | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Percentage of quota share reinsurance treaty | 50.00% | ||||||||||||||||||||||
Profit sharing percent | 50.00% | ||||||||||||||||||||||
Maison Insurance Company (MIC) | FNIC | Hurricane Delta and Subsequent Events | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Reinsurance payable and funds withheld liabilities | $ 13,000 | $ 2,300 | |||||||||||||||||||||
Maison Insurance Company (MIC) | FNIC | First Event Coverage | Hurricane Delta and Subsequent Events | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 10,000 | ||||||||||||||||||||||
Excess retention, retention percentage, co-participation | 65.00% | ||||||||||||||||||||||
Excess retention, threshold limit above initial insured amount | 50,000 | $ 15,000 | |||||||||||||||||||||
Excess retention, occurrence deductible | 850 | ||||||||||||||||||||||
Maison Insurance Company (MIC) | FNIC | Second Event Coverage | Hurricane Delta and Subsequent Events | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Excess retention, amount reinsured | $ 10,000 | $ 4,150 | |||||||||||||||||||||
Number of layers protection was secured | layer | 2 | ||||||||||||||||||||||
Quota Share Two | FNIC | Florida Homeowners Book of Business | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Percentage of quota share reinsurance treaty | 10.00% | 10.00% | 10.00% | 20.00% | |||||||||||||||||||
2019-2020 Catastrophe Excess Loss Reinsurance Programs | Maximum | Second Event Coverage | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Reinsurance retention amount | $ 2,000 | ||||||||||||||||||||||
2019-2020 Catastrophe Excess Loss Reinsurance Programs | Private and FHCF Reinsurance | |||||||||||||||||||||||
Liability for Catastrophe Claims [Line Items] | |||||||||||||||||||||||
Maximum single event coverage | $ 1,300,000 | $ 1,300,000 | 1,300,000 | ||||||||||||||||||||
Liability for catastrophe claims | $ 1,900,000 | $ 1,900,000 | $ 1,900,000 |
REINSURANCE (Reinsurance Recove
REINSURANCE (Reinsurance Recoverables) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Reinsurance Disclosures [Abstract] | ||
Reinsurance recoverable on paid losses | $ 59,096 | $ 54,898 |
Reinsurance recoverable on unpaid losses | 554,356 | 358,193 |
Reinsurance recoverable, allowance for credit loss | (249) | (65) |
Reinsurance premium paid | $ 613,203 | $ 413,026 |
REINSURANCE (Premiums Written a
REINSURANCE (Premiums Written and Earned) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net Premiums Written | |||
Direct | $ 684,777 | $ 726,885 | $ 610,608 |
Ceded | (501,070) | (490,262) | (232,729) |
Net premiums written | 183,707 | 236,623 | 377,879 |
Net Premiums Earned | |||
Direct | 708,820 | 720,967 | 582,334 |
Ceded | (525,517) | (356,833) | (218,682) |
Net premiums earned | $ 183,303 | $ 364,134 | $ 363,652 |
ALLOWANCES FOR CREDIT LOSS (Sch
ALLOWANCES FOR CREDIT LOSS (Schedule of allowance for credit loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Premium Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at the beginning of the period | $ 233 | |
Balance at the end of the period | 125 | $ 233 |
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | ||
Balance at the beginning of the peroid | 65 | |
Balance at the end of the period | 249 | 65 |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at the beginning of the period | 298 | 159 |
Credit loss, expense (recovery) | 76 | 106 |
Balance at the end of the period | 374 | 298 |
Cumulative Effect, Period of Adoption, Adjustment | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at the beginning 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 | 0 |
Credit loss expense (recovery) | 0 | (1) |
Balance at the end of the period | 0 | 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 beginning of the period | 1 | |
Premiums Receivable | ||
Premium Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at the beginning of the period | 233 | 159 |
Credit loss expense (recovery) | (108) | 74 |
Balance at the end of the period | 125 | 233 |
Premiums Receivable | Cumulative Effect, Period of Adoption, Adjustment | ||
Premium Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at the beginning of the period | 0 | |
Reinsurance Recoverable, Net | ||
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | ||
Balance at the beginning of the peroid | 65 | 0 |
Credit loss expense (recovery) | 184 | 33 |
Balance at the end of the period | $ 249 | 65 |
Reinsurance Recoverable, Net | Cumulative Effect, Period of Adoption, Adjustment | ||
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | ||
Balance at the beginning of the peroid | $ 32 |
ALLOWANCES FOR CREDIT LOSS - Na
ALLOWANCES FOR CREDIT LOSS - Narrative (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Receivables [Abstract] | |
Premiums receivable write-off Policy term (in years) | 1 year |
Reinsurance recoverable, valuation allowance for credit losses, unobservable data, LGD, percent | 100.00% |
ALLOWANCES FOR CREDIT LOSS (Pre
ALLOWANCES FOR CREDIT LOSS (Premium Receivable Past Due) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Financing Receivable, Past Due [Line Items] | ||
Amortized cost | $ 41,299 | $ 51,036 |
Allowance for credit loss | (125) | (233) |
Net | 41,174 | 50,803 |
Current | ||
Financing Receivable, Past Due [Line Items] | ||
Amortized cost | 39,287 | 46,376 |
Allowance for credit loss | 0 | 0 |
Net | 39,287 | 46,376 |
1 to 29 Days Past Due | ||
Financing Receivable, Past Due [Line Items] | ||
Amortized cost | 1,670 | 4,253 |
Allowance for credit loss | (15) | (43) |
Net | 1,655 | 4,210 |
30 to 59 Days Past Due | ||
Financing Receivable, Past Due [Line Items] | ||
Amortized cost | 233 | 159 |
Allowance for credit loss | (12) | (8) |
Net | 221 | 151 |
60 to 89 Days Past Due | ||
Financing Receivable, Past Due [Line Items] | ||
Amortized cost | 16 | 94 |
Allowance for credit loss | (5) | (28) |
Net | 11 | 66 |
90 Plus Days Past Due | ||
Financing Receivable, Past Due [Line Items] | ||
Amortized cost | 93 | 154 |
Allowance for credit loss | (93) | (154) |
Net | $ 0 | $ 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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Gross Goodwill as of Beginning-of-Year | $ 10,997 | $ 10,997 | $ 10,997 | |
Accumulated Impairment as of Beginning-of-Year | (10,997) | (10,997) | $ 0 | |
Acquisition accounting adjustments | $ 0 | 0 | ||
Impairment | (11,000) | 0 | (10,997) | |
Net Goodwill as of End-of-Year | $ 0 | $ 0 | $ 0 |
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, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Impairment | $ 11,000 | $ 0 | $ 10,997 |
GOODWILL AND IDENTIFIABLE INT_5
GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Intangible asset, accumulated amortization | $ 300 | $ 162 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Total | 300 | 1,580 |
Trade Names | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Intangible asset, gross | 0 | 1,100 |
Impairment of intangible assets | 1,100 | 700 |
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Impairment of intangible assets | 1,100 | 700 |
Insurance Licenses | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Intangible asset, gross | 0 | 180 |
Impairment of intangible assets | 180 | 2 |
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Impairment of intangible assets | $ 180 | 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 | $ 300 | $ 162 |
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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Gross reserves, beginning-of-period | $ 540,367 | $ 324,362 | $ 296,230 |
Less: reinsurance recoverable | (358,128) | (164,429) | (166,396) |
Net reserves, beginning-of-period | 182,239 | 159,933 | 129,834 |
Net reserves from the Maison Companies acquisition | 0 | 0 | 11,825 |
Incurred loss, net of reinsurance, related to: | |||
Current year | 226,537 | 358,952 | 262,118 |
Prior year loss development | 6,305 | 18,367 | 13,460 |
Ceded losses under retrospectively rated quota-share | (68) | (816) | (2,489) |
Prior years | 6,237 | 17,551 | 10,971 |
Amortization of acquisition fair value adjustment | (14) | (54) | (9) |
Total incurred loss and LAE, net of reinsurance | 232,760 | 376,449 | 273,080 |
Paid loss, net of reinsurance, related to: | |||
Current year | 105,017 | 253,344 | 173,313 |
Prior years | 125,295 | 100,799 | 81,493 |
Total paid loss and LAE, net of reinsurance | 230,312 | 354,143 | 254,806 |
Net reserves, end-of-period | 184,687 | 182,239 | 159,933 |
Plus: reinsurance recoverable | 554,107 | 358,128 | 164,429 |
Gross reserves, end-of-period | $ 738,794 | $ 540,367 | $ 324,362 |
LOSS AND LOSS ADJUSTMENT RESE_4
LOSS AND LOSS ADJUSTMENT RESERVES - (Narrative) (Details) - USD ($) $ in Thousands | Feb. 28, 2021 | Jul. 31, 2017 | Jul. 31, 2016 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Liability for Catastrophe Claims [Line Items] | ||||||
Current year | $ 226,537 | $ 358,952 | $ 262,118 | |||
Federated National Reinsurance Programs | Florida | ||||||
Liability for Catastrophe Claims [Line Items] | ||||||
Current year | $ 6,300 | $ 18,400 | $ 13,500 | |||
Quota Share Treaties | Property Insurance Product Line | Florida | ||||||
Liability for Catastrophe Claims [Line Items] | ||||||
Percentage of quota share reinsurance treaty | 30.00% | 10.00% | 30.00% | |||
Settlement adjustment | $ 11,200 |
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, 2021USD ($)reported_claim | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($) |
Homeowners | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 1,614,678 | |||||||||
Homeowners | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | 26,935 | $ 26,984 | $ 26,951 | $ 26,836 | $ 26,356 | $ 25,889 | $ 24,468 | $ 24,186 | $ 23,301 | $ 23,032 |
IBNR & development on reported claims | $ 27 | |||||||||
Cumulative number of reported claims | reported_claim | 2,692,000 | |||||||||
Homeowners | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 38,141 | 38,088 | 37,978 | 37,880 | 37,185 | 35,859 | 35,834 | 42,021 | 43,807 | |
IBNR & development on reported claims | $ 28 | |||||||||
Cumulative number of reported claims | reported_claim | 3,443,000 | |||||||||
Homeowners | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 62,533 | 62,535 | 62,043 | 61,817 | 62,206 | 61,770 | 63,300 | 64,312 | ||
IBNR & development on reported claims | $ 488 | |||||||||
Cumulative number of reported claims | reported_claim | 7,656,000 | |||||||||
Homeowners | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 96,189 | 96,144 | 94,703 | 94,760 | 95,129 | 92,411 | 99,497 | |||
IBNR & development on reported claims | $ 1,203 | |||||||||
Cumulative number of reported claims | reported_claim | 13,228,000 | |||||||||
Homeowners | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 156,493 | 156,316 | 157,880 | 158,764 | 162,043 | 171,264 | ||||
IBNR & development on reported claims | $ 2,180 | |||||||||
Cumulative number of reported claims | reported_claim | 23,996,000 | |||||||||
Homeowners | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 178,890 | 179,327 | 188,548 | 192,769 | 202,844 | |||||
IBNR & development on reported claims | $ 48,811 | |||||||||
Cumulative number of reported claims | reported_claim | 67,453,000 | |||||||||
Homeowners | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 218,267 | 216,570 | 213,128 | 210,158 | ||||||
IBNR & development on reported claims | $ 19,174 | |||||||||
Cumulative number of reported claims | reported_claim | 38,289,000 | |||||||||
Homeowners | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 260,089 | 261,541 | 257,644 | |||||||
IBNR & development on reported claims | $ 10,861 | |||||||||
Cumulative number of reported claims | reported_claim | 22,774,000 | |||||||||
Homeowners | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 349,456 | 342,119 | ||||||||
IBNR & development on reported claims | $ 125,767 | |||||||||
Cumulative number of reported claims | reported_claim | 71,508,000 | |||||||||
Homeowners | 2021 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 227,685 | |||||||||
IBNR & development on reported claims | $ 302,033 | |||||||||
Cumulative number of reported claims | reported_claim | 23,296,000 | |||||||||
Commercial general liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 62,455 | |||||||||
Commercial general liability | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | 6,430 | 6,431 | 5,109 | 4,509 | 4,346 | 4,658 | 4,700 | 4,801 | 4,952 | 5,279 |
IBNR & development on reported claims | $ 926 | |||||||||
Cumulative number of reported claims | reported_claim | 854 | |||||||||
Commercial general liability | 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 7,588 | 7,588 | 5,984 | 5,580 | 5,704 | 5,502 | 5,221 | 5,069 | 7,095 | |
IBNR & development on reported claims | $ 913 | |||||||||
Cumulative number of reported claims | reported_claim | 967 | |||||||||
Commercial general liability | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 9,027 | 9,028 | 6,697 | 6,348 | 6,620 | 6,384 | 7,709 | 7,475 | ||
IBNR & development on reported claims | $ 694 | |||||||||
Cumulative number of reported claims | reported_claim | 1,012 | |||||||||
Commercial general liability | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 9,141 | 9,141 | 7,947 | 5,377 | 6,020 | 7,008 | 8,082 | |||
IBNR & development on reported claims | $ 1,597 | |||||||||
Cumulative number of reported claims | reported_claim | 966 | |||||||||
Commercial general liability | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 11,903 | 12,267 | 8,502 | 6,561 | 5,809 | 10,727 | ||||
IBNR & development on reported claims | $ 4,525 | |||||||||
Cumulative number of reported claims | reported_claim | 922 | |||||||||
Commercial general liability | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 8,518 | 8,519 | 6,558 | 7,853 | 8,289 | |||||
IBNR & development on reported claims | $ 2,675 | |||||||||
Cumulative number of reported claims | reported_claim | 642 | |||||||||
Commercial general liability | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 7,276 | 7,280 | 6,233 | 6,553 | ||||||
IBNR & development on reported claims | $ 2,801 | |||||||||
Cumulative number of reported claims | reported_claim | 456 | |||||||||
Commercial general liability | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 2,487 | 2,535 | 1,604 | |||||||
IBNR & development on reported claims | $ 944 | |||||||||
Cumulative number of reported claims | reported_claim | 79 | |||||||||
Commercial general liability | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 68 | 37 | ||||||||
IBNR & development on reported claims | $ 0 | |||||||||
Cumulative number of reported claims | reported_claim | 8 | |||||||||
Commercial general liability | 2021 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 17 | |||||||||
IBNR & development on reported claims | $ 0 | |||||||||
Cumulative number of reported claims | reported_claim | 4 | |||||||||
Automobile | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 65,175 | |||||||||
Automobile | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | 1,447 | 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 | $ 2,128 | 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 | 3,472 | |||||||||
Automobile | 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 4,410 | 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 | 6,021 | |||||||||
Automobile | 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 2,945 | 2,944 | 2,915 | 2,878 | 2,781 | 2,882 | $ 3,045 | |||
IBNR & development on reported claims | $ 10 | |||||||||
Cumulative number of reported claims | reported_claim | 6,561 | |||||||||
Automobile | 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 25,930 | 25,923 | 25,918 | 24,346 | 20,205 | $ 13,414 | ||||
IBNR & development on reported claims | $ 34 | |||||||||
Cumulative number of reported claims | reported_claim | 76,660 | |||||||||
Automobile | 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 24,253 | 24,669 | 24,579 | 22,472 | $ 20,411 | |||||
IBNR & development on reported claims | $ 169 | |||||||||
Cumulative number of reported claims | reported_claim | 61,751 | |||||||||
Automobile | 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 4,062 | 4,439 | 4,623 | $ 3,513 | ||||||
IBNR & development on reported claims | $ 104 | |||||||||
Cumulative number of reported claims | reported_claim | 10,937 | |||||||||
Automobile | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 0 | 0 | $ (3) | |||||||
IBNR & development on reported claims | $ 2 | |||||||||
Cumulative number of reported claims | reported_claim | 103 | |||||||||
Automobile | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred, claims and allocated claim adjustment expenses, net of reinsurance | $ 0 | $ 0 | ||||||||
IBNR & development on reported claims | $ 0 | |||||||||
Cumulative number of reported claims | reported_claim | 6 | |||||||||
Automobile | 2021 | ||||||||||
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 | 6 |
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, 2021 | 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 |
Claims Development [Line Items] | ||||||||||
Unfavorable loss and LAE reserve | $ 738,794 | $ 540,367 | $ 324,362 | $ 296,230 | ||||||
Homeowners | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 1,457,603 | |||||||||
Unfavorable loss and LAE reserve | 157,143 | |||||||||
Homeowners | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 26,909 | 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 | 37,952 | 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 | 62,039 | 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 | 94,281 | 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 | 155,152 | 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 | 179,102 | 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 | 212,935 | 206,133 | 194,160 | 141,173 | ||||||
Homeowners | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 252,608 | 236,090 | 157,768 | |||||||
Homeowners | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 330,656 | 236,197 | ||||||||
Homeowners | 2021 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 105,969 | |||||||||
Homeowners | All outstanding liabilities for unpaid claims and ALAE prior to 2012, net of reinsurance | ||||||||||
Claims Development [Line Items] | ||||||||||
Unfavorable loss and LAE reserve | 68 | |||||||||
Commercial general liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 42,379 | |||||||||
Unfavorable loss and LAE reserve | 23,637 | |||||||||
Commercial general liability | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 5,047 | 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 | 6,112 | 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 | 7,316 | 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 | 6,840 | 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 | 8,841 | 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 | 4,643 | 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 | 2,928 | 2,604 | 1,554 | 963 | ||||||
Commercial general liability | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 598 | 424 | 147 | |||||||
Commercial general liability | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 52 | 5 | ||||||||
Commercial general liability | 2021 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 2 | |||||||||
Commercial general liability | All outstanding liabilities for unpaid claims and ALAE prior to 2012, net of reinsurance | ||||||||||
Claims Development [Line Items] | ||||||||||
Unfavorable loss and LAE reserve | 3,561 | |||||||||
Automobile | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 64,827 | |||||||||
Unfavorable loss and LAE reserve | 368 | |||||||||
Automobile | 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 1,449 | 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 | 2,116 | 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 | 4,396 | 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 | 2,897 | 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 | 26,294 | 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 | 24,599 | 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 | 3,076 | 3,137 | 3,626 | $ 2,331 | ||||||
Automobile | 2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 0 | 0 | $ (5) | |||||||
Automobile | 2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative paid, claims and allocated claim adjustment expenses, net of reinsurance | 0 | $ 0 | ||||||||
Automobile | 2021 | ||||||||||
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 2012, net of reinsurance | ||||||||||
Claims Development [Line Items] | ||||||||||
Unfavorable loss and LAE reserve | $ 20 |
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, 2021 |
Homeowners | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 1 | 61.90% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 2 | 26.50% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 3 | 5.10% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 4 | 2.20% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 5 | 1.30% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 6 | 1.50% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 7 | 0.90% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 8 | 0.50% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 9 | 0.10% |
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 | 10.90% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 2 | 13.90% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 3 | 11.30% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 4 | 7.70% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 5 | 10.50% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 6 | 6.00% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 7 | 4.50% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 8 | 4.80% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 9 | 3.50% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 10 | 5.40% |
Automobile | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 1 | 66.80% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 2 | 37.10% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 3 | (14.00%) |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 4 | 6.90% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 5 | 1.90% |
Average annual percentage payout of incurred claims by age, net of reinsurance, Year 6 | 0.90% |
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 | 0.10% |
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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Liability for Claims and Claims Adjustment Expense [Abstract] | ||||
Total liabilities for unpaid losses and LAE, net of reinsurance | $ 181,148 | $ 179,030 | ||
Reinsurance Recoverables on Unpaid Losses, Gross to Net [Abstract] | ||||
Total reinsurance recoverables | 554,107 | 358,128 | ||
Unallocated loss adjustment expenses | 3,539 | 3,209 | ||
Unfavorable loss and LAE reserve | 738,794 | 540,367 | $ 324,362 | $ 296,230 |
Homeowners | ||||
Liability for Claims and Claims Adjustment Expense [Abstract] | ||||
Total liabilities for unpaid losses and LAE, net of reinsurance | 157,143 | 149,314 | ||
Reinsurance Recoverables on Unpaid Losses, Gross to Net [Abstract] | ||||
Total reinsurance recoverables | 553,689 | 353,741 | ||
Unfavorable loss and LAE reserve | 157,143 | |||
Commercial general liability | ||||
Liability for Claims and Claims Adjustment Expense [Abstract] | ||||
Total liabilities for unpaid losses and LAE, net of reinsurance | 23,637 | 28,328 | ||
Reinsurance Recoverables on Unpaid Losses, Gross to Net [Abstract] | ||||
Total reinsurance recoverables | 0 | 0 | ||
Unfavorable loss and LAE reserve | 23,637 | |||
Automobile | ||||
Liability for Claims and Claims Adjustment Expense [Abstract] | ||||
Total liabilities for unpaid losses and LAE, net of reinsurance | 368 | 1,388 | ||
Reinsurance Recoverables on Unpaid Losses, Gross to Net [Abstract] | ||||
Total reinsurance recoverables | 352 | 1,424 | ||
Unfavorable loss and LAE reserve | 368 | |||
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 | $ 66 | $ 2,963 |
LONG-TERM DEBT - (Schedule of D
LONG-TERM DEBT - (Schedule of Debt) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Total debt maturities | $ 118,805 | $ 98,683 |
Senior Unsecured Floating Rate Notes, Due December 31, 2027 | ||
Debt Instrument [Line Items] | ||
Deferred financing costs | 1,170 | 1,317 |
Unsecured Debt | Senior Unsecured Floating Rate Notes, Due December 31, 2027 | ||
Debt Instrument [Line Items] | ||
Total debt maturities | 98,830 | 98,683 |
Unsecured Debt | Convertible Senior Unsecured Fixed Rate Notes, Due April 19, 2026 | ||
Debt Instrument [Line Items] | ||
Total debt maturities | 19,975 | $ 0 |
Deferred financing costs | $ 1,025 |
LONG-TERM DEBT - (Schedule of M
LONG-TERM DEBT - (Schedule of Maturities of Long-term Debt) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
2022 | $ 0 | |
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 21,000 | |
Thereafter | 100,000 | |
Total debt maturities | 121,000 | |
Less: deferred financing costs | 2,195 | $ 1,317 |
Total debt maturities, net | $ 118,805 | $ 98,683 |
LONG-TERM DEBT - (Narrative) (D
LONG-TERM DEBT - (Narrative) (Details) | Apr. 20, 2021USD ($)$ / shares | Mar. 15, 2021 | Mar. 05, 2019USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | ||||||
Covenant compliance, debt to capital ratio threshold | 60.00% | |||||
Repayments of promissory note | $ 0 | $ 0 | $ 48,000,000 | |||
Incremental debt allowable under the indenture | $ 10,000,000 | |||||
Debt to capital ratio, actual | 0.667 | |||||
Total debt maturities | $ 118,805,000 | 98,683,000 | ||||
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 | 7.75% | 7.50% | ||||
Covenant compliance, debt to capital ratio threshold | 60.00% | |||||
Covenant ratio of indebtedness to net capital threshold | 20.00% | |||||
Interest rate increase, percent | 0.25% | |||||
Redemption price, percentage | 100.00% | |||||
Redemption premium, percentage | 1.00% | |||||
Senior Unsecured Fixed Rate Notes, Due March 15, 2029 | Unsecured Debt | Level 2 | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt, fair value | $ 106,500,000 | $ 99,700,000 | ||||
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% | |||||
Senior Unsecured Fixed Rate Notes, Due 2026 | Unsecured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument face amount | $ 21,000,000 | |||||
Accordion feature, increase limit | $ 35,000,000 | |||||
Stated interest rate | 5.00% | |||||
Conversion ratio (in shares) | 166.6667 | |||||
Conversion ratio (in dollars per share) | $ / shares | $ 6 | |||||
Conversion ratio, percent | 33.00% | |||||
Senior Unsecured Fixed Rate Notes, Due 2026 | Unsecured Debt | Level 2 | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt, fair value | $ 22,100,000 | |||||
Senior Unsecured Fixed Rate Notes, Due 2026 | Unsecured Debt | Change in Control | ||||||
Debt Instrument [Line Items] | ||||||
Redemption price, percentage | 101.00% | |||||
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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Federal: | |||
Current | $ 258 | $ (29,449) | $ (982) |
Deferred | 198 | (3,494) | 567 |
Federal income tax expense (benefit) | 456 | (32,943) | (415) |
State: | |||
Current | 0 | (403) | 241 |
Deferred | (140) | (150) | (124) |
State income tax expense (benefit) | (140) | (553) | 117 |
Total income tax expense (benefit) | $ 316 | $ (33,496) | $ (298) |
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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Computed expected tax expense provision, at federal rate | $ (21,585) | $ (23,447) | $ 150 |
State tax, net of federal tax benefit | (137) | (3,157) | (122) |
Tax-exempt interest | (2) | (5) | (3) |
Income subject to dividends-received deduction | (21) | (26) | (34) |
Goodwill impairment | 0 | 2,309 | 0 |
Return to provision | (2,036) | (3,407) | (307) |
Executive compensation | 30 | 41 | 230 |
Meals and entertainment | 0 | 13 | 43 |
Uncertain tax position | 0 | (179) | (203) |
Rate difference on NOL carryback | 98 | (8,785) | (113) |
Change in valuation allowance | 23,436 | 2,968 | 0 |
Other | 533 | 179 | 61 |
Total income tax expense (benefit) | $ 316 | $ (33,496) | $ (298) |
INCOME TAXES - (Narrative) (Det
INCOME TAXES - (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Contingency [Line Items] | |||
Effective income tax rate | (0.30%) | 30.00% | (41.80%) |
Valuation allowance during the period | $ 27,500 | ||
Valuation allowance on DTA | 30,481 | $ 2,968 | |
Domestic Tax Authority | |||
Income Tax Contingency [Line Items] | |||
Operating loss carryforwards | 88,800 | ||
Operating loss carryforwards, not subject to expiration | 12,700 | ||
State and Local Jurisdiction | |||
Income Tax Contingency [Line Items] | |||
Operating loss carryforwards | 127,700 | ||
Operating loss carryforwards, not subject to expiration | $ 20,800 |
INCOME TAXES - (Reconciliation
INCOME TAXES - (Reconciliation of Tax Positions Taken During the Year) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of Unrecognized Tax Benefits [Roll Forward] | |||
Balance at January 1 | $ 203 | $ 382 | $ 585 |
Increases/(decreases) for uncertain tax positions taken during the prior years | 0 | (179) | (203) |
Balance at the end of the period | $ 203 | $ 203 | $ 382 |
INCOME TAXES - (Significant Com
INCOME TAXES - (Significant Components of Net Deferred Tax Liability) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred income tax assets: | ||
Unearned premiums | $ 5,419 | $ 5,611 |
Unpaid losses and loss adjustment expenses | 3,416 | 581 |
Accrued expenses | 307 | 236 |
Net operating loss carryforwards | 27,780 | 5,350 |
Share-based compensation | 149 | 232 |
Depreciation and amortization | 771 | 412 |
Lease liability | 1,623 | 1,783 |
Other | 45 | 69 |
Gross deferred income tax assets | 39,510 | 14,274 |
Valuation allowance | (30,481) | (2,968) |
Total deferred income tax assets | 9,029 | 11,306 |
Deferred income tax liabilities: | ||
Deferred acquisition costs and other | (3,926) | (6,387) |
Unrealized gains on investment securities | (608) | (2,865) |
Embedded derivative | (2,601) | 0 |
Lease asset | (1,623) | (1,783) |
Other | (271) | (213) |
Total deferred income tax liabilities | (9,029) | (11,248) |
Deferred tax assets, net | $ 0 | $ 58 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Operating lease cost | $ 1.1 | $ 1.1 | $ 1 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - (Schedule of Future Minimum Lease Payments) (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2022 | $ 1,098 |
2023 | 1,131 |
2024 | 1,164 |
2025 | 1,115 |
2026 | 1,140 |
Thereafter | 2,178 |
Total | $ 7,826 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Additional Lease Information (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets |
Right-of-use asset | $ 6,693 | $ 7,430 |
Accrued rent | (482) | (259) |
Right-of-use asset, net | $ 6,211 | $ 7,171 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Other liabilities | Other liabilities |
Lease liability | $ 6,693 | $ 7,430 |
Weighted average discount rate (as a percent) | 4.70% | 4.70% |
Weighted average remaining lease term (in years) | 6 years 8 months 12 days | 7 years 8 months 12 days |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES - Lease Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Lease expense | $ 1,118 | $ 1,118 | $ 1,046 |
Sublease income | (479) | (466) | (229) |
Lease expense, net | 639 | 652 | 817 |
Net cash provided by (used in) operating activities | $ (587) | $ (555) | $ (573) |
SHAREHOLDERS' EQUITY - (Narrati
SHAREHOLDERS' EQUITY - (Narrative) (Details) - USD ($) | Mar. 15, 2021 | Apr. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2018 | Jun. 30, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Repurchase of common stock, amount | $ 10,000,000 | $ 3,867,000 | ||||||
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 | |||||||
Public Stock Offering | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares issued (in shares) | 3,500,000 | 100,650 | ||||||
Price per share (in dollars per share) | $ 4.75 | |||||||
Gross consideration received | $ 16,600,000 | |||||||
Net proceeds to the company from sale of stock | $ 15,100,000 | $ 400,000 | ||||||
Common Stock | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Repurchase of common stock (in shares) | 800,235 | 237,647 | ||||||
Repurchase of common stock, amount | $ 8,000 | $ 3,000 | ||||||
Restricted Stock | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Unamortized share-based compensation expense not yet recognized | $ 2,500,000 | |||||||
Unamortized share-based compensation remaining weighted average vesting period | 1 year 8 months 23 days | |||||||
Restricted stock awards, granted (in shares) | 171,576 | 210,272 | 140,156 | |||||
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 | ||||
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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total share-based compensation expense | $ 1,164 | $ 1,580 | $ 2,176 |
Recognized tax benefit | 0 | 634 | 534 |
Intrinsic value of options exercised | 2 | 110 | 2 |
Fair value of restricted stock vested | 1,700 | 1,659 | 1,977 |
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total share-based compensation expense | 1,079 | 1,409 | 1,841 |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total share-based compensation expense | $ 85 | $ 171 | $ 335 |
SHAREHOLDERS' EQUITY - (Summary
SHAREHOLDERS' EQUITY - (Summary of Stock Option Activity) (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Outstanding, end of period (in dollars per share) | $ 4.40 | ||
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding, beginning of period (in shares) | 25,417 | 38,850 | 39,017 |
Granted (in shares) | 0 | 0 | 0 |
Exercised (in shares) | (4,085) | (13,433) | (167) |
Cancelled (in shares) | (1,500) | 0 | 0 |
Outstanding, end of period (in shares) | 19,832 | 25,417 | 38,850 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Outstanding, beginning of period (in dollars per share) | $ 4.01 | $ 3.80 | $ 3.80 |
Weighted Average Option Exercise Price, Granted (in dollars per share) | 0 | 0 | 0 |
Weighted Average Option Exercise Price, Exercised (in dollars per share) | 2.45 | 3.16 | 2.45 |
Weighted Average Option Exercise Price, Cancelled (in dollars per share) | 3.10 | 0 | 0 |
Outstanding, end of period (in dollars per share) | $ 4.40 | $ 4.01 | $ 3.80 |
SHAREHOLDERS' EQUITY - (Summa_2
SHAREHOLDERS' EQUITY - (Summary Information about Stock Options Outstanding and Exercisable) (Details) | 12 Months Ended |
Dec. 31, 2021USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share outstanding and exercisable (in shares) | shares | 19,832 |
Weighted Average Remaining Contractual Term (in years) | 3 months 3 days |
Weighted average exercise price (in dollars per share) | $ 4.40 |
Aggregate intrinsic value | $ | $ 0 |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Range of Exercise Price (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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
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) | 375,728 | 255,345 | 262,334 |
Granted (in shares) | 171,576 | 210,272 | 140,156 |
Vested (in shares) | (124,287) | (89,889) | (94,755) |
Cancelled (in shares) | (79,334) | 0 | (52,390) |
Outstanding, end of period (in shares) | 343,683 | 375,728 | 255,345 |
Restricted Shares, Weighted Average Option Exercise Price [Roll Forward] | |||
Outstanding, beginning of period (in dollars per share) | $ 14.32 | $ 17.82 | $ 18.78 |
Granted (in dollars per share) | 4.63 | 11.82 | 18.03 |
Vested (in dollars per share) | 13.68 | 18.46 | 20.87 |
Cancelled (in dollars per share) | 13.16 | 0 | 17.66 |
Outstanding, end of period (in dollars per share) | $ 9.98 | $ 14.32 | $ 17.82 |
SHAREHOLDERS' EQUITY -(Reconcil
SHAREHOLDERS' EQUITY -(Reconciliation of Changes in Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Net | ||
Accumulated other comprehensive income (loss), net of tax | $ 11,386 | |
Accumulated other comprehensive income (loss), net of tax | (1,034) | $ 11,386 |
AOCI Attributable to Parent | ||
Before Tax | ||
AOCI including portion attributable to noncontrolling interest, before tax | 15,086 | 13,621 |
Other comprehensive income (loss) due to debt securities - held to maturity reclassified to available-for-sale, before Tax | 0 | (58) |
Other comprehensive income (loss), before reclassifications, before tax | (10,826) | 19,114 |
Reclassification from accumulated other comprehensive income, current period, before tax | (1,589) | (17,591) |
Comprehensive income (loss) | (12,415) | 1,523 |
AOCI Including Portion Attributable to Noncontrolling Interest, before Tax | 2,671 | 15,086 |
Income Tax | ||
AOCI including portion attributable to noncontrolling interest, tax | (3,700) | (3,340) |
Other comprehensive income (loss) due to debt securities - held to maturity reclassified to available-for-sale, tax | 0 | 14 |
Other comprehensive income (loss) before reclassifications, tax | 0 | (4,688) |
Reclassification from AOCI, Current Period, tax | (5) | 4,314 |
Other comprehensive income (loss), tax | (5) | (374) |
AOCI including portion attributable to noncontrolling interest, tax | (3,705) | (3,700) |
Net | ||
Accumulated other comprehensive income (loss), net of tax | 11,386 | 10,281 |
Other comprehensive income (loss) due to debt securities - held to maturity reclassified to available-for-sale, net of tax | 0 | (44) |
Other comprehensive income (loss), before reclassifications, net of tax | (10,826) | 14,426 |
Reclassification adjustment for realized losses (gains) included in net income, net | (1,594) | (13,277) |
Other comprehensive income (loss), net of tax, portion attributable to parent | (12,420) | 1,149 |
Accumulated other comprehensive income (loss), net of tax | $ (1,034) | $ 11,386 |
EMPLOYEE BENEFIT PLAN - (Detail
EMPLOYEE BENEFIT PLAN - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
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 | $ 1,300 | $ 1,200 | $ 900 |
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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Other Income | |||
Related Party Transaction [Line Items] | |||
Revenue from related parties | $ 3.6 | $ 2.2 | $ 0.3 |
EARNINGS PER SHARE - (Schedule
EARNINGS PER SHARE - (Schedule of Calculation of Basic and Diluted Net Income Per Common Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Net income (loss) | $ (103,100) | $ (78,158) | $ 1,011 |
Basic (in shares) | 16,675,000 | 13,846,000 | 12,977,000 |
Net income (loss) per share - basic (in dollars per share) | $ (6.18) | $ (5.64) | $ 0.08 |
Dilutive effect of convertible debt (in shares) | 0 | 0 | 0 |
Dilutive effect of stock compensation plans (in shares) | 0 | 0 | 46,000 |
Diluted (in shares) | 16,675,000 | 13,846,000 | 13,023,000 |
Net income per share - diluted (in dollars per share) | $ (6.18) | $ (5.64) | $ 0.08 |
Dividends declared per share of common stock (in dollars per share) | $ 0 | $ 0.36 | $ 0.33 |
Antidilutive securities excluded from computation of EPS (in shares) | 2,460 | ||
Interest Expense | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Interest expense | $ 700 |
STATUTORY ACCOUNTING AND DIVI_2
STATUTORY ACCOUNTING AND DIVIDEND RESTRICTIONS - (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statutory Accounting Practices [Line Items] | |||
Statutory capital and surplus | $ 113.1 | $ 145.2 | |
Statutory net income (loss) amount | $ (124.6) | $ (57.5) | $ (36.8) |
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 |
Schedule II - Condensed Finan_2
Schedule II - Condensed Financial Information of Registrant - Condensed Balance Shsets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Assets [Abstract] | ||
Fair value | $ 327,532 | $ 488,210 |
Equity securities, at fair value | 5,905 | 3,157 |
Cash and cash equivalents | 83,526 | 102,367 |
Deferred income taxes, net | 0 | 58 |
Current and deferred income taxes, net | 30,014 | 35,035 |
Right-of-use assets | 6,693 | 7,430 |
Other assets | 49,950 | 32,262 |
Total assets | 1,412,670 | 1,428,537 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
Long-term debt | 118,805 | 98,683 |
Lease liabilities | 6,693 | 7,430 |
Other liabilities | 44,950 | 54,524 |
Total liabilities | 1,353,284 | 1,270,377 |
Preferred stock | 0 | 0 |
Common stock | 174 | 137 |
Additional paid-in capital | 186,007 | 169,298 |
Accumulated other comprehensive income (loss) | (1,034) | 11,386 |
Retained earnings (deficit) | (125,761) | (22,661) |
Total liabilities and shareholders' equity | 1,412,670 | 1,428,537 |
Parent Company | ||
Assets [Abstract] | ||
Investments in subsidiaries | 237,872 | 225,568 |
Fair value | 151 | 20,646 |
Equity securities, at fair value | 2,049 | 1,881 |
Cash and cash equivalents | 4,632 | 18,170 |
Deferred income taxes, net | 0 | 868 |
Current and deferred income taxes, net | 5,142 | 7,969 |
Note receivable and accrued interest to subsidiary | 0 | 19,517 |
Right-of-use assets | 6,441 | 7,108 |
Other assets | 1,719 | 1,991 |
Total assets | 258,006 | 303,718 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
Due to subsidiaries, net | 68,349 | 31,686 |
Long-term debt | 118,805 | 98,683 |
Lease liabilities | 6,441 | 7,108 |
Other liabilities | 5,025 | 8,081 |
Total liabilities | 198,620 | 145,558 |
Preferred stock | 0 | 0 |
Common stock | 174 | 137 |
Additional paid-in capital | 186,007 | 169,298 |
Accumulated other comprehensive income (loss) | (1,034) | 11,386 |
Retained earnings (deficit) | (125,761) | (22,661) |
Total shareholders’ equity | 59,386 | 158,160 |
Total liabilities and shareholders' equity | $ 258,006 | $ 303,718 |
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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | |||
Net investment income | $ 6,770 | $ 11,786 | $ 15,901 |
Net realized and unrealized investment gains (losses) | 11,017 | 18,032 | 7,084 |
Total revenues | 245,549 | 431,863 | 414,961 |
Costs and expenses [Abstract] | |||
General and administrative expenses | 24,355 | 23,420 | 23,203 |
Interest expense | 8,758 | 7,661 | 10,776 |
Total costs and expenses | 348,333 | 543,517 | 414,248 |
Income (loss) before income taxes | (102,784) | (111,654) | 713 |
Income tax expense (benefit) | 316 | (33,496) | (298) |
Net income (loss) | (103,100) | (78,158) | 1,011 |
Parent Company | |||
Revenues: | |||
Management fees | 2,667 | 2,660 | 2,160 |
Interest from subsidiaries | 1,515 | 1,410 | 107 |
Net investment income | 378 | 477 | 1,757 |
Net realized and unrealized investment gains (losses) | 506 | 972 | 448 |
Equity in income (loss) of consolidated subsidiaries | (81,924) | (94,363) | 20,909 |
Total revenues | (76,858) | (88,844) | 25,381 |
Costs and expenses [Abstract] | |||
General and administrative expenses | 17,168 | 15,149 | 13,892 |
Interest expense | 8,758 | 7,661 | 10,776 |
Total costs and expenses | 25,926 | 22,810 | 24,668 |
Income (loss) before income taxes | (102,784) | (111,654) | 713 |
Income tax expense (benefit) | $ 316 | $ (33,496) | $ (298) |
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, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | $ 1,916 | $ 1,904 | $ 1,477 |
Amortization of investment premium or discount, net | 3,645 | 3,740 | 916 |
Loss (gain) on early extinguishment of debt | 0 | 0 | 3,575 |
Share-based compensation | 1,164 | 1,580 | 2,176 |
Changes in operating assets and liabilities [Abstract] | |||
Current and deferred income taxes, net | 5,016 | (32,835) | (3,723) |
Other | (14,197) | 10,285 | 602 |
Net cash provided by (used in) operating activities | (191,171) | (91,908) | 35,316 |
Cash flow from investing activities: | |||
Payment for acquisition | 0 | 0 | 10,402 |
Purchases of property and equipment | (1,836) | (3,357) | (2,040) |
Net cash provided by (used in) investing activities | 136,930 | 76,367 | (9,011) |
Cash flow from financing activities: | |||
Proceeds from issuance of long-term debt, net of issuance costs | 19,818 | 0 | 98,390 |
Payment of long-term debt and prepayment penalties | 0 | 0 | (48,000) |
Issuance of common stock | 15,571 | 0 | 0 |
Issuance of common stock for share-based awards | 11 | 42 | 1 |
Purchases of FedNat Holding Company common stock | 0 | (10,418) | (3,449) |
Dividends paid | 0 | (5,077) | (4,309) |
Net cash provided by (used in) financing activities | 35,400 | (15,453) | 42,633 |
Net increase (decrease) in cash and cash equivalents | (18,841) | (30,994) | 68,938 |
Cash and cash equivalents at beginning-of-period | 102,367 | 133,361 | 64,423 |
Cash and cash equivalents at end-of-period | 83,526 | 102,367 | 133,361 |
Parent Company | |||
Cash flow from operating activities: | |||
Net income (loss) | (103,100) | (78,158) | 1,011 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Net realized and unrealized investment (gains) losses | (506) | (972) | (448) |
Depreciation and amortization | 81,924 | 94,363 | (20,909) |
Amortization of investment premium or discount, net | 555 | 430 | 369 |
Loss (gain) on early extinguishment of debt | 0 | 0 | 3,575 |
Share-based compensation | 581 | 790 | 1,050 |
Increase (Decrease) in Notes Receivable, Related Parties | 1,515 | 1,410 | 107 |
Changes in operating assets and liabilities [Abstract] | |||
Current and deferred income taxes, net | 3,730 | 6,900 | (5,379) |
Due to subsidiaries | 40,254 | (21,891) | 3,044 |
Other | 755 | 4,974 | 1,105 |
Net cash provided by (used in) operating activities | 22,678 | 5,026 | (16,689) |
Cash flow from investing activities: | |||
Capital contributions to consolidated subsidiaries | (65,271) | (11,000) | 0 |
Sales, maturities and redemptions of investments securities | 8,458 | 31,300 | 11,276 |
Purchases of investment securities | (14,768) | (25,089) | (15,617) |
Payment for acquisition | 0 | 0 | (25,566) |
Issuance of note receivable to subsidiary | 0 | 0 | (18,000) |
Purchases of property and equipment | (35) | (21) | (289) |
Net cash provided by (used in) investing activities | (71,616) | (4,810) | (48,196) |
Cash flow from financing activities: | |||
Proceeds from issuance of long-term debt, net of issuance costs | 19,818 | 0 | 98,390 |
Payment of long-term debt and prepayment penalties | 0 | 0 | (48,000) |
Issuance of common stock | 15,571 | 0 | 0 |
Issuance of common stock for share-based awards | 11 | 42 | 1 |
Purchases of FedNat Holding Company common stock | 0 | (10,418) | (3,449) |
Dividends from consolidated subsidiaries | 0 | 12,376 | 39,174 |
Dividends paid | 0 | (5,077) | (4,309) |
Net cash provided by (used in) financing activities | 35,400 | (3,077) | 81,807 |
Net increase (decrease) in cash and cash equivalents | (13,538) | (2,861) | 16,922 |
Cash and cash equivalents at beginning-of-period | 18,170 | 21,031 | 4,109 |
Cash and cash equivalents at end-of-period | $ 4,632 | $ 18,170 | $ 21,031 |
Schedule V - Valuation and Qu_2
Schedule V - Valuation and Qualifying Accounts - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Allowance for uncollectible reinsurance recoverable | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance, beginning of period | $ 65 | $ 0 | $ 0 |
Valuation Allowances and Reserves, Additions for Charges to Cost and Expense | 184 | 65 | 0 |
Deductions | 0 | 0 | 0 |
Balance, end of period | 249 | 65 | 0 |
Allowance for uncollectible premiums receivable | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance, beginning of period | 233 | 159 | 77 |
Valuation Allowances and Reserves, Additions for Charges to Cost and Expense | 74 | 82 | |
Deductions | (108) | 0 | 0 |
Balance, end of period | $ 125 | $ 233 | $ 159 |
Schedule VI - Supplemental In_2
Schedule VI - Supplemental Information Concerning Insurance Operations - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Supplemental Information for Property, Casualty Insurance Underwriters [Line Items] | |||
Claim and claim adjustment expenses incurred related to current year | $ 226,537 | $ 358,952 | $ 262,118 |
Claim and claim adjustment expenses incurred related to prior year | 6,237 | 17,551 | 10,971 |
Property and Casualty Insurance | |||
Supplemental Information for Property, Casualty Insurance Underwriters [Line Items] | |||
Deferred acquisition costs | 18,829 | 25,405 | 56,136 |
Loss and loss adjustment expense reserves | 738,794 | 540,367 | 324,362 |
Unearned premiums | 342,747 | 366,789 | 360,870 |
Earned premiums | 183,303 | 364,134 | 363,652 |
Net investment income | 6,770 | 11,786 | 15,901 |
Claim and claim adjustment expenses incurred related to current year | 226,523 | 358,898 | 262,109 |
Claim and claim adjustment expenses incurred related to prior year | 6,237 | 17,551 | 10,971 |
Amortization of Deferred Acquisition Costs | 124,374 | 121,524 | 96,885 |
Paid claims and claims adjustment expense | 230,312 | 354,143 | 254,806 |
Net Premiums Written | $ 183,707 | $ 236,623 | $ 377,879 |