Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 11, 2013 | |
Document Information [Line Items] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-13 | ' |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Trading Symbol | 'AFFM | ' |
Entity Registrant Name | 'AFFIRMATIVE INSURANCE HOLDINGS INC | ' |
Entity Central Index Key | '0001282543 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 15,408,358 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Assets | ' | ' |
Available-for-sale securities, at fair value | $70,055 | $47,748 |
Other invested assets | 3,991 | 3,390 |
Cash and cash equivalents | 40,570 | 38,176 |
Fiduciary and restricted cash | 843 | 569 |
Accrued investment income | 495 | 284 |
Premiums and fees receivable, net | 62,110 | 29,431 |
Premium finance receivable, net | ' | 38,942 |
Commissions receivable | ' | 1,869 |
Receivable from reinsurers | 150,458 | 120,601 |
Deferred acquisition costs, net asset | ' | 98 |
Income taxes receivable | ' | 150 |
Investment in real property, net | 10,457 | 10,996 |
Property and equipment (net of accumulated depreciation of $62,484 for 2013 and $60,242 for 2012) | 15,399 | 22,571 |
Other intangible assets (net of accumulated amortization of $7,665 for 2012) | 1,501 | 14,265 |
Prepaid expenses | 7,111 | 6,318 |
Other assets (net of allowance for doubtful accounts of $7,739 for 2013 and $7,213 for 2012) | 23,040 | 2,987 |
Total assets | 386,030 | 338,395 |
Liabilities: | ' | ' |
Reserves for losses and loss adjustment expenses | 126,756 | 138,854 |
Unearned premium | 86,591 | 72,861 |
Amounts due to reinsurers | 55,533 | 27,286 |
Due to third-party carriers | 8,800 | 2,617 |
Deferred revenue | 7,118 | 6,117 |
Capital lease obligation | 5,326 | 7,513 |
Debt | 131,814 | 176,165 |
Income taxes payable | 3,974 | ' |
Deferred tax liability | ' | 3,178 |
Deferred acquisition costs, net liability | 5,346 | ' |
Other liabilities | 45,478 | 37,058 |
Total liabilities | 476,736 | 471,649 |
Stockholders' deficit: | ' | ' |
Common stock, $0.01 par value; 75,000,000 shares authorized, 18,202,221 shares issued and 15,408,358 shares outstanding at September 30, 2013 and at December 31, 2012 | 182 | 182 |
Additional paid-in capital | 166,996 | 166,749 |
Treasury stock, at cost (2,793,863 shares at September 30, 2013 and December 31, 2012) | -32,910 | -32,910 |
Accumulated other comprehensive loss | -1,549 | -998 |
Retained deficit | -223,425 | -266,277 |
Total stockholders' deficit | -90,706 | -133,254 |
Total liabilities and stockholders' deficit | $386,030 | $338,395 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
Property and equipment, accumulated depreciation | $62,484 | $60,242 |
Other intangible assets, accumulated amortization | ' | 7,665 |
Other assets, allowance for doubtful accounts | $7,739 | $7,213 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 18,202,221 | 18,202,221 |
Common stock, shares outstanding | 15,408,358 | 15,408,358 |
Treasury stock, shares | 2,793,863 | 2,793,863 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Revenues | ' | ' | ' | ' |
Net premiums earned | $30,802 | $35,261 | $121,792 | $104,377 |
Commission income, fees and managing general agent revenue | 21,958 | 14,879 | 65,991 | 45,991 |
Net investment income | 542 | 819 | 1,965 | 2,572 |
Net realized gains | 8 | 192 | 37 | 921 |
Other income | ' | 4 | 123 | 504 |
Total revenues | 53,310 | 51,155 | 189,908 | 154,365 |
Expenses | ' | ' | ' | ' |
Net losses and loss adjustment expenses | 33,725 | 25,397 | 103,531 | 77,786 |
Selling, general and administrative expenses | 24,525 | 24,097 | 80,728 | 74,529 |
Depreciation and amortization | 1,776 | 2,414 | 5,562 | 7,044 |
Total expenses | 60,026 | 51,908 | 189,821 | 159,359 |
Operating income (loss) | -6,716 | -753 | 87 | -4,994 |
Gain on sale of retail business | 65,325 | ' | 65,325 | ' |
Loss on extinguishment of debt | -4,193 | ' | -4,193 | ' |
Interest expense | -5,917 | -4,802 | -17,149 | -14,568 |
Goodwill and other intangible assets impairment | ' | -23,692 | ' | -23,692 |
Income (loss) before income tax expense | 48,499 | -29,247 | 44,070 | -43,254 |
Income tax expense | 881 | 211 | 1,218 | 379 |
Net income (loss) | $47,618 | ($29,458) | $42,852 | ($43,633) |
Basic income (loss) per common share: | ' | ' | ' | ' |
Net income (loss) | $3.09 | ($1.91) | $2.78 | ($2.83) |
Diluted income (loss) per common share: | ' | ' | ' | ' |
Net income (loss) | $3.02 | ($1.91) | $2.76 | ($2.83) |
Weighted average common shares outstanding: | ' | ' | ' | ' |
Basic | 15,408 | 15,408 | 15,408 | 15,408 |
Diluted | 15,772 | 15,408 | 15,531 | 15,408 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Net income (loss) | $47,618 | ($29,458) | $42,852 | ($43,633) |
Other comprehensive income (loss): | ' | ' | ' | ' |
Unrealized gains (losses) on available-for-sale investment securities arising during period | 148 | -15 | -519 | 172 |
Reclassification adjustment for realized gains included in net income (loss) | -9 | -190 | -32 | -800 |
Other comprehensive income (loss), net | 139 | -205 | -551 | -628 |
Total comprehensive income (loss) | $47,757 | ($29,663) | $42,301 | ($44,261) |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (USD $) | Total | Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Retained Deficit |
In Thousands, except Share data | ||||||
Beginning Balance at Dec. 31, 2011 | ' | $182 | $166,342 | ($32,910) | ($227) | ($214,364) |
Beginning balance (in shares) at Dec. 31, 2011 | ' | 18,202,221 | ' | 2,793,863 | ' | ' |
Stock-based compensation | ' | ' | 271 | ' | ' | ' |
Unrealized loss on available-for-sale investment securities | ' | ' | ' | ' | -628 | ' |
Net income (loss) | -43,633 | ' | ' | ' | ' | -43,633 |
Ending Balance at Sep. 30, 2012 | -124,967 | 182 | 166,613 | -32,910 | -855 | -257,997 |
Ending Balance (in shares) at Sep. 30, 2012 | ' | 18,202,221 | ' | 2,793,863 | ' | ' |
Beginning Balance at Dec. 31, 2012 | -133,254 | 182 | 166,749 | -32,910 | -998 | -266,277 |
Beginning balance (in shares) at Dec. 31, 2012 | ' | 18,202,221 | ' | 2,793,863 | ' | ' |
Stock-based compensation | ' | ' | 247 | ' | ' | ' |
Unrealized loss on available-for-sale investment securities | ' | ' | ' | ' | -551 | ' |
Net income (loss) | 42,852 | ' | ' | ' | ' | 42,852 |
Ending Balance at Sep. 30, 2013 | ($90,706) | $182 | $166,996 | ($32,910) | ($1,549) | ($223,425) |
Ending Balance (in shares) at Sep. 30, 2013 | ' | 18,202,221 | ' | 2,793,863 | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Cash flows from operating activities | ' | ' |
Net income (loss) | $42,852 | ($43,633) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ' | ' |
Depreciation and amortization | 6,101 | 7,644 |
Stock-based compensation expense | 247 | 254 |
Amortization of debt modification costs | 748 | 280 |
Amortization of debt discount | 4,421 | 2,930 |
Net realized gains from sales of available-for-sale securities | -32 | -800 |
Fair value gain on investment in hedge fund | -601 | -411 |
Gain on disposal of assets | -6 | -121 |
Gain on sale of retail business | -65,325 | ' |
Amortization of premiums on investments, net | 402 | 1,271 |
Provision for doubtful accounts | 170 | 609 |
Paid-in-kind interest | 1,433 | 939 |
Loss on extinguishment of debt | 4,193 | ' |
Goodwill and other intangible assets impairment | ' | 23,692 |
Change in operating assets and liabilities: | ' | ' |
Fiduciary and restricted cash | -274 | 1,910 |
Premiums, fees and commissions receivable, net | -12,757 | -6,561 |
Reserves for losses and loss adjustment expenses | -12,098 | -40,513 |
Amounts due from reinsurers | -1,610 | 4,861 |
Due to third-party carriers | 9,772 | 120 |
Premium finance receivable, net (related to our insurance premiums) | -3,932 | -3,565 |
Deferred revenue | 2,753 | 1,151 |
Unearned premium | 13,730 | 9,429 |
Deferred acquisition costs, net | 5,444 | -5,262 |
Deferred taxes | -3,178 | 252 |
Income taxes receivable | 4,124 | 723 |
Other | 4,051 | -6,921 |
Net cash provided by (used in) operating activities | 628 | -51,722 |
Cash flows from investing activities | ' | ' |
Proceeds from sale of retail business, net of cash sold | 79,270 | ' |
Proceeds from sales of available-for-sale securities | 297 | 33,730 |
Proceeds from maturities of available-for-sale securities | 35,877 | 26,791 |
Purchases of available-for-sale securities | -50,427 | -8,839 |
Premium finance receivable, net (related to third-party insurance premiums) | -281 | 157 |
Purchases of property and equipment | -746 | -1,170 |
Proceeds from insurance recoveries | ' | 30 |
Net cash provided by investing activities | 63,990 | 50,699 |
Cash flows from financing activities | ' | ' |
Principal payments under capital lease obligations | -2,187 | -4,010 |
Principal payments on senior secured credit facility effective January 2007 | -120,192 | -3,277 |
Principal payments on mortgage security agreement | -826 | ' |
Issuance of mortgage security agreement | 4,809 | ' |
Debt issuance costs paid | -787 | ' |
Bank overdrafts | -3,541 | 4,164 |
Net cash used in financing activities | -62,224 | -3,123 |
Net increase (decrease) in cash and cash equivalents | 2,394 | -4,146 |
Cash and cash equivalents at beginning of year | 38,176 | 28,559 |
Cash and cash equivalents at end of period | 40,570 | 24,413 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 8,824 | 7,666 |
Cash paid for income taxes | 390 | 335 |
Disclosure of non-cash information: | ' | ' |
Debt issuance costs | 3,000 | ' |
Effective January 2007 | ' | ' |
Cash flows from financing activities | ' | ' |
Borrowings under senior secured credit facility | 12,500 | ' |
Effective September 2013 | ' | ' |
Cash flows from financing activities | ' | ' |
Borrowings under senior secured credit facility | $48,000 | ' |
Going_Concern
Going Concern | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Going Concern | ' | |||
1. Going Concern | ||||
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. This assumes continuing operations and the realization of assets and liabilities in the normal course of business. | ||||
Prior to 2013, the Company incurred losses from operations over the last four years, including a net loss of $51.9 million for the year ended December 31, 2012. The Company’s losses over this time period were primarily due to underwriting losses, significant revenue declines and expenses declining less than the amount of revenue declines and goodwill impairments. The loss from operations was the result of prior pricing issues in some states in which the Company has taken significant pricing and underwriting actions to address profitability, losses from states that the Company has exited, such as Florida and Michigan, and goodwill impairment charges as a result of such losses. As a result of declining performance, the Company breached the leverage ratio covenant under the senior secured credit facility as of September 30, 2012; however, the lenders for the facility agreed to waive such event of default. The Company breached the leverage, interest coverage and risk-based capital ratio covenants (Financial Covenants) as of December 31, 2012, the leverage and interest coverage ratio covenants as of March 31, 2013, and the leverage ratio covenant as of June 30, 2013. The Required Lenders under the facility agreed to temporarily forbear from exercising their rights and remedies under the facility until the earlier of September 30, 2013 or the occurrence of a further event of default under the facility. The facility was refinanced and fully extinguished on September 30, 2013. | ||||
The Illinois Insurance Code includes an annual reserve requirement that an insurer maintain an amount of qualifying investments, as defined, at least equal to the lesser of $250.0 million or 100% of its adjusted loss reserves and loss adjustment expenses reserves, as defined, as of fiscal year end. As of December 31, 2012, Affirmative Insurance Company (AIC) was deficient in meeting the qualifying investments requirement by $16.5 million. As required by the Illinois Department of Insurance, management submitted a plan to cure the deficiency as of June 30, 2013, which was approved by the Illinois Department of Insurance. As of June 30, 2013, AIC was in compliance with the reserve requirement. The next measurement date is December 31, 2013. | ||||
At December 31, 2012, the Company’s history of recurring losses from operations, its failure to comply with the Financial Covenants in its senior secured credit facility, its failure to comply with the Illinois Department of Insurance reserve requirement, and substantial liquidity needs the Company would face when the senior secured credit facility was set to expire in January 2014 raised substantial doubt about the Company’s ability to continue as a going concern. | ||||
The Company has taken additional actions to address its liquidity concerns including: | ||||
• | Sale of retail business – On September 30, 2013, the Company sold its retail agency distribution business for $101.8 million plus the potential to receive an additional $20.0 million of cash proceeds. See Note 3. | |||
• | Debt refinancing – The Company used proceeds from the sale of the retail agency distribution business and two new debt arrangements to replace the existing senior secured credit facility. The Company’s new debt arrangement consists of a $40.0 million senior secured credit facility with a maturity date of March 30, 2016, and a $10.0 million subordinated secured credit facility with a maturity date of March 30, 2017. See Note 7. | |||
• | Management has taken and will continue to pursue appropriate actions to improve the underwriting results. | |||
Management believes these actions will enable the Company to meet its liquidity needs and maintain its debt covenants compliance and comply with the Illinois Department of Insurance reserve requirement. However, there can be no assurance that this will occur. Since the sale of the retail business and debt refinancing just occurred on September 30 and there has not been sufficient time to fully evaluate the impacts of these changes, along with a history of recurring losses from operations, substantial doubt about the Company’s ability to continue as a going concern remains at this time. | ||||
The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects of this uncertainty on the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2013 | |
Summary of Significant Accounting Policies | ' |
2. Summary of Significant Accounting Policies | |
Basis of Presentation | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements of the Company. In the opinion of management, all adjustments necessary for a fair presentation have been included and are of a normal recurring nature. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K. The results of operations for interim periods should not be considered indicative of results to be expected for the full year. | |
Certain prior year amounts have been reclassified to conform to the current presentation. | |
New Accounting Standards | |
In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, an amendment to FASB Accounting Standards Codification (ASC) Topic 220. This update requires disclosure of amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present either on the face of the statement of operations or in the notes to the financial statements, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. This ASU is effective prospectively for annual and interim periods beginning after December 15, 2012. The adoption of this standard did not have an impact on our consolidated financial position, results of operations or cash flows. | |
ASU 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, provides companies with the option to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If the Company concludes that it is more likely than not that the asset is impaired, it is required to determine the fair value of the intangible asset and perform a quantitative impairment test by comparing the fair value with the carrying value in accordance with Topic 350. If the Company concludes otherwise, no further quantitative assessment is required. This standard was effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this standard did not have a material impact on our consolidated financial position, results of operations or cash flows. |
Sale_of_the_Retail_Business
Sale of the Retail Business | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Sale of the Retail Business | ' | ||||
3. Sale of the Retail Business | |||||
On September 30, 2013, the Company sold its retail agency distribution business to Confie Seguros (Confie). The Company’s retail agency distribution business consisted of 195 retail locations in Louisiana, Alabama, Texas, Illinois, Indiana, Missouri, Kansas, South Carolina and Wisconsin and two premium finance companies (the retail business). Proceeds from the sale were $101.8 million in cash with the potential to receive an additional $20.0 million of cash proceeds. The initial $101.8 million of cash proceeds included $20.0 million placed in an escrow account which is included in other assets on the balance sheet. The funds held in escrow will, dependent upon the risk-based capital status of Affirmative Insurance Company (AIC), be utilized to either infuse capital into AIC or pay down debt. The risk-based capital measurement will be made quarterly as of September 30, 2013 through June 30, 2014. The initial cash proceeds also included a preliminary working capital adjustment of $1.8 million as of September 30, 2013. This amount is subject to adjustment and review by the purchaser pending final determination in the fourth quarter. | |||||
The Company may receive up to an additional $20.0 million of proceeds that could be used to pay down debt or infuse capital into AIC. The additional proceeds are contingent on AIC meeting certain risk-based capital thresholds. The measurement begins as of June 30, 2014 and can be achieved quarterly through December 31, 2015. In the best case scenario, the Company would receive an additional $10.0 million of proceeds based on the risk-based capital measurement as of June 30, 2014, and an additional $10.0 million of proceeds based on the measurement as of September 30, 2014. These contingent proceeds will be recognized in future periods as risk-based capital measurement thresholds are achieved. | |||||
In connection with the sale of the retail business, the Company also entered into a distribution agreement pursuant to which the purchaser will continue to produce insurance business for the Company’s insurance subsidiaries at least until the earlier of December 15, 2015, or when Confie’s obligation to pay the contingent proceeds pursuant to the purchase agreement is discharged. Among other things, the distribution agreement sets forth the terms and conditions under which Confie will produce insurance business for the Company after the closing and includes terms designed to preserve the volume of business produced by the retail business for the Company as of the closing. In turn, the distribution agreement obligates the Company’s insurance subsidiaries to maintain their underwriting capacity in the markets where the retail business operates for the duration of the distribution agreement, including certain restrictions on increasing fees and rates beyond certain thresholds without Confie’s consent. Additionally, Confie will continue to provide premium financing capability for the Company’s policies, including for business written through independent agencies in certain markets, and the parties will share equally in any increased profits from premium financing independent agency business during the term of the distribution agreement. Due to the Company’s significant continuing involvement as the underwriter for business produced by the retail agency distribution business and the ongoing premium finance arrangements, the operating activities of the retail agency distribution are not reflected as discontinued operations as of September 30, 2013. | |||||
The Company realized a pretax gain on the sale of $65.3 million. The Company’s consolidated results of operations include the retail business’s results of operations through the date of the sale, September 30, 2013. The net assets sold comprised of (in thousands): | |||||
September 30, 2013 | |||||
Assets | |||||
Cash and cash equivalents | $ | 2,529 | |||
Premium finance and commission receivable | 25,458 | ||||
Other intangible assets | 12,764 | ||||
Other assets | 3,455 | ||||
Total Assets | $ | 44,206 | |||
Liabilities | |||||
Due to third-party carriers | $ | 3,589 | |||
Other liabilities | 6,974 | ||||
Total Liabilities | 10,563 | ||||
Net Assets | $ | 33,643 | |||
Intercompany balances between the Company and the retail subsidiaries sold which were previously eliminated are now reflected in the consolidated financial statements gross of intercompany impact, including premiums and fees receivable and due to third party carriers of $20.9 million. | |||||
AvailableforSale_Investment_Se
Available-for-Sale Investment Securities | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Available-for-Sale Investment Securities | ' | ||||||||||||||||||||||||
4. Available-for-Sale Investment Securities | |||||||||||||||||||||||||
The Company’s available-for-sale investment securities are carried at fair value with unrealized gains and losses reported in accumulated other comprehensive loss, a separate component of stockholders’ deficit. No income tax effect of unrealized gains and losses is reflected in other comprehensive income (loss) due to the Company carrying a full deferred tax valuation allowance. Gains and losses realized on the disposition of investment securities are determined on the specific-identification basis and credited or charged to income at the time of disposal. | |||||||||||||||||||||||||
The amortized cost, gross unrealized gains (losses), and estimated fair value of the Company’s available-for-sale securities at September 30, 2013 and December 31, 2012, were as follows (in thousands): | |||||||||||||||||||||||||
Amortized | Gross | Gross | Estimated Fair | ||||||||||||||||||||||
Cost | Unrealized | Unrealized | Value | ||||||||||||||||||||||
Gains | Losses | ||||||||||||||||||||||||
September 30, 2013 | |||||||||||||||||||||||||
U.S. Treasury and government agencies | $ | 18,690 | $ | 66 | $ | (38 | ) | $ | 18,718 | ||||||||||||||||
Mortgage-backed securities | 3,983 | 10 | (34 | ) | 3,959 | ||||||||||||||||||||
States and political subdivisions | 3,331 | 74 | — | 3,405 | |||||||||||||||||||||
Corporate debt securities | 33,751 | 165 | (307 | ) | 33,609 | ||||||||||||||||||||
Certificates of deposit | 10,310 | 54 | — | 10,364 | |||||||||||||||||||||
Total | $ | 70,065 | $ | 369 | $ | (379 | ) | $ | 70,055 | ||||||||||||||||
December 31, 2012 | |||||||||||||||||||||||||
U.S. Treasury and government agencies | $ | 11,354 | $ | 112 | $ | — | $ | 11,466 | |||||||||||||||||
States and political subdivisions | 3,535 | 107 | (3 | ) | 3,639 | ||||||||||||||||||||
Corporate debt securities | 19,108 | 262 | (1 | ) | 19,369 | ||||||||||||||||||||
Certificates of deposit | 13,210 | 65 | (1 | ) | 13,274 | ||||||||||||||||||||
Total | $ | 47,207 | $ | 546 | $ | (5 | ) | $ | 47,748 | ||||||||||||||||
For additional disclosures regarding methods and assumptions used in estimating fair values of these securities see Note 14. | |||||||||||||||||||||||||
Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties. The Company’s amortized cost and estimated fair values of fixed-income securities at September 30, 2013 by contractual maturity were as follows (in thousands): | |||||||||||||||||||||||||
Amortized | Estimated Fair | ||||||||||||||||||||||||
Cost | Value | ||||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||||
Due in one year or less | $ | 26,073 | $ | 26,098 | |||||||||||||||||||||
Due after one year through five years | 32,523 | 32,595 | |||||||||||||||||||||||
Due after five years through ten years | 7,486 | 7,403 | |||||||||||||||||||||||
Mortgage-backed securities | 3,983 | 3,959 | |||||||||||||||||||||||
Total | $ | 70,065 | $ | 70,055 | |||||||||||||||||||||
Gross realized gains and losses on available-for-sale investments for the nine months ended September 30 were as follows (in thousands): | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Gross gains | $ | 40 | $ | 921 | |||||||||||||||||||||
Gross losses | (8 | ) | (121 | ) | |||||||||||||||||||||
Total | $ | 32 | $ | 800 | |||||||||||||||||||||
The following table summarizes the Company’s available-for-sale securities in an unrealized loss position at September 30, 2013 and December 31, 2012, the estimated fair value and amount of gross unrealized losses, aggregated by investment category and length of time those securities have been continuously in an unrealized loss position (in thousands): | |||||||||||||||||||||||||
September 30, 2013 | |||||||||||||||||||||||||
Less Than Twelve | Twelve Months or | Total | |||||||||||||||||||||||
Months | Greater | ||||||||||||||||||||||||
Estimated | Gross | Estimated | Gross | Estimated | Gross | ||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||||
U.S. Treasury and government agencies | $ | 11,973 | $ | (38 | ) | $ | — | $ | — | $ | 11,973 | $ | (38 | ) | |||||||||||
Mortgage-backed securities | 2,648 | (34 | ) | — | — | 2,648 | (34 | ) | |||||||||||||||||
Corporate debt securities | 23,497 | (307 | ) | — | — | 23,497 | (307 | ) | |||||||||||||||||
Total | $ | 38,118 | $ | (379 | ) | $ | — | $ | — | $ | 38,118 | $ | (379 | ) | |||||||||||
December 31, 2012 | |||||||||||||||||||||||||
Less Than Twelve | Twelve Months or | Total | |||||||||||||||||||||||
Months | Greater | ||||||||||||||||||||||||
Estimated | Gross | Estimated | Gross | Estimated | Gross | ||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||||
States and political subdivisions | $ | — | $ | — | $ | 71 | $ | (3 | ) | $ | 71 | $ | (3 | ) | |||||||||||
Corporate debt securities | 979 | (1 | ) | — | — | 979 | (1 | ) | |||||||||||||||||
Certificates of deposit | 499 | (1 | ) | — | — | 499 | (1 | ) | |||||||||||||||||
Total | $ | 1,478 | $ | (2 | ) | $ | 71 | $ | (3 | ) | $ | 1,549 | $ | (5 | ) | ||||||||||
The Company’s portfolio contained approximately 50 and 16 individual investment securities that were in an unrealized loss position as of September 30, 2013 and December 31, 2012, respectively. | |||||||||||||||||||||||||
The unrealized losses at September 30, 2013 were primarily attributable to changes in market interest rates since the securities were purchased. Management systematically evaluates investment securities for other-than-temporary declines in fair value on a quarterly basis. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. On a quarterly basis, the Company considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, duration and extent to which the fair value is less than cost. If the fair value of a debt security is less than its amortized cost basis, an other-than-temporary impairment may be triggered in circumstances where (1) an entity has an intent to sell the security, (2) it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, or (3) the entity does not expect to recover the entire amortized cost basis of the security (that is, a credit loss exists). Other-than-temporary impairments are separated into amounts representing credit losses which are recognized in earnings and amounts related to all other factors which are recognized in other comprehensive income (loss). The Company also considers potential adverse conditions related to the financial health of the issuer based on rating agency actions. As a result of management’s quarterly analyses for the nine-month periods ended September 30, 2013 and 2012, no individual securities were other-than-temporarily impaired. | |||||||||||||||||||||||||
As of September 30, 2013, certificates of deposit in the amount of $5.4 million were pledged as collateral associated with the capital lease related to certain computer software, software licenses, and hardware used in the Company’s insurance operations. See Note 8 for discussion of the associated capital lease obligation. In addition, a $5.0 million certificate of deposit was pledged as collateral associated with a third-party credit card processor. |
Reinsurance
Reinsurance | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Reinsurance | ' | ||||||||||||||||||||||||
5. Reinsurance | |||||||||||||||||||||||||
In the ordinary course of business, the Company places reinsurance with other insurance companies in order to provide greater diversification of its business and limit the potential for losses arising from large risks. In addition, the Company assumes reinsurance from other insurance companies. | |||||||||||||||||||||||||
In 2011, the Company entered into a quota-share agreement with a third-party reinsurance company under which the Company ceded 10% of business produced in Louisiana, Alabama, Texas and Illinois from September 1, 2011 through December 31, 2011. At December 31, 2011, this contract converted to a 40% quota-share reinsurance contract on the in-force business for the applicable states throughout 2012. This agreement was extended under the same terms through March 31, 2013 and terminated on a cutoff basis as of April 1, 2013. Upon termination, the Company recorded $27.2 million of returned premium, net of $7.7 million deferred ceding commissions. Written premiums ceded under this agreement totaled $99.4 million since inception. | |||||||||||||||||||||||||
In March 2013, the Company entered into a new quota-share agreement with this third-party reinsurance company effective March 31, 2013, under which the Company cedes 40% for the same four states as the expiring agreement. This agreement is through December 31, 2013, but has automatic one-year renewals unless either party provides notice of intent not to renew within 75 days. This agreement was amended effective June 30, 2013, under which the Company will cede an additional 40% for the same four states for the remainder of 2013. Written premiums ceded under this agreement totaled $44.6 million during the three months ended September 30, 2013 and $115.1 million since inception. | |||||||||||||||||||||||||
Historically, the Company assumed reinsurance from a Texas county mutual insurance company (the county mutual) whereby the Company assumed 100% of the policies issued by the county mutual for business produced by the Company’s owned general agents. The county mutual did not retain any of this business and there were no loss limits other than the underlying policy limits. The assumed reinsurance agreement was terminated on January 1, 2013 on a cut-off basis and the third-party reinsurance company that the Company has had quota-share agreements with since September 2011 is now assuming 100% of the business originated through the county mutual; however, the Company continues to serve as a general agent for this business. Unearned premium of $11.8 million was returned to the Texas county mutual as of January 1, 2013 related to the termination of the reinsurance agreement. | |||||||||||||||||||||||||
The effect of reinsurance on premiums written and earned was as follows (in thousands): | |||||||||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Written | Earned | Loss and | Written | Earned | Loss and | ||||||||||||||||||||
Premium | Premium | Loss | Premium | Premium | Loss | ||||||||||||||||||||
Adjustment | Adjustment | ||||||||||||||||||||||||
Expenses | Expenses | ||||||||||||||||||||||||
Direct | $ | 78,061 | $ | 74,560 | $ | 65,518 | $ | 50,667 | $ | 44,665 | $ | 28,837 | |||||||||||||
Reinsurance assumed | — | — | (319 | ) | 9,095 | 9,997 | 7,538 | ||||||||||||||||||
Reinsurance ceded | (44,950 | ) | (43,758 | ) | (31,474 | ) | (21,252 | ) | (19,401 | ) | (10,978 | ) | |||||||||||||
Total | $ | 33,111 | $ | 30,802 | $ | 33,725 | $ | 38,510 | $ | 35,261 | $ | 25,397 | |||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Written | Earned | Loss and | Written | Earned | Loss and | ||||||||||||||||||||
Premium | Premium | Loss | Premium | Premium | Loss | ||||||||||||||||||||
Adjustment | Adjustment | ||||||||||||||||||||||||
Expenses | Expenses | ||||||||||||||||||||||||
Direct | $ | 231,921 | $ | 206,835 | $ | 160,834 | $ | 143,313 | $ | 135,688 | $ | 93,234 | |||||||||||||
Reinsurance assumed | (11,812 | ) | — | 4 | 29,115 | 26,925 | 21,559 | ||||||||||||||||||
Reinsurance ceded | (110,437 | ) | (85,043 | ) | (57,307 | ) | (45,889 | ) | (58,236 | ) | (37,007 | ) | |||||||||||||
Total | $ | 109,672 | $ | 121,792 | $ | 103,531 | $ | 126,539 | $ | 104,377 | $ | 77,786 | |||||||||||||
Under certain of the Company’s reinsurance transactions, the Company has received ceding commissions. The ceding commission rate varies based on loss experience. The estimates of loss experience are continually reviewed and adjusted, and the resulting adjustments to ceding commissions are reflected in current operations. Ceding commissions recognized, reflected as a reduction of selling, general and administrative expenses, were as follows (in thousands): | |||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||
Selling, general and administrative expenses | $ | (13,734 | ) | $ | (7,059 | ) | $ | (27,485 | ) | $ | (19,430 | ) | |||||||||||||
The amount of loss reserves and unearned premium the Company would remain liable for in the event its reinsurers are unable to meet their obligations were as follows (in thousands): | |||||||||||||||||||||||||
September 30, | December 31, | ||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Losses and loss adjustment expense reserves | $ | 70,239 | $ | 67,166 | |||||||||||||||||||||
Unearned premium reserve | 50,022 | 24,628 | |||||||||||||||||||||||
Total | $ | 120,261 | $ | 91,794 | |||||||||||||||||||||
The table below presents the total amount of receivables due from reinsurers as of September 30, 2013 and December 31, 2012 (in thousands): | |||||||||||||||||||||||||
September 30, | December 31, | ||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Quota-share reinsurer for agreements effective September 1, 2011 and March 31, 2013 | $ | 95,824 | $ | 53,195 | |||||||||||||||||||||
Michigan Catastrophic Claims Association | 36,106 | 39,652 | |||||||||||||||||||||||
Vesta Insurance Group | 13,425 | 13,674 | |||||||||||||||||||||||
Excess of loss reinsurers | 3,810 | 5,521 | |||||||||||||||||||||||
Quota-share reinsurer for agreements effective in fourth quarter of 2010 and January 1, 2011 | (1,122 | ) | 5,800 | ||||||||||||||||||||||
Other | 2,415 | 2,759 | |||||||||||||||||||||||
Total reinsurance receivable | $ | 150,458 | $ | 120,601 | |||||||||||||||||||||
The quota-share reinsurers and the excess of loss reinsurers all have at least A ratings from A.M. Best. Accordingly, the Company believes there is minimal credit risk related to these reinsurance receivables. Under the reinsurance agreement with Vesta Insurance Group (VIG), including primarily Vesta Fire Insurance Corporation (VFIC), AIC had the right, under certain circumstances, to require VFIC to provide a letter of credit or establish a trust account to collateralize gross amounts due from VFIC under the reinsurance agreement. At September 30, 2013, the VFIC Trust held $16.6 million (after cumulative withdrawals of $9.0 million through September 30, 2013), consisting of $15.6 million of a U.S. Treasury money market account held in cash and cash equivalents, and $1.0 million of corporate bonds rated BBB+ or higher, to collateralize the $13.4 million net recoverable from VFIC. | |||||||||||||||||||||||||
AIC established a trust to secure the Company’s obligation under the county mutual reinsurance contract with a balance of $15.0 million and $27.7 million as of September 30, 2013 and December 31, 2012, respectively, of which $1.7 million and $9.9 million was held in cash equivalents as of September 30, 2013 and December 31, 2012, respectively. | |||||||||||||||||||||||||
At September 30, 2013, $2.5 million was included in reserves for losses and loss adjustment expenses that represented the amounts owed by AIC under a reinsurance agreement with a VIG-affiliated company. Affirmative established a trust account to secure the Company’s obligations under this reinsurance contract, which currently holds $15.7 million in a money market cash equivalent account (the AIC Trust). The Special Deputy Receiver in Texas had cumulative withdrawals from the AIC Trust of $0.4 million through September 2013, and the Special Deputy Receiver in Hawaii had cumulative withdrawals from the AIC Trust of $1.7 million through September 2013. |
Deferred_Policy_Acquisition_Co
Deferred Policy Acquisition Costs | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Deferred Policy Acquisition Costs | ' | ||||||||||||
6. Deferred Policy Acquisition Costs | |||||||||||||
Policy acquisition costs, consisting of primarily commissions and premium taxes, net of ceding commission income, are deferred and charged against income ratably over the terms of the related policies. The components of deferred policy acquisition costs and the related amortization expense were as follows for the three months ended September 30, 2013 and 2012 (in thousands): | |||||||||||||
Gross | Ceded | Net | |||||||||||
Balance at July 1, 2013 | $ | 8,908 | $ | (14,398 | ) | $ | (5,490 | ) | |||||
Additions | 8,802 | (13,218 | ) | (4,416 | ) | ||||||||
Amortization | (8,304 | ) | 12,864 | 4,560 | |||||||||
Ending balance at September 30, 2013 | $ | 9,406 | $ | (14,752 | ) | $ | (5,346 | ) | |||||
Balance at July 1, 2012 | $ | 4,961 | $ | (6,398 | ) | $ | (1,437 | ) | |||||
Additions | 5,051 | (6,014 | ) | (963 | ) | ||||||||
Amortization | (4,286 | ) | 5,484 | 1,198 | |||||||||
Ending balance at September 30, 2012 | $ | 5,726 | $ | (6,928 | ) | $ | (1,202 | ) | |||||
The components of deferred policy acquisition costs and the related amortization expense were as follows for the nine months ended September 30, 2013 and 2012 (in thousands): | |||||||||||||
Gross | Ceded | Net | |||||||||||
Balance at January 1, 2013 | $ | 7,111 | $ | (7,013 | ) | $ | 98 | ||||||
Additions | 25,040 | (32,467 | ) | (7,427 | ) | ||||||||
Amortization | (22,745 | ) | 24,728 | 1,983 | |||||||||
Ending balance at September 30, 2013 | $ | 9,406 | $ | (14,752 | ) | $ | (5,346 | ) | |||||
Balance at January 1, 2012 | $ | 3,668 | $ | (10,132 | ) | $ | (6,464 | ) | |||||
Additions | 13,741 | (13,176 | ) | 565 | |||||||||
Amortization | (11,683 | ) | 16,380 | 4,697 | |||||||||
Ending balance at September 30, 2012 | $ | 5,726 | $ | (6,928 | ) | $ | (1,202 | ) | |||||
Debt
Debt | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt | ' | ||||||||
7. Debt | |||||||||
The Company’s long-term debt instruments and balances outstanding at September 30, 2013 and December 31, 2012 were as follows (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Notes payable due 2035 | $ | 30,928 | $ | 30,928 | |||||
Notes payable due 2035 | 25,774 | 25,774 | |||||||
Notes payable due 2035 | 20,129 | 20,140 | |||||||
Total notes payable | 76,831 | 76,842 | |||||||
Senior secured credit facility effective January 2007, net of discount | — | 99,323 | |||||||
Senior secured credit facility effective September 2013, net of discount | 38,000 | — | |||||||
Subordinated secured credit facility | 13,000 | — | |||||||
Mortgage payable | 3,983 | — | |||||||
Total long-term debt | $ | 131,814 | $ | 176,165 | |||||
Notes payable | |||||||||
The $30.9 million notes payable due 2035 are redeemable in whole or in part by the Company. The notes adjust quarterly to the three-month LIBOR rate plus 3.60%. The interest rate as of September 30, 2013 was 3.85%. | |||||||||
The $25.8 million notes payable due 2035 are redeemable in whole or in part by the Company. The notes adjust quarterly to the three-month LIBOR rate plus 3.55%. The interest rate as of September 30, 2013 was 3.80%. | |||||||||
On February 28, 2012, the Company exercised its right to defer interest payments on the two notes payable mentioned above beginning with the scheduled interest payment due in March 2012 and continuing for a period of up to five years. The affected notes are associated with obligations to the Company’s unconsolidated trusts. The outstanding balance of the affected notes was $56.7 million as of September 30, 2013. The Company will continue to accrue interest on the principal during the interest deferral period and the unpaid deferred interest will also accrue interest. Deferred interest will be due and payable at the expiration of the interest deferral period and totaled $4.0 million as of September 30, 2013. | |||||||||
The $20.1 million notes payable due 2035 are redeemable in whole or in part by the Company. The notes adjust quarterly to the three-month LIBOR rate plus 3.95%. The interest rate as of September 30, 2013 was 4.20%. | |||||||||
Senior and subordinated secured facilities | |||||||||
In August 2013, a new class of loans to be borrowed under the senior secured credit facility was created allowing for an additional tranche of incremental term loan (ITL B). Under the ITL B, the Company borrowed $12.5 million which was contributed to our subsidiary, LIFCO, LLC to pay off an intercompany note due AIC. | |||||||||
On September 30, 2013, the Company replaced its existing senior credit facility with the proceeds from the sale of the retail business and with proceeds from two new debt arrangements. The Company’s new debt arrangement consisted of a $40.0 million senior secured credit facility with a maturity date of March 30, 2016, and a $10.0 million subordinated secured credit facility with a maturity date of March 30, 2017. | |||||||||
The pricing under the senior secured credit facility is currently subject to an adjusted LIBOR rate floor of 1.25%, plus 7.25%. The interest rate as of September 30, 2013 was 8.50%. As of September 30, 2013, the principal balance of the senior secured credit facility was $40.0 million. The senior secured credit facility was issued at a discount of $2.0 million that will be amortized as interest expense over the expected term of the loan using the effective interest method. Repayment of the facility is due quarterly with $2.0 million payable for each quarter through September 30, 2014, $3.5 million payable each quarter through September 30, 2015, $4.5 million payable on December 31, 2015 and the remaining balance of $13.5 million due in full on March 30, 2016. | |||||||||
The pricing under the subordinated secured credit facility is currently subject to an adjusted LIBOR rate floor of 1.25%, plus 18.00%. The interest rate as of September 30, 2013 was 19.25%. The subordinated secured credit facility included a commitment fee of $3.0 million that was added to the principal balance outstanding. As of September 30, 2013, the principal balance of the subordinated secured credit facility was $13.0 million. | |||||||||
The Company recorded a $4.2 million pretax loss on extinguishment of debt as a result of the refinancing for the period ended September 30, 2013. The $4.2 million debt extinguishment loss resulted from the write-off of $2.2 million of deferred debt issuance costs and unamortized discount relating to the senior secured credit facility effective January 2007, $1.4 million of legal fees and a $0.6 million prepayment premium. | |||||||||
New debt issuance costs of $4.4 million were capitalized and will be amortized to interest expense over the expected term of the new credit agreements. | |||||||||
Mortgage payable | |||||||||
In March 2013, the Company, through one of its indirect, wholly-owned subsidiaries, entered into a $4.8 million loan secured by commercial real estate to provide liquidity to AIC. The loan is evidenced by a promissory note secured by a mortgage security agreement and assignment of leases and rents on real estate located in Baton Rouge, Louisiana, which is held as investment in real property on the consolidated balance sheet. The loan is included in debt on the consolidated balance sheet. | |||||||||
The mortgage bears interest at a per annum fixed rate of 4.95%. The mortgage requires monthly payments of principal and interest with the final payment due on the maturity date of December 15, 2015. As security for payments, the Company assigned rents due under the lease to a trustee. Pursuant to an escrow and servicing agreement, the trustee will receive rent due under the lease, make required payments due under the mortgage and maintain certain escrow accounts to pay for the necessary expenses of the property until the mortgage is paid in full. The principal balance of the mortgage payable was $4.0 million at September 30, 2013. |
Capital_Lease_Obligation
Capital Lease Obligation | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Capital Lease Obligation | ' | ||||||||
8. Capital Lease Obligation | |||||||||
In May 2010, the Company entered into two capital lease obligations related to certain computer software, software licenses, and hardware used in the Company’s insurance operations. The Company received cash proceeds from the financing in the amount of $28.2 million. As required by the lease agreements, the Company purchased $28.2 million of certificates of deposit held in brokerage accounts and pledged such securities as collateral against all of the Company’s obligations under the lease. The dollar amount of collateral pledged is set to decline over the term of the lease as the Company makes the scheduled lease payments. At the end of the initial term, the Company will have the right to purchase the software for a nominal fee, after which all rights, title and interest would transfer to the Company. | |||||||||
On October 17, 2012, the Company received notice from one of the lessors (Lessor) under a capital lease obligation that, based upon Lessor’s claim of an alleged default under the terms of the applicable lease and security agreements, it elected to immediately seek recovery of an amount equal to the casualty loss value of the leased property, together with all other sums allegedly due to Lessor, which Lessor calculated as $9.6 million. Lessor informed the Company that it had directed the escrow agent to redeem the CDs securing the Company’s lease payment obligation and disburse to it the approximately $8.3 million in proceeds, which Lessor received on October 15, 2012. Lessor threatened legal action against the Company to recover the remaining $1.3 million, alleged liquidated damages. The Company contests that any event of default has occurred and also disputes Lessor’s demand for payment of the casualty loss value of the leased property. The Company has demanded that Lessor pay the Company approximately $0.5 million, the amount by which the CD redemption proceeds exceeded Lessor’s remaining interest in the lease at the time it declared default. On December 26, 2012, Lessor conveyed all right and interest in the leased property back to the Company, although both parties reserved all claims with respect to the disputed demands for payment. Neither party has filed suit at this time. | |||||||||
The remaining lease term is 20 months with monthly rental payments totaling approximately $0.3 million. Cash and securities pledged as collateral and held as available-for-sale securities were $6.7 million and $9.1 million as of September 30, 2013 and December 31, 2012, respectively. | |||||||||
Property under capital lease consisted of the following as of September 30, 2013 and December 31, 2012 (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Computer software, software licenses and hardware | $ | 17,106 | $ | 17,106 | |||||
Accumulated depreciation | (11,444 | ) | (9,751 | ) | |||||
Computer software, software licenses and hardware, net | $ | 5,662 | $ | 7,355 | |||||
Estimated future lease payments for the years ending December 31 (in thousands): | |||||||||
Fourth quarter of 2013 | $ | 848 | |||||||
2014 | 3,390 | ||||||||
2015 | 1,413 | ||||||||
Total estimated future lease payments | 5,651 | ||||||||
Less: Amount representing interest | 325 | ||||||||
Present value of future lease payments | $ | 5,326 | |||||||
Income_Taxes
Income Taxes | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Income Taxes | ' | ||||||||||||||||
9. Income Taxes | |||||||||||||||||
The provision for income taxes for the three and nine months ended September 30, 2013 and 2012 consisted of the following (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Current tax expense | $ | 4,195 | $ | 127 | $ | 4,396 | $ | 127 | |||||||||
Deferred tax expense | (3,314 | ) | 84 | (3,178 | ) | 252 | |||||||||||
Net income tax expense | $ | 881 | $ | 211 | $ | 1,218 | $ | 379 | |||||||||
The Company’s effective tax rate differed from the statutory rate of 35% for the three and nine months ended September 30 as follows (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Income (loss) before income taxes | $ | 48,499 | $ | (29,247 | ) | $ | 44,070 | $ | (43,254 | ) | |||||||
Tax provision computed at the federal statutory income tax rate | 16,975 | (10,237 | ) | 15,425 | (15,139 | ) | |||||||||||
Increases (reductions) in tax resulting from: | |||||||||||||||||
Tax-exempt interest | (4 | ) | (10 | ) | (13 | ) | (61 | ) | |||||||||
State income taxes | 3,453 | 40 | 3,593 | 335 | |||||||||||||
IRS audit settlement | — | — | — | (118 | ) | ||||||||||||
Goodwill impairment | — | 5,623 | — | 5,623 | |||||||||||||
Valuation allowance | (19,552 | ) | 4,809 | (17,811 | ) | 9,770 | |||||||||||
Other | 9 | (14 | ) | 24 | (31 | ) | |||||||||||
Income tax expense | $ | 881 | $ | 211 | $ | 1,218 | $ | 379 | |||||||||
Effective tax rate | 1.8 | % | (0.7 | %) | 2.8 | % | (0.9 | %) | |||||||||
The gross deferred tax assets prior to recognition of valuation allowance were $86.2 million and $103.4 million at September 30, 2013 and December 31, 2012, respectively. In assessing the realizability of our deferred tax assets, the Company considered whether it was more likely than not that our deferred tax assets will be realized based upon all available evidence, including scheduled reversal of deferred tax liabilities, historical operating results, projected future operating results, tax carry-back availability, and limitations pursuant to Section 382 of the Internal Revenue Code, among others. Based on this assessment, the Company began recording a valuation allowance against deferred taxes in December 2009. The valuation allowance was $85.2 million and $101.9 million at September 30, 2013 and December 31, 2012, respectively. |
Legal_and_Regulatory_Proceedin
Legal and Regulatory Proceedings | 9 Months Ended |
Sep. 30, 2013 | |
Legal and Regulatory Proceedings | ' |
10. Legal and Regulatory Proceedings | |
The Company and its subsidiaries are named from time to time as parties in various legal actions arising in the ordinary course of the Company’s business and arising out of or related to claims made in connection with the Company’s insurance policies and claims handling. Except as set forth below, there are no material changes with respect to legal and regulatory proceedings previously disclosed in Item 3 and Note 16 to the consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2012. | |
On March 20, 2013, the Company was served with a Class Action Petition for Damages and Penalties for Arbitrary and Capricious Behavior filed in the 13th Judicial District Court, Parish of Evangeline, Louisiana against USAgencies Casualty Insurance Company (USAgencies). The named plaintiffs allege that the denial of their first-party property damage claim based on USAgencies’ policy exclusion for driving under the influence of alcohol was arbitrary and capricious, and that USAgencies’ enforcement of the subject policy exclusion violates Louisiana public policy. On August 2, 2013, the Court ruled that USAgencies’ policy exclusion violated Louisiana public policy and was unenforceable. On August 30, 2013, USAgencies filed its application for supervisory writ with the Louisiana Third Circuit Court of Appeal, which was denied on November 5, 2013. The Company is now pursuing a regular appeal in the Louisiana Third Circuit Court of Appeal. At this time, no accurate estimate of the range of potential loss can be made. |
Net_Income_Loss_per_Common_Sha
Net Income (Loss) per Common Share | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Net Income (Loss) per Common Share | ' | ||||||||||||||||
11. Net Income (Loss) per Common Share | |||||||||||||||||
Net income (loss) per common share is based on the weighted average number of shares outstanding. Diluted weighted average shares are calculated by adjusting basic weighted average shares outstanding by all potentially dilutive stock options. Stock options outstanding of 1,195,883 for the three and nine months ended September 30, 2013 and 2,484,500 for the three and nine months ended September 30, 2012 were not included in the computation of diluted earnings per share because the exercise price of the options was greater than the average market price of the common stock or there was a net loss from operations in the period thus the inclusion would have been anti-dilutive. Diluted earnings per share are calculated using the treasury stock method. | |||||||||||||||||
The following table sets forth the reconciliation of numerators and denominators for the basic and diluted earnings per share computation for the three and nine months ended September 30, 2013 and 2012 (in thousands, except per share amounts): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) | $ | 47,618 | $ | (29,458 | ) | $ | 42,852 | $ | (43,633 | ) | |||||||
Denominator: | |||||||||||||||||
Weighted average common shares outstanding | 15,408 | 15,408 | 15,408 | 15,408 | |||||||||||||
Weighted average effect of dilutive securities | 364 | — | 123 | — | |||||||||||||
Total Weighted average diluted shares outstanding | 15,772 | 15,408 | 15,531 | 15,408 | |||||||||||||
Basic income (loss) per common share | $ | 3.09 | $ | (1.91 | ) | $ | 2.78 | $ | (2.83 | ) | |||||||
Diluted income (loss) per common share | $ | 3.02 | $ | (1.91 | ) | $ | 2.76 | $ | (2.83 | ) | |||||||
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions | ' |
12. Related Party Transactions | |
On September 30, 2013, the Company entered into a $10.0 million subordinated secured credit facility with JCF AFFM Debt Holdings, L.P., as Administrative Agent and Collateral Agent. JCF AFFM Debt Holdings, L.P. is an affiliate of J.C. Flowers & Co. LLC and New Affirmative LLC, the Company’s 51.0% majority shareholder. David I. Schamis is an employee of J.C. Flowers & Co. LLC and a member of the Company’s Board of Directors. Mr. Schamis is also a limited partner of JCF AFFM Debt Holdings, L.P. |
Disclosures_for_Items_Reclassi
Disclosures for Items Reclassified Out of Accumulated Other Comprehensive Income (AOCI) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Disclosures for Items Reclassified Out of Accumulated Other Comprehensive Income (AOCI) | ' | ||||||||
13. Disclosures for Items Reclassified Out of Accumulated Other Comprehensive Income (Loss) | |||||||||
The following table sets forth the components of accumulated other comprehensive income (loss), including reclassification adjustments (in thousands): | |||||||||
Three Months | Nine Months | ||||||||
Ended | Ended | ||||||||
September 30, | September 30, | ||||||||
2013 | 2013 | ||||||||
Beginning balance | $ | (1,688 | ) | $ | (998 | ) | |||
Other comprehensive income (loss) before reclassifications | 148 | (519 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) | (9 | ) | (32 | ) | |||||
Net current period other comprehensive income (loss) | 139 | (551 | ) | ||||||
Ending balance | $ | (1,549 | ) | $ | (1,549 | ) | |||
Net gain in accumulated other comprehensive income (loss) reclassifications for previously unrealized net gains on available-for-sale securities was $9 thousand and $32 thousand for the three and nine months ended September 30, 2013, respectively. The gain was not net of any taxes due to the valuation allowance for deferred income taxes. |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
Fair Value of Financial Instruments | ' | ||||||||||||||||||||
14. Fair Value of Financial Instruments | |||||||||||||||||||||
The Company utilizes a hierarchy of valuation techniques for the disclosure of fair value estimates based on whether the significant inputs into the valuation are observable. In determining the level of hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. The Company measures certain assets and liabilities at fair value on a recurring basis, including investment securities classified as available-for-sale, cash equivalents and other invested assets. Following is a brief description of the type of valuation information that qualifies as a financial asset or liability for each level: | |||||||||||||||||||||
Level 1 — Unadjusted quoted market prices for identical assets or liabilities in active markets which are accessible by the Company. | |||||||||||||||||||||
Level 2 — Observable prices in active markets for similar assets or liabilities. Prices for identical or similar assets or liabilities in markets that are not active. Directly observable market inputs for substantially the full term of the asset or liability, e.g., interest rates and yield curves at commonly quoted intervals, volatilities, prepayment speeds, default rates, and credit spreads. Market inputs that are not directly observable, but are derived from or corroborated by observable market data. | |||||||||||||||||||||
Level 3 — Unobservable inputs based on the Company’s own judgment as to assumptions a market participant would use, including inputs derived from extrapolation and interpolation that are not corroborated by observable market data. | |||||||||||||||||||||
The Company evaluates the various types of financial assets and liabilities to determine the appropriate fair value hierarchy based upon trading activity and the observation of market inputs. The Company employs control processes to validate the reasonableness of the fair value estimates of its assets and liabilities, including those estimates based on prices and quotes obtained from independent third-party sources. The Company’s procedures generally include, but are not limited to, initial and ongoing evaluation of methodologies used by independent third-parties and additional pricing services are used as a comparison to determine the reasonableness of fair values used in pricing the investment portfolio. | |||||||||||||||||||||
The Company recognizes transfers between levels at the actual date of the event or change in circumstances that caused the transfer. | |||||||||||||||||||||
Where possible, the Company utilizes quoted market prices to measure fair value. For assets and liabilities that have quoted market prices in active markets, the Company uses the quoted market prices as fair value and includes these prices in the amounts disclosed in Level 1 of the hierarchy. When quoted market prices in active markets are unavailable, the Company determines fair values based on independent external valuation information obtained from independent pricing services, which utilize various models and valuation techniques based on a range of inputs including pricing models, quoted market prices of publicly traded securities with similar duration and yield, time value, yield curve, prepayment speeds, default rates and discounted cash flows. In most cases, these estimates are determined based on independent third-party valuation information, and the amounts are disclosed as Level 2 or Level 3 of the fair value hierarchy depending on the level of observable market inputs. | |||||||||||||||||||||
Financial assets measured at fair value on a recurring basis | |||||||||||||||||||||
The following table provides information as of September 30, 2013 about the Company’s financial assets measured at fair value on a recurring basis (in thousands): | |||||||||||||||||||||
Total | Quoted | Significant | Significant | ||||||||||||||||||
Prices in | Other | Unobservable | |||||||||||||||||||
Active | Observable | Inputs | |||||||||||||||||||
Markets | Inputs | (Level 3) | |||||||||||||||||||
(Level 1) | (Level 2) | ||||||||||||||||||||
U.S. Treasury and government agencies | $ | 18,718 | $ | 18,718 | $ | — | $ | — | |||||||||||||
Mortgage-backed securities | 3,959 | — | 3,959 | — | |||||||||||||||||
States and political subdivisions | 3,405 | — | 3,405 | — | |||||||||||||||||
Corporate debt securities | 33,609 | — | 33,609 | — | |||||||||||||||||
Certificates of deposit | 10,364 | — | 10,364 | — | |||||||||||||||||
Total investment securities | 70,055 | 18,718 | 51,337 | — | |||||||||||||||||
Other invested assets | 3,991 | — | — | 3,991 | |||||||||||||||||
Total assets | $ | 74,046 | $ | 18,718 | $ | 51,337 | $ | 3,991 | |||||||||||||
The following table provides information as of December 31, 2012 about the Company’s financial assets measured at fair value on a recurring basis (in thousands): | |||||||||||||||||||||
Total | Quoted | Significant | Significant | ||||||||||||||||||
Prices in | Other | Unobservable | |||||||||||||||||||
Active | Observable | Inputs | |||||||||||||||||||
Markets | Inputs | (Level 3) | |||||||||||||||||||
(Level 1) | (Level 2) | ||||||||||||||||||||
U.S. Treasury and government agencies | $ | 11,466 | $ | 11,466 | $ | — | $ | — | |||||||||||||
States and political subdivisions | 3,639 | — | 3,639 | — | |||||||||||||||||
Corporate debt securities | 19,369 | — | 19,369 | — | |||||||||||||||||
Certificates of deposit | 13,274 | — | 13,274 | — | |||||||||||||||||
Total investment securities | 47,748 | 11,466 | 36,282 | — | |||||||||||||||||
Other invested assets | 3,390 | — | — | 3,390 | |||||||||||||||||
Total assets | $ | 51,138 | $ | 11,466 | $ | 36,282 | $ | 3,390 | |||||||||||||
Level 1 Financial assets | |||||||||||||||||||||
Financial assets classified as Level 1 in the fair value hierarchy include U.S. Treasury and government agencies securities. These securities are actively traded and the Company estimates the fair value of these securities using unadjusted quoted market prices. | |||||||||||||||||||||
Level 2 Financial assets | |||||||||||||||||||||
Financial assets classified as Level 2 in the fair value hierarchy include mortgage-backed securities, tax-exempt securities, corporate bonds and certificates of deposit. The fair value of these securities is determined based on observable market inputs provided by independent third-party pricing services. To date, the Company has not experienced a circumstance where it has determined that an adjustment is required to a quote or price received from independent third-party pricing sources. To the extent the Company determines that a price or quote is inconsistent with actual trading activity observed in that investment or similar investments, the Company would determine a fair value using this observable market information and disclose the occurrence of this circumstance. All of the fair values of securities disclosed in Level 2 are estimated based on independent third-party pricing services. | |||||||||||||||||||||
Level 3 Financial assets | |||||||||||||||||||||
At September 30, 2013, the Company’s Level 3 financial assets include an investment in a hedge fund, which is presented as other invested assets in the consolidated balance sheets. The Company elected the fair value option for its investment in the hedge fund and measures the fair value of the hedge fund on the basis of the net asset value of the fund as reported by the fund manager. The hedge fund is primarily invested in residential mortgage-backed securities and other asset-backed securities which are recorded at fair value as determined by the fund manager. Such fair value determination is based on quoted marked prices, bid prices, or the fund manager’s proprietary valuation models where quoted prices are unavailable or deemed to be inadequately representative of fair value. Significant decreases in the fair value of the underlying securities in the hedge fund would result in a significantly lower fair value measurement of other invested assets as reported in the consolidated balance sheets. | |||||||||||||||||||||
Fair value measurements for assets in Level 3 for the three months ended September 30, 2013 were as follows (in thousands): | |||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||
Using Significant | |||||||||||||||||||||
Unobservable Inputs | |||||||||||||||||||||
(Level 3) | |||||||||||||||||||||
Other Invested Assets | |||||||||||||||||||||
Balance at July 1, 2013 | $ | 3,926 | |||||||||||||||||||
Transfers into Level 3 | — | ||||||||||||||||||||
Total gains included in earnings as net investment income | 65 | ||||||||||||||||||||
Settlements | — | ||||||||||||||||||||
Balance at September 30, 2013 | $ | 3,991 | |||||||||||||||||||
Fair value measurements for assets in Level 3 for the three months ended September 30, 2012 were as follows (in thousands): | |||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||
Using Significant | |||||||||||||||||||||
Unobservable Inputs | |||||||||||||||||||||
(Level 3) | |||||||||||||||||||||
Other Invested Assets | |||||||||||||||||||||
Balance at July 1, 2012 | $ | 3,098 | |||||||||||||||||||
Transfers into Level 3 | — | ||||||||||||||||||||
Total gains included in earnings as net investment income | 211 | ||||||||||||||||||||
Settlements | — | ||||||||||||||||||||
Balance at September 30, 2012 | $ | 3,309 | |||||||||||||||||||
Fair value measurements for assets in Level 3 for the nine months ended September 30, 2013 were as follows (in thousands): | |||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||
Using Significant | |||||||||||||||||||||
Unobservable Inputs | |||||||||||||||||||||
(Level 3) | |||||||||||||||||||||
Other Invested Assets | |||||||||||||||||||||
Balance at January 1, 2013 | $ | 3,390 | |||||||||||||||||||
Transfers into Level 3 | — | ||||||||||||||||||||
Total gains included in earnings as net investment income | 601 | ||||||||||||||||||||
Settlements | — | ||||||||||||||||||||
Balance at September 30, 2013 | $ | 3,991 | |||||||||||||||||||
Fair value measurements for assets in Level 3 for the nine months ended September 30, 2012 were as follows (in thousands): | |||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||
Using Significant | |||||||||||||||||||||
Unobservable Inputs | |||||||||||||||||||||
(Level 3) | |||||||||||||||||||||
Other Invested Assets | |||||||||||||||||||||
Balance at January 1, 2012 | $ | 2,898 | |||||||||||||||||||
Transfers into Level 3 | — | ||||||||||||||||||||
Total gains included in earnings as net investment income | 411 | ||||||||||||||||||||
Settlements | — | ||||||||||||||||||||
Balance at September 30, 2012 | $ | 3,309 | |||||||||||||||||||
The Company did not have any transfers between Levels 1 and 2 during the three or nine month periods ended September 30, 2013 and 2012. | |||||||||||||||||||||
Financial Instruments Disclosed, But Not Carried, At Fair Value | |||||||||||||||||||||
Fair values represent the Company’s best estimates and may not be substantiated by comparisons to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. | |||||||||||||||||||||
The following table presents the carrying value and estimated fair value of the Company’s financial assets and liabilities disclosed, but not carried, at fair value at September 30, 2013 and the level within the fair value hierarchy (in thousands): | |||||||||||||||||||||
Carrying | Estimated | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Value | Fair Value | ||||||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 40,570 | $ | 40,570 | $ | 40,570 | $ | — | $ | — | |||||||||||
Fiduciary and restricted cash | 843 | 843 | 843 | — | — | ||||||||||||||||
Total | $ | 41,413 | $ | 41,413 | $ | 41,413 | $ | — | $ | — | |||||||||||
Liabilities: | |||||||||||||||||||||
Notes payable | $ | 76,831 | $ | 12,525 | $ | — | $ | — | $ | 12,525 | |||||||||||
Senior secured credit facility | 38,000 | 38,000 | — | — | 38,000 | ||||||||||||||||
Subordinated secured credit facility | 13,000 | 13,000 | — | — | 13,000 | ||||||||||||||||
Mortgage payable | 3,983 | 3,983 | — | — | 3,983 | ||||||||||||||||
Total | $ | 131,814 | $ | 67,508 | $ | — | $ | — | $ | 67,508 | |||||||||||
The following table presents the carrying value and estimated fair value of the Company’s financial assets and liabilities disclosed, but not carried, at fair value at December 31, 2012 and the level within the fair value hierarchy (in thousands): | |||||||||||||||||||||
Carrying | Estimated | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Value | Fair Value | ||||||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 38,176 | $ | 38,176 | $ | 38,176 | $ | — | $ | — | |||||||||||
Fiduciary and restricted cash | 569 | 569 | 569 | — | — | ||||||||||||||||
Total | $ | 38,745 | $ | 38,745 | $ | 38,745 | $ | — | $ | — | |||||||||||
Liabilities: | |||||||||||||||||||||
Notes payable | $ | 76,842 | $ | 7,655 | $ | — | $ | — | $ | 7,655 | |||||||||||
Senior secured credit facility | 99,323 | 55,002 | — | — | 55,002 | ||||||||||||||||
Total | $ | 176,165 | $ | 62,657 | $ | — | $ | — | $ | 62,657 | |||||||||||
The fair values of the notes payable and the senior secured credit facility effective January 2007 were estimated using discounted cash flows analyses prepared by a third-party valuation source based on inputs and assumptions, such as credit and default risk associated with the debt. The senior secured credit facility effective September 2013 and the subordinated secured credit facility fair values approximate their value at the date of issuance. The mortgage payable reported at par value approximates its fair value. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Basis of Presentation | ' |
Basis of Presentation | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements of the Company. In the opinion of management, all adjustments necessary for a fair presentation have been included and are of a normal recurring nature. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K. The results of operations for interim periods should not be considered indicative of results to be expected for the full year. | |
Certain prior year amounts have been reclassified to conform to the current presentation. | |
New Accounting Standards | ' |
New Accounting Standards | |
In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, an amendment to FASB Accounting Standards Codification (ASC) Topic 220. This update requires disclosure of amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present either on the face of the statement of operations or in the notes to the financial statements, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. This ASU is effective prospectively for annual and interim periods beginning after December 15, 2012. The adoption of this standard did not have an impact on our consolidated financial position, results of operations or cash flows. | |
ASU 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, provides companies with the option to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If the Company concludes that it is more likely than not that the asset is impaired, it is required to determine the fair value of the intangible asset and perform a quantitative impairment test by comparing the fair value with the carrying value in accordance with Topic 350. If the Company concludes otherwise, no further quantitative assessment is required. This standard was effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this standard did not have a material impact on our consolidated financial position, results of operations or cash flows. |
Sale_of_the_Retail_Business_Ta
Sale of the Retail Business (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Component of Net Assets Sold | ' | ||||
The net assets sold comprised of (in thousands): | |||||
September 30, 2013 | |||||
Assets | |||||
Cash and cash equivalents | $ | 2,529 | |||
Premium finance and commission receivable | 25,458 | ||||
Other intangible assets | 12,764 | ||||
Other assets | 3,455 | ||||
Total Assets | $ | 44,206 | |||
Liabilities | |||||
Due to third-party carriers | $ | 3,589 | |||
Other liabilities | 6,974 | ||||
Total Liabilities | 10,563 | ||||
Net Assets | $ | 33,643 | |||
AvailableforSale_Investment_Se1
Available-for-Sale Investment Securities (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Summary of Available-for-Sale Securities | ' | ||||||||||||||||||||||||
The amortized cost, gross unrealized gains (losses), and estimated fair value of the Company’s available-for-sale securities at September 30, 2013 and December 31, 2012, were as follows (in thousands): | |||||||||||||||||||||||||
Amortized | Gross | Gross | Estimated Fair | ||||||||||||||||||||||
Cost | Unrealized | Unrealized | Value | ||||||||||||||||||||||
Gains | Losses | ||||||||||||||||||||||||
September 30, 2013 | |||||||||||||||||||||||||
U.S. Treasury and government agencies | $ | 18,690 | $ | 66 | $ | (38 | ) | $ | 18,718 | ||||||||||||||||
Mortgage-backed securities | 3,983 | 10 | (34 | ) | 3,959 | ||||||||||||||||||||
States and political subdivisions | 3,331 | 74 | — | 3,405 | |||||||||||||||||||||
Corporate debt securities | 33,751 | 165 | (307 | ) | 33,609 | ||||||||||||||||||||
Certificates of deposit | 10,310 | 54 | — | 10,364 | |||||||||||||||||||||
Total | $ | 70,065 | $ | 369 | $ | (379 | ) | $ | 70,055 | ||||||||||||||||
December 31, 2012 | |||||||||||||||||||||||||
U.S. Treasury and government agencies | $ | 11,354 | $ | 112 | $ | — | $ | 11,466 | |||||||||||||||||
States and political subdivisions | 3,535 | 107 | (3 | ) | 3,639 | ||||||||||||||||||||
Corporate debt securities | 19,108 | 262 | (1 | ) | 19,369 | ||||||||||||||||||||
Certificates of deposit | 13,210 | 65 | (1 | ) | 13,274 | ||||||||||||||||||||
Total | $ | 47,207 | $ | 546 | $ | (5 | ) | $ | 47,748 | ||||||||||||||||
Gross Realized Gains and Losses on Available-for-Sale Investment | ' | ||||||||||||||||||||||||
Gross realized gains and losses on available-for-sale investments for the nine months ended September 30 were as follows (in thousands): | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Gross gains | $ | 40 | $ | 921 | |||||||||||||||||||||
Gross losses | (8 | ) | (121 | ) | |||||||||||||||||||||
Total | $ | 32 | $ | 800 | |||||||||||||||||||||
Summary of Available-for-sale Securities in Unrealized Loss Position | ' | ||||||||||||||||||||||||
The following table summarizes the Company’s available-for-sale securities in an unrealized loss position at September 30, 2013 and December 31, 2012, the estimated fair value and amount of gross unrealized losses, aggregated by investment category and length of time those securities have been continuously in an unrealized loss position (in thousands): | |||||||||||||||||||||||||
September 30, 2013 | |||||||||||||||||||||||||
Less Than Twelve | Twelve Months or | Total | |||||||||||||||||||||||
Months | Greater | ||||||||||||||||||||||||
Estimated | Gross | Estimated | Gross | Estimated | Gross | ||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||||
U.S. Treasury and government agencies | $ | 11,973 | $ | (38 | ) | $ | — | $ | — | $ | 11,973 | $ | (38 | ) | |||||||||||
Mortgage-backed securities | 2,648 | (34 | ) | — | — | 2,648 | (34 | ) | |||||||||||||||||
Corporate debt securities | 23,497 | (307 | ) | — | — | 23,497 | (307 | ) | |||||||||||||||||
Total | $ | 38,118 | $ | (379 | ) | $ | — | $ | — | $ | 38,118 | $ | (379 | ) | |||||||||||
December 31, 2012 | |||||||||||||||||||||||||
Less Than Twelve | Twelve Months or | Total | |||||||||||||||||||||||
Months | Greater | ||||||||||||||||||||||||
Estimated | Gross | Estimated | Gross | Estimated | Gross | ||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||||
States and political subdivisions | $ | — | $ | — | $ | 71 | $ | (3 | ) | $ | 71 | $ | (3 | ) | |||||||||||
Corporate debt securities | 979 | (1 | ) | — | — | 979 | (1 | ) | |||||||||||||||||
Certificates of deposit | 499 | (1 | ) | — | — | 499 | (1 | ) | |||||||||||||||||
Total | $ | 1,478 | $ | (2 | ) | $ | 71 | $ | (3 | ) | $ | 1,549 | $ | (5 | ) | ||||||||||
Fixed income securities | ' | ||||||||||||||||||||||||
Summary of Available-for-Sale Securities | ' | ||||||||||||||||||||||||
The Company’s amortized cost and estimated fair values of fixed-income securities at September 30, 2013 by contractual maturity were as follows (in thousands): | |||||||||||||||||||||||||
Amortized | Estimated Fair | ||||||||||||||||||||||||
Cost | Value | ||||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||||
Due in one year or less | $ | 26,073 | $ | 26,098 | |||||||||||||||||||||
Due after one year through five years | 32,523 | 32,595 | |||||||||||||||||||||||
Due after five years through ten years | 7,486 | 7,403 | |||||||||||||||||||||||
Mortgage-backed securities | 3,983 | 3,959 | |||||||||||||||||||||||
Total | $ | 70,065 | $ | 70,055 | |||||||||||||||||||||
Reinsurance_Tables
Reinsurance (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Effect of Reinsurance on Premiums Written and Earned | ' | ||||||||||||||||||||||||
The effect of reinsurance on premiums written and earned was as follows (in thousands): | |||||||||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Written | Earned | Loss and | Written | Earned | Loss and | ||||||||||||||||||||
Premium | Premium | Loss | Premium | Premium | Loss | ||||||||||||||||||||
Adjustment | Adjustment | ||||||||||||||||||||||||
Expenses | Expenses | ||||||||||||||||||||||||
Direct | $ | 78,061 | $ | 74,560 | $ | 65,518 | $ | 50,667 | $ | 44,665 | $ | 28,837 | |||||||||||||
Reinsurance assumed | — | — | (319 | ) | 9,095 | 9,997 | 7,538 | ||||||||||||||||||
Reinsurance ceded | (44,950 | ) | (43,758 | ) | (31,474 | ) | (21,252 | ) | (19,401 | ) | (10,978 | ) | |||||||||||||
Total | $ | 33,111 | $ | 30,802 | $ | 33,725 | $ | 38,510 | $ | 35,261 | $ | 25,397 | |||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Written | Earned | Loss and | Written | Earned | Loss and | ||||||||||||||||||||
Premium | Premium | Loss | Premium | Premium | Loss | ||||||||||||||||||||
Adjustment | Adjustment | ||||||||||||||||||||||||
Expenses | Expenses | ||||||||||||||||||||||||
Direct | $ | 231,921 | $ | 206,835 | $ | 160,834 | $ | 143,313 | $ | 135,688 | $ | 93,234 | |||||||||||||
Reinsurance assumed | (11,812 | ) | — | 4 | 29,115 | 26,925 | 21,559 | ||||||||||||||||||
Reinsurance ceded | (110,437 | ) | (85,043 | ) | (57,307 | ) | (45,889 | ) | (58,236 | ) | (37,007 | ) | |||||||||||||
Total | $ | 109,672 | $ | 121,792 | $ | 103,531 | $ | 126,539 | $ | 104,377 | $ | 77,786 | |||||||||||||
Selling, General and Administrative Expenses | ' | ||||||||||||||||||||||||
Ceding commissions recognized, reflected as a reduction of selling, general and administrative expenses, were as follows (in thousands): | |||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||
Selling, general and administrative expenses | $ | (13,734 | ) | $ | (7,059 | ) | $ | (27,485 | ) | $ | (19,430 | ) | |||||||||||||
Amount of Loss Reserves and Unearned Premium | ' | ||||||||||||||||||||||||
The amount of loss reserves and unearned premium the Company would remain liable for in the event its reinsurers are unable to meet their obligations were as follows (in thousands): | |||||||||||||||||||||||||
September 30, | December 31, | ||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Losses and loss adjustment expense reserves | $ | 70,239 | $ | 67,166 | |||||||||||||||||||||
Unearned premium reserve | 50,022 | 24,628 | |||||||||||||||||||||||
Total | $ | 120,261 | $ | 91,794 | |||||||||||||||||||||
Amount of Receivables Due from Reinsurers | ' | ||||||||||||||||||||||||
The table below presents the total amount of receivables due from reinsurers as of September 30, 2013 and December 31, 2012 (in thousands): | |||||||||||||||||||||||||
September 30, | December 31, | ||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Quota-share reinsurer for agreements effective September 1, 2011 and March 31, 2013 | $ | 95,824 | $ | 53,195 | |||||||||||||||||||||
Michigan Catastrophic Claims Association | 36,106 | 39,652 | |||||||||||||||||||||||
Vesta Insurance Group | 13,425 | 13,674 | |||||||||||||||||||||||
Excess of loss reinsurers | 3,810 | 5,521 | |||||||||||||||||||||||
Quota-share reinsurer for agreements effective in fourth quarter of 2010 and January 1, 2011 | (1,122 | ) | 5,800 | ||||||||||||||||||||||
Other | 2,415 | 2,759 | |||||||||||||||||||||||
Total reinsurance receivable | $ | 150,458 | $ | 120,601 | |||||||||||||||||||||
Deferred_Policy_Acquisition_Co1
Deferred Policy Acquisition Costs (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Components of Deferred Policy Acquisition Costs and Related Amortization Expense | ' | ||||||||||||
The components of deferred policy acquisition costs and the related amortization expense were as follows for the three months ended September 30, 2013 and 2012 (in thousands): | |||||||||||||
Gross | Ceded | Net | |||||||||||
Balance at July 1, 2013 | $ | 8,908 | $ | (14,398 | ) | $ | (5,490 | ) | |||||
Additions | 8,802 | (13,218 | ) | (4,416 | ) | ||||||||
Amortization | (8,304 | ) | 12,864 | 4,560 | |||||||||
Ending balance at September 30, 2013 | $ | 9,406 | $ | (14,752 | ) | $ | (5,346 | ) | |||||
Balance at July 1, 2012 | $ | 4,961 | $ | (6,398 | ) | $ | (1,437 | ) | |||||
Additions | 5,051 | (6,014 | ) | (963 | ) | ||||||||
Amortization | (4,286 | ) | 5,484 | 1,198 | |||||||||
Ending balance at September 30, 2012 | $ | 5,726 | $ | (6,928 | ) | $ | (1,202 | ) | |||||
The components of deferred policy acquisition costs and the related amortization expense were as follows for the nine months ended September 30, 2013 and 2012 (in thousands): | |||||||||||||
Gross | Ceded | Net | |||||||||||
Balance at January 1, 2013 | $ | 7,111 | $ | (7,013 | ) | $ | 98 | ||||||
Additions | 25,040 | (32,467 | ) | (7,427 | ) | ||||||||
Amortization | (22,745 | ) | 24,728 | 1,983 | |||||||||
Ending balance at September 30, 2013 | $ | 9,406 | $ | (14,752 | ) | $ | (5,346 | ) | |||||
Balance at January 1, 2012 | $ | 3,668 | $ | (10,132 | ) | $ | (6,464 | ) | |||||
Additions | 13,741 | (13,176 | ) | 565 | |||||||||
Amortization | (11,683 | ) | 16,380 | 4,697 | |||||||||
Ending balance at September 30, 2012 | $ | 5,726 | $ | (6,928 | ) | $ | (1,202 | ) | |||||
Debt_Tables
Debt (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Summary of Long-Term Debt Instruments and Balances Outstanding | ' | ||||||||
The Company’s long-term debt instruments and balances outstanding at September 30, 2013 and December 31, 2012 were as follows (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Notes payable due 2035 | $ | 30,928 | $ | 30,928 | |||||
Notes payable due 2035 | 25,774 | 25,774 | |||||||
Notes payable due 2035 | 20,129 | 20,140 | |||||||
Total notes payable | 76,831 | 76,842 | |||||||
Senior secured credit facility effective January 2007, net of discount | — | 99,323 | |||||||
Senior secured credit facility effective September 2013, net of discount | 38,000 | — | |||||||
Subordinated secured credit facility | 13,000 | — | |||||||
Mortgage payable | 3,983 | — | |||||||
Total long-term debt | $ | 131,814 | $ | 176,165 | |||||
Capital_Lease_Obligation_Table
Capital Lease Obligation (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Property Under Capital Lease | ' | ||||||||
Property under capital lease consisted of the following as of September 30, 2013 and December 31, 2012 (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Computer software, software licenses and hardware | $ | 17,106 | $ | 17,106 | |||||
Accumulated depreciation | (11,444 | ) | (9,751 | ) | |||||
Computer software, software licenses and hardware, net | $ | 5,662 | $ | 7,355 | |||||
Future Lease Payments | ' | ||||||||
Estimated future lease payments for the years ending December 31 (in thousands): | |||||||||
Fourth quarter of 2013 | $ | 848 | |||||||
2014 | 3,390 | ||||||||
2015 | 1,413 | ||||||||
Total estimated future lease payments | 5,651 | ||||||||
Less: Amount representing interest | 325 | ||||||||
Present value of future lease payments | $ | 5,326 | |||||||
Income_Taxes_Tables
Income Taxes (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Provision for Income Taxes | ' | ||||||||||||||||
The provision for income taxes for the three and nine months ended September 30, 2013 and 2012 consisted of the following (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Current tax expense | $ | 4,195 | $ | 127 | $ | 4,396 | $ | 127 | |||||||||
Deferred tax expense | (3,314 | ) | 84 | (3,178 | ) | 252 | |||||||||||
Net income tax expense | $ | 881 | $ | 211 | $ | 1,218 | $ | 379 | |||||||||
Summary of Effective Tax Rate Differed from Statutory Rate | ' | ||||||||||||||||
The Company’s effective tax rate differed from the statutory rate of 35% for the three and nine months ended September 30 as follows (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Income (loss) before income taxes | $ | 48,499 | $ | (29,247 | ) | $ | 44,070 | $ | (43,254 | ) | |||||||
Tax provision computed at the federal statutory income tax rate | 16,975 | (10,237 | ) | 15,425 | (15,139 | ) | |||||||||||
Increases (reductions) in tax resulting from: | |||||||||||||||||
Tax-exempt interest | (4 | ) | (10 | ) | (13 | ) | (61 | ) | |||||||||
State income taxes | 3,453 | 40 | 3,593 | 335 | |||||||||||||
IRS audit settlement | — | — | — | (118 | ) | ||||||||||||
Goodwill impairment | — | 5,623 | — | 5,623 | |||||||||||||
Valuation allowance | (19,552 | ) | 4,809 | (17,811 | ) | 9,770 | |||||||||||
Other | 9 | (14 | ) | 24 | (31 | ) | |||||||||||
Income tax expense | $ | 881 | $ | 211 | $ | 1,218 | $ | 379 | |||||||||
Effective tax rate | 1.8 | % | (0.7 | %) | 2.8 | % | (0.9 | %) | |||||||||
Net_Income_Loss_per_Common_Sha1
Net Income (Loss) per Common Share (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Summary of Reconciliation of Numerators and Denominators for the Basic and Diluted Earnings per Share | ' | ||||||||||||||||
The following table sets forth the reconciliation of numerators and denominators for the basic and diluted earnings per share computation for the three and nine months ended September 30, 2013 and 2012 (in thousands, except per share amounts): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) | $ | 47,618 | $ | (29,458 | ) | $ | 42,852 | $ | (43,633 | ) | |||||||
Denominator: | |||||||||||||||||
Weighted average common shares outstanding | 15,408 | 15,408 | 15,408 | 15,408 | |||||||||||||
Weighted average effect of dilutive securities | 364 | — | 123 | — | |||||||||||||
Total Weighted average diluted shares outstanding | 15,772 | 15,408 | 15,531 | 15,408 | |||||||||||||
Basic income (loss) per common share | $ | 3.09 | $ | (1.91 | ) | $ | 2.78 | $ | (2.83 | ) | |||||||
Diluted income (loss) per common share | $ | 3.02 | $ | (1.91 | ) | $ | 2.76 | $ | (2.83 | ) | |||||||
Disclosures_for_Items_Reclassi1
Disclosures for Items Reclassified Out of Accumulated Other Comprehensive Income (AOCI) (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Disclosures for Items Reclassified Out of Accumulated Other Comprehensive Income (AOCI) | ' | ||||||||
The following table sets forth the components of accumulated other comprehensive income (loss), including reclassification adjustments (in thousands): | |||||||||
Three Months | Nine Months | ||||||||
Ended | Ended | ||||||||
September 30, | September 30, | ||||||||
2013 | 2013 | ||||||||
Beginning balance | $ | (1,688 | ) | $ | (998 | ) | |||
Other comprehensive income (loss) before reclassifications | 148 | (519 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) | (9 | ) | (32 | ) | |||||
Net current period other comprehensive income (loss) | 139 | (551 | ) | ||||||
Ending balance | $ | (1,549 | ) | $ | (1,549 | ) | |||
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
Financial Assets Measured at Fair Value on Recurring Basis | ' | ||||||||||||||||||||
The following table provides information as of September 30, 2013 about the Company’s financial assets measured at fair value on a recurring basis (in thousands): | |||||||||||||||||||||
Total | Quoted | Significant | Significant | ||||||||||||||||||
Prices in | Other | Unobservable | |||||||||||||||||||
Active | Observable | Inputs | |||||||||||||||||||
Markets | Inputs | (Level 3) | |||||||||||||||||||
(Level 1) | (Level 2) | ||||||||||||||||||||
U.S. Treasury and government agencies | $ | 18,718 | $ | 18,718 | $ | — | $ | — | |||||||||||||
Mortgage-backed securities | 3,959 | — | 3,959 | — | |||||||||||||||||
States and political subdivisions | 3,405 | — | 3,405 | — | |||||||||||||||||
Corporate debt securities | 33,609 | — | 33,609 | — | |||||||||||||||||
Certificates of deposit | 10,364 | — | 10,364 | — | |||||||||||||||||
Total investment securities | 70,055 | 18,718 | 51,337 | — | |||||||||||||||||
Other invested assets | 3,991 | — | — | 3,991 | |||||||||||||||||
Total assets | $ | 74,046 | $ | 18,718 | $ | 51,337 | $ | 3,991 | |||||||||||||
The following table provides information as of December 31, 2012 about the Company’s financial assets measured at fair value on a recurring basis (in thousands): | |||||||||||||||||||||
Total | Quoted | Significant | Significant | ||||||||||||||||||
Prices in | Other | Unobservable | |||||||||||||||||||
Active | Observable | Inputs | |||||||||||||||||||
Markets | Inputs | (Level 3) | |||||||||||||||||||
(Level 1) | (Level 2) | ||||||||||||||||||||
U.S. Treasury and government agencies | $ | 11,466 | $ | 11,466 | $ | — | $ | — | |||||||||||||
States and political subdivisions | 3,639 | — | 3,639 | — | |||||||||||||||||
Corporate debt securities | 19,369 | — | 19,369 | — | |||||||||||||||||
Certificates of deposit | 13,274 | — | 13,274 | — | |||||||||||||||||
Total investment securities | 47,748 | 11,466 | 36,282 | — | |||||||||||||||||
Other invested assets | 3,390 | — | — | 3,390 | |||||||||||||||||
Total assets | $ | 51,138 | $ | 11,466 | $ | 36,282 | $ | 3,390 | |||||||||||||
Fair Value Measurements for Assets | ' | ||||||||||||||||||||
Fair value measurements for assets in Level 3 for the three months ended September 30, 2013 were as follows (in thousands): | |||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||
Using Significant | |||||||||||||||||||||
Unobservable Inputs | |||||||||||||||||||||
(Level 3) | |||||||||||||||||||||
Other Invested Assets | |||||||||||||||||||||
Balance at July 1, 2013 | $ | 3,926 | |||||||||||||||||||
Transfers into Level 3 | — | ||||||||||||||||||||
Total gains included in earnings as net investment income | 65 | ||||||||||||||||||||
Settlements | — | ||||||||||||||||||||
Balance at September 30, 2013 | $ | 3,991 | |||||||||||||||||||
Fair value measurements for assets in Level 3 for the three months ended September 30, 2012 were as follows (in thousands): | |||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||
Using Significant | |||||||||||||||||||||
Unobservable Inputs | |||||||||||||||||||||
(Level 3) | |||||||||||||||||||||
Other Invested Assets | |||||||||||||||||||||
Balance at July 1, 2012 | $ | 3,098 | |||||||||||||||||||
Transfers into Level 3 | — | ||||||||||||||||||||
Total gains included in earnings as net investment income | 211 | ||||||||||||||||||||
Settlements | — | ||||||||||||||||||||
Balance at September 30, 2012 | $ | 3,309 | |||||||||||||||||||
Fair value measurements for assets in Level 3 for the nine months ended September 30, 2013 were as follows (in thousands): | |||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||
Using Significant | |||||||||||||||||||||
Unobservable Inputs | |||||||||||||||||||||
(Level 3) | |||||||||||||||||||||
Other Invested Assets | |||||||||||||||||||||
Balance at January 1, 2013 | $ | 3,390 | |||||||||||||||||||
Transfers into Level 3 | — | ||||||||||||||||||||
Total gains included in earnings as net investment income | 601 | ||||||||||||||||||||
Settlements | — | ||||||||||||||||||||
Balance at September 30, 2013 | $ | 3,991 | |||||||||||||||||||
Fair value measurements for assets in Level 3 for the nine months ended September 30, 2012 were as follows (in thousands): | |||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||
Using Significant | |||||||||||||||||||||
Unobservable Inputs | |||||||||||||||||||||
(Level 3) | |||||||||||||||||||||
Other Invested Assets | |||||||||||||||||||||
Balance at January 1, 2012 | $ | 2,898 | |||||||||||||||||||
Transfers into Level 3 | — | ||||||||||||||||||||
Total gains included in earnings as net investment income | 411 | ||||||||||||||||||||
Settlements | — | ||||||||||||||||||||
Balance at September 30, 2012 | $ | 3,309 | |||||||||||||||||||
Fair Value Measurements for Assets and Liabilities | ' | ||||||||||||||||||||
The following table presents the carrying value and estimated fair value of the Company’s financial assets and liabilities disclosed, but not carried, at fair value at September 30, 2013 and the level within the fair value hierarchy (in thousands): | |||||||||||||||||||||
Carrying | Estimated | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Value | Fair Value | ||||||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 40,570 | $ | 40,570 | $ | 40,570 | $ | — | $ | — | |||||||||||
Fiduciary and restricted cash | 843 | 843 | 843 | — | — | ||||||||||||||||
Total | $ | 41,413 | $ | 41,413 | $ | 41,413 | $ | — | $ | — | |||||||||||
Liabilities: | |||||||||||||||||||||
Notes payable | $ | 76,831 | $ | 12,525 | $ | — | $ | — | $ | 12,525 | |||||||||||
Senior secured credit facility | 38,000 | 38,000 | — | — | 38,000 | ||||||||||||||||
Subordinated secured credit facility | 13,000 | 13,000 | — | — | 13,000 | ||||||||||||||||
Mortgage payable | 3,983 | 3,983 | — | — | 3,983 | ||||||||||||||||
Total | $ | 131,814 | $ | 67,508 | $ | — | $ | — | $ | 67,508 | |||||||||||
The following table presents the carrying value and estimated fair value of the Company’s financial assets and liabilities disclosed, but not carried, at fair value at December 31, 2012 and the level within the fair value hierarchy (in thousands): | |||||||||||||||||||||
Carrying | Estimated | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Value | Fair Value | ||||||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 38,176 | $ | 38,176 | $ | 38,176 | $ | — | $ | — | |||||||||||
Fiduciary and restricted cash | 569 | 569 | 569 | — | — | ||||||||||||||||
Total | $ | 38,745 | $ | 38,745 | $ | 38,745 | $ | — | $ | — | |||||||||||
Liabilities: | |||||||||||||||||||||
Notes payable | $ | 76,842 | $ | 7,655 | $ | — | $ | — | $ | 7,655 | |||||||||||
Senior secured credit facility | 99,323 | 55,002 | — | — | 55,002 | ||||||||||||||||
Total | $ | 176,165 | $ | 62,657 | $ | — | $ | — | $ | 62,657 | |||||||||||
Going_Concern_Additional_Infor
Going Concern - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Going Concern [Line Items] | ' | ' | ' | ' | ' | ' |
Net income (loss) | ' | $47,618,000 | ($29,458,000) | $42,852,000 | ($43,633,000) | ($51,900,000) |
Qualifying investments required | 250,000,000 | 250,000,000 | ' | 250,000,000 | ' | ' |
Adjusted loss reserves percentage | 100.00% | 100.00% | ' | 100.00% | ' | ' |
Qualifying investment reserve deficiency | ' | ' | ' | ' | ' | 16,500,000 |
Cash proceeds from sale of business | 101,800,000 | ' | ' | 101,800,000 | ' | ' |
Potential additional cash proceeds from sale of business | 20,000,000 | 20,000,000 | ' | 20,000,000 | ' | ' |
Debt instrument maturity period | ' | ' | ' | 15-Dec-15 | ' | ' |
Senior Secured Credit Facility | ' | ' | ' | ' | ' | ' |
Going Concern [Line Items] | ' | ' | ' | ' | ' | ' |
Secured credit facility | 40,000,000 | 40,000,000 | ' | 40,000,000 | ' | ' |
Debt instrument maturity period | ' | ' | ' | 30-Mar-16 | ' | ' |
Subordinated Secured Credit Facility | ' | ' | ' | ' | ' | ' |
Going Concern [Line Items] | ' | ' | ' | ' | ' | ' |
Debt instrument maturity period | ' | ' | ' | 30-Mar-17 | ' | ' |
Debt instrument face amount | $10,000,000 | $10,000,000 | ' | $10,000,000 | ' | ' |
Sale_of_the_Retail_Business_Ad
Sale of the Retail Business - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Entity | |||
Location | |||
Assets And Liabilities Disposed On Sale Of Business [Line Items] | ' | ' | ' |
Number of retail locations | 195 | ' | ' |
Number of premium finance companies | 2 | ' | ' |
Cash proceeds from sale of business | $101,800,000 | ' | $101,800,000 |
Potential additional cash proceeds from sale of business | 20,000,000 | 20,000,000 | 20,000,000 |
Amount held in escrow dependent upon the risk-based capital status | 20,000,000 | 20,000,000 | 20,000,000 |
Working capital adjustment | 1,800,000 | ' | ' |
Gain (loss) on sale of Retail Business | ' | 65,325,000 | 65,325,000 |
Premiums, fees receivables and due to third party carriers, net | 20,900,000 | 20,900,000 | 20,900,000 |
30-Jun-14 | ' | ' | ' |
Assets And Liabilities Disposed On Sale Of Business [Line Items] | ' | ' | ' |
Potential additional cash proceeds from sale of business | 10,000,000 | 10,000,000 | 10,000,000 |
30-Sep-14 | ' | ' | ' |
Assets And Liabilities Disposed On Sale Of Business [Line Items] | ' | ' | ' |
Potential additional cash proceeds from sale of business | $10,000,000 | $10,000,000 | $10,000,000 |
Component_of_Net_Assets_Sold_D
Component of Net Assets Sold (Detail) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Assets | ' |
Cash and cash equivalents | $2,529 |
Premium finance and commission receivable | 25,458 |
Other intangible assets | 12,764 |
Other assets | 3,455 |
Total Assets | 44,206 |
Liabilities | ' |
Due to third-party carriers | 3,589 |
Other liabilities | 6,974 |
Total Liabilities | 10,563 |
Net Assets | $33,643 |
Amortized_Cost_Gross_Unrealize
Amortized Cost Gross Unrealized Gains Losses and Estimated Fair Value of Available-for-Sale Securities (Detail) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Amortized Cost | $70,065 | $47,207 |
Gross Unrealized Gains | 369 | 546 |
Gross Unrealized Losses | -379 | -5 |
Estimated Fair Value | 70,055 | 47,748 |
U.S. Treasury and government agencies | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Amortized Cost | 18,690 | 11,354 |
Gross Unrealized Gains | 66 | 112 |
Gross Unrealized Losses | -38 | ' |
Estimated Fair Value | 18,718 | 11,466 |
Mortgage-backed securities | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Amortized Cost | 3,983 | ' |
Gross Unrealized Gains | 10 | ' |
Gross Unrealized Losses | -34 | ' |
Estimated Fair Value | 3,959 | ' |
States and political subdivisions | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Amortized Cost | 3,331 | 3,535 |
Gross Unrealized Gains | 74 | 107 |
Gross Unrealized Losses | ' | -3 |
Estimated Fair Value | 3,405 | 3,639 |
Corporate debt securities | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Amortized Cost | 33,751 | 19,108 |
Gross Unrealized Gains | 165 | 262 |
Gross Unrealized Losses | -307 | -1 |
Estimated Fair Value | 33,609 | 19,369 |
Certificates of deposit | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Amortized Cost | 10,310 | 13,210 |
Gross Unrealized Gains | 54 | 65 |
Gross Unrealized Losses | ' | -1 |
Estimated Fair Value | $10,364 | $13,274 |
Amortized_Costs_and_Estimated_
Amortized Costs and Estimated Fair Values of Fixed Income Securities (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Amortized Cost | $70,065 | $47,207 |
Estimated Fair Value | 70,055 | 47,748 |
Fixed income securities | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Fixed maturities, Due in one year or less, Amortized Cost | 26,073 | ' |
Fixed maturities, Due after one year through five years, Amortized Cost | 32,523 | ' |
Fixed maturities, Due after five years through ten years, Amortized Cost | 7,486 | ' |
Mortgage-backed securities, Amortized Cost | 3,983 | ' |
Fixed maturities, Due in one year or less, Estimated Fair Value | 26,098 | ' |
Fixed maturities, Due after one year through five years, Estimated Fair Value | 32,595 | ' |
Fixed maturities, Due after five years through ten years, Estimated Fair Value | 7,403 | ' |
Mortgage-backed securities, Estimated Fair Value | $3,959 | ' |
Gross_Realized_Gains_and_Losse
Gross Realized Gains and Losses on Available-for-Sale Investments (Detail) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Gross gains | $40 | $921 |
Gross losses | -8 | -121 |
Total | $32 | $800 |
AvailableforSale_Investment_Se2
Available-for-Sale Investment Securities in Unrealized Loss Position (Detail) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Less Than Twelve Months Estimated Fair Value | $38,118 | $1,478 |
Less Than Twelve Months Gross Unrealized Losses | -379 | -2 |
Twelve Months or Greater Estimated Fair Value | ' | 71 |
Twelve Months or Greater Gross Unrealized Losses | ' | -3 |
Total Estimated Fair Value | 38,118 | 1,549 |
Total Gross Unrealized Losses | -379 | -5 |
U.S. Treasury and government agencies | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Less Than Twelve Months Estimated Fair Value | 11,973 | ' |
Less Than Twelve Months Gross Unrealized Losses | -38 | ' |
Total Estimated Fair Value | 11,973 | ' |
Total Gross Unrealized Losses | -38 | ' |
Mortgage-backed securities | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Less Than Twelve Months Estimated Fair Value | 2,648 | ' |
Less Than Twelve Months Gross Unrealized Losses | -34 | ' |
Total Estimated Fair Value | 2,648 | ' |
Total Gross Unrealized Losses | -34 | ' |
Corporate debt securities | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Less Than Twelve Months Estimated Fair Value | 23,497 | 979 |
Less Than Twelve Months Gross Unrealized Losses | -307 | -1 |
Total Estimated Fair Value | 23,497 | 979 |
Total Gross Unrealized Losses | -307 | -1 |
Certificates of deposit | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Less Than Twelve Months Estimated Fair Value | ' | 499 |
Less Than Twelve Months Gross Unrealized Losses | ' | -1 |
Total Estimated Fair Value | ' | 499 |
Total Gross Unrealized Losses | ' | -1 |
States and political subdivisions | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Twelve Months or Greater Estimated Fair Value | ' | 71 |
Twelve Months or Greater Gross Unrealized Losses | ' | -3 |
Total Estimated Fair Value | ' | 71 |
Total Gross Unrealized Losses | ' | ($3) |
AvailableforSale_Investment_Se3
Available-for-Sale Investment Securities - Additional Information (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | Securities | Securities |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Individual investment securities in an unrealized loss position | 50 | 16 |
Available-for-sale securities pledged as collateral | $6.70 | $9.10 |
Certificates of deposit | Capital Lease | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Available-for-sale securities pledged as collateral | 5.4 | ' |
Certificates of deposit | Third Party Credit Card Processor | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Available-for-sale securities pledged as collateral | $5 | ' |
Reinsurance_Additional_Informa
Reinsurance - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 1 Months Ended | 25 Months Ended | 1 Months Ended | 3 Months Ended | 25 Months Ended | ||||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Mar. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | Mar. 31, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Affirmative Insurance Company | Affirmative Insurance Company | Affirmative Insurance Company | Affirmative Insurance Company | Subsidiaries | Quota-share reinsurer for agreements effective in fourth quarter of 2010 and January 2011 | Quota-share reinsurer for agreements effective in fourth quarter of 2010 and January 2011 | Quota-share reinsurer for agreements effective in fourth quarter of 2010 and January 2011 | Vesta Insurance Group | Vesta Insurance Group | New Quota Share Reinsurance Treaty Agreements | New Quota Share Reinsurance Treaty Agreements | New Quota Share Reinsurance Treaty Agreements | New Quota Share Reinsurance Treaty Agreements | |||||||
Cash Equivalents | Cash Equivalents | Louisiana, Alabama, Texas, Illinois | Louisiana, Alabama, Texas, Illinois | Louisiana, Alabama, Texas, Illinois | Louisiana, Alabama, Texas, Illinois | |||||||||||||||
Effects of Reinsurance [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ceded percentage of business produced | ' | ' | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 40.00% | 40.00% | ' | ' |
Conversion rate of quota share reinsurance contract | ' | ' | ' | ' | ' | 40.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ceded unearned premium | ' | ' | ' | $11,800,000 | ' | ' | ' | ' | ' | ' | ' | $27,200,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred ceding commission | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,700,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Unearned premium ceded | 44,950,000 | 21,252,000 | ' | 110,437,000 | 45,889,000 | ' | ' | ' | ' | ' | ' | ' | 99,400,000 | ' | ' | ' | ' | ' | 44,600,000 | 115,100,000 |
Percentage of policies issued | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total deposit | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 16,600,000 | ' | ' | ' | ' | ' |
Deposit after cumulative withdrawals | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,000,000 | ' | ' | ' | ' | ' |
Treasury money market account | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15,600,000 | ' | ' | ' | ' | ' |
Corporate bond deposits | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | ' | ' | ' | ' | ' |
Receivable from reinsurers | 150,458,000 | ' | ' | 150,458,000 | ' | 120,601,000 | ' | ' | ' | ' | ' | ' | -1,122,000 | 5,800,000 | 13,425,000 | 13,674,000 | ' | ' | ' | ' |
Company obligation under reinsurance contract | ' | ' | ' | ' | ' | ' | 15,000,000 | 27,700,000 | 1,700,000 | 9,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reserves for losses and loss adjustment expenses | 126,756,000 | ' | ' | 126,756,000 | ' | 138,854,000 | ' | ' | ' | ' | 2,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Funds in a money market cash equivalent account | 15,700,000 | ' | ' | 15,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cumulative withdrawal by first party | 400,000 | ' | ' | 400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cumulative withdrawal by second party | $1,700,000 | ' | ' | $1,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effect_of_Reinsurance_on_Premi
Effect of Reinsurance on Premiums Written and Earned (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Effects of Reinsurance [Line Items] | ' | ' | ' | ' |
Written Premium, Direct | $78,061 | $50,667 | $231,921 | $143,313 |
Written Premium, Reinsurance assumed | ' | 9,095 | -11,812 | 29,115 |
Written Premium, Reinsurance ceded | -44,950 | -21,252 | -110,437 | -45,889 |
Written Premium, Total | 33,111 | 38,510 | 109,672 | 126,539 |
Earned Premium, Direct | 74,560 | 44,665 | 206,835 | 135,688 |
Earned Premium, Reinsurance assumed | ' | 9,997 | ' | 26,925 |
Earned Premium, Reinsurance ceded | -43,758 | -19,401 | -85,043 | -58,236 |
Earned Premium, Total | 30,802 | 35,261 | 121,792 | 104,377 |
Loss and Loss Adjustment Expenses, Direct | 65,518 | 28,837 | 160,834 | 93,234 |
Loss and Loss Adjustment Expenses, Reinsurance assumed | -319 | 7,538 | 4 | 21,559 |
Loss and Loss Adjustment Expenses, Reinsurance ceded | -31,474 | -10,978 | -57,307 | -37,007 |
Loss and Loss Adjustment Expenses, Total | $33,725 | $25,397 | $103,531 | $77,786 |
Adjustments_to_Ceding_Commissi
Adjustments to Ceding Commissions Recognized (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Effects of Reinsurance [Line Items] | ' | ' | ' | ' |
Selling, general and administrative expenses | ($13,734) | ($7,059) | ($27,485) | ($19,430) |
Amount_of_Loss_Reserves_and_Un
Amount of Loss Reserves and Unearned Premium (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Effects of Reinsurance [Line Items] | ' | ' |
Losses and loss adjustment expense reserves | $70,239 | $67,166 |
Unearned premium reserve | 50,022 | 24,628 |
Total | $120,261 | $91,794 |
Amount_of_Receivables_Due_from
Amount of Receivables Due from Reinsurers (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Total reinsurance receivable | $150,458 | $120,601 |
Quota-share reinsurer for agreements effective September 1, 2011 and March 31, 2013 | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Total reinsurance receivable | 95,824 | 53,195 |
Michigan Catastrophic Claims Association | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Total reinsurance receivable | 36,106 | 39,652 |
Vesta Insurance Group | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Total reinsurance receivable | 13,425 | 13,674 |
Excess of Loss Reinsurers | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Total reinsurance receivable | 3,810 | 5,521 |
Quota-share reinsurer for agreements effective in fourth quarter of 2010 and January 2011 | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Total reinsurance receivable | -1,122 | 5,800 |
Other | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Total reinsurance receivable | $2,415 | $2,759 |
Summary_of_Policy_Acquisition_
Summary of Policy Acquisition Cost (Detail) (USD $) | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
In Thousands, unless otherwise specified | Deferred Policy Acquisition Costs, Gross | Deferred Policy Acquisition Costs, Gross | Deferred Policy Acquisition Costs, Gross | Deferred Policy Acquisition Costs, Gross | Deferred Policy Acquisition Costs, Ceded | Deferred Policy Acquisition Costs, Ceded | Deferred Policy Acquisition Costs, Ceded | Deferred Policy Acquisition Costs, Ceded | Deferred Policy acquisition Costs, Net | Deferred Policy acquisition Costs, Net | Deferred Policy acquisition Costs, Net | Deferred Policy acquisition Costs, Net | |
Deferred Policy Acquisition Costs [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Beginning balance | $98 | $8,908 | $4,961 | $7,111 | $3,668 | ($14,398) | ($6,398) | ($7,013) | ($10,132) | ($5,490) | ($1,437) | $98 | ($6,464) |
Additions | ' | 8,802 | 5,051 | 25,040 | 13,741 | -13,218 | -6,014 | -32,467 | -13,176 | -4,416 | -963 | -7,427 | 565 |
Amortization | ' | -8,304 | -4,286 | -22,745 | -11,683 | 12,864 | 5,484 | 24,728 | 16,380 | 4,560 | 1,198 | 1,983 | 4,697 |
Ending balance | $98 | $9,406 | $5,726 | $9,406 | $5,726 | ($14,752) | ($6,928) | ($14,752) | ($6,928) | ($5,346) | ($1,202) | ($5,346) | ($1,202) |
Summary_of_LongTerm_Debt_Instr
Summary of Long-Term Debt Instruments and Balances Outstanding (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Debt Instrument [Line Items] | ' | ' |
Notes payable | $76,831 | $76,842 |
Subordinated secured credit facility | 13,000 | ' |
Mortgage payable | 3,983 | ' |
Total long-term debt | 131,814 | 176,165 |
Notes payable due 2035 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Notes payable | 30,928 | 30,928 |
Notes payable due 2035 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Notes payable | 25,774 | 25,774 |
Notes payable due 2035 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Notes payable | 20,129 | 20,140 |
Effective January 2007 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Senior secured credit facility, net of discount | ' | 99,323 |
Effective September 2013 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Senior secured credit facility, net of discount | $38,000 | ' |
Debt_Additional_Information_De
Debt - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Notes payable | $76,831,000 | $76,831,000 | ' | $76,842,000 |
Period of interest payments on selected notes payable | ' | '5 years | ' | ' |
Total deferred interest payable at the expiration of interest deferral period | 4,000,000 | 4,000,000 | ' | ' |
Debt instrument maturity period | ' | 15-Dec-15 | ' | ' |
Principal balance | 13,000,000 | 13,000,000 | ' | ' |
Extinguishment of debt gain | -4,193,000 | -4,193,000 | ' | ' |
Deferred debt issuance cost | ' | 2,200,000 | ' | ' |
Legal fees | ' | 1,400,000 | ' | ' |
Prepayment premium | ' | 600,000 | ' | ' |
Debt issuance cost capitalized | 4,400,000 | 4,400,000 | ' | ' |
Secured loan | ' | ' | 4,800,000 | ' |
Mortgage, interest rate | 4.95% | 4.95% | ' | ' |
Mortgage payable | 4,000,000 | 4,000,000 | ' | ' |
ITL-B | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Incremental term loan period | ' | '2013-08 | ' | ' |
Debt instrument face amount | 12,500,000 | 12,500,000 | ' | ' |
Senior Secured Credit Facility | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Interest rate | 8.50% | 8.50% | ' | ' |
Interest rate adjusted | ' | 7.25% | ' | ' |
Secured credit facility | 40,000,000 | 40,000,000 | ' | ' |
Debt instrument maturity period | ' | 30-Mar-16 | ' | ' |
Leverage ratio under condition one | ' | 1.25% | ' | ' |
Debt instrument discount | 2,000,000 | 2,000,000 | ' | ' |
Senior Secured Credit Facility | September 30, 2014 Payment Due | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Repayment of credit facility | ' | 2,000,000 | ' | ' |
Senior Secured Credit Facility | September 30, 2015 Payment Due | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Repayment of credit facility | ' | 3,500,000 | ' | ' |
Senior Secured Credit Facility | December 31, 2015 Payment Due | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Repayment of credit facility | ' | 4,500,000 | ' | ' |
Senior Secured Credit Facility | March 30, 2016 Payment Due | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Repayment of credit facility | ' | 13,500,000 | ' | ' |
Subordinated Secured Credit Facility | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Interest rate | 19.25% | 19.25% | ' | ' |
Interest rate adjusted | ' | 18.00% | ' | ' |
Debt instrument face amount | 10,000,000 | 10,000,000 | ' | ' |
Debt instrument maturity period | ' | 30-Mar-17 | ' | ' |
Leverage ratio under condition one | ' | 1.25% | ' | ' |
Commitment fee | ' | 3,000,000 | ' | ' |
Principal balance | 13,000,000 | 13,000,000 | ' | ' |
Notes payable due 2035 | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Notes payable | 30,928,000 | 30,928,000 | ' | 30,928,000 |
Interest rate | 3.85% | 3.85% | ' | ' |
Interest rate adjusted | ' | 3.60% | ' | ' |
Securities adjusted | ' | 'Three-month LIBOR | ' | ' |
Notes payable due 2035 | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Notes payable | 25,774,000 | 25,774,000 | ' | 25,774,000 |
Interest rate | 3.80% | 3.80% | ' | ' |
Interest rate adjusted | ' | 3.55% | ' | ' |
Securities adjusted | ' | 'Three-month LIBOR | ' | ' |
Notes Payable With Deferred Interest Right | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Notes payable | 56,700,000 | 56,700,000 | ' | ' |
Notes payable due 2035 | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' |
Notes payable | $20,129,000 | $20,129,000 | ' | $20,140,000 |
Interest rate | 4.20% | 4.20% | ' | ' |
Interest rate adjusted | ' | 3.95% | ' | ' |
Securities adjusted | ' | 'Three-month LIBOR | ' | ' |
Capital_Lease_Obligation_Addit
Capital Lease Obligation - Additional Information (Detail) (USD $) | 1 Months Ended | 9 Months Ended | |
In Millions, unless otherwise specified | 31-May-10 | Sep. 30, 2013 | Dec. 31, 2012 |
Leases | |||
Schedule of Capital Lease Obligations [Line Items] | ' | ' | ' |
Cash proceeds received from financing | $28.20 | ' | ' |
Purchase of FDIC-insured certificates of deposit | 28.2 | ' | ' |
Number of capital lease obligations | 2 | ' | ' |
Casualty loss value of the lease property | ' | 9.6 | ' |
Proceeds received by the lessor | ' | 8.3 | ' |
Remaining liquidated damages | ' | 1.3 | ' |
Proceed from Lessor | ' | '0.5 | ' |
Lease term | ' | '20 months | ' |
Total rental monthly payments | ' | 0.3 | ' |
Available-for-sale securities pledged as collateral | ' | $6.70 | $9.10 |
Property_Under_Capital_Lease_D
Property Under Capital Lease (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Capital Leased Assets [Line Items] | ' | ' |
Computer software, software licenses and hardware | $17,106 | $17,106 |
Accumulated depreciation | -11,444 | -9,751 |
Computer software, software licenses and hardware, net | $5,662 | $7,355 |
Estimated_Future_Lease_Payment
Estimated Future Lease Payments (Detail) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Schedule of Capital Lease Obligations [Line Items] | ' |
Fourth quarter of 2013 | $848 |
2014 | 3,390 |
2015 | 1,413 |
Total estimated future lease payments | 5,651 |
Less: Amount representing interest | 325 |
Present value of future lease payments | $5,326 |
Provision_for_Income_Taxes_Det
Provision for Income Taxes (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Provision For Income Taxes [Line Items] | ' | ' | ' | ' |
Current tax expense | $4,195 | $127 | $4,396 | $127 |
Deferred tax expense | -3,314 | 84 | -3,178 | 252 |
Net income tax expense | $881 | $211 | $1,218 | $379 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 |
Schedule Of Income Tax [Line Items] | ' | ' | ' |
Effective tax rate from statutory rate | 35.00% | 35.00% | ' |
Gross deferred tax assets | $86.20 | $86.20 | $103.40 |
Deferred tax assets valuation allowance | $85.20 | $85.20 | $101.90 |
Effective_Tax_Rate_Differed_fr
Effective Tax Rate Differed from Statutory Tax Rate (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Schedule Of Effective Tax Rates Line Items | ' | ' | ' | ' |
Income (loss) before income taxes | $48,499 | ($29,247) | $44,070 | ($43,254) |
Tax provision computed at the federal statutory income tax rate | 16,975 | -10,237 | 15,425 | -15,139 |
Increases (reductions) in tax resulting from: | ' | ' | ' | ' |
Tax-exempt interest | -4 | -10 | -13 | -61 |
State income taxes | 3,453 | 40 | 3,593 | 335 |
IRS audit settlement | ' | ' | ' | -118 |
Goodwill impairment | ' | 5,623 | ' | 5,623 |
Valuation allowance | -19,552 | 4,809 | -17,811 | 9,770 |
Other | 9 | -14 | 24 | -31 |
Income tax expense | $881 | $211 | $1,218 | $379 |
Effective tax rate | 1.80% | -0.70% | 2.80% | -0.90% |
Net_Income_Loss_per_Common_Sha2
Net Income Loss per Common Share - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Earnings Loss Per Share [Line Items] | ' | ' | ' | ' |
Stock options outstanding excluded from computation of earnings per share due to anti-dilutive effect | 1,195,883 | 2,484,500 | 1,195,883 | 2,484,500 |
Summary_of_Reconciliation_of_N
Summary of Reconciliation of Numerators and Denominators for Basic and Diluted Earnings per Share (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Numerator: | ' | ' | ' | ' | ' |
Net income (loss) | $47,618 | ($29,458) | $42,852 | ($43,633) | ($51,900) |
Denominator: | ' | ' | ' | ' | ' |
Weighted average common shares outstanding | 15,408 | 15,408 | 15,408 | 15,408 | ' |
Weighted average effect of dilutive securities | 364 | ' | 123 | ' | ' |
Total Weighted average diluted shares outstanding | 15,772 | 15,408 | 15,531 | 15,408 | ' |
Basic income (loss) per common share | $3.09 | ($1.91) | $2.78 | ($2.83) | ' |
Diluted income (loss) per common share | $3.02 | ($1.91) | $2.76 | ($2.83) | ' |
Related_Party_Transactions_Det
Related Party Transactions (Detail) (USD $) | Sep. 30, 2013 |
In Millions, unless otherwise specified | |
Subordinated Secured Credit Facility | ' |
Related Party Transaction [Line Items] | ' |
Debt instrument face amount | $10 |
JCF AFFM Debt Holdings, L.P. | ' |
Related Party Transaction [Line Items] | ' |
Ownership percentage | 51.00% |
JCF AFFM Debt Holdings, L.P. | Subordinated Secured Credit Facility | ' |
Related Party Transaction [Line Items] | ' |
Debt instrument face amount | $10 |
Items_Reclassified_Out_of_Accu
Items Reclassified Out of Accumulated Other Comprehensive Income (AOCI) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ' | ' |
Beginning balance | ($1,688) | ' | ($998) | ' |
Other comprehensive income (loss) before reclassifications | 148 | -15 | -519 | 172 |
Amounts reclassified from accumulated other comprehensive income (loss) | -9 | -190 | -32 | -800 |
Net current period other comprehensive income (loss) | 139 | -205 | -551 | -628 |
Ending balance | ($1,549) | ' | ($1,549) | ' |
Disclosures_for_Items_Reclassi2
Disclosures for Items Reclassified Out of Accumulated Other Comprehensive Income (AOCI) - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ' | ' |
Unrealized net gains on available-for-sale securities | ($9) | ($190) | ($32) | ($800) |
Financial_Assets_Measured_at_F
Financial Assets Measured at Fair Value on Recurring Basis (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | $70,055 | $47,748 |
Other invested assets | 3,991 | 3,390 |
Estimated Fair Value | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 70,055 | 47,748 |
Other invested assets | 3,991 | 3,390 |
Total assets | 74,046 | 51,138 |
Estimated Fair Value | U.S. Treasury and government agencies | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 18,718 | 11,466 |
Estimated Fair Value | Mortgage-backed securities | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 3,959 | ' |
Estimated Fair Value | States and political subdivisions | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 3,405 | 3,639 |
Estimated Fair Value | Corporate debt securities | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 33,609 | 19,369 |
Estimated Fair Value | Certificates of deposit | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 10,364 | 13,274 |
Estimated Fair Value | Level 1 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 18,718 | 11,466 |
Total assets | 18,718 | 11,466 |
Estimated Fair Value | Level 1 | U.S. Treasury and government agencies | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 18,718 | 11,466 |
Estimated Fair Value | Level 2 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 51,337 | 36,282 |
Total assets | 51,337 | 36,282 |
Estimated Fair Value | Level 2 | Mortgage-backed securities | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 3,959 | ' |
Estimated Fair Value | Level 2 | States and political subdivisions | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 3,405 | 3,639 |
Estimated Fair Value | Level 2 | Corporate debt securities | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 33,609 | 19,369 |
Estimated Fair Value | Level 2 | Certificates of deposit | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Total investment securities | 10,364 | 13,274 |
Estimated Fair Value | Level 3 | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' |
Other invested assets | 3,991 | 3,390 |
Total assets | $3,991 | $3,390 |
Fair_Value_Measurements_for_As
Fair Value Measurements for Assets using Unobservable Inputs (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' | ' | ' | ' |
Beginning Balance | $3,926 | $3,098 | $3,390 | $2,898 |
Transfers into Level 3 | ' | ' | ' | ' |
Total gains included in earnings as net investment income | 65 | 211 | 601 | 411 |
Settlements | ' | ' | ' | ' |
Ending Balance | $3,991 | $3,309 | $3,991 | $3,309 |
Fair_Value_Measurements_for_As1
Fair Value Measurements for Assets and Liabilities (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Liabilities: | ' | ' |
Subordinated secured credit facility | $13,000 | ' |
Level 1 | ' | ' |
Assets: | ' | ' |
Cash and cash equivalents | 40,570 | 38,176 |
Fiduciary and restricted cash | 843 | 569 |
Total | 41,413 | 38,745 |
Level 3 | ' | ' |
Liabilities: | ' | ' |
Notes payable | 12,525 | 7,655 |
Senior secured credit facility | 38,000 | 55,002 |
Subordinated secured credit facility | 13,000 | ' |
Mortgage payable | 3,983 | ' |
Total | 67,508 | 62,657 |
Carrying Value | ' | ' |
Assets: | ' | ' |
Cash and cash equivalents | 40,570 | 38,176 |
Fiduciary and restricted cash | 843 | 569 |
Total | 41,413 | 38,745 |
Liabilities: | ' | ' |
Notes payable | 76,831 | 76,842 |
Senior secured credit facility | 38,000 | 99,323 |
Subordinated secured credit facility | 13,000 | ' |
Mortgage payable | 3,983 | ' |
Total | 131,814 | 176,165 |
Estimated Fair Value | ' | ' |
Assets: | ' | ' |
Cash and cash equivalents | 40,570 | 38,176 |
Fiduciary and restricted cash | 843 | 569 |
Total | 41,413 | 38,745 |
Liabilities: | ' | ' |
Notes payable | 12,525 | 7,655 |
Senior secured credit facility | 38,000 | 55,002 |
Subordinated secured credit facility | 13,000 | ' |
Mortgage payable | 3,983 | ' |
Total | $67,508 | $62,657 |