Document_And_Entity_Informatio
Document And Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 13, 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 | 'HAHC | ' |
Entity Common Stock, Shares Outstanding | ' | 15,706,152 |
Entity Registrant Name | 'Homeowners of America Holding Corp | ' |
Entity Central Index Key | '0001346922 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Assets: | ' | ' |
Cash and cash equivalents | $2,002,812 | $10,194,375 |
Short-term investments | 7,923,223 | 3,853,353 |
Restricted certificates of deposit | 1,000,000 | 1,000,000 |
Long-term investments | 3,407,000 | 2,155,695 |
Accrued investment income | 14,857 | 8,435 |
Due and deferred premiums | 3,845,922 | 3,643,136 |
Amounts recoverable from reinsurance companies | 46,590,246 | 36,080,628 |
Property, equipment and software, net | 221,763 | 234,156 |
Deferred policy acquision costs | 6,149,835 | 5,274,515 |
Deferred ceding comissions | 1,493 | 683,914 |
TWIA assessments, net of ceded amounts | 0 | 80,040 |
Prepaid expenses and other | 211,844 | 130,296 |
Deferred tax assets, net | 934,088 | 816,811 |
Total assets | 72,303,083 | 64,155,354 |
Liabilities | ' | ' |
Loss and loss adjustment expenses | 15,600,076 | 11,641,296 |
Advance premiums | 102,987 | 36,499 |
Ceded reinsurance premiums payable | 7,011,948 | 2,782,190 |
Unearned premiums | 30,911,360 | 26,578,928 |
Ceded deferred premiums | 0 | 2,381,906 |
Unearned ceding commissions | 7,969,196 | 6,826,778 |
Commissions payable, reinsurers and agents | 2,004,966 | 6,117,170 |
General and other accrued expenses payable | 785,380 | 729,441 |
Income tax payable | 240,095 | 349,785 |
Taxes, licenses and other fees payable | 153,597 | 431,382 |
Funds held under reinsurance treaty | 36,573 | 36,573 |
Convertible promissory note | 50,000 | 1,000,000 |
Total liabilities | 64,866,178 | 58,911,948 |
Stockholders’ equity: | ' | ' |
Preferred stock | 0 | 0 |
Common Stock | 1,571 | 90 |
Treasury stock, $0.0001 par value per share; 1,350,000 common shares as of September 30, 2013 | -135 | 0 |
Additional paid-in-capital | 5,914,562 | 4,906,000 |
Retained earnings | 1,520,907 | 336,816 |
Total stockholders’ equity | 7,436,905 | 5,243,406 |
Total liabilities and stockholders’ equity | 72,303,083 | 64,155,354 |
Series A Preferred Stock [Member] | ' | ' |
Stockholders’ equity: | ' | ' |
Preferred stock | 0 | 450 |
Series B Preferred Stock [Member] | ' | ' |
Stockholders’ equity: | ' | ' |
Preferred stock | $0 | $50 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Preferred Stock Convertible Cumulative Percentage | 12.50% | 12.50% |
Preferred Stock, Par or Stated Value Per Share | $0.00 | $0.00 |
Preferred Stock, Shares Authorized | 20,500,000 | ' |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $0.00 | $0.00 |
Common Stock, Shares Authorized | 40,000,000 | 10,000,000 |
Common Stock, Shares, Issued | 17,056,152 | 900,000 |
Common Stock, Shares, Outstanding | 15,706,152 | 900,000 |
Treasury Stock Par Or Stated Value Per Share | $0.00 | $0.00 |
Treasury Stock, Shares | 1,350,000 | ' |
Series A Preferred Stock [Member] | ' | ' |
Preferred Stock, Shares Authorized | ' | 4,500,000 |
Preferred Stock, Shares Issued | ' | 4,500,000 |
Preferred Stock, Shares Outstanding | ' | 4,500,000 |
Series B Preferred Stock [Member] | ' | ' |
Preferred Stock, Shares Authorized | ' | 1,000,000 |
Preferred Stock, Shares Issued | ' | 500,000 |
Preferred Stock, Shares Outstanding | ' | 500,000 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Revenues: | ' | ' | ' | ' |
Premiums earned | $13,643,436 | $12,167,675 | $39,037,947 | $34,644,311 |
Ceded premims | -12,390,289 | -10,738,665 | -35,494,253 | -30,918,356 |
Net premiums | 1,253,147 | 1,429,010 | 3,543,694 | 3,725,955 |
Policy fees | 1,286,995 | 1,229,532 | 3,497,765 | 3,375,574 |
Ceding commissions | 2,683,744 | 2,453,439 | 7,727,536 | 7,076,554 |
Gross investment income | 9,339 | 4,352 | 31,684 | 13,491 |
Reinsurance profit sharing, installment fees and other income | 649,033 | 328,399 | 1,400,748 | 1,131,256 |
Total Revenue | 5,882,258 | 5,444,732 | 16,201,427 | 15,322,830 |
Expenses: | ' | ' | ' | ' |
Losses and loss adjustment expenses | 547,080 | 786,510 | 1,967,627 | 3,518,863 |
Policy acquisition expenses | 2,934,105 | 2,641,824 | 8,331,051 | 7,588,107 |
Underwriting expenses | 1,424,225 | 1,571,149 | 4,110,404 | 3,998,636 |
Total Expenses | 4,905,410 | 4,999,483 | 14,409,082 | 15,105,606 |
Income before income taxes | 976,848 | 445,249 | 1,792,345 | 217,224 |
Provision (benefit) for income taxes: | ' | ' | ' | ' |
Current | 374,639 | 251,268 | 725,531 | 227,846 |
Deferred | -58,710 | 0 | -117,277 | 0 |
Total income taxes | 315,929 | 251,268 | 608,254 | 227,846 |
Net income (loss) | 660,919 | 193,981 | 1,184,091 | -10,622 |
Cumulative preferred stock dividends | -255,215 | -327,478 | -974,179 | -970,088 |
Net income (loss) available to common stockholders | $405,704 | ($133,497) | $209,912 | ($980,710) |
Basic income (loss) per common share (in dollars per share) | $0.06 | ($0.06) | $0.06 | ($0.44) |
Weighted average number of common shares outstanding - basic (in shares) | 6,735,384 | 2,250,000 | 3,745,128 | 2,250,000 |
Diluted income (loss) per common share (in dollars per share) | $0.04 | ($0.06) | $0.06 | ($0.44) |
Weighted average number of common shares outstanding - diluted (in shares) | 17,430,962 | 2,250,000 | 3,745,128 | 2,250,000 |
Cash dividend declared per common share | $0 | $0 | $0 | $0 |
CONSOLIDATED_STATEMENT_OF_STOC
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Total | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Treasury Stock [Member] |
Balance at Dec. 31, 2011 | $4,140,409 | $90 | $4,906,000 | ($766,181) | $450 | $50 | ' |
Balance, shares at Dec. 31, 2011 | ' | 900,000 | ' | ' | 4,500,000 | 500,000 | ' |
Net Income (Loss) | -10,622 | 0 | 0 | -10,622 | 0 | 0 | ' |
Balance at Sep. 30, 2012 | 4,129,787 | 90 | 4,906,000 | -776,803 | 450 | 50 | ' |
Balance, shares at Sep. 30, 2012 | ' | 900,000 | ' | ' | 4,500,000 | 500,000 | ' |
Balance at Dec. 31, 2012 | 5,243,406 | 90 | 4,906,000 | 336,816 | 450 | 50 | ' |
Balance, shares at Dec. 31, 2012 | ' | 900,000 | ' | ' | 4,500,000 | 500,000 | ' |
Net Income (Loss) | 1,184,091 | ' | ' | 1,184,091 | ' | ' | ' |
Conversion of Series A Preferred Stock | 675 | 1,125 | ' | ' | -450 | ' | ' |
Conversion of Series A Preferred Stock (in shares) | ' | 11,250,000 | ' | ' | -4,500,000 | ' | ' |
Conversion of Series B Preferred Stock | 75 | 125 | ' | ' | ' | -50 | ' |
Conversion Of Series B Preferred Stock (in shares) | ' | 1,250,000 | ' | ' | ' | -500,000 | ' |
Conversion of Convertible Note Payable | 950,216 | 216 | 950,000 | ' | ' | ' | ' |
Conversion of Convertible Note Payable (in shares) | ' | 2,158,875 | ' | ' | ' | ' | ' |
Conversion of Interest on Convertible Note Payable (in shares) | ' | 147,277 | ' | ' | ' | ' | ' |
Conversion of Interest on Convertible Note Payable | 64,731 | 15 | 64,716 | ' | ' | ' | ' |
Repurchase of Common Stock | -5,400 | ' | -5,265 | ' | ' | ' | -135 |
Repurchase of Common Stock (in shares) | ' | ' | ' | ' | ' | ' | 1,350,000 |
Adjustment of Par Value to reflect Forward Stock Split | -889 | ' | -889 | ' | ' | ' | ' |
Balance at Sep. 30, 2013 | $7,436,905 | $1,571 | $5,914,562 | $1,520,907 | $0 | $0 | ($135) |
Balance, shares at Sep. 30, 2013 | ' | 15,706,152 | ' | ' | 0 | 0 | 1,350,000 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Cash flows from operating activities: | ' | ' |
Net income (loss) | $1,184,091 | ($10,622) |
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: | ' | ' |
Depreciation & amortization | 63,573 | 51,773 |
(Increase) decrease in: | ' | ' |
Accrued investment income | -6,422 | 1,714 |
Due and deferred premiums | -202,786 | -524,892 |
Amounts recoverable from reinsurance companies | -10,509,618 | -11,929,404 |
Deferred policy acquisition costs | -875,320 | -813,526 |
Deferred ceding commissions | 682,421 | 0 |
TWIA assessments, net | 80,040 | 80,040 |
Federal income tax recoverable | 0 | 0 |
Prepaid and other | -81,548 | -58,424 |
Deferred tax assets | -117,277 | 0 |
Increase (decrease) in: | ' | ' |
Losses and loss adjustment expenses | 3,958,780 | 3,503,199 |
Advance premiums | 66,488 | -3,430 |
Ceded reinsurance premiums payable | 4,229,758 | 5,959,056 |
Unearned premiums | 4,332,432 | 4,307,919 |
Ceded deferred premiums | -2,381,906 | 73,947 |
Unearned ceding commissions | 1,142,418 | 1,063,855 |
Commissions payable, reinsurance & agents | -4,112,204 | 1,439,165 |
General and other accrued expenses | 52,117 | 386,289 |
Income tax payable | -109,690 | 157,846 |
Taxes, licenses and other fees payable | -277,785 | 20,398 |
Interest on notes convertible | 68,630 | 0 |
Net cash provided by (used in) operating activities | -2,813,808 | 3,704,903 |
Cash flows from investing activities: | ' | ' |
Purchases of long-term certificate of deposit | -2,703,305 | -123,695 |
Maturites of long-term certificate of deposit | 1,452,000 | 0 |
Maturities of short-term investments | 1,862,181 | 116,643 |
Purchases of short-term investments | -5,932,051 | -4,276 |
Additions to furniture, equipment and software | -51,180 | -162,135 |
Net cash used in investing activities | -5,372,355 | -173,463 |
Cash flows from financing activities: | ' | ' |
Repurchase of common stock | -5,400 | 0 |
Net cash used in financing activities | -5,400 | 0 |
Net increase (decrease) in cash and cash equivalents | -8,191,563 | 3,531,440 |
Cash and cash equivalents, beginning of period | 10,194,375 | 7,193,402 |
Cash and cash equivalents, end of the period | 2,002,812 | 10,724,842 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid during the year for income tax | 801,274 | 70,000 |
Cash paid during the year for interest expense | 0 | 0 |
Non cash investing from financing activities | ' | ' |
Repayment of debt on convertible note and conversion to common stock | 950,000 | 0 |
Conversion of interest on convertible note | $64,808 | $0 |
ORGANIZATION_AND_SUMMARY_OF_SI
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation Of Financial Statements [Abstract] | ' |
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] | ' |
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Homeowners of America Holding Corporation (“HAHC”) is a privately owned insurance holding company established to hold insurance entities for the purpose of marketing homeowners insurance products on a national basis. HAHC owns 100% of Homeowners of America Insurance Company (“HAIC”). HAIC is domiciled in Texas, licensed in multiple states and is authorized to write various forms of homeowners and auto insurance. All coverage is concentrated in Texas. HAHC also owns 100% of Homeowners of America MGA, Inc. (“MGA”), a Texas Corporation, formed as a captive managing general agency to produce business for HAIC. HAHC, along with its subsidiaries HAIC and MGA, are collectively referred to as “the Company”. | |
Principles of consolidation | |
The accompanying consolidated financial statements include the accounts of Homeowners of America Holding Corporation and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. | |
Basis of Presentation | |
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). | |
Cash and cash equivalents | |
Cash and cash equivalents include cash and highly liquid short-term investments, with original maturities of three months or less. The amount is carried at cost, which approximates fair value. At September 30, 2013 and December 31, 2012, cash and cash equivalents consist of cash on deposit with financial institutions. | |
Investments | |
The Company’s investments are comprised of short-term investments, restricted certificates of deposit and long-term investments. Restricted certificates of deposit and long-term investments are described below. Short-term investments, including money market accounts held at financial institutions, money market mutual funds, and certificates of deposit with original maturities greater than three months and maturities of one year or less. Due to the short-term nature of these investments, significant changes in prevailing interest rates and economic conditions should not adversely affect the timing and amount of cash flows on such investments or their related values. Accordingly, money market accounts and certificates of deposit are carried at cost, which approximates fair value, while money market mutual funds are measured at fair value on a recurring basis. | |
Certificates of deposit totaling $1 million have been pledged to the Texas Department of Insurance for the purpose of meeting state regulatory requirements. These certificates of deposit are shown separately in the accompanying consolidated balance sheets as “Restricted certificates of deposit”. Although the Company, with the approval of the Texas Department of Insurance, may replace the certificates of deposit with other funds or investments, management intends to hold the certificates of deposit to maturity. As such, the restricted certificates of deposit are carried at cost which approximates fair value. Interest earned on these investments inures to the benefit of the Company. | |
The Company’s investments also include certificates of deposit that mature more than one year after the balance sheet date and are reflected on the consolidated balance sheets as Long-term investments. Based on management’s intent to hold to maturity, this investment is carried at cost. Cost approximates fair value based on the rates currently offered for deposits of similar remaining maturities. | |
The Company’s investments in certificates of deposits and money market accounts do not qualify as securities as defined in FASB ASC 320, Investment – Debt and Equity Securities. Accordingly, the fair value disclosures required by FASB ASC 820, Fair Value Measurements and Disclosures are not provided. Where applicable, the Company assesses investments of an issuer currently carrying a net unrealized loss. If in management’s judgment, the decline in value is other than temporary, the cost of the investment is written down to fair value with a corresponding charge to earnings. Factors considered in determining whether an impairment exists include financial condition, business prospects and creditworthiness of the issuer, the length of time and magnitude that the asset value has been less than cost, and the ability and intent to hold such investments until the fair value recovers. | |
Comprehensive Income | |
Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 220 - Comprehensive Income, requires that recognized revenues, expenses, gains and losses be included in net income (loss). Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the consolidated balance sheet, these items, along with net income (loss), are components of comprehensive income. The Company characterizes their fixed income portfolio as available-for-sale securities, with appropriate adjustments to other comprehensive income. There were no qualifying items reported in comprehensive income for the three and nine months ended September 30, 2013 or 2012. | |
Recognition of Premium Revenues | |
Premiums are recognized as revenue on a daily pro rata basis over the policy term. The portion of premiums related to the unexpired term of policies in force as of the end of the measurement period and to be earned over the remaining term of those polices, is deferred and reported as unearned premiums. | |
Ceding Commission | |
Ceding commissions represent acquisition costs associated with insurance risk ceded to other reinsurance partners and is earned on a pro-rata basis over the life of the associated policy. | |
Policy Fees | |
Policy fee income includes application fees which are intended to reimburse the Company for a portion of the costs incurred in establishing the insurance. Policy fees on policies where premium is traditionally paid in full upon inception of the policy are recognized when written, while fees charged on policies where premiums are paid in installments, are recognized when collected. | |
Reinsurance Profit Sharing, Installments and Other Income | |
Reinsurance profit share income is recognized when earned. Installments and other fees associated with the collection of installment premium payments are recognized as income when collected. There is no amount over 5% of total revenue within this classification on the consolidated statement of operations for the three months and nine months ended September 30, 2013 and September 30, 2012. | |
Property, Equipment and Software | |
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, which range from three to five years. The cost and related accumulated depreciation of assets sold or disposed are removed from the accounts and the resulting gain or loss is included in the consolidated statement of operations. Maintenance and repairs are expensed as incurred. | |
Software installation and development is stated at cost, net of accumulated amortization. Amortization is calculated on a straight-line basis method over three years. | |
Impairment of Long-Lived Assets | |
Long-lived assets, such as property, equipment and software, are reviewed for impairment whenever business events or circumstances could lead to or indicate that the value of the asset is in fact may not be recoverable. The assessment of possible impairment is based on whether the carrying amount of the assets exceeds its fair value. The Company uses estimates of undiscounted future cash flows in determining the recoverability of long-lived assets. As of September 30, 2013 and December 31, 2012, no impairment has been recorded. | |
Deferred Policy and Acquisition Costs/Deferred Ceding Commissions | |
Deferred policy acquisitions costs (“DAC”) as of September 30, 2013 and December 31, 2012, consist of commissions, premium taxes and policy underwriting and production expenses which are incurred through and vary directly with, the level of production of new and renewal insurance business and are amortized over the terms of the policies they relate to. The method used in calculating DAC limits the amount of the deferred cost to their estimated realizable value, which gives effect to allocating their expense along with other period costs associated with the insurance business, in relation to the amount of gross premium earned on policies to which they relate and investment income. DAC is reviewed to determine if it is recoverable from future income, including investment income. The amount of DAC considered recoverable could be reduced in the near term if estimates of future premium income from their related lines of insurance are revised. | |
Deferred ceding commission as of September 30, 2013 and December 31, 2012 consist of the expense allowance afforded by reinsurers on premium subject to quota share reinsurance treaties, which remain uncollected as of the balance sheet date. Due to a change in the terms of the Company’s property reinsurance treaty effective April 1, 2013, where ceded premium is remitted on a written basis rather than on a collected basis, the balance of uncollected ceding commission for property quota share reinsurance is zero at September 30, 2013. | |
Reserve for Losses and Loss Adjustment Expenses | |
The liability for losses and loss adjustment expenses (“LAE”) are estimates of the amounts required to cover known incurred losses and LAE, developed through the review and assessment of loss reports, along with the development of known claims. In addition, loss and loss adjustment expense reserves include management’s estimate of an amount for losses incurred but not reported (“IBNR”), determined from reviewing overall loss reporting patterns as well as the loss development cycles of individual claim cases. Such liabilities are necessarily based on estimates and while management believes that the amount is adequate, the ultimate liability may be more or less than the amounts provided. The approach and methods for making such estimates and for establishing the resulting liability are continually reviewed and any adjustments are reflected in current earnings. | |
Due and Deferred Premiums | |
Due and deferred premiums consist of uncollateralized premiums and agents’ balances in the course of collection as well as premiums booked but not yet due. | |
Reinsurance | |
In the normal course of business, the Company seeks to reduce the overall exposure to losses that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk with other insurance enterprises or reinsurers. The Company uses only quality, financially rated reinsurers and continually monitors the financial ratings of these companies through its brokers. The amount and type of reinsurance purchased each year is based on management’s estimate of its probable maximum loss and the conditions within the reinsurance market. The Company continually monitors its risk exposure through the use of the AIR modeling system and other modeling tools provided by its reinsurance brokers. Reinsurance premiums, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums paid for reinsurance are reported as reductions of earned premium income. | |
Income Taxes | |
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss carryforwards, and liabilities are measured using enacted tax rates expected to be recovered or settled. | |
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. In assessing the realizable value of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. | |
Uncertain Tax Positions | |
The Company recognizes uncertain tax positions in the consolidated financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns, and that its accruals for tax liabilities are adequate for all open tax years based on an assessment of many factors including experience and interpretations of tax laws applied to the facts of each matter. At September 30, 2013, the Company’s tax years from 2009 through 2012 remain subject to examination. | |
Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s primary areas of estimate are for liabilities for unpaid losses and loss adjustment expenses, deferred policy acquisition costs, deferred tax and asset valuation, and reinsurance. Actual results could differ significantly from those estimates. | |
Fair Value of Financial Instruments | |
The carrying value for the Company’s cash and cash equivalents and short-term investments approximate fair values as of September 30, 2013 and December 31, 2012 due to their short-term nature. Fair value for securities are based on the framework for measuring fair value established by FASB ASC Topic 820, Fair Value Measurements and Disclosures. | |
Convertible Notes Payable | |
The Company accounts for convertible notes payable under FASB ASC Topic 470-20 – Debt with Conversion and Other Options, which requires issuers to assess whether or not an embedded conversion feature is required to be separately accounted for as a derivative liability for liability and equity components and if the conversion feature is beneficial to the holder. See Note 10 on Convertible Notes Payable for additional disclosure. | |
Stock Based Compensation | |
The Company accounts for stock-based compensation under the fair value recognition provisions of FASB ASC Topic 718 – “Compensation – Stock Compensation”, which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors including stock options and restricted stock issuances based on estimated fair values. In accordance with FASB ASC Topic 718, the Company recognizes stock-based compensation, if any, in the consolidated statements of operations on a straight line basis over the vesting period of the stock award. See Note 18 on Subsequent Events for additional disclosure. | |
Earnings (Loss) Per Share | |
Basic earnings (loss) per share of common stock is computed by dividing net income or loss, less cumulative preferred stock dividends for the period whether or not earned or paid, by the weighted-average number of common shares during the period. | |
For the three months ended September 30, 2013, the net income attributable to common stockholders was decreased for cumulative dividends on preferred stock during the period of $255,215. | |
For the three months ended September 30, 2012, the net income attributable to common stockholders was decreased for cumulative dividends on preferred stock during the period of $327,478. | |
For the nine months ended September 30, 2013, the net income attributable to common stockholders was decreased for cumulative dividends on preferred stock during the period of $974,179. | |
For the nine months ended September 30, 2012, net loss attributable to common stockholders was increased for cumulative dividends on preferred stock during the period of $970,088. | |
Diluted earnings (loss) per share of common stock is computed by dividing income or loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include convertible notes payable, outstanding convertible preferred stock and stock options. | |
For the three months ended September 30, 2013, all of the Company’s dilutive securities were included in the computation of diluted earnings per share as dilutive. The total number of dilutive shares of common stock that were included totaled 10,695,578. | |
For the nine months ended September 30, 2013, all of the Company’s potentially dilutive securities were excluded from the computation of dilutive earnings per share as they were anti-dilutive. The total number of potentially dilutive shares of common stock that were excluded totaled 13,985,834. | |
For the three months and nine months ended September 30, 2012, all of the Company’s potentially dilutive securities were excluded from the computation of diluted earnings per share as they were anti-dilutive. The total number of potentially dilutive shares of common stock that were excluded totaled 13,112,816. | |
RECENT_ACCOUNTING_PRONOUNCEMEN
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2013 | |
New Accounting Pronouncements and Changes In Accounting Principles [Abstract] | ' |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | ' |
2 RECENT ACCOUNTING PRONOUNCEMENTS | |
There have been no recent accounting pronouncements or changes in recent accounting pronouncements during the nine months ended September 30, 2013, as compared to those described in our registration filing for the year ended December 31, 2012, that are of significance, or potential significance, to the Company. | |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions Disclosure [Text Block] | ' |
3. RELATED PARTY TRANSACTIONS | |
MGA commenced operations September 1, 2010. As a captive insurance agency formed to service HAIC, MGA has the authority to receive and accept proposals for insurance, charge and collect premiums, maintain underwriting guidelines, prepare rate filings, appoint agents and create marketing materials and advertising. As compensation for these services, MGA retains the policy fees charged on each policy ranging from $50 to $75, as well as installment and delinquent collection fees. The policy fees and other miscellaneous charges were previously a component of HAIC operations. | |
In conjunction with the retention of certain policy fees at MGA, HAIC allocates a significant portion of its general expense base to MGA. HAIC’s general expenses and taxes, licenses and fees to MGA during the three months ended September 30, 2013 increased $481,043 and decreased $145,912 during the three months ended September 30, 2012. The expense allocation agreement has been approved by the Texas Department of Insurance. On a consolidated company basis these transactions are eliminated. | |
In conjunction with the retention of certain policy fees at MGA, HAIC allocates a significant portion of its general expense base to MGA. HAIC allocated $1,487,302 and $1,335,233 of general expenses and taxes, licenses and fees to MGA during the nine months ended September 30, 2013 and 2012, respectively. The expense allocation agreement has been approved by the Texas Department of Insurance. On a consolidated company basis these transactions are eliminated. | |
During the three months ended September 30, 2013 and 2012, MGA collected policy fees in the amount of $1,286,995 and $1,229,532, respectively. | |
During the nine months ended September 30, 2013 and 2012, MGA collected policy fees in the amount of $3,497,765 and $3,375,574, respectively. | |
In December 2012, HAHC entered into a Convertible Promissory Note with Inter-Atlantic and Phoenix Associates, Inc., (a company controlled by a shareholder and director). See Note 10 Convertible Notes Payable for additional disclosure. | |
INVESTMENT
INVESTMENT | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Investments Schedule [Abstract] | ' | ||||||||||||||||
Investment [Text Block] | ' | ||||||||||||||||
4. INVESTMENT | |||||||||||||||||
Gross investment income from investments totaled $9,339 and $4,352 for the three months ended September 30, 2013 and 2012, respectively. | |||||||||||||||||
Gross investment income from investments totaled $31,684 and $13,491 for the nine months ended September 30, 2013 and 2012, respectively. | |||||||||||||||||
There were no realized or unrealized gains or losses recognized for the periods due to the short term nature of the investments held and the intent is to hold to maturity certificates of deposit carried at amortized cost. | |||||||||||||||||
The following table provides the Company’s investment holdings by type of financial instruments that were used to estimate the fair value disclosures for financial instruments: | |||||||||||||||||
September 30, 2013 | December 31, 2012 | ||||||||||||||||
Book Value | Fair Value / Carrying Value | Book Value | Fair Value / Carrying Value | ||||||||||||||
Financial Assets: | |||||||||||||||||
Restricted certificates of deposit | $ | 1,000,000 | $ | 1,000,000 | $ | 1,000,000 | $ | 1,000,000 | |||||||||
Long term investments | 3,407,000 | 3,407,000 | 2,155,695 | 2,155,695 | |||||||||||||
Short-term investments | 7,923,223 | 7,923,223 | 3,853,353 | 3,853,353 | |||||||||||||
$ | 12,330,223 | $ | 12,330,223 | $ | 7,009,048 | $ | 7,009,048 | ||||||||||
September 30, 2013 | December 31, 2012 | ||||||||||||||||
Range of Maturities | Interest Rates | Range of Maturities | Interest Rates | ||||||||||||||
Restricted certifcate of deposit | Less than 1 year | 0.20% - 0.25% | Less than 1 year | 0.25% - 0.35% | |||||||||||||
Long-term investments | More than 1 year | 0.30% - 0.80% | More than 1 year | 0.35% - 1.24% | |||||||||||||
Short-term investments | Less than 1 year | 0.20% - 1.24% | Less than 1 year | 0.25% - 0.85% | |||||||||||||
FAIR_VALUE_OF_FINANCIAL_INSTRU
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Disclosure Text Block Supplement [Abstract] | ' | ||||||||||||||||
Financial Instruments Disclosure [Text Block] | ' | ||||||||||||||||
5. FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||||||||
The Company’s financial assets carried at fair value have been classified, for disclosure purposes, based on hierarchy established within FASB ASC 820-10 – Fair Value Measurements and Disclosures. When market prices are not available, fair value is generally estimated utilizing valuation techniques that vary by asset class and incorporate available trade, bid and other market information, when available. The acceptable valuation techniques include (a) market approach, which uses prices or relevant information derived from market transactions for identical or comparable assets or liabilities, (b) the Income Approach, which converts future amounts such as cash flows or earnings to a single present value amount based on current market expectations about those future amounts, and (c) the Cost Approach, which is based on the amount that currently would be required to replace the service capacity of an asset. In certain circumstances, these valuation techniques may involve some level of management estimation and judgment which becomes significant with increasingly complex instruments or pricing models. Where appropriate, adjustments are included to reflect the risk premium inherent in a particular methodology, model or input used. | |||||||||||||||||
The fair value hierarchy is used to prioritize valuation inputs into three levels: | |||||||||||||||||
⋅ | Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities. These inputs are considered to be the most reliable evidence of fair value. | ||||||||||||||||
⋅ | Level 2 – quoted prices for similar assets in active markets, quoted process from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the investment. Such inputs include market interest rates and volatilities, spreads and yield curves. | ||||||||||||||||
⋅ | Level 3 – termed unobservable inputs which are utilized in situations where there is little or no market activity for the asset or liability at the measurement date. The approach typically involves a significant subjective management judgment toward the pricing of the security. | ||||||||||||||||
The Company’s short-term investments comprise money market accounts and certificates of deposit held at financial institutions which are not measured at fair value, on a recurring basis, as well as money market mutual funds which are measured at fair value on a recurring basis. The following tables provide information as of September 30, 2013 and December 31, 2012, about the Company’s financial assets measured at fair value on a recurring basis: | |||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
As of September 30, 2013 | |||||||||||||||||
Money market mutual funds | $ | 5,526,584 | $ | - | $ | - | $ | 5,526,584 | |||||||||
Total | $ | 5,526,584 | $ | - | $ | - | $ | 5,526,584 | |||||||||
Fair Value Measurements Using | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
As of December 31, 2012 | |||||||||||||||||
Money market mutual funds | $ | 60,855 | $ | - | $ | - | $ | 60,855 | |||||||||
Total | $ | 60,855 | $ | - | $ | - | $ | 60,855 | |||||||||
The following methods and assumptions were used to estimate the fair value disclosures for financial instruments: | |||||||||||||||||
Money market mutual funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. As the funds are generally maintained at a net asset value which does not fluctuate, cost approximates fair value. These are included as a Level 1 measurement in the table above. | |||||||||||||||||
PROPERTY_AND_EQUIPMENT_AND_SOF
PROPERTY AND EQUIPMENT, AND SOFTWARE NET | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||||||
Property, Plant and Equipment Disclosure [Text Block] | ' | |||||||||||
6. PROPERTY AND EQUIPMENT, AND SOFTWARE NET | ||||||||||||
Property, equipment, and software net consist of the following as of September 30, 2013 and December 31, 2012, respectively: | ||||||||||||
September 30, | December 31, | |||||||||||
2013 | 2012 | Useful Life | ||||||||||
Computer equipment | $ | 212,004 | $ | 200,786 | 3 years | |||||||
Office equipment | 13,999 | 13,999 | 5 years | |||||||||
Furniture and fixtures | 99,852 | 95,022 | 5 years | |||||||||
Software installation and development | 719,143 | 684,011 | 3 years | |||||||||
Total, at cost | 1,044,998 | 993,818 | ||||||||||
Less accumulated depreciation and amortization | -823,235 | -759,662 | ||||||||||
Property and equipment, net | $ | 221,763 | $ | 234,156 | ||||||||
Depreciation and amortization expense for property, equipment and software totaled $22,769 and $17,440 for the three months ended September 30, 2013 and 2012, respectively. | ||||||||||||
Depreciation and amortization expense for property, equipment and software totaled $63,573 and $51,773 for the nine months ended September 30, 2013 and 2012, respectively. | ||||||||||||
DEFERRED_POLICY_ACQUISION_COST
DEFERRED POLICY ACQUISION COSTS AND CEDING COMMISSIONS | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Deferred Policy Acquisition Costs Disclosures [Abstract] | ' | ||||||||||||||||
Deferred Policy Acquisition Costs [Text Block] | ' | ||||||||||||||||
7. DEFERRED POLICY ACQUISION COSTS AND CEDING COMMISSIONS | |||||||||||||||||
Total capitalized deferred policy acquisition costs as of September 30, 2013 and September 30, 2012, comprised of commissions, premium taxes and costs associated with underwriting and issuing policies were $6,149,835 and $5,243,270, respectively. | |||||||||||||||||
Changes in deferred policy acquisition costs for the three and nine months ended September 30, 2013 and September 30, 2012, are as follows: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Deferred policy acquisition charges, beginning of the period | $ | 5,570,771 | $ | 4,791,473 | $ | 5,274,515 | $ | 4,429,744 | |||||||||
Capitalized costs | 3,112,886 | 2,754,727 | 8,211,996 | 7,346,931 | |||||||||||||
Amortized costs | -2,533,822 | -2,302,930 | -7,336,676 | -6,533,405 | |||||||||||||
Deferred policy acquisition charges, end of the period | $ | 6,149,835 | $ | 5,243,270 | $ | 6,149,835 | $ | 5,243,270 | |||||||||
Deferred ceding commissions, which represent acquisition costs associated with insurance risk ceded to other reinsurance partners, as of September 30, 2013 and September 30, 2012 were $1,493 and $1,439,587, respectively. The decrease of $1,438,094 is due to a change in settlement procedures affecting the property quota share reinsurance program. | |||||||||||||||||
Changes in deferred ceding commissions for the three and nine months ended September 30, 2013 and September 30, 2012 are as follows: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Deferred ceding commission, beginning of the period | $ | 1,493 | $ | 1,439,587 | $ | 683,914 | $ | 1,439,587 | |||||||||
Capitalized commissions | 4,246,185 | 3,684,115 | 11,205,306 | 9,815,992 | |||||||||||||
Amortized commissions | -4,246,185 | -3,684,115 | -11,887,727 | -9,815,992 | |||||||||||||
Deferred ceding commission, end of the period | $ | 1,493 | $ | 1,439,587 | $ | 1,493 | $ | 1,439,587 | |||||||||
TWIA_ASSESSMENTS
TWIA ASSESSMENTS | 9 Months Ended |
Sep. 30, 2013 | |
Twia Assessments [Abstract] | ' |
Twia Assessments [Text Block] | ' |
8. TWIA ASSESSMENTS | |
On September 17, 2008, an assessment was levied against HAIC by the Texas Windstorm Insurance Association (“TWIA”) in the aftermath of Hurricane Ike. HAIC’s portion of the overall statutory assessment was $748,200. HAIC received an immediate premium tax credit of $400,200 for a portion of the assessment paid and established an asset for possible future recoverables under the terms of the reinsurance agreement. This asset was fully recovered during the period ending September 30, 2013. No further TWIA assessments have been levied against HAIC since 2008. | |
UNPAID_LOSSES_AND_LOSS_ADJUSTM
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Supplementary Insurance Information [Abstract] | ' | ||||||||||||||||
Supplementary Insurance Information, for Insurance Companies Disclosure [Text Block] | ' | ||||||||||||||||
9. UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES | |||||||||||||||||
Losses and loss adjustment expenses (LAE), less related reinsurance and deductibles, are charged to operations as incurred. Unpaid losses and LAE are based on claims adjusters’ estimates of the cost of settlement plus an estimate for losses IBNR based upon historical experience, industry loss experience, and management’s estimates. Loss reserves reflect Company management’s best estimate of the total cost of (i) claims that have been incurred but not yet paid, and (ii) claims that have been incurred, but not yet reported (IBNR). Loss reserves that are established by Company management are not an exact calculation of our liability, but rather loss reserves represent management’s best estimate for our Company’s liability based on the application of actuarial techniques and other projection methodology, taking into consideration other facts and circumstances known as of the balance sheet date. The process of setting reserves is complex and necessarily imprecise. The impact of both internal and external variables on ultimate loss and LAE costs is difficult to estimate. To arrive as its best estimate for losses the Company uses damage estimating software developed and owned by acknowledged industry leader, Insurance Service Office. Reserves factors for IBNR are reviewed quarterly by an independent actuarial consultant. In addition, our appointed independent actuary attests to the adequacy of our unpaid claim reserve, including IBNR at calendar year end. | |||||||||||||||||
Losses and Loss Adjustment Expenses | |||||||||||||||||
The following table provides the reconciliation of the beginning and ending reserve balances for losses and LAE, gross of reinsurance for the three and nine months ended September 30, 2013 and for September 30, 2012: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Reserve for losses and LAE, at start of the period | $ | 15,019,644 | $ | 15,095,704 | $ | 11,641,296 | $ | 9,308,974 | |||||||||
Reinsurance recoverables on losses and LAE | -13,943,102 | -13,936,533 | -10,618,032 | -8,469,000 | |||||||||||||
Reserve for losses and LAE, net of reinsurance recoverables at beginning of year | 1,076,542 | 1,159,171 | 1,023,264 | 839,974 | |||||||||||||
Add provision for claims and LAE occurring in: | |||||||||||||||||
Current year | 437,080 | 793,510 | 1,958,627 | 3,593,863 | |||||||||||||
Prior years | 110,000 | -7,000 | 9,000 | -75,000 | |||||||||||||
Net Incurred losses and LAE during the current period | 547,080 | 786,510 | 1,967,627 | 3,518,863 | |||||||||||||
Deduct payments for claims and LAE occuring in: | |||||||||||||||||
Current year | 569,658 | 616,584 | 1,430,927 | 2,736,740 | |||||||||||||
Prior years | 13,000 | 82,184 | 519,000 | 375,184 | |||||||||||||
Net claim and LAE payments during the current year | 582,658 | 698,768 | 1,949,927 | 3,111,924 | |||||||||||||
Reserve for losses and LAE, net of reinsurance recoverables, at end of period | 1,040,964 | 1,246,913 | 1,040,964 | 1,246,913 | |||||||||||||
Reinsurance recoverables on losses and LAE | 14,559,112 | 11,565,261 | 14,559,112 | 11,565,261 | |||||||||||||
Losses and LAE reserves at end of period | $ | 15,600,076 | $ | 12,812,174 | $ | 15,600,076 | $ | 12,812,174 | |||||||||
As a result of additional information on claims occurring in prior years becoming available to management, changes in estimates of provisions of claims and claim adjustment expenses were made resulting in an increase of $110,000 for the three months ended September 30, 2013 and a decrease of $7,000 for the three months ended September 30, 2012. | |||||||||||||||||
The changes in estimates of provisions of claims and claim adjustment expenses for the nine months ended September 30, 2013 resulted in an increase of $9,000 and a decrease of $75,000 for the nine months ended September 30, 2012. | |||||||||||||||||
CONVERTIBLE_NOTES_PAYABLE
CONVERTIBLE NOTES PAYABLE | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Debt Disclosure [Text Block] | ' | |||||||
10. CONVERTIBLE NOTES PAYABLE | ||||||||
On December 26, 2012 the Company entered into Convertible Promissory Note agreements with Inter-Atlantic Fund, L.P. and Phoenix Associates, Inc. (a company controlled by a shareholder and director) in the amounts of $950,000 and $50,000, respectively, with an interest rate equal to 10% per annum (accelerating to 12.5% per annum in the event of default) which are due and payable on December 26, 2013. At any date, the holders of the majority interest of these notes has the right to convert all or a portion of the notes, plus accrued interest, into that number of shares of the Company’s Series A convertible preferred stock, identical in all respects to the existing Series A preferred stock issued in November 2005, equal to a ratio of 1 share per 1.10 of the note’s principal plus accrued interest plus, the amount of cumulative unpaid Series A preferred stock dividends the note holders would have received had the notes been outstanding since 2005. | ||||||||
To the extent the existing Series A convertible preferred stock is no longer outstanding at the time of conversion, the notes shall be convertible, using the above ratio, into stock or other consideration received for the existing Series A convertible preferred stock. | ||||||||
During the three months ended September 30, 2013, interest expense on these notes totaled $17,397. | ||||||||
During the nine months ended September 30, 2013, interest expense on these notes totaled $68,630. | ||||||||
On August 31, 2013, Inter-Atlantic Fund, L.P. elected to convert all of its $950,000 Convertible Promissory Note and accrued interest in accordance with the terms of the Convertible Promissory Note into 922,461 shares of Series A preferred stock. | ||||||||
Amount | Conversion ratio | |||||||
to Series A | ||||||||
Preferred Stock | ||||||||
0.909 | ||||||||
Convertible Promissory Note on 12/26/12 | $ | 950,000 | 863,550 | |||||
Interest on Convertible Promissory Note at 8/31/2013 | 64,808 | 58,911 | ||||||
Total ended September 30, 2013 | $ | 1,014,808 | 922,461 | |||||
As more fully described below, these common shares were part of the 2.5:1 forward stock split which took place on August 31, 2013. As a result of the forward stock split, the 922,461 shares of Series A preferred stock noted above were converted into 2,306,152 common shares. | ||||||||
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
Stockholders' Equity Note [Abstract] | ' | |||||||||
Stockholders' Equity Note Disclosure [Text Block] | ' | |||||||||
11. STOCKHOLDERS’ EQUITY | ||||||||||
Preferred Stock | ||||||||||
On July 24, 2013, the Delaware Secretary of State approved an amendment to the Amended and Restated Certificate of Incorporation increasing the authorized preferred stock to 20,500,000 shares. | ||||||||||
On August 31, 2013, in accordance with Article Fourth, Section C, Subsection 4 of the Company’s Amended and Restated Certificate of Incorporation, the Series A and Series B preferred stockholders elected to convert 100% of their shares into common stock on a 1:1 basis; therefore as of September 30, 2013 there were no shares of Series A or Series B preferred stock outstanding. | ||||||||||
Preferred Shares | Conversion Ratio | Common Stock | ||||||||
Series A Preferred Stock | 4,500,000 | 1:01 | 4,500,000 | |||||||
Series B Preferred Stock | 500,000 | 1:01 | 500,000 | |||||||
Convertible Promissory Note | 922,461 | 1:01 | 922,461 | |||||||
Common Stock | 900,000 | n/a | 900,000 | |||||||
Total Converted Preferred Shares | 6,822,461 | 6,822,461 | ||||||||
As of September 30, 2012, the Series A and Series B preferred stockholders had not elected to convert or redeem their preferred stock. | ||||||||||
Common Stock | ||||||||||
There were no common stock warrants or options issued during the three and nine months ended September 30, 2013 and September 30, 2012. | ||||||||||
As of December 31, 2012, the Company had 10,000,000 shares authorized and 900,000 shares issued and outstanding of $0.0001 par value common stock. Holders of common stock are entitled to one (1) vote for each share of common stock held at all meetings of stockholders. | ||||||||||
On July 24, 2013 the Delaware Secretary of State approved an amendment to the Amended and Restated Certificate of Incorporation increasing the authorized common stock to 40,000,000 shares. | ||||||||||
Buyback of Shares | ||||||||||
On August 31, 2013, the Company entered into a Stock Purchase Agreement with Mr. Spencer Tucker (director of the Company and president and chief operating officer of HAIC) and Mr. Richard Backus (secretary of HAIC) pursuant to which the Company purchased 480,000 and 60,000 shares of the Company’s common stock from Mr. Tucker and Mr. Backus respectively, for an aggregate consideration of $5,400. | ||||||||||
As discussed in the Preferred Stock section of this footnote above, on August 31, 2013, in accordance with Article Fourth, Section C, Subsection 4 of the Company’s Amended and Restated Certificate of Incorporation the Series A and Series B preferred stockholders elected to convert 100% of their shares into common stock on a 1:1 basis; therefore as of September 30, 2013 there were no shares of Series A or Series B preferred stock outstanding. Further, in accordance with the Company’s Amended and Restated Certificate of Incorporation Article Fourth, Section C, Subsection 4(c) (iii) & (iv), all shares which shall have been surrendered for conversion shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, and to receive payment of any dividends occurred or declared but unpaid cease and terminate at the time of conversion, except only the right of the holders thereof to receive common stock in exchange therefor. Upon such conversion, no adjustment to the applicable conversion price shall be made for any accrued or declared but unpaid dividends on the series of preferred stock surrendered for conversion or the common stock delivered upon conversion. | ||||||||||
As of September 30, 2013, the Company has 40,000,000 shares authorized and 17,056,152 shares issued and 15,706,152 shares outstanding of $0.0001 par value common stock (giving effect to the forward stock split discussed below). Holders of common stock are entitled to one (1) vote for each share of common stock held at all meetings of stockholders. | ||||||||||
Forward Stock Split | ||||||||||
On August 31, 2013, the Board of Directors of the Company unanimously approved and recommended for approval by the stockholders of the Company, and the holders of voting shares representing 99.15% of the voting rights of our common stock approved, an amendment to the Company’s Amended and Restated Certificate of Incorporation. The Certificate of Amendment was filed with the Delaware Secretary of State and is effective. The Certificate of Amendment provides for a 2.5 for 1 forward stock split of the Company’s common stock. All holders of the Company’s Series A and Series B preferred shares converted their preferred shares to common stock prior to the effectiveness of the stock split. | ||||||||||
Common Stock | Forward Stock | Common Stock | Par Value at $.0001 | |||||||
Split on 8/31/2013 | ||||||||||
Series A Preferred Stock | 4,500,000 | 2.5:1 | 11,250,000 | 1,125 | ||||||
Series B Preferred Stock | 500,000 | 2.5:1 | 1,250,000 | 125 | ||||||
Convertible Promissory Note | 922,461 | 2.5:1 | 2,306,152 | 231 | ||||||
Common Stock, including Treasury Stock | 900,000 | 2.5:1 | 2,250,000 | 225 | ||||||
Total Common Stock | 6,822,461 | 17,056,152 | 1,706 | |||||||
Note: The above shares have been adjusted to reflect the conversion of Series A & B preferred stock into common stock and the forward stock split of common stock on August 31, 2013. | ||||||||||
STOCK_BASED_COMPENSATION
STOCK BASED COMPENSATION | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | ' | |||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | ' | |||||||||||||||
12. STOCK BASED COMPENSATION | ||||||||||||||||
The Company accounts for stock-based compensation under the fair value recognition provision of FASB ASC Topic 718 – “Compensation – Stock Compensation”. | ||||||||||||||||
Incentive Plans | ||||||||||||||||
The Company’s 2005 Management Incentive Plan (the “Plan”) provides for granting of stock options to enable the Company to obtain and retain the services of selected persons, both employees and directors, considered to be essential to the long-range success of the Company. Under the Plan, options may be granted to purchase a total not to exceed 789,475 shares, as adjusted for the 2.5 to 1 forward stock split in the aggregate, made up of original issue shares, treasury share or a combination of the two. At September 30, 2013 and September 30, 2012, options to purchase 783,750 shares have been granted under the plan. Options have a life of 10 years and vest at a rate of 25% per year, beginning 12 months from their date of issue. | ||||||||||||||||
A summary of the activity of the Company’s stock option plan for the three and nine months ended September 30, 2013 and September 30, 2012 is as follows: | ||||||||||||||||
Number of | Weighted Avg | Weighted Avg | Aggregate | |||||||||||||
Options | Exercise Price | Remaining Cont. | Intrinsic Value | |||||||||||||
Term | ||||||||||||||||
Outstanding at January 1, 2013 | 783,750 | $ | 0.79 | 6.08 | $ | 11 | ||||||||||
Outstanding at March 31, 2013 | 783,750 | 0.78 | 5.58 | $ | 11 | |||||||||||
Outstanding at June 30, 2013 | 783,750 | 0.78 | 5.33 | $ | 11 | |||||||||||
Outstanding at September 30, 2013 | 783,750 | 0.8 | 5.08 | $ | 11 | |||||||||||
Exercisable at September 30, 2013 | 702,500 | 0.8 | 4.9 | $ | 11 | |||||||||||
Outstanding at January 1, 2012 | 783,750 | $ | 0.78 | 6.79 | $ | 11 | ||||||||||
Outstanding at March 31, 2012 | 783,750 | 0.78 | 5.83 | $ | 11 | |||||||||||
Outstanding at June 30, 2012 | 783,750 | 0.78 | 6.33 | $ | 11 | |||||||||||
Outstanding at September 30, 2012 | 783,750 | 0.8 | 5.08 | $ | 11 | |||||||||||
Exercisable at September 30, 2012 | 612,816 | 0.8 | 4.7 | $ | 11 | |||||||||||
** The above shares have been adjsuted for the 2.5 to 1 forward stock split ** | ||||||||||||||||
The fair value of options granted is estimated using a market value approach and the Black-Scholes option pricing model using the following assumptions for the nine months ended September 30, 2013 and September 30, 2012: | ||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Dividend Yield | 0 | % | 0 | % | ||||||||||||
Expected Volatility | 30 | % | 30 | % | ||||||||||||
Risk-free interest rate | 0.25 | % | 0.33 | % | ||||||||||||
Expected life (in years) | 2 | 2 | ||||||||||||||
Weighted average fair value per options granted | $ | 0 | $ | 0 | ||||||||||||
No compensation expense was recognized for the nine months ended September 30, 2013 and 2012 as the amounts were deemed not to be material. | ||||||||||||||||
See Note 18 on Subsequent Event for additional disclosures on Stock Based Compensation Incentive Plans. | ||||||||||||||||
INCOME_TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' |
Income Tax Disclosure [Text Block] | ' |
13. INCOME TAXES | |
During the three and nine months ended September 30, 2013, the Company recorded $315,929 and $608,254 respectively, of income tax expense (benefit) which resulted in estimated annual effective tax rates of 32.3% and 33.9%. | |
During the three and nine months ended September 30, 2012, the Company recorded $251,268 and $227,846 respectively, of income tax expense (benefit) which resulted in estimated annual effective tax rates of 56.4% and 104.8%. The effective tax rates were impacted primarily as a result of increases in the deferred tax asset valuation allowance of approximately $99,910 and $146,114, respectively. | |
The Company’s federal income tax return is consolidated with HAIC and MGA. Allocation of tax expense or refunds among the consolidated group is based on separate return calculations. | |
REINSURANCE
REINSURANCE | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Insurance [Abstract] | ' | ||||||||||||||||
Reinsurance [Text Block] | ' | ||||||||||||||||
14. REINSURANCE | |||||||||||||||||
Certain premiums and benefits are ceded to other insurance companies under various reinsurance agreements. The reinsurance agreements provide HAIC with increased capacity to write larger risks and maintain its exposure to loss within its capital resources. Ceded reinsurance contracts do not relieve HAIC from its obligations to policyholders. HAIC remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet the obligations assumed under the reinsurance agreements. To minimize its exposure to significant losses from reinsurer insolvencies, HAIC evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers. | |||||||||||||||||
For the 12 month period commencing April 1, 2013 and ending March 31, 2014, the Company reinsured with various third party reinsurers under residential quota share reinsurance treaties, 90% of its risk. The reinsurers’ liability under the quota share arrangement beginning in respect to any one loss occurrence shall not exceed $80,000,000. Property catastrophe treaties, which went into effect on the same day and have the same term as the quota share treaties, develop over four layers and cover a gross loss of $76,000,000 excess of $4,000,000 per occurrence. The Company’s net retention is $400,000 per occurrence. | |||||||||||||||||
From April 1, 2012 through March 31, 2013, the Company reinsured with various reinsurers under homeowners quotashare reinsurance treaties ceding 90% of its risk to reinsurers. The reinsurers’ liability under the quota share arrangement beginning April 1, 2012, in respect to any one loss occurrence shall not exceed $60,000,000. Property catastrophe treaties in effect at the end of 2012 develop over four layers and cover a gross loss of $62,000,000 excess of $3,000,000 per occurrence. The Company’s net retention is $300,000 per occurrence. | |||||||||||||||||
The Company also purchases reinsurance covering non-weather losses (two occurrences) in excess of a gross loss of $500,000 per occurrence for all coverage lines (a net loss of $50,000). This coverage which was enforced during 2013 and 2012 has been obtained principally to protect the Company in the event of a large fire loss. | |||||||||||||||||
Effective June 1, 2011 through May 31, 2012, the Company’s private passenger auto reinsurance program reinsures 50% of physical damage and liability losses emanating from private passenger automobile policies written by the Company. This coverage was extended through July 31, 2012 in respect to policies written during the term of the contract. With effect from August 1, 2012, the Company stopped writing new policies. Per the terms of the reinsurance contract the reinsurance coverage remains in force on policies the Company is required to issue, renew or keep in force by any state regulator until the first time the Company can lawfully cancel or non-renew such policies. The maximum coverage period for subject policies is deemed to be 12 months, plus odd time, not to exceed 18 months. The Company also purchases excess of loss insurance on its private passenger automobile program, covering 50% of losses from physical damage and liability claim in excess of $40,000. This coverage reinsurance program has the same run-off provisions. | |||||||||||||||||
From June 1, 2010 through May 31, 2011 the Company reinsured 90% of physical damage and liability losses emanating from private passenger automobile policies written during the term of the reinsurance contract and all required renewals of policies in effect at the time of its expiration. | |||||||||||||||||
The effects of reinsurance on premiums written and earned were as follows, for the three and nine months period ended September 30, 2013 and September 30, 2012: | |||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||
September 30, 2013 | September 30, 2013 | September 30, 2012 | September 30, 2012 | ||||||||||||||
Written | Earned | Written | Earned | ||||||||||||||
Direct premiums | $ | 16,398,118 | $ | 13,643,436 | $ | 14,514,552 | $ | 12,167,675 | |||||||||
Ceded premiums | -14,641,816 | -12,390,289 | -12,772,408 | -10,738,665 | |||||||||||||
Net Premiums | $ | 1,756,302 | $ | 1,253,147 | $ | 1,742,144 | $ | 1,429,010 | |||||||||
Nine Months | Nine Months | ||||||||||||||||
September 30, 2013 | September 30, 2013 | September 30, 2012 | September 30, 2012 | ||||||||||||||
Written | Earned | Written | Earned | ||||||||||||||
Direct premiums | $ | 43,370,380 | $ | 39,037,947 | $ | 38,952,230 | $ | 34,644,311 | |||||||||
Ceded premiums | -38,659,828 | -35,494,253 | -34,122,602 | -30,918,356 | |||||||||||||
Net Premiums | $ | 4,710,552 | $ | 3,543,694 | $ | 4,829,628 | $ | 3,725,955 | |||||||||
Following is a summary of HAIC’s reinsurance balances under the above described reinsurance treaties as of and for the three and nine months ended September 30, 2013 and September 30, 2012: | |||||||||||||||||
Three Months | Nine Months Ended | ||||||||||||||||
September 30, 2013 | September 30, 2012 | September 30, 2013 | September 30, 2012 | ||||||||||||||
Ceded premiums payable | $ | 259,344 | $ | 4,594,707 | $ | 6,795,001 | $ | 10,615,155 | |||||||||
Ceded loss adjustment expenses | 2,802,674 | 1,061,415 | 8,472,005 | 3,404,536 | |||||||||||||
Ceded loss and loss adjustment expense reserve | 1,295,104 | -1,236,607 | 11,137,559 | 6,314,276 | |||||||||||||
Ceded unearned premium reserve | 2,476,398 | 2,158,507 | 27,579,588 | 23,683,223 | |||||||||||||
Ceded earned premiums | 12,390,289 | 10,738,665 | 35,494,253 | 30,918,356 | |||||||||||||
CONCENTRATION_OF_CREDIT_RISK
CONCENTRATION OF CREDIT RISK | 9 Months Ended |
Sep. 30, 2013 | |
Risks and Uncertainties [Abstract] | ' |
Concentration Risk Disclosure [Text Block] | ' |
15. CONCENTRATION OF CREDIT RISK | |
The Company has exposure and remains liable in the event of an insolvency of one of its primary reinsurers. Management and its reinsurance intermediary regularly assess the credit quality and ratings of its reinsurer base companies. | |
Financial instruments which potentially subject the Company to credit risk consist principally of cash and money market accounts on deposit with financial institutions, money market funds, certificates of deposit and premium balance in the course of collection. With respect to cash and money market accounts. Section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act provides temporary (to December 31, 2012) Federal Deposit Insurance Corporation (“FDIC”) insurance coverage on all balances held in non-interest bearing accounts. Subsequent to December 31, 2012, insurance coverage on interest and non-interest bearing accounts continues at $250,000 per bank. At times, the Company’s bank deposits may exceed the FDIC limit. | |
The Concentration of credit risk with respect to premium balances in the course of collection is limited, due to the large number of insureds comprising the Company’s customer base. However, substantially all of the Company’s revenues are derived from customers in Texas, which could be adversely affected by economic conditions, an increase in competition, or other environmental changes. | |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||||
Commitments and Contingencies Disclosure [Text Block] | ' | |||||
16. COMMITMENTS AND CONTINGENCIES | ||||||
Operating Leases | ||||||
The Company leases its corporate office space and certain office equipment under non-cancelable operating leases which expire at various dates through 2016. Future minimum lease payments required under the non-cancelable operating leases are as follows for the years ending December 31: | ||||||
2013 | (3 Months) | 26,682 | ||||
2014 | 111,234 | |||||
2015 | 96,087 | |||||
2016 | 39,582 | |||||
$ | 273,585 | |||||
Rent expense under such leases in the three months ended September 30, 2013 and September 30, 2012 was $23,152 and $17,822, respectively. | ||||||
Rent expense under such leases in the nine months ended September 30, 2013 and September 30, 2012 was $73,281 and $75,147, respectively. | ||||||
Litigation | ||||||
The Company is the defendant in routine litigation involving matters that are incidental to the claims aspect of the Company’s business for which estimated losses are included in unpaid loss and loss adjustment expense reserves in the Company’s consolidated financial statements. It is management’s opinion that these lawsuits are not material individually or in the aggregate to the Company’s financial position, results of operations, or cash flow. | ||||||
REGULATORY_REQUIREMENTS_AND_RE
REGULATORY REQUIREMENTS AND RESTRICTIONS | 9 Months Ended |
Sep. 30, 2013 | |
Banking and Thrift [Abstract] | ' |
Regulatory Capital Requirements under Banking Regulations [Text Block] | ' |
17. REGULATORY REQUIREMENTS AND RESTRICTIONS | |
HAIC is subject to the laws and regulations of the State of Texas and the regulations of any other states in which HAIC conducts business. State regulations cover all aspects of HAIC’s business and are generally designed to protect the interests of insurance policyholders, as opposed to the interests of stockholders. The Texas Insurance Code requires all property and casualty insurers to have aminimum of $2.5 million in capital stock and $2.5 million in surplus. Companies already authorized to do business in Texas as of September 1, 2009, which includes HAIC, are able to increase their capital and surplus to these levels incrementally, with compliance with the new requirements by December 31, 2019. | |
As of December 31, 2012, HAIC’s total statutory surplus was $6,716,222 (capital stock of $1,500,000 and surplus of $5,216,222). | |
As of September 30, 2013, HAIC’s total statutory surplus was $7,952,843 (capital stock of $1,500,000 and surplus of $6,452,843). | |
As of September 30, 2013 and December 31, 2012, HAIC had certificates of deposits totaling of $1 million which had been pledged to the Texas Department of Insurance for the benefit of the State of Texas. States routinely require deposits of assets for the protection of policyholders. | |
The Texas Insurance Code limits dividends from insurance companies to their stockholders to net income accumulated in the Company’s surplus account, or “earned surplus”. | |
The maximum dividend that may be paid without approval of the Insurance Commissioner is limited to the greater of 10% of the statutory surplus at the end of the preceding calendar year or the statutory net income of the preceding calendar year. No dividends were paid by HAIC in 2013 or 2012. | |
HAIC prepares its statutory-based financial statements in conformity with accounting practices prescribed or permitted by the Texas Department of Insurance. Prescribed statutory accounting practices primarily include those published as statements of SAP by the NAIC, as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practice not so prescribed. As of September 30, 2013 and December 31, 2012, there were no material permitted statutory accounting practice utilized by HAIC. | |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events [Text Block] | ' |
18. SUBSEQUENT EVENTS | |
On October 24, 2013, the Board of Directors of the Homeowners of America Holding Company, Inc., unanimously approved and adopted the 2013 Equity Compensation Plan, which became effective October 24, 2013. The Plan provides for the grant of incentive stock option, stock options, stock awards and restricted stock to participating employees, non-employee directors of, and consultants and advisors to, the Company and its subsidiaries. The Board granted options to purchase an aggregate of 1,925,000 shares of the Company’s common stock to certain employees, advisors, officers and directors under the 2013 Equity Compensation Plan. A total of 2,925,000 shares may be issued under the Plan and will terminate upon the earlier of October 23, 2023 or (ii) the date on which the Board otherwise terminates the Plan in accordance with the terms thereof. | |
The preceding is a summary of the 2013 Equity Compensation Plan and is qualified in its entirety by reference to the Company’s Form 8-K which was filed with the SEC on October 30, 2013. | |
ORGANIZATION_AND_SUMMARY_OF_SI1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation Of Financial Statements [Abstract] | ' |
Consolidation, Policy [Policy Text Block] | ' |
Principles of consolidation | |
The accompanying consolidated financial statements include the accounts of Homeowners of America Holding Corporation and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. | |
Basis of Accounting, Policy [Policy Text Block] | ' |
Basis of Presentation | |
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). | |
Cash and Cash Equivalents, Policy [Policy Text Block] | ' |
Cash and cash equivalents | |
Cash and cash equivalents include cash and highly liquid short-term investments, with original maturities of three months or less. The amount is carried at cost, which approximates fair value. At September 30, 2013 and December 31, 2012, cash and cash equivalents consist of cash on deposit with financial institutions. | |
Investment, Policy [Policy Text Block] | ' |
Investments | |
The Company’s investments are comprised of short-term investments, restricted certificates of deposit and long-term investments. Restricted certificates of deposit and long-term investments are described below. Short-term investments, including money market accounts held at financial institutions, money market mutual funds, and certificates of deposit with original maturities greater than three months and maturities of one year or less. Due to the short-term nature of these investments, significant changes in prevailing interest rates and economic conditions should not adversely affect the timing and amount of cash flows on such investments or their related values. Accordingly, money market accounts and certificates of deposit are carried at cost, which approximates fair value, while money market mutual funds are measured at fair value on a recurring basis. | |
Certificates of deposit totaling $1 million have been pledged to the Texas Department of Insurance for the purpose of meeting state regulatory requirements. These certificates of deposit are shown separately in the accompanying consolidated balance sheets as “Restricted certificates of deposit”. Although the Company, with the approval of the Texas Department of Insurance, may replace the certificates of deposit with other funds or investments, management intends to hold the certificates of deposit to maturity. As such, the restricted certificates of deposit are carried at cost which approximates fair value. Interest earned on these investments inures to the benefit of the Company. | |
The Company’s investments also include certificates of deposit that mature more than one year after the balance sheet date and are reflected on the consolidated balance sheets as Long-term investments. Based on management’s intent to hold to maturity, this investment is carried at cost. Cost approximates fair value based on the rates currently offered for deposits of similar remaining maturities. | |
The Company’s investments in certificates of deposits and money market accounts do not qualify as securities as defined in FASB ASC 320, Investment – Debt and Equity Securities. Accordingly, the fair value disclosures required by FASB ASC 820, Fair Value Measurements and Disclosures are not provided. Where applicable, the Company assesses investments of an issuer currently carrying a net unrealized loss. If in management’s judgment, the decline in value is other than temporary, the cost of the investment is written down to fair value with a corresponding charge to earnings. Factors considered in determining whether an impairment exists include financial condition, business prospects and creditworthiness of the issuer, the length of time and magnitude that the asset value has been less than cost, and the ability and intent to hold such investments until the fair value recovers. | |
Comprehensive Income, Policy [Policy Text Block] | ' |
Comprehensive Income | |
Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 220 - Comprehensive Income, requires that recognized revenues, expenses, gains and losses be included in net income (loss). Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the consolidated balance sheet, these items, along with net income (loss), are components of comprehensive income. The Company characterizes their fixed income portfolio as available-for-sale securities, with appropriate adjustments to other comprehensive income. There were no qualifying items reported in comprehensive income for the three and nine months ended September 30, 2013 or 2012. | |
Revenue Recognition, Policy [Policy Text Block] | ' |
Recognition of Premium Revenues | |
Premiums are recognized as revenue on a daily pro rata basis over the policy term. The portion of premiums related to the unexpired term of policies in force as of the end of the measurement period and to be earned over the remaining term of those polices, is deferred and reported as unearned premiums. | |
Ceding Commission [Policy Text Block] | ' |
Ceding Commission | |
Ceding commissions represent acquisition costs associated with insurance risk ceded to other reinsurance partners and is earned on a pro-rata basis over the life of the associated policy. | |
Policy Fees [Policy Text Block] | ' |
Policy Fees | |
Policy fee income includes application fees which are intended to reimburse the Company for a portion of the costs incurred in establishing the insurance. Policy fees on policies where premium is traditionally paid in full upon inception of the policy are recognized when written, while fees charged on policies where premiums are paid in installments, are recognized when collected. | |
Reinsurance Profit Sharing Installments and Other Income [Policy Text Block] | ' |
Reinsurance Profit Sharing, Installments and Other Income | |
Reinsurance profit share income is recognized when earned. Installments and other fees associated with the collection of installment premium payments are recognized as income when collected. There is no amount over 5% of total revenue within this classification on the consolidated statement of operations for the three months and nine months ended September 30, 2013 and September 30, 2012. | |
Property, Plant and Equipment, Policy [Policy Text Block] | ' |
Property, Equipment and Software | |
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets, which range from three to five years. The cost and related accumulated depreciation of assets sold or disposed are removed from the accounts and the resulting gain or loss is included in the consolidated statement of operations. Maintenance and repairs are expensed as incurred. | |
Software installation and development is stated at cost, net of accumulated amortization. Amortization is calculated on a straight-line basis method over three years. | |
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | ' |
Impairment of Long-Lived Assets | |
Long-lived assets, such as property, equipment and software, are reviewed for impairment whenever business events or circumstances could lead to or indicate that the value of the asset is in fact may not be recoverable. The assessment of possible impairment is based on whether the carrying amount of the assets exceeds its fair value. The Company uses estimates of undiscounted future cash flows in determining the recoverability of long-lived assets. As of September 30, 2013 and December 31, 2012, no impairment has been recorded. | |
Commissions, Policy [Policy Text Block] | ' |
Deferred Policy and Acquisition Costs/Deferred Ceding Commissions | |
Deferred policy acquisitions costs (“DAC”) as of September 30, 2013 and December 31, 2012, consist of commissions, premium taxes and policy underwriting and production expenses which are incurred through and vary directly with, the level of production of new and renewal insurance business and are amortized over the terms of the policies they relate to. The method used in calculating DAC limits the amount of the deferred cost to their estimated realizable value, which gives effect to allocating their expense along with other period costs associated with the insurance business, in relation to the amount of gross premium earned on policies to which they relate and investment income. DAC is reviewed to determine if it is recoverable from future income, including investment income. The amount of DAC considered recoverable could be reduced in the near term if estimates of future premium income from their related lines of insurance are revised. | |
Deferred ceding commission as of September 30, 2013 and December 31, 2012 consist of the expense allowance afforded by reinsurers on premium subject to quota share reinsurance treaties, which remain uncollected as of the balance sheet date. Due to a change in the terms of the Company’s property reinsurance treaty effective April 1, 2013, where ceded premium is remitted on a written basis rather than on a collected basis, the balance of uncollected ceding commission for property quota share reinsurance is zero at September 30, 2013. | |
Reserve For Losses and Loss Adjustment Expenses [Policy Text Block] | ' |
Reserve for Losses and Loss Adjustment Expenses | |
The liability for losses and loss adjustment expenses (“LAE”) are estimates of the amounts required to cover known incurred losses and LAE, developed through the review and assessment of loss reports, along with the development of known claims. In addition, loss and loss adjustment expense reserves include management’s estimate of an amount for losses incurred but not reported (“IBNR”), determined from reviewing overall loss reporting patterns as well as the loss development cycles of individual claim cases. Such liabilities are necessarily based on estimates and while management believes that the amount is adequate, the ultimate liability may be more or less than the amounts provided. The approach and methods for making such estimates and for establishing the resulting liability are continually reviewed and any adjustments are reflected in current earnings. | |
Due and Deferred Premiums [Policy Text Block] | ' |
Due and Deferred Premiums | |
Due and deferred premiums consist of uncollateralized premiums and agents’ balances in the course of collection as well as premiums booked but not yet due. | |
Reinsurance Accounting Policy [Policy Text Block] | ' |
Reinsurance | |
In the normal course of business, the Company seeks to reduce the overall exposure to losses that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk with other insurance enterprises or reinsurers. The Company uses only quality, financially rated reinsurers and continually monitors the financial ratings of these companies through its brokers. The amount and type of reinsurance purchased each year is based on management’s estimate of its probable maximum loss and the conditions within the reinsurance market. The Company continually monitors its risk exposure through the use of the AIR modeling system and other modeling tools provided by its reinsurance brokers. Reinsurance premiums, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums paid for reinsurance are reported as reductions of earned premium income. | |
Income Tax, Policy [Policy Text Block] | ' |
Income Taxes | |
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss carryforwards, and liabilities are measured using enacted tax rates expected to be recovered or settled. | |
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. In assessing the realizable value of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. | |
Income Tax Uncertainties, Policy [Policy Text Block] | ' |
Uncertain Tax Positions | |
The Company recognizes uncertain tax positions in the consolidated financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns, and that its accruals for tax liabilities are adequate for all open tax years based on an assessment of many factors including experience and interpretations of tax laws applied to the facts of each matter. At September 30, 2013, the Company’s tax years from 2009 through 2012 remain subject to examination. | |
Use of Estimates, Policy [Policy Text Block] | ' |
Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s primary areas of estimate are for liabilities for unpaid losses and loss adjustment expenses, deferred policy acquisition costs, deferred tax and asset valuation, and reinsurance. Actual results could differ significantly from those estimates. | |
Fair Value of Financial Instruments, Policy [Policy Text Block] | ' |
Fair Value of Financial Instruments | |
The carrying value for the Company’s cash and cash equivalents and short-term investments approximate fair values as of September 30, 2013 and December 31, 2012 due to their short-term nature. Fair value for securities are based on the framework for measuring fair value established by FASB ASC Topic 820, Fair Value Measurements and Disclosures. | |
Convertible Notes Payable [Policy Text Block] | ' |
Convertible Notes Payable | |
The Company accounts for convertible notes payable under FASB ASC Topic 470-20 – Debt with Conversion and Other Options, which requires issuers to assess whether or not an embedded conversion feature is required to be separately accounted for as a derivative liability for liability and equity components and if the conversion feature is beneficial to the holder. See Note 10 on Convertible Notes Payable for additional disclosure. | |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | ' |
Stock Based Compensation | |
The Company accounts for stock-based compensation under the fair value recognition provisions of FASB ASC Topic 718 – “Compensation – Stock Compensation”, which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors including stock options and restricted stock issuances based on estimated fair values. In accordance with FASB ASC Topic 718, the Company recognizes stock-based compensation, if any, in the consolidated statements of operations on a straight line basis over the vesting period of the stock award. See Note 18 on Subsequent Events for additional disclosure. | |
Earnings Per Share, Policy [Policy Text Block] | ' |
Earnings (Loss) Per Share | |
Basic earnings (loss) per share of common stock is computed by dividing net income or loss, less cumulative preferred stock dividends for the period whether or not earned or paid, by the weighted-average number of common shares during the period. | |
For the three months ended September 30, 2013, the net income attributable to common stockholders was decreased for cumulative dividends on preferred stock during the period of $255,215. | |
For the three months ended September 30, 2012, the net income attributable to common stockholders was decreased for cumulative dividends on preferred stock during the period of $327,478. | |
For the nine months ended September 30, 2013, the net income attributable to common stockholders was decreased for cumulative dividends on preferred stock during the period of $974,179. | |
For the nine months ended September 30, 2012, net loss attributable to common stockholders was increased for cumulative dividends on preferred stock during the period of $970,088. | |
Diluted earnings (loss) per share of common stock is computed by dividing income or loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include convertible notes payable, outstanding convertible preferred stock and stock options. | |
For the three months ended September 30, 2013, all of the Company’s dilutive securities were included in the computation of diluted earnings per share as dilutive. The total number of dilutive shares of common stock that were included totaled 10,695,578. | |
For the nine months ended September 30, 2013, all of the Company’s potentially dilutive securities were excluded from the computation of dilutive earnings per share as they were anti-dilutive. The total number of potentially dilutive shares of common stock that were excluded totaled 13,985,834. | |
For the three months and nine months ended September 30, 2012, all of the Company’s potentially dilutive securities were excluded from the computation of diluted earnings per share as they were anti-dilutive. The total number of potentially dilutive shares of common stock that were excluded totaled 13,112,816. | |
INVESTMENT_Tables
INVESTMENT (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Investments Schedule [Abstract] | ' | ||||||||||||||||
Investment Holdings, Schedule of Investments [Table Text Block] | ' | ||||||||||||||||
The following table provides the Company’s investment holdings by type of financial instruments that were used to estimate the fair value disclosures for financial instruments: | |||||||||||||||||
September 30, 2013 | December 31, 2012 | ||||||||||||||||
Book Value | Fair Value / Carrying Value | Book Value | Fair Value / Carrying Value | ||||||||||||||
Financial Assets: | |||||||||||||||||
Restricted certificates of deposit | $ | 1,000,000 | $ | 1,000,000 | $ | 1,000,000 | $ | 1,000,000 | |||||||||
Long term investments | 3,407,000 | 3,407,000 | 2,155,695 | 2,155,695 | |||||||||||||
Short-term investments | 7,923,223 | 7,923,223 | 3,853,353 | 3,853,353 | |||||||||||||
$ | 12,330,223 | $ | 12,330,223 | $ | 7,009,048 | $ | 7,009,048 | ||||||||||
September 30, 2013 | December 31, 2012 | ||||||||||||||||
Range of Maturities | Interest Rates | Range of Maturities | Interest Rates | ||||||||||||||
Restricted certifcate of deposit | Less than 1 year | 0.20% - 0.25% | Less than 1 year | 0.25% - 0.35% | |||||||||||||
Long-term investments | More than 1 year | 0.30% - 0.80% | More than 1 year | 0.35% - 1.24% | |||||||||||||
Short-term investments | Less than 1 year | 0.20% - 1.24% | Less than 1 year | 0.25% - 0.85% | |||||||||||||
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Disclosure Text Block Supplement [Abstract] | ' | ||||||||||||||||
Fair Value, Assets Measured on Recurring Basis [Table Text Block] | ' | ||||||||||||||||
The following tables provide information as of September 30, 2013 and December 31, 2012, about the Company’s financial assets measured at fair value on a recurring basis: | |||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
As of September 30, 2013 | |||||||||||||||||
Money market mutual funds | $ | 5,526,584 | $ | - | $ | - | $ | 5,526,584 | |||||||||
Total | $ | 5,526,584 | $ | - | $ | - | $ | 5,526,584 | |||||||||
Fair Value Measurements Using | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
As of December 31, 2012 | |||||||||||||||||
Money market mutual funds | $ | 60,855 | $ | - | $ | - | $ | 60,855 | |||||||||
Total | $ | 60,855 | $ | - | $ | - | $ | 60,855 | |||||||||
PROPERTY_AND_EQUIPMENT_AND_SOF1
PROPERTY AND EQUIPMENT, AND SOFTWARE NET (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2013 | ||||||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||||||
Property, Plant and Equipment [Table Text Block] | ' | |||||||||||
Property, equipment, and software net consist of the following as of September 30, 2013 and December 31, 2012, respectively: | ||||||||||||
September 30, | December 31, | |||||||||||
2013 | 2012 | Useful Life | ||||||||||
Computer equipment | $ | 212,004 | $ | 200,786 | 3 years | |||||||
Office equipment | 13,999 | 13,999 | 5 years | |||||||||
Furniture and fixtures | 99,852 | 95,022 | 5 years | |||||||||
Software installation and development | 719,143 | 684,011 | 3 years | |||||||||
Total, at cost | 1,044,998 | 993,818 | ||||||||||
Less accumulated depreciation and amortization | -823,235 | -759,662 | ||||||||||
Property and equipment, net | $ | 221,763 | $ | 234,156 | ||||||||
DEFERRED_POLICY_ACQUISION_COST1
DEFERRED POLICY ACQUISION COSTS AND CEDING COMMISSIONS (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Deferred Policy Acquisition Costs Disclosures [Abstract] | ' | ||||||||||||||||
Deferred Policy Acquisition Costs and Ceding Commissions [Table Text Block] | ' | ||||||||||||||||
Changes in deferred policy acquisition costs for the three and nine months ended September 30, 2013 and September 30, 2012, are as follows: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Deferred policy acquisition charges, beginning of the period | $ | 5,570,771 | $ | 4,791,473 | $ | 5,274,515 | $ | 4,429,744 | |||||||||
Capitalized costs | 3,112,886 | 2,754,727 | 8,211,996 | 7,346,931 | |||||||||||||
Amortized costs | -2,533,822 | -2,302,930 | -7,336,676 | -6,533,405 | |||||||||||||
Deferred policy acquisition charges, end of the period | $ | 6,149,835 | $ | 5,243,270 | $ | 6,149,835 | $ | 5,243,270 | |||||||||
Schedule Of Changes In Deferred Ceding Commissions [Table Text Block] | ' | ||||||||||||||||
Changes in deferred ceding commissions for the three and nine months ended September 30, 2013 and September 30, 2012 are as follows: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Deferred ceding commission, beginning of the period | $ | 1,493 | $ | 1,439,587 | $ | 683,914 | $ | 1,439,587 | |||||||||
Capitalized commissions | 4,246,185 | 3,684,115 | 11,205,306 | 9,815,992 | |||||||||||||
Amortized commissions | -4,246,185 | -3,684,115 | -11,887,727 | -9,815,992 | |||||||||||||
Deferred ceding commission, end of the period | $ | 1,493 | $ | 1,439,587 | $ | 1,493 | $ | 1,439,587 | |||||||||
UNPAID_LOSSES_AND_LOSS_ADJUSTM1
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Supplementary Insurance Information [Abstract] | ' | ||||||||||||||||
Liability for Unpaid Claims Adjustment Expense by Expense Type [Table Text Block] | ' | ||||||||||||||||
The following table provides the reconciliation of the beginning and ending reserve balances for losses and LAE, gross of reinsurance for the three and nine months ended September 30, 2013 and for September 30, 2012: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Reserve for losses and LAE, at start of the period | $ | 15,019,644 | $ | 15,095,704 | $ | 11,641,296 | $ | 9,308,974 | |||||||||
Reinsurance recoverables on losses and LAE | -13,943,102 | -13,936,533 | -10,618,032 | -8,469,000 | |||||||||||||
Reserve for losses and LAE, net of reinsurance recoverables at beginning of year | 1,076,542 | 1,159,171 | 1,023,264 | 839,974 | |||||||||||||
Add provision for claims and LAE occurring in: | |||||||||||||||||
Current year | 437,080 | 793,510 | 1,958,627 | 3,593,863 | |||||||||||||
Prior years | 110,000 | -7,000 | 9,000 | -75,000 | |||||||||||||
Net Incurred losses and LAE during the current period | 547,080 | 786,510 | 1,967,627 | 3,518,863 | |||||||||||||
Deduct payments for claims and LAE occuring in: | |||||||||||||||||
Current year | 569,658 | 616,584 | 1,430,927 | 2,736,740 | |||||||||||||
Prior years | 13,000 | 82,184 | 519,000 | 375,184 | |||||||||||||
Net claim and LAE payments during the current year | 582,658 | 698,768 | 1,949,927 | 3,111,924 | |||||||||||||
Reserve for losses and LAE, net of reinsurance recoverables, at end of period | 1,040,964 | 1,246,913 | 1,040,964 | 1,246,913 | |||||||||||||
Reinsurance recoverables on losses and LAE | 14,559,112 | 11,565,261 | 14,559,112 | 11,565,261 | |||||||||||||
Losses and LAE reserves at end of period | $ | 15,600,076 | $ | 12,812,174 | $ | 15,600,076 | $ | 12,812,174 | |||||||||
CONVERTIBLE_NOTES_PAYABLE_Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Schedule of Debt Conversions [Table Text Block] | ' | |||||||
On August 31, 2013, Inter-Atlantic Fund, L.P. elected to convert all of its $950,000 Convertible Promissory Note and accrued interest in accordance with the terms of the Convertible Promissory Note into 922,461 shares of Series A preferred stock. | ||||||||
Amount | Conversion ratio | |||||||
to Series A | ||||||||
Preferred Stock | ||||||||
0.909 | ||||||||
Convertible Promissory Note on 12/26/12 | $ | 950,000 | 863,550 | |||||
Interest on Convertible Promissory Note at 8/31/2013 | 64,808 | 58,911 | ||||||
Total ended September 30, 2013 | $ | 1,014,808 | 922,461 | |||||
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
Stockholders' Equity Note [Abstract] | ' | |||||||||
Schedule of Conversion Of Preferred Stock and Common Stock Debt [Table Text Block] | ' | |||||||||
On August 31, 2013, in accordance with Article Fourth, Section C, Subsection 4 of the Company’s Amended and Restated Certificate of Incorporation, the Series A and Series B preferred stockholders elected to convert 100% of their shares into common stock on a 1:1 basis; therefore as of September 30, 2013 there were no shares of Series A or Series B preferred stock outstanding. | ||||||||||
Preferred Shares | Conversion Ratio | Common Stock | ||||||||
Series A Preferred Stock | 4,500,000 | 1:01 | 4,500,000 | |||||||
Series B Preferred Stock | 500,000 | 1:01 | 500,000 | |||||||
Convertible Promissory Note | 922,461 | 1:01 | 922,461 | |||||||
Common Stock | 900,000 | n/a | 900,000 | |||||||
Total Converted Preferred Shares | 6,822,461 | 6,822,461 | ||||||||
Schedule Of Conversion Of Preferred Stock And Stock Split On Common Stock [Table Text Block] | ' | |||||||||
All holders of the Company’s Series A and Series B preferred shares converted their preferred shares to common stock prior to the effectiveness of the stock split. | ||||||||||
Common Stock | Forward Stock | Common Stock | Par Value at $.0001 | |||||||
Split on 8/31/2013 | ||||||||||
Series A Preferred Stock | 4,500,000 | 2.5:1 | 11,250,000 | 1,125 | ||||||
Series B Preferred Stock | 500,000 | 2.5:1 | 1,250,000 | 125 | ||||||
Convertible Promissory Note | 922,461 | 2.5:1 | 2,306,152 | 231 | ||||||
Common Stock, including Treasury Stock | 900,000 | 2.5:1 | 2,250,000 | 225 | ||||||
Total Common Stock | 6,822,461 | 17,056,152 | 1,706 | |||||||
STOCK_BASED_COMPENSATION_Table
STOCK BASED COMPENSATION (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | ' | |||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | ' | |||||||||||||||
A summary of the activity of the Company’s stock option plan for the three and nine months ended September 30, 2013 and September 30, 2012 is as follows: | ||||||||||||||||
Number of | Weighted Avg | Weighted Avg | Aggregate | |||||||||||||
Options | Exercise Price | Remaining Cont. | Intrinsic Value | |||||||||||||
Term | ||||||||||||||||
Outstanding at January 1, 2013 | 783,750 | $ | 0.79 | 6.08 | $ | 11 | ||||||||||
Outstanding at March 31, 2013 | 783,750 | 0.78 | 5.58 | $ | 11 | |||||||||||
Outstanding at June 30, 2013 | 783,750 | 0.78 | 5.33 | $ | 11 | |||||||||||
Outstanding at September 30, 2013 | 783,750 | 0.8 | 5.08 | $ | 11 | |||||||||||
Exercisable at September 30, 2013 | 702,500 | 0.8 | 4.9 | $ | 11 | |||||||||||
Outstanding at January 1, 2012 | 783,750 | $ | 0.78 | 6.79 | $ | 11 | ||||||||||
Outstanding at March 31, 2012 | 783,750 | 0.78 | 5.83 | $ | 11 | |||||||||||
Outstanding at June 30, 2012 | 783,750 | 0.78 | 6.33 | $ | 11 | |||||||||||
Outstanding at September 30, 2012 | 783,750 | 0.8 | 5.08 | $ | 11 | |||||||||||
Exercisable at September 30, 2012 | 612,816 | 0.8 | 4.7 | $ | 11 | |||||||||||
Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block] | ' | |||||||||||||||
The fair value of options granted is estimated using a market value approach and the Black-Scholes option pricing model using the following assumptions for the nine months ended September 30, 2013 and September 30, 2012: | ||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Dividend Yield | 0 | % | 0 | % | ||||||||||||
Expected Volatility | 30 | % | 30 | % | ||||||||||||
Risk-free interest rate | 0.25 | % | 0.33 | % | ||||||||||||
Expected life (in years) | 2 | 2 | ||||||||||||||
Weighted average fair value per options granted | $ | 0 | $ | 0 | ||||||||||||
REINSURANCE_Tables
REINSURANCE (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Insurance [Abstract] | ' | ||||||||||||||||
Schedule Of Effects Of Reinsurance On Premiums Written and Earned [Table Text Block] | ' | ||||||||||||||||
The effects of reinsurance on premiums written and earned were as follows, for the three and nine months period ended September 30, 2013 and September 30, 2012: | |||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||
September 30, 2013 | September 30, 2013 | September 30, 2012 | September 30, 2012 | ||||||||||||||
Written | Earned | Written | Earned | ||||||||||||||
Direct premiums | $ | 16,398,118 | $ | 13,643,436 | $ | 14,514,552 | $ | 12,167,675 | |||||||||
Ceded premiums | -14,641,816 | -12,390,289 | -12,772,408 | -10,738,665 | |||||||||||||
Net Premiums | $ | 1,756,302 | $ | 1,253,147 | $ | 1,742,144 | $ | 1,429,010 | |||||||||
Nine Months | Nine Months | ||||||||||||||||
September 30, 2013 | September 30, 2013 | September 30, 2012 | September 30, 2012 | ||||||||||||||
Written | Earned | Written | Earned | ||||||||||||||
Direct premiums | $ | 43,370,380 | $ | 39,037,947 | $ | 38,952,230 | $ | 34,644,311 | |||||||||
Ceded premiums | -38,659,828 | -35,494,253 | -34,122,602 | -30,918,356 | |||||||||||||
Net Premiums | $ | 4,710,552 | $ | 3,543,694 | $ | 4,829,628 | $ | 3,725,955 | |||||||||
Summary Of Reinsurance Balance [Table Text Block] | ' | ||||||||||||||||
Following is a summary of HAIC’s reinsurance balances under the above described reinsurance treaties as of and for the three and nine months ended September 30, 2013 and September 30, 2012: | |||||||||||||||||
Three Months | Nine Months Ended | ||||||||||||||||
September 30, 2013 | September 30, 2012 | September 30, 2013 | September 30, 2012 | ||||||||||||||
Ceded premiums payable | $ | 259,344 | $ | 4,594,707 | $ | 6,795,001 | $ | 10,615,155 | |||||||||
Ceded loss adjustment expenses | 2,802,674 | 1,061,415 | 8,472,005 | 3,404,536 | |||||||||||||
Ceded loss and loss adjustment expense reserve | 1,295,104 | -1,236,607 | 11,137,559 | 6,314,276 | |||||||||||||
Ceded unearned premium reserve | 2,476,398 | 2,158,507 | 27,579,588 | 23,683,223 | |||||||||||||
Ceded earned premiums | 12,390,289 | 10,738,665 | 35,494,253 | 30,918,356 | |||||||||||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||||
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | ' | |||||
Future minimum lease payments required under the non-cancelable operating leases are as follows for the years ending December 31: | ||||||
2013 | (3 Months) | 26,682 | ||||
2014 | 111,234 | |||||
2015 | 96,087 | |||||
2016 | 39,582 | |||||
$ | 273,585 | |||||
ORGANIZATION_AND_SUMMARY_OF_SI2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Certificates of Deposit, at Carrying Value | $1,000,000 | ' | $1,000,000 | ' |
Percentage Of Settlement With Tax Authority | ' | ' | 50.00% | ' |
Cumulative preferred stock dividends | $255,215 | $327,478 | $974,179 | $970,088 |
Uncollected Ceding Commission For Property Quota Share Reinsurance Percentage | ' | ' | 0.00% | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 10,695,578 | 13,112,816 | 13,985,834 | 13,112,816 |
Maximum [Member] | ' | ' | ' | ' |
Reinsurance Profit Sharing Instalments And Other Income Percentage | 5.00% | 5.00% | 5.00% | 5.00% |
Homeowners Of America Insurance Company [Member] | ' | ' | ' | ' |
Noncontrolling Interest, Ownership Percentage by Parent | 100.00% | ' | 100.00% | ' |
Homeowners Of America Mga Inc [Member] | ' | ' | ' | ' |
Noncontrolling Interest, Ownership Percentage by Parent | 100.00% | ' | 100.00% | ' |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Policy fees | $1,286,995 | $1,229,532 | $3,497,765 | $3,375,574 |
General Insurance Expense | 481,043 | 145,912 | 1,487,302 | 1,335,233 |
Homeowners Of America Mga Inc [Member] | ' | ' | ' | ' |
Policy fees | 1,286,995 | 1,229,532 | 3,497,765 | 3,375,574 |
Maximum [Member] | ' | ' | ' | ' |
Policy fees | ' | ' | 75 | ' |
Minimum [Member] | ' | ' | ' | ' |
Policy fees | ' | ' | $50 | ' |
INVESTMENT_Details
INVESTMENT (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Financial Assets Book Value | $12,330,223 | $7,009,048 |
Financial Assets Fair Value / Carrying Value | 12,330,223 | 7,009,048 |
Restricted Certificates Of Deposit [Member] | ' | ' |
Financial Assets Book Value | 1,000,000 | 1,000,000 |
Financial Assets Fair Value / Carrying Value | 1,000,000 | 1,000,000 |
Range of Maturities | 'Less than 1 year | 'Less than 1 year |
Restricted Certificates Of Deposit [Member] | Maximum [Member] | ' | ' |
Interest Rates | 0.25% | 0.35% |
Restricted Certificates Of Deposit [Member] | Minimum [Member] | ' | ' |
Interest Rates | 0.20% | 0.25% |
Long-term investments [Member] | ' | ' |
Financial Assets Book Value | 3,407,000 | 2,155,695 |
Financial Assets Fair Value / Carrying Value | 3,407,000 | 2,155,695 |
Range of Maturities | 'More than 1 year | 'More than 1 year |
Long-term investments [Member] | Maximum [Member] | ' | ' |
Interest Rates | 0.80% | 1.24% |
Long-term investments [Member] | Minimum [Member] | ' | ' |
Interest Rates | 0.30% | 0.35% |
Short-term investments [Member] | ' | ' |
Financial Assets Book Value | 7,923,223 | 3,853,353 |
Financial Assets Fair Value / Carrying Value | $7,923,223 | $3,853,353 |
Range of Maturities | 'Less than 1 year | 'Less than 1 year |
Short-term investments [Member] | Maximum [Member] | ' | ' |
Interest Rates | 1.24% | 0.85% |
Short-term investments [Member] | Minimum [Member] | ' | ' |
Interest Rates | 0.20% | 0.25% |
INVESTMENT_Details_textual
INVESTMENT (Details textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Investment Income, Net | $9,339 | $4,352 | $31,684 | $13,491 |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Money market mutual funds, Total | $5,526,584 | $60,855 |
Money market mutual funds [Member] | ' | ' |
Money market mutual funds, Total | 5,526,584 | 60,855 |
Fair Value, Inputs, Level 1 [Member] | ' | ' |
Money market mutual funds, Total | 5,526,584 | 60,855 |
Fair Value, Inputs, Level 1 [Member] | Money market mutual funds [Member] | ' | ' |
Money market mutual funds, Total | 5,526,584 | 60,855 |
Fair Value, Inputs, Level 2 [Member] | ' | ' |
Money market mutual funds, Total | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Money market mutual funds [Member] | ' | ' |
Money market mutual funds, Total | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ' | ' |
Money market mutual funds, Total | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Money market mutual funds [Member] | ' | ' |
Money market mutual funds, Total | $0 | $0 |
PROPERTY_AND_EQUIPMENT_AND_SOF2
PROPERTY AND EQUIPMENT, AND SOFTWARE NET (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Total, at cost | $1,044,998 | $993,818 |
Less accumulated depreciation and amortization | -823,235 | -759,662 |
Property and equipment, net | 221,763 | 234,156 |
Computer equipment [Member] | ' | ' |
Total, at cost | 212,004 | 200,786 |
Property, Plant and Equipment, Useful Life | '3 years | '3 years |
Office equipment [Member] | ' | ' |
Total, at cost | 13,999 | 13,999 |
Property, Plant and Equipment, Useful Life | '5 years | '5 years |
Furniture and fixtures [Member] | ' | ' |
Total, at cost | 99,852 | 95,022 |
Property, Plant and Equipment, Useful Life | '5 years | '5 years |
Software installation and development [Member] | ' | ' |
Total, at cost | $719,143 | $684,011 |
Property, Plant and Equipment, Useful Life | '3 years | '3 years |
PROPERTY_AND_EQUIPMENT_AND_SOF3
PROPERTY AND EQUIPMENT, AND SOFTWARE NET (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Depreciation, Amortization and Accretion, Net | $22,769 | $17,440 | $63,573 | $51,773 |
DEFERRED_POLICY_ACQUISION_COST2
DEFERRED POLICY ACQUISION COSTS AND CEDING COMMISSIONS (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Deferred policy acquisition charges, end of the period | $6,149,835 | $5,243,270 | $6,149,835 | $5,243,270 |
Deferred Policy Acquisition Costs [Member] | ' | ' | ' | ' |
Deferred policy acquisition charges, beginning of the period | 5,570,771 | 4,791,473 | 5,274,515 | 4,429,744 |
Capitalized Costs | 3,112,886 | 2,754,727 | 8,211,996 | 7,346,931 |
Amortized commissions | -2,533,822 | -2,302,930 | -7,336,676 | -6,533,405 |
Deferred policy acquisition charges, end of the period | $6,149,835 | $5,243,270 | $6,149,835 | $5,243,270 |
DEFERRED_POLICY_ACQUISION_COST3
DEFERRED POLICY ACQUISION COSTS AND CEDING COMMISSIONS (Details 1) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Deferred ceding commission, end of the period | $1,493 | $1,439,587 | $1,493 | $1,439,587 |
Deferred Ceding Commissions [Member] | ' | ' | ' | ' |
Deferred ceding commission, beginning of the period | 1,493 | 1,439,587 | 683,914 | 1,439,587 |
Capitalized commissions | 4,246,185 | 3,684,115 | 11,205,306 | 9,815,992 |
Amortized commissions | -4,246,185 | -3,684,115 | -11,887,727 | -9,815,992 |
Deferred ceding commission, end of the period | $1,493 | $1,439,587 | $1,493 | $1,439,587 |
DEFERRED_POLICY_ACQUISION_COST4
DEFERRED POLICY ACQUISION COSTS AND CEDING COMMISSIONS (Details Textual) (USD $) | 9 Months Ended | |||||
Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Dec. 31, 2011 | |
Deferred Policy Acquisition Costs, Net | $6,149,835 | ' | ' | $5,243,270 | ' | ' |
Deferred Ceding Commissions Net | 1,493 | ' | ' | 1,439,587 | ' | ' |
Deferred Ceding Commissions [Member] | ' | ' | ' | ' | ' | ' |
Deferred Ceding Commissions Net | 1,493 | 1,493 | 683,914 | 1,439,587 | 1,439,587 | 1,439,587 |
Deferred Policy Acquisition Costs, Period Increase (Decrease) | $1,438,094 | ' | ' | ' | ' | ' |
TWIA_ASSESSMENTS_Details_Textu
TWIA ASSESSMENTS (Details Textual) (USD $) | 1 Months Ended |
Sep. 17, 2008 | |
Statutory Accounting Practices, Statutory Net Income Amount | $748,200 |
Premium Tax Credit | $400,200 |
UNPAID_LOSSES_AND_LOSS_ADJUSTM2
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Reserve for losses and LAE, at start of the period | $15,019,644 | $15,095,704 | $11,641,296 | $9,308,974 |
Reinsurance recoverables on losses and LAE | -13,943,102 | -13,936,533 | -10,618,032 | -8,469,000 |
Reserve for losses and LAE, net of reinsurance recoverables at beginning of year | 1,076,542 | 1,159,171 | 1,023,264 | 839,974 |
Add provision for claims and LAE occurring in: | ' | ' | ' | ' |
Current year | 437,080 | 793,510 | 1,958,627 | 3,593,863 |
Prior years | 110,000 | -7,000 | 9,000 | -75,000 |
Net Incurred losses and LAE during the current period | 547,080 | 786,510 | 1,967,627 | 3,518,863 |
Deduct payments for claims and LAE occuring in: | ' | ' | ' | ' |
Current year | 569,658 | 616,584 | 1,430,927 | 2,736,740 |
Prior years | 13,000 | 82,184 | 519,000 | 375,184 |
Net claim and LAE payments during the current year | 582,658 | 698,768 | 1,949,927 | 3,111,924 |
Reserve for losses and LAE, net of reinsurance recoverables, at end of period | 1,040,964 | 1,246,913 | 1,040,964 | 1,246,913 |
Reinsurance recoverables on losses and LAE | 14,559,112 | 11,565,261 | 14,559,112 | 11,565,261 |
Losses and LAE reserves at end of period | $15,600,076 | $12,812,174 | $15,600,076 | $12,812,174 |
UNPAID_LOSSES_AND_LOSS_ADJUSTM3
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Liability for Unpaid Claims and Claims Adjustment Expense, Incurred Claims, Prior Years | ($110,000) | $7,000 | ($9,000) | $75,000 |
CONVERTIBLE_NOTES_PAYABLE_Deta
CONVERTIBLE NOTES PAYABLE (Details) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Debt Conversion [Line Items] | ' |
Convertible Promissory Note on 12/26/12 | $950,000 |
Interest on Convertible Promissory Note at 8/31/2013 | 64,808 |
Total ended September 30, 2013 | $1,014,808 |
Conversion ratio to Series A Preferred Stock 0.9090 | ' |
Debt Conversion [Line Items] | ' |
Convertible Promissory Note on 12/26/12 | 863,550 |
Interest on Convertible Promissory Note at 8/31/2013 | 58,911 |
Total ended September 30, 2013 | 922,461 |
CONVERTIBLE_NOTES_PAYABLE_Deta1
CONVERTIBLE NOTES PAYABLE (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 1 Months Ended | |||||
Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Aug. 31, 2013 | Dec. 26, 2012 | Aug. 31, 2013 | Dec. 26, 2012 | Dec. 26, 2012 | Aug. 31, 2013 | |
Inter-Atlantic Fund, L.P [Member] | Inter-Atlantic Fund, L.P [Member] | Phoenix Associates, Inc [Member] | Series A Preferred Stock [Member] | ||||||
Convertible Notes Payable, Total | $50,000 | $50,000 | $1,000,000 | ' | ' | $950,000 | $950,000 | $50,000 | ' |
Debt Instrument, Interest Rate, Stated Percentage | ' | ' | ' | ' | 10.00% | ' | ' | ' | ' |
Debt Instrument Interest Rate On Default | ' | ' | ' | ' | 12.50% | ' | ' | ' | ' |
Debt Instrument, Maturity Date | ' | ' | 26-Dec-12 | ' | ' | ' | ' | ' | ' |
Debt Instrument, Convertible, Terms of Conversion Feature | ' | ' | 'At any date, the holders of the majority interest of these notes has the right to convert all or a portion of the notes, plus accrued interest, into that number of shares of the Companys Series A convertible preferred stock, identical in all respects to the existing Series A preferred stock issued in November 2005, equal to a ratio of 1 share per 1.10 of the notes principal plus accrued interest plus, the amount of cumulative unpaid Series A preferred stock dividends the note holders would have received had the notes been outstanding since 2005 | ' | ' | ' | ' | ' | ' |
Interest Expense, Debt, Total | $17,397 | $68,630 | ' | ' | ' | ' | ' | ' | ' |
Debt Conversion, Converted Instrument, Shares Issued | ' | ' | ' | ' | ' | ' | ' | ' | 922,461 |
Convertible preferred stock, shares issued upon conversion | ' | ' | ' | 6,822,461 | ' | ' | ' | ' | 2,306,152 |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS EQUITY (Details) | 1 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | |||||
Aug. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Aug. 31, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Convertible Debt [Member] | Convertible Common Stock [Member] | Convertible Common Stock [Member] | Convertible Preferred Stock [Member] | ||||
Preferred Stock, Shares Outstanding | ' | 0 | 0 | 4,500,000 | 500,000 | ' | ' | ' | 6,822,461 |
Debt Conversion, Converted Instrument, Shares Issued | ' | ' | ' | ' | ' | 922,461 | ' | ' | ' |
Common Stock, Shares, Outstanding | ' | 15,706,152 | 900,000 | ' | ' | ' | ' | 900,000 | ' |
Convertible Preferred Stock, Conversion Ratio | ' | ' | ' | '1:1 | '1:1 | '1:1 | ' | ' | ' |
Convertible Preferred Stock, Shares Issued upon Conversion | 6,822,461 | ' | ' | 4,500,000 | 500,000 | 922,461 | 922,461 | ' | 6,822,461 |
Stock Issued During Period, Shares, Conversion of Convertible Securities | 17,056,152 | ' | ' | ' | ' | ' | 2,306,152 | 900,000 | ' |
STOCKHOLDERS_EQUITY_Details_1
STOCKHOLDERS' EQUITY (Details 1) (USD $) | 1 Months Ended | 9 Months Ended |
Aug. 31, 2013 | Sep. 30, 2013 | |
CommonStock | 6,822,461 | ' |
CommonStock | 17,056,152 | ' |
ParValueat 0.0001 | $1,706 | ' |
Series A Preferred Stock [Member] | ' | ' |
CommonStock | 4,500,000 | ' |
CommonStock | 11,250,000 | ' |
ParValueat 0.0001 | $1,125 | ' |
Series A Preferred Stock [Member] | Maximum [Member] | ' | ' |
Forward Stock Split on 8/31/2013 | '2.5:1 | ' |
Series B Preferred Stock [Member] | ' | ' |
CommonStock | 500,000 | ' |
CommonStock | 1,250,000 | ' |
ParValueat 0.0001 | $125 | ' |
Series B Preferred Stock [Member] | Maximum [Member] | ' | ' |
Forward Stock Split on 8/31/2013 | '2.5:1 | ' |
Convertible Common Stock [Member] | ' | ' |
CommonStock | 922,461 | ' |
CommonStock | 2,306,152 | 900,000 |
ParValueat 0.0001 | $231 | ' |
Convertible Common Stock [Member] | Maximum [Member] | ' | ' |
Forward Stock Split on 8/31/2013 | '2.5:1 | ' |
Common Stock [Member] | ' | ' |
CommonStock | 900,000 | ' |
CommonStock | 2,250,000 | ' |
ParValueat 0.0001 | $225 | ' |
Common Stock [Member] | Maximum [Member] | ' | ' |
Forward Stock Split on 8/31/2013 | '2.5:1 | ' |
STOCKHOLDERS_EQUITY_Details_Te
STOCKHOLDERS' EQUITY (Details Textual) (USD $) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Aug. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Jul. 24, 2013 | |
Common Stock, Shares Authorized | ' | 40,000,000 | 10,000,000 | 40,000,000 |
Common Stock, Shares, Issued | ' | 17,056,152 | 900,000 | ' |
Common Stock, Shares, Outstanding | ' | 15,706,152 | 900,000 | ' |
Common Stock, Par or Stated Value Per Share | ' | $0.00 | $0.00 | ' |
Common Stock, Voting Rights | ' | 'one (1) vote for each share of common stock held | 'one (1) vote for each share of common stock held | ' |
Preferred Stock, Shares Authorized | ' | 20,500,000 | ' | 20,500,000 |
Payment for Buy Back of Shares | $5,400 | ' | ' | ' |
Equity Method Investment, Ownership Percentage | 99.15% | ' | ' | ' |
Mr. Tucker [Member] | ' | ' | ' | ' |
Buy Back Of Shares | 480,000 | ' | ' | ' |
Mr. Backus [Member] | ' | ' | ' | ' |
Buy Back Of Shares | 60,000 | ' | ' | ' |
Series A and B Preferred Stock [Member] | ' | ' | ' | ' |
Percentage Of Conversion Of Preferred Stock Into Securities | 100.00% | ' | ' | ' |
STOCK_BASED_COMPENSATION_Detai
STOCK BASED COMPENSATION (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Number Of Options, Outstanding (in shares) | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | ' |
Numberof Options, Outstanding (in shares) | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 |
Number of Options, Exercisable (in shares) | 702,500 | ' | ' | 612,816 | ' | ' | 702,500 | 612,816 | ' | ' |
Weighted Average Exercise Price, Outstanding (in dollars per shares) | $0.78 | $0.78 | $0.79 | $0.78 | $0.78 | $0.78 | $0.79 | $0.78 | $0.78 | ' |
Weighted Average Exercise Price, Outstanding (in dollars per shares) | $0.80 | $0.78 | $0.78 | $0.80 | $0.78 | $0.78 | $0.80 | $0.80 | $0.79 | $0.78 |
Weighted Average Exercise Price, Exerciseable | $0.80 | ' | ' | $0.80 | ' | ' | $0.80 | $0.80 | ' | ' |
Weighted Average Remaining Contractual Term, Outstanding | '5 years 29 days | '5 years 3 months 29 days | '5 years 6 months 29 days | '5 years 29 days | '6 years 3 months 29 days | '5 years 9 months 29 days | ' | ' | '6 years 29 days | '6 years 9 months 14 days |
Weighted Average Remaining Contractual Term, Exerciseable | ' | ' | ' | ' | ' | ' | '4 years 10 months 24 days | '4 years 8 months 12 days | ' | ' |
Aggregate IntrinsicValue, Outstanding (in dollars) | $11 | $11 | $11 | $11 | $11 | $11 | $11 | $11 | $11 | ' |
Aggregate IntrinsicValue, Outstanding (in dollars) | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 |
Aggregate IntrinsicValue, Outstanding Exerciseable | $11 | ' | ' | $11 | ' | ' | $11 | $11 | ' | ' |
STOCK_BASED_COMPENSATION_Detai1
STOCK BASED COMPENSATION (Details 1) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Dividend Yield | 0.00% | 0.00% |
Expected Volatility | 30.00% | 30.00% |
Risk-free interest rate | 0.25% | 0.33% |
Expected life (in years) | '2 years | '2 years |
Weighted average fair value per options granted (in dollars per shares) | $0 | $0 |
STOCK_BASED_COMPENSATION_Detai2
STOCK BASED COMPENSATION (Details Textual) | 9 Months Ended | |||||||
Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee | 789,475 | ' | ' | ' | ' | ' | ' | ' |
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Outstanding, Contractual Term | '10 years | ' | ' | ' | ' | ' | ' | ' |
Share Based Compensation Arrangement By Share Based Payment Award Options Vested and Expected To Vest Rate | 25.00% | ' | ' | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 | 783,750 |
INCOME_TAXES_Details_Textual
INCOME TAXES (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Valuation allowance | $99,910 | $146,114 | $99,910 | $146,114 |
Income tax expense (benefit) | $315,929 | $251,268 | $608,254 | $227,846 |
Income tax rate | 32.30% | 56.40% | 33.90% | 104.80% |
REINSURANCE_Details
REINSURANCE (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Direct premiums, Written | $16,398,118 | $14,514,552 | $43,370,380 | $38,952,230 |
Ceded premiums, Written | -14,641,816 | -12,772,408 | -38,659,828 | -34,122,602 |
Net Premiums, Written | 1,756,302 | 1,742,144 | 4,710,552 | 4,829,628 |
Direct premiums, Earned | 13,643,436 | 12,167,675 | 39,037,947 | 34,644,311 |
Ceded premiums, Earned | -12,390,289 | -10,738,665 | -35,494,253 | -30,918,356 |
Net premiums, Earned | $1,253,147 | $1,429,010 | $3,543,694 | $3,725,955 |
REINSURANCE_Details_1
REINSURANCE (Details 1) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Ceded premiums payable | $259,344 | $4,594,707 | $6,795,001 | $10,615,155 |
Ceded loss adjustment expenses | 2,802,674 | 1,061,415 | 8,472,005 | 3,404,536 |
Ceded loss and loss adjustment expense reserve | 1,295,104 | -1,236,607 | 11,137,559 | 6,314,276 |
Ceded unearned premium reserve | 2,476,398 | 2,158,507 | 27,579,588 | 23,683,223 |
Ceded earned premiums | $12,390,289 | $10,738,665 | $35,494,253 | $30,918,356 |
REINSURANCE_Details_Textual
REINSURANCE (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | ||||||
Mar. 31, 2012 | Sep. 30, 2013 | Mar. 31, 2013 | 31-May-11 | Dec. 31, 2012 | Sep. 30, 2013 | 31-May-12 | Sep. 30, 2013 | Mar. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Mar. 31, 2013 | |
Non-Weather Losse [Member] | Private Passenger Automobile Policies [Member] | Property Catastrophe Treaties [Member] | Property Catastrophe Treaties [Member] | Excess Of Loss Reinsurance [Member] | Maximum [Member] | Maximum [Member] | ||||||
Private Passenger Automobile Policies [Member] | ||||||||||||
Contracts in Force Subject to Participation Through Reinsurance, Percentage | ' | 90.00% | 90.00% | 90.00% | ' | ' | 50.00% | ' | ' | 50.00% | ' | ' |
Reinsurance recoverables on losses and LAE | ' | $46,590,246 | ' | ' | $36,080,628 | ' | ' | ' | ' | ' | $80,000,000 | $60,000,000 |
Liability for Claims and Claims Adjustment Expense, Property Casualty Liability | ' | ' | ' | ' | ' | 500,000 | ' | 76,000,000 | 62,000,000 | 40,000 | ' | ' |
Net Retention Amount Under Reinsurance Liability | 3,000,000 | 4,000,000 | ' | ' | ' | 50,000 | ' | ' | ' | ' | ' | ' |
Retention Payable, Total | $300,000 | $400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
CONCENTRATION_OF_CREDIT_RISK_D
CONCENTRATION OF CREDIT RISK (Details Textual) (USD $) | Dec. 31, 2012 |
Cash, FDIC Insured Amount | $250,000 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Sep. 30, 2013 |
2013 | $26,682 |
2014 | 111,234 |
2015 | 96,087 |
2016 | 39,582 |
Operating Leases, Future Minimum Payments Due | $273,585 |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Operating Leases, Rent Expense | $23,152 | $17,822 | $73,281 | $75,147 |
REGULATORY_REQUIREMENTS_AND_RE1
REGULATORY REQUIREMENTS AND RESTRICTIONS (Details Textual) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | |
Description of Regulatory Capital Requirements under Insurance Regulations | 'minimum of $2.5 million in capital stock and $2.5 million in surplus | ' |
Statutory Accounting Practices, Statutory Capital and Surplus, Balance | $7,952,843 | $6,716,222 |
Statutory Accounting Practices Statutory Capital Balance | 1,500,000 | 1,500,000 |
Statutory Accounting Practices Statutory Surplus Balance | 6,452,843 | 5,216,222 |
Statutory Accounting Practices, Future Dividend Payments Restrictions | 'The maximum dividend that may be paid without approval of the Insurance Commissioner is limited to the greater of 10% of the statutory surplus at the end of the preceding calendar year or the statutory net income of the preceding calendar year | ' |
Certificates Of Deposit [Member] | ' | ' |
Assets Held by Insurance Regulators | $1,000,000 | $1,000,000 |
SUBSEQUENT_EVENTS_Details_Text
SUBSEQUENT EVENTS (Details Textual) (Employee Stock Option [Member], Subsequent Event [Member]) | 1 Months Ended |
Oct. 24, 2013 | |
Employee Stock Option [Member] | Subsequent Event [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,925,000 |
Common Stock, Capital Shares Reserved for Future Issuance | 2,925,000 |