Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 29, 2016 | Jun. 30, 2015 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 16,566,961 | ||
Entity Registrant Name | Homeowners of America Holding Corp | ||
Entity Central Index Key | 1,346,922 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Assets: | ||
Cash and cash equivalents | $ 5,708,402 | $ 5,648,278 |
Short-term investments | 9,105,000 | 1,231,881 |
Restricted cash and investments | 2,760,038 | 3,790,000 |
Restricted fixed-maturity securities, available-for-sale, at fair value (amortized cost $539,735 as of December 31, 2015 and $539,558 as of December 31, 2014) | 539,472 | 539,654 |
Fixed-maturity securities, available-for-sale, at fair value (amortized cost $3,655,617 as of December 31, 2015 and $3,827,268 as of December 31, 2014) | 3,670,587 | 3,827,245 |
Long-term investments | 9,265,000 | 3,430,000 |
Accrued investment income | 74,534 | 55,908 |
Due and deferred premiums | 6,849,932 | 5,089,131 |
Balance due from reinsurers | 77,825,489 | 54,157,528 |
Property, equipment and software, net | 259,883 | 344,495 |
Deferred policy acquisition costs | 10,548,203 | 7,897,806 |
Prepaid expenses and other | 724,159 | 552,728 |
Deferred tax assets, net | 2,316,545 | 1,517,935 |
Total assets | 129,647,244 | 88,082,589 |
Liabilities: | ||
Loss and loss adjustment expenses | 27,972,037 | 15,009,506 |
Advance premiums | 165,263 | 74,172 |
Ceded reinsurance premiums payable | 6,101,956 | 4,342,874 |
Unearned premiums | 54,119,100 | 40,021,934 |
Unearned ceding commissions | 15,820,781 | 11,200,317 |
Commissions payable, reinsurers and agents | 3,993,599 | 3,754,929 |
General and other accrued expenses payable | 5,190,181 | 2,232,547 |
Funds held under reinsurance treaty | 229,798 | 0 |
Income tax payable | 37,680 | 0 |
Taxes, licenses and other fees payable | 1,095,186 | 765,782 |
Total liabilities | 114,725,581 | 77,402,061 |
Stockholders' equity: | ||
Common stock, $0.0001 par value per share; 40,000,000 shares authorized; 17,708,125 shares issued and 16,400,125 shares outstanding as of December 31, 2015 and 17,479,852 shares issued and 16,168,852 shares outstanding as of December 31, 2014 | 1,640 | 1,617 |
Treasury stock, $0.0001 par value per share; 1,308,000 common shares as of December 31, 2015 and 1,311,000 common shares as of December 31, 2014 | (131) | (131) |
Additional paid-in-capital | 6,396,936 | 6,209,265 |
Accumulated other comprehensive income | 14,707 | 73 |
Retained earnings | 8,508,511 | 4,469,704 |
Total stockholders' equity | 14,921,663 | 10,680,528 |
Total liabilities and stockholders' equity | $ 129,647,244 | $ 88,082,589 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Assets: | ||
Restricted fixed-maturity securities, available for sale, amortized cost | $ 539,735 | $ 539,558 |
Fixed-maturity securities, available for sale, amortized cost | $ 3,655,617 | $ 3,827,268 |
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock, shares issued (in shares) | 17,708,125 | 17,479,852 |
Common stock, shares outstanding (in shares) | 16,400,125 | 16,168,852 |
Treasury stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Treasury stock, shares (in shares) | 1,308,000 | 1,311,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues: | ||
Premiums earned | $ 83,394,739 | $ 64,895,484 |
Ceded premiums | (78,026,288) | (60,484,640) |
Net premiums earned | 5,368,451 | 4,410,844 |
Policy fees | 7,104,575 | 5,616,525 |
Ceding commissions and reinsurance profit share | 23,655,849 | 16,651,464 |
Loss adjustment and other fee income | 2,148,208 | 1,530,234 |
Investment income, net of investment expenses | 138,517 | 43,603 |
Net realized investment losses | (3,783) | 0 |
Total revenue | 38,411,817 | 28,252,670 |
Expenses: | ||
Losses and loss adjustment expenses | 5,202,576 | 2,930,295 |
Policy acquisition and other underwriting expenses | 20,286,806 | 16,497,662 |
General and administrative expenses | 6,761,533 | 5,496,391 |
Total expenses | 32,250,915 | 24,924,348 |
Income before income taxes | 6,160,902 | 3,328,322 |
Provision (benefit) for income taxes: | ||
Current | 2,920,705 | 1,748,911 |
Deferred | (798,610) | (584,714) |
Total income taxes | 2,122,095 | 1,164,197 |
Net income | 4,038,807 | 2,164,125 |
Cumulative preferred stock dividends | 0 | 0 |
Net income available to common stockholders | $ 4,038,807 | $ 2,164,125 |
Basic income per common share (in dollars per share) | $ 0.25 | $ 0.13 |
Diluted income per common share (in dollars per share) | 0.23 | 0.12 |
Cash dividend declared per common share (in dollars per share) | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | ||
Net income | $ 4,038,807 | $ 2,164,125 |
Change in unrealized gain on investments: | ||
Unrealized gain arising from the period | 10,851 | 73 |
Amounts reclassified from accumulated comprehensive income | 3,783 | 0 |
Deferred income taxes on securities | 0 | 0 |
Total other comprehensive income, net of income taxes | 14,634 | 73 |
Comprehensive income | $ 4,053,441 | $ 2,164,198 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Treasury Stock [Member] | Additional Paid In Capital [Member] | Accumulated Other Comprehensive Income, Net of Tax [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2013 | $ 1,583 | $ (135) | $ 5,969,550 | $ 0 | $ 2,305,579 | $ 8,276,577 |
Balance (in shares) at Dec. 31, 2013 | 15,831,140 | 1,350,000 | ||||
Net Income | $ 0 | $ 0 | 0 | 0 | 2,164,125 | 2,164,125 |
Total other comprehensive income, net of income taxes | 0 | 0 | 0 | 73 | 0 | 73 |
Stock options exercised | $ 1 | $ 0 | 7,849 | 0 | 0 | 7,850 |
Stock options exercised (in shares) | 10,250 | 0 | ||||
Common stock issued | $ 33 | $ 4 | 170,243 | 0 | 0 | 170,280 |
Common stock issued (in shares) | 327,462 | (39,000) | ||||
Stock-based compensation | $ 0 | $ 0 | 61,623 | 0 | 0 | 61,623 |
Balance at Dec. 31, 2014 | $ 1,617 | $ (131) | 6,209,265 | 73 | 4,469,704 | 10,680,528 |
Balance (in shares) at Dec. 31, 2014 | 16,168,852 | 1,311,000 | ||||
Net Income | $ 0 | $ 0 | 0 | 0 | 4,038,807 | 4,038,807 |
Total other comprehensive income, net of income taxes | 0 | 0 | 0 | 14,634 | 0 | 14,634 |
Stock options exercised | $ 0 | $ 0 | 400 | 0 | 0 | 400 |
Stock options exercised (in shares) | 1,000 | 0 | ||||
Common stock issued | $ 23 | $ 0 | 152,327 | 0 | 0 | 152,350 |
Common stock issued (in shares) | 230,273 | (3,000) | ||||
Stock-based compensation | $ 0 | $ 0 | 34,944 | 0 | 0 | 34,944 |
Balance at Dec. 31, 2015 | $ 1,640 | $ (131) | $ 6,396,936 | $ 14,707 | $ 8,508,511 | $ 14,921,663 |
Balance (in shares) at Dec. 31, 2015 | 16,400,125 | 1,308,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net income | $ 4,038,807 | $ 2,164,125 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 147,314 | 128,107 |
Accounting charge related to stock-based compensation expense | 34,944 | 61,623 |
Common stock compensation for management services | 150,000 | 150,000 |
Employee compensation stock issuance expense | 2,350 | 20,280 |
Amortization of premium/accretion of discount, net | 105,344 | 62,053 |
Net realized losses on investments | 3,783 | 0 |
Deferred tax assets | (798,610) | (584,714) |
(Increase) decrease in: | ||
Accrued investment income | (18,626) | (47,055) |
Due and deferred premiums | (1,760,801) | (919,307) |
Balance due from reinsurers | (23,667,961) | (7,875,772) |
Deferred policy acquisition costs | (2,650,397) | (1,683,472) |
Prepaid and other | (171,432) | (424,533) |
Increase (decrease) in: | ||
Losses and loss adjustment expenses | 12,962,531 | (874,556) |
Advance premiums | 91,091 | (16,682) |
Ceded reinsurance premiums payable | 1,759,082 | 1,071,016 |
Unearned premiums | 14,097,166 | 8,724,816 |
Unearned ceding commissions | 4,620,464 | 3,133,155 |
Commissions payable, reinsurance and agents | 238,670 | 38,506 |
General and other accrued expenses | 2,957,634 | 326,282 |
Funds held under reinsurance treaty | 229,798 | 0 |
Income tax payable | 37,680 | (211,198) |
Taxes, licenses and other fees payable | 329,404 | 291,279 |
Net cash provided by operating activities | 12,738,235 | 3,533,953 |
Cash flows from investing activities: | ||
Purchases of long-term certificate of deposit | (8,500,038) | (3,430,000) |
Maturities of long-term certificate of deposit | 2,205,000 | 1,960,000 |
Purchases of short-term investments | (9,615,000) | (4,262,922) |
Maturities of short-term investments | 3,231,881 | 4,392,052 |
Purchases of fixed-maturity securities, available-for-sale | (2,486,127) | (5,033,879) |
Call or maturity of fixed-maturity securities, available-for-sale | 2,548,475 | 605,000 |
Additions to furniture, equipment and software | (62,702) | (228,086) |
Net cash used in investing activities | (12,678,511) | (5,997,835) |
Cash flows from financing activities: | ||
Proceeds from stock options exercised | 400 | 7,850 |
Net cash provided by financing activities | 400 | 7,850 |
Net increase (decrease) in cash and cash equivalents | 60,124 | (2,456,032) |
Cash and cash equivalents, beginning of period | 5,648,278 | 8,104,310 |
Cash and cash equivalents, end of the period | 5,708,402 | 5,648,278 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the year for income tax | $ 2,660,000 | $ 2,307,680 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Homeowners of America Holding Corporation ("HAHC") is an insurance holding company established to hold insurance entities for the purpose of marketing personal lines 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. Coverage is concentrated in Texas. HAHC also owns 100% of Homeowners of America MGA, Inc. ("HAMGA"), a Texas Corporation, formed to provide marketing and claims administration services. HAHC, along with its subsidiaries HAIC and HAMGA, 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"). Certain reclassifications of prior year amounts have been made to conform to the current year presentation. 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 December 31, 2015 and 2014, cash and cash equivalents consist of cash on deposit with financial institutions, as well as money market mutual funds. General and other accrued expenses payable as of December 31, 2015 and December 31, 2014, include $4.5 million and $1.7 million, respectively, of both claim and general operating expense checks issued in excess of cash book balances, not yet presented for payment. Investments The Company's investments are comprised of short-term, restricted, long-term investments and fixed-maturity securities classified as available-for-sale as of December 31, 2015 and 2014. Restricted investments and long-term investments are described below. Short-term investments include 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, certificates of deposit are carried at cost, which approximates fair value. Fixed-maturity securities are classified as available-for-sale when it is not management's intent to make profits by buying and selling the securities within a short period of time or when it is not management's intent to hold the securities to maturity. As of December 31, 2015 and 2014, the Company has restricted cash and investments, in the amount of $3.3 million and $4.3 million, respectively, pledged to the Department of Insurance in certain states as a condition of its Certificate of Authority for the purpose of meeting obligations to policyholders and creditors. Restricted assets are shown separately in the accompanying consolidated balance sheets as "Restricted cash and investments" and include money market accounts and certificates of deposits. "Restricted fixed-maturity securities, classified as available-for-sale" are shown separately in the accompanying consolidated balance sheets and recorded at fair value. With the approval of the Departments of Insurance, the Company may exchange the investments with other funds or investments. In respect to certificates of deposit, management intends to hold the portion of these restricted investments to their maturity. As such, these 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 following table provides the Company's restricted cash and investments as of December 31, 2015 and December 31, 2014. Restricted cash and investments December 31, 2015 December 31, 2014 Money Market $ 300,000 $ 300,000 Certificates of Deposit 2,460,038 3,490,000 US Treasury Bond 539,472 539,654 $ 3,299,510 $ 4,329,654 As of December 31, 2015 and December 31, 2014, 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, these investments are 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 the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 320, Investment – Debt and Equity Securities. Accordingly, the fair value disclosures required by FASB ASC Topic 820, Fair Value Measurements and Disclosures are not provided. The Company's fixed-maturity securities classified as available-for-sale are "marked to market" as of the end of each calendar quarter. As of that date, unrealized gains and losses are recorded to Accumulated Other Comprehensive Income, except where such securities are deemed to be other-than-temporarily impaired. 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 FASB ASC Topic 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 when it is not management's intent to make profits by buying and selling the securities within a short period of time or when it is not management's intent to hold the securities to maturity, with appropriate adjustments to other comprehensive income. For the year ended December 31, 2015 and 2014, the Company recorded $10,851 and $73, respectively, of unrealized gains on ava 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 Commissions and Reinsurance Profit Share Ceding commissions represent acquisition costs associated with insurance risk ceded to reinsurers and is earned on a pro-rata basis over the life of the associated policy. Reinsurance profit share is additional ceding commissions payable to the Company based upon attaining specified loss ratios within individual treaty years. Reinsurance profit share income is recognized when earned, which includes adjustments to earned reinsurance profit share based on changes in incurred losses. Policy Fees Policy fee income collected by the Company's MGA, 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. Loss Adjustment and Other Fee Income Loss adjustment and other fee income is recognized as income when collected. Loss adjustment fee income for the year ended December 31, 2015 was in excess of 5% of total revenue on the consolidated statement of operations. For the year ended December 31, 2014, loss adjustment and other fee income did not exceed 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 statements 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 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 December 31, 2015 and 2014, no impairment has been recorded. Deferred Policy and Acquisition Costs Deferred policy acquisitions costs ("DAC") as of December 31, 2015 and 2014, 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 management's estimates of future premium and investment income is reduced which could impair the Company's ability to recover these costs. 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 analysis of liquidity and its 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 December 31, 2015, the Company's tax years from 2012 through 2015 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 consolidated 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 asset valuation, and reinsurance. Actual results could differ significantly from those estimates. Fair Value of Cash, Cash Equivalents and Short-term Investments The carrying value for the Company's cash and cash equivalents and short-term investments approximate fair values as of December 31, 2015 and 2014 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. Fair Value of Fixed-Maturity Securities held as Available-for-Sale The Company's fixed-maturity securities held as available-for-sale are carried at fair value as of December 31, 2015 and 2014. Fair value for securities are based on the framework for measuring fair value established by FASB ASC Topic 820, Fair Value Measurements and Disclosures. 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. For those stock awards vesting 100 % at the issue date, the Company recognizes stock-based compensation immediately. 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. Diluted earnings (loss) per share of common stock is computed by dividing net income or loss attributable to common stockholders, adjusted for the effect of potentially dilutive securities, 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 using the treasury stock method. Potentially dilutive securities include convertible notes payable, outstanding convertible preferred stock and common stock options. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2015 | |
RECENT ACCOUNTING PRONOUNCEMENTS [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | 2. RECENT ACCOUNTING PRONOUNCEMENTS On February 25, 2016, the FASB issued Accounting Standards Update No. 2016-02 ("ASU 2016-02"), Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees (for capital and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach. The Company is currently evaluating the impact of adopting this guidance. On January 5, 2016, the FASB issued Accounting Standards Update No. 2016-01 ("ASU 2016-01"), Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities. The amendment affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. On November 20, 2015, the FASB issued Accounting Standards Update No. 2015-17 ("ASU 2015-17"), Income Taxes (Topic 740), Balance Sheet Classification Deferred Taxes. ASU 2015-17 simplifies the presentation of deferred income taxes. ASU 2015-17 require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendment applies to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendment. ASU 2015-17 is effective for annual periods beginning after December 15, 2016, and interim periods within annual periods for public business entities. For all other entities, ASU 2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. The amendments in ASU 2015-17 may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company presents an unclassified statement of financial position, therefore there will be no impact to the Company's consolidated financial statements. On May 21, 2015, the FASB issued Accounting Standards Update No. 2015-09 ("ASU 2015-09"), Financial Services - Insurance (Topic 944), Disclosures about Short-Duration Contracts. ASU 2015-09 provides enhanced disclosures related to the reserve for losses and loss expenses. The enhanced disclosures required by ASU 2015-09 include (1) net incurred and paid claims development by accident year, (2) a reconciliation of incurred and paid claims development information to the aggregate carrying amount of the reserve for losses and loss expenses, (3) for each accident year presented of incurred claims development information, the total of reserves for incurred but not reported (IBNR), including expected development on reported claims, included in the reserve for losses and loss expenses and a description of the reserving methodologies and changes to the reserving methodologies, and (4) for each accident year presented of incurred claims development information, quantitative information about claims frequency, as well as a description of methodologies used for determining claim frequency information. ASU 2015-09 is effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. The amendments in ASU 2015-09 should be applied retrospectively by providing comparative disclosures for each period presented, except for those requirements that apply only to the current period. The Company is currently assessing the impact the adoption of ASU 2015-09 will have on future disclosures. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | 3. RELATED PARTY TRANSACTIONS In August 2013, HAHC entered into an agreement or the "Advisory Agreement", with Inter-Atlantic Advisors III, Ltd., or "Inter-Atlantic", under which Inter-Atlantic agrees to perform certain management services for the Company. A number of our directors are among the beneficial owners of Inter-Atlantic. The Advisory Agreement has an initial term of six years, to be automatically renewed from year-to-year thereafter, unless terminated by either party upon 60 days' notice prior to the termination of the initial or any renewal term. For its services, the Company pays Inter-Atlantic an annual fee of $300,000, as well as, an annual grant of shares of our common stock with an aggregate fair market value of $150,000 at the time of grant, plus reimburses Inter-Atlantic's expenses incurred in connection with the performance of its service. As long as the Advisory Agreement is in effect and the fees and expense reimbursements are paid, the directors of the Company that are affiliated with Inter-Atlantic have agreed to waive any other compensation for their service as directors. For the year ended December 31, 2015, the Company incurred an expense of $450,000 (of which $150,000 is represented by the issuance of 227,273 shares of common stock) for services performed under the Advisory Agreement. For the year ended December 31, 2014, the Company incurred an expense of $450,000 (of which $150,000 is represented by the issuance of 288,462 shares of common stock) for services performed under the Advisory Agreement. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2015 | |
INVESTMENTS [Abstract] | |
INVESTMENTS | 4. INVESTMENTS For the years ended December 31, 2015 and 2014, there were $10,851 and $73, respectively, in unrealized gains/(losses) on fixed-maturity securities held as available-for-sale. For the year ended December 31, 2015, there were $1,049 of realized gains recognized and $4,832 of realized losses recognized for the period. There were no realized gains or losses recognized for the year ended December 31, 2014 due to the short term nature of the investments held during 2014. The intent is to hold to maturity certificates of deposit carried at amortized cost. The following table provides the Company's short-term, restricted and long-term investment holdings by type of financial instruments that were used to estimate the fair value disclosures for financial instruments: December 31, 2015 December 31, 2014 Book Value Fair Value Carrying Value Book Value Fair Value Carrying Value Financial Assets: Restricted certificates of deposit $ 2,460,038 $ 2,460,038 $ 3,490,000 $ 3,490,000 Restricted money markets 300,000 300,000 300,000 300,000 Long-term investments 9,265,000 9,265,000 3,430,000 3,430,000 Short-term investments 9,105,000 9,105,000 1,231,881 1,231,881 $ 21,130,038 $ 21,130,038 $ 8,451,881 $ 8,451,881 December 31, 2015 December 31, 2014 Range of Maturities Interest Rates Range of Maturities Interest Rates Restricted certificates of deposit Less than 1 year 0.35% - 0.80% Less than 1 year 0.10% - 0.40% Restricted certificates of deposit More than 1 year 0.10% - 1.40% More than 1 year 0.35% - 1.40% Restricted money markets Less than 1 year - Less than 1 year - Long-term investments More than 1 year 0.65% - 1.50% More than 1 year 0.75% - 1.50% Short-term investments Less than 1 year 0.35% - 1.10% Less than 1 year 0.35% - 0.70% The following table provides the Company's fixed-maturity securities classified as available-for-sale which are carried at fair value as of December 31, 2015 and December 31, 2014: December 31, 2015 Gross Unrealized Amortized Cost Gains Losses Fair Value Fixed Maturities: Obligations of states, municipalities and political subdivisions $ 3,655,617 $ 22,755 $ (7,785 ) $ 3,670,587 U.S. Treasury - held as restricted 539,735 - (263 ) 539,472 Total Fixed Maturities $ 4,195,352 $ 22,755 $ (8,048 ) $ 4,210,059 December 31, 2014 Gross Unrealized Amortized Cost Gains Losses Fair Value Fixed Maturities: Obligations of states, municipalities and political subdivisions $ 3,827,268 $ 6,331 $ (6,354 ) $ 3,827,245 U.S. Treasury - held as restricted 539,558 96 - 539,654 Total Fixed Maturities $ 4,366,826 $ 6,427 $ (6,354 ) $ 4,366,899 December 31, 2015 Remaining Time to Maturity Amortized Cost Basis Fair Value Less than one year $ 594,408 $ 594,536 One to five years 2,373,494 2,375,769 Five to ten years 688,367 700,582 More than ten years 539,083 539,172 Total $ 4,195,352 $ 4,210,059 December 31, 2014 Remaining Time to Maturity Amortized Cost Basis Fair Value Less than one year $ 570,236 $ 569,734 One to five years 1,985,297 1,981,134 Five to ten years 162,124 162,519 More than ten years 1,649,169 1,653,512 Total $ 4,366,826 $ 4,366,899 Other-than-temporary Impairment ("OTTI") The Company regularly reviews its individual investment securities for OTTI. The Company considers various factors in determining whether each individual security is other-than-temporarily-impaired, including: ● the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings; ● the length of time and the extent to which the market value of the security has been below its cost or amortized cost; ● general market conditions and industry or sector specific factors; ● nonpayment by the issuer of its contractually obligated interest and principal payments; and ● the Company's intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs. Securities with gross unrealized loss positions at December 31, 2015 and December 31, 2014, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows: Less Than Twelve Months Twelve Months or Greater Total As of December 31, 2015 Gross Unrealized Loss Estimated Fair Value Gross Unrealized Loss Estimated Fair Value Gross Unrealized Loss Estimated Fair Value Fixed-maturity securities Obligations of states, municipalities and political subdivisions $ (7,595 ) $ 2,021,197 $ (453 ) $ 143,896 $ (8,048 ) $ 2,165,093 U.S. Treasury - held as restricted - - - - - - Total available-for-sale securities $ (7,595 ) $ 2,021,197 $ (453 ) $ 143,896 $ (8,048 ) $ 2,165,093 At December 31, 2015, there were 32 securities in an unrealized loss position. Of these securities, three securities had been in an unrealized loss position for 12 months or greater. Less Than Twelve Months Twelve Months or Greater Total As of December 31, 2014 Gross Unrealized Loss Estimated Fair Value Gross Unrealized Loss Estimated Fair Value Gross Unrealized Loss Estimated Fair Value Fixed-maturity securities Obligations of states, municipalities and political subdivisions $ (6,354 ) $ 2,392,217 $ - $ - $ (6,354 ) $ 2,392,217 U.S. Treasury - held as restricted - - - - - - Total available-for-sale securities $ (6,354 ) $ 2,392,217 $ - $ - $ (6,354 ) $ 2,392,217 At December 31, 2014, there were 31 securities in an unrealized loss position. The Company began its investment in these securities in June 2014, therefore none of these securities had been in an unrealized loss position for 12 months or greater at December 31, 2014. The Company believes there were no fundamental issues such as credit losses or other factors with respect to any of its available-for-sale securities. The unrealized losses on investments in fixed-maturity securities were caused primarily by interest rate changes. It is expected that the securities would not be settled at a price less than par value of the investments. Because the declines in fair value are attributable to changes in interest rates or market conditions and not credit quality, and because the Company has the ability and intent to hold its available-for-sale investments until a market price recovery or maturity, the Company does not consider any of its investments to be other-than-temporarily impaired at December 31, 2015 and 2014. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2015 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 5. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial assets carried at fair value have been classified, for disclosure purposes, based on the hierarchy established within FASB ASC Topic 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 ● Level 2 ● Level 3 The Company's short-term investments comprised of certificates of deposit held at financial institutions which are not measured at fair value on a recurring basis. A portion of the Company's cash and cash equivalents include money market mutual fund accounts held at financial institutions which are measured at fair value on a recurring basis. Fixed-maturity securities held as available-for-sale are carried at fair value in our consolidated financial statements. The following tables provide information as of December 31, 2015 and 2014, 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 December 31, 2015 Money market mutual funds $ 2,107,223 $ - $ - $ 2,107,223 Restricted money market mutual funds 300,000 - - 300,000 Securities-available-for-sale fixed-maturity: Obligations of states, municipalities and political subdivisions - 3,670,587 - 3,670,587 U.S. Treasury - 539,472 - 539,472 Total $ 2,407,223 $ 4,210,059 $ - $ 6,617,282 Fair Value Measurements Using Level 1 Level 2 Level 3 Total As of December 31, 2014 Money market mutual funds $ 3,372,527 $ - $ - $ 3,372,527 Restricted money market mutual funds 300,000 - - 300,000 Securities-available-for-sale fixed-maturity: Obligations of states, municipalities and political subdivisions - 3,827,245 - 3,827,245 U.S. Treasury - 539,654 - 539,654 Total $ 3,672,527 $ 4,366,899 $ - $ 8,039,426 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. The fair values for available-for-sale fixed-maturity securities are based upon prices provided by an independent pricing service. The Company has reviewed these prices for reasonableness and has not adjusted any prices received from the independent provider. Level 2 securities represent assets whose fair value is determined using observable market information such as previous day trade prices, quotes from less active markets or quoted prices of securities with similar characteristics. There were no transfers between Level 1 and Level 2 during the year ended December 31, 2015 or 2014. |
PROPERTY, EQUIPMENT, AND SOFTWA
PROPERTY, EQUIPMENT, AND SOFTWARE NET | 12 Months Ended |
Dec. 31, 2015 | |
PROPERTY, EQUIPMENT, AND SOFTWARE NET [Abstract] | |
PROPERTY, EQUIPMENT, AND SOFTWARE NET | 6. PROPERTY, EQUIPMENT, AND SOFTWARE NET Property, equipment, and software net consist of the following as of December 31, 2015 and 2014, respectively: December 31, 2015 December 31, 2014 Useful Life Computer equipment $ 250,343 $ 231,860 3 years Office equipment 17,409 17,409 5 years Furniture and fixtures 142,450 142,450 5 years Software installation and development 973,535 929,316 3 years Total, at cost 1,383,737 1,321,035 Less accumulated depreciation and amortization (1,123,854 ) (976,540 ) Property and equipment, net $ 259,883 $ 344,495 Depreciation and amortization expense for property, equipment and software totaled $147,314 and $128,107 for the years ended December 31, 2015 and 2014, respectively. |
DEFERRED POLICY ACQUISITION COS
DEFERRED POLICY ACQUISITION COSTS | 12 Months Ended |
Dec. 31, 2015 | |
DEFERRED POLICY ACQUISITION COSTS [Abstract] | |
DEFERRED POLICY ACQUISITION COSTS | 7. DEFERRED POLICY ACQUISITION COSTS Total capitalized deferred policy acquisition costs as of December 31, 2015 and December 31, 2014, comprised of commissions, premium taxes and costs associated with underwriting and issuing policies were $10,548,203 and $7,897,806, respectively. Changes in deferred policy acquisition costs for the years ended December 31, 2015 and 2014 are as follows: 2015 2014 Deferred policy acquisition charges, beginning of the period $ 7,897,806 $ 6,214,334 Capitalized costs 18,611,214 14,429,241 Amortized costs (15,960,817 ) (12,745,769 ) Deferred policy acquisition charges, end of the period $ 10,548,203 $ 7,897,806 |
UNPAID LOSSES AND LOSS ADJUSTME
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES | 12 Months Ended |
Dec. 31, 2015 | |
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES [Abstract] | |
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES | 8. 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 at its best estimate for losses, the Company uses damage estimating software developed and owned by acknowledged industry leader, Insurance Service Office. Reserve 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 2015 and 2014: 2015 2014 Reserve for losses and LAE, beginning of year $ 15,009,506 $ 15,884,062 Reinsurance recoverables on losses and LAE (13,995,400 ) (15,090,175 ) Reserve for losses and LAE, net of reinsurance recoverables at beginning of year 1,014,106 793,887 Add provision for claims and LAE occurring in: Current year 4,978,121 2,882,295 Prior years 224,455 48,000 Net incurred losses and LAE during the current year 5,202,576 2,930,295 Deduct payments for claims and LAE occurring in: Current year 3,303,363 2,111,930 Prior years 712,982 598,146 Net claim and LAE payments during the current year 4,016,345 2,710,076 Reserve for losses and LAE, net of reinsurance recoverables, at end of year 2,200,337 1,014,106 Reinsurance recoverables on losses and LAE 25,771,700 13,995,400 Losses and loss adjustment expenses at December 31 $ 27,972,037 $ 15,009,506 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 $224,455 and $48,000 for the years ended December 31, 2015 and 2014, respectively. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2015 | |
STOCKHOLDERS' EQUITY [Abstract] | |
STOCKHOLDERS' EQUITY | 9. STOCKHOLDERS' EQUITY Preferred Stock As of December 31, 2015 and December 31, 2014, the Company has 20,500,000 shares of preferred stock, convertible, 12.50 % cumulative, $0.0001 par value per share, authorized and none issued and outstanding. Common Stock As of December 31, 2015, the Company had 40,000,000 shares authorized and 17,708,125 shares issued and 16,400,125 shares 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. As of December 31, 2014, the Company had 40,000,000 shares authorized and 17,479,852 shares issued and 16,168,852 shares 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. There were no common stock warrants issued during the years ended December 31, 2015 and 2014. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2015 | |
EARNINGS (LOSS) PER SHARE [Abstract] | |
EARNINGS (LOSS) PER SHARE [Text Block] | 10. EARNINGS (LOSS) PER SHARE The following table represents the reconciliation of the Company's basic earnings per common share and diluted earnings per common share computations reported on the Consolidated Statements of Operations for the year ended December 31, 2015 and 2014: Year Ended December 31, 2015 2014 Basic earnings per common share Net income $ 4,038,807 $ 2,164,125 Cumulative dividend - - Adjusted net income $ 4,038,807 $ 2,164,125 Weighted average common shares outstanding 16,379,019 16,126,689 Basic earnings per common share $ 0.25 $ 0.13 Year Ended December 31, 2015 2014 Diluted earnings per common share Net income $ 4,038,807 $ 2,164,125 Add interest expense on convertible promissory notes - - Adjusted net income $ 4,038,807 $ 2,164,125 Weighted average common shares outstanding 16,379,019 16,162,352 Effect of diluted securities: Stock options 1,086,752 1,287,250 Diluted common shares outstanding 17,465,771 17,449,602 Diluted earnings per common share $ 0.23 $ 0.12 |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2015 | |
STOCK BASED COMPENSATION [Abstract] | |
STOCK BASED COMPENSATION | 11. 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 "2005 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 2005 Plan, options may be granted to purchase a total not to exceed 789,475 shares in the aggregate, made up of original issue shares, treasury share or a combination of the two. At December 31, 2015 and 2014, options to purchase 783,750 shares have been granted under the 2005 Plan. The Company's 2013 Equity Compensation Plan (the "2013 Plan") provides for granting of stock options, incentive stock options, stock awards, and restricted stock units 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 2013 Plan, options may be granted to purchase a total not to exceed 2,925,000 shares of common stock, made up of original issue shares, treasury shares or a combination of the two. At December 31, 2015, options to purchase 1,965,000 shares of common stock and 3,000 shares of common stock in the form of a stock award had been granted under the 2013 Plan. At December 31, 2014, options to purchase 1,965,000 shares of common stock and 39,000 shares of common stock in the form of a stock award have been granted under the 2013 Plan. A summary of the activity of the Company's stock option plan for the years ended December 31, 2015 and 2014 is as follows: Number of Options Weighted Avg. Exercise Price Weighted Avg Remaining Cont. Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2013 2,708,750 $ 0.58 8.41 $ 4 Granted 40,000 $ 1.00 Exercised (10,250 ) $ 0.50 Outstanding at December 31, 2014 2,738,500 $ 0.59 7.32 $ 226 Granted - $ - Exercised (1,000 ) $ 0.40 Outstanding at December 31, 2015 2,737,500 $ 0.59 6.46 $ 1,354 Exercisable at December 31, 2015 1,670,500 $ 0.63 5.57 $ 748 There were no stock options granted in 2015. Stock options granted in 2014 had a weighted average grant date fair value of $0.02. 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 year ended and December 31, 2014: Year Ending December 31, 2014 Dividend Yield 0.00 % Expected Volatility 22 % Risk-free interest rate 1.65 % Expected life (in years) 5.21 The Company records stock-based compensation expense related to granting stock options in general and administrative expenses. The Company recognized compensation expense as follows for the year ended December 31, 2015 and 2014: Year Ending December 31, 2015 2014 Total gross compensation expense $ 34,944 $ 61,623 Total tax benefit associated with compensation expense (686 ) (7,677 ) Total net compensation expense $ 34,258 $ 53,946 As of December 31, 2015, the Company expects to record compensation expense in the future as follows: Year Ending December 31, 2016 2017 2018 2019 Total gross unrecognized compensation expense $ 34,944 $ 34,944 $ 28,365 $ 81 Tax benefit associated with unrecognized compensation expense (686 ) (686 ) (556 ) - Total net unrecognized compensation expense $ 34,258 $ 34,258 $ 27,809 $ 81 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | 12. INCOME TAXES The Company files a consolidated federal income tax return. Allocation of tax expense or refunds among the consolidated group is based on separate return calculations. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows: 2015 2014 Gross Deferred Tax Assets: Loss reserve discount $ 26,206 $ 14,915 Unearned premium reserve discount 477,812 339,224 Organization costs (net of amortization) 58,581 64,390 Unearned ceding commissions 5,379,065 3,808,108 Stock-based compensation 8,363 7,677 Capital loss carryover 1,286 - Total Deferred Tax Assets 5,951,313 4,234,314 Valuation allowance - - Total Adjusted Deferred Tax Assets $ 5,951,313 $ 4,234,314 Deferred Tax Liabilities Deferred policy acquisition costs $ 3,586,389 $ 2,685,253 Property, equipment and software 48,379 31,126 Total deferred tax liabilities 3,634,768 2,716,379 Net Deferred Tax Assets $ 2,316,545 $ 1,517,935 As of December 31, 2015 and 2014, it was determined that no valuation allowance against deferred tax assets was considered necessary. In assessing the realizability of deferred tax assets, management utilizes the criteria established under Accounting Standards Codification (ASC) 740 to annually evaluate the need for a deferred tax valuation allowance in order to determine whether it is more likely than not that some or all of the deferred tax assets will not be realized. Management considers the reversal of deferred tax liabilities and projected future taxable income in making this assessment. The results of operations during the years ended December 31, 2015 and 2014, continued growth in the Company's insurance policy and premium base with a wider demographic and geographic spread, as well as changes in the Company's reinsurance and catastrophe coverage were also considered important factors in assessing the realizability of deferred tax assets. The total income tax provision (benefit) incurred is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The significant items causing this difference for 2015 and 2014 are as follows: 2015 Tax Effect Tax Rate Income before taxes at statutory rate $ 2,094,707 34.0 % Tax exempt interest (15,881 ) -0.26 % Meals and entertainment 11,275 0.18 % Other 31,994 0.52 % Total $ 2,122,095 34.44 % 2014 Tax Effect Tax Rate Income before taxes at statutory rate $ 1,131,629 34.0 % Meals and entertainment 9,613 0.29 % Other 22,955 0.69 % Total $ 1,164,197 34.98 % |
REINSURANCE
REINSURANCE | 12 Months Ended |
Dec. 31, 2015 | |
REINSURANCE [Abstract] | |
REINSURANCE | 13. 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. Commencing April 1, 2015, the Company reinsured its property and casualty risk under multiple quota share reinsurance treaties with third party reinsurers. The treaties cover 40 % of its risk under property coverage on any one loss occurrence not to exceed $20 million; 50 % of its risk under property coverage on any one loss occurrence not to exceed $175 million and approximately 35 % of its risk under casualty coverages. The Company also purchased per risk reinsurance covering non-weather losses (ten occurrences) in excess of a gross loss of $500,000 per occurrence for all coverage lines (a net loss of $50,000). This coverage is obtained principally to protect the Company in the event of a large fire loss. Due to the Company's increased exposure to casualty risk as previously mentioned, the Company entered into a per risk casualty excess of loss reinsurance program, beginning April 1, 2015. The program allows for 10 reinstatements during the treaty period, with an annual loss limit of $7.15 million and a per occurrence limit of $650,000. Property catastrophe treaties, which went into effect on the same day as the quota share program, develop over four layers with a gross loss of $175 million excess of $5 million per occurrence. The Company's net retention is $500,000 per loss occurrence. The Company entered into a mixture of 12 and 24 month treaty periods to take advantage of low catastrophe reinsurance pricing in the marketplace. The Company's higher limit catastrophe coverage is placed for 12 months, as the Company believes this level of coverage has less price volatility than lower limits and feels it can acquire this type of coverage at competitive prices going forward. Finally, in support of the Company's expansion in the Houston metropolitan area, commencing June 1, 2015, the Company entered into a property quota share reinsurance treaty with a third party reinsurer, specifically to mitigate named tropical cyclone storm risk. The treaty covers 90 % of the Company's risk under property coverage on any named hurricane or tropical storm system which affects certain geographical areas in the Houston metropolitan area, not to exceed the lesser of $75 million or a 250 year return period. This reinsurance coverage is in addition to the reinsurance programs described above. Property catastrophe treaties, which went into effect on the same day and having the same term as the quota share treaties, develop over four layers and 20 % of our risk on property coverage on a gross loss of $110 million excess of $4 million Commencing August 1, 2014 and ending November 30, 2014, the Company purchased a fifth layer of property catastrophe reinsurance with third party reinsurers to cover its potential maximum loss during the 2014 hurricane season. The layer extended the Company's coverage to $140 million, excess of $4 million of ultimate net loss arising out of each loss occurrence. When this coverage was in force, the Company's net retention on each loss occurrence remained at $400,000. 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 in force during 2014 had been obtained principally to protect the Company in the event of a large fire loss. The effects of reinsurance on premiums written and earned were as follows, for the years ended December 31, 2015 and December 31, 2014: 2015 2014 Written Earned Written Earned Direct premiums $ 97,491,905 $ 83,394,739 $ 73,620,300 $ 64,895,484 Ceded premiums (84,675,104 ) (78,026,288 ) (65,079,700 ) (60,484,640 ) Net Premiums $ 12,816,801 $ 5,368,451 $ 8,540,600 $ 4,410,844 Following is a summary of HAIC's reinsurance balances under the above described reinsurance treaties as of December 31, 2015 and December 31, 2014: 2015 2014 Ceded premiums payable $ 6,101,956 $ 4,342,874 Ceded loss adjustment expenses 5,968,731 4,763,808 Ceded loss and loss adjustment expense reserve 25,771,700 13,995,400 Ceded unearned premium reserve 47,257,712 35,442,177 Ceded earned premiums 78,026,288 60,484,640 The following is a summary of the names of each of HAIC's significant reinsurer and the amount due from each for paid losses, LAE and unearned premium. 2015 2014 Paid Losses & LAE Unearned Premium Total Receivable Paid Losses & LAE Unearned Premium Total Receivable Maiden Reinsurance Company $ 1,443 $ - $ 1,443 $ 85,203 $ - $ 85,203 NGM Insurance Company 244 - 244 53,033 - 53,033 Arch Reinsurance Company 52,008 - 52,008 378,977 - 378,977 Endurance Reinsurance Corp. of America 17,746 - 17,746 138,392 - 138,392 Catlin RE 224,485 2,627,526 2,852,011 214,945 4,002,194 4,217,139 Montpelier Insurance Company 10,874 - 10,874 107,472 2,001,097 2,108,569 Swiss Re 16,540 - 16,540 198,953 4,002,193 4,201,146 RLI Insurance Company 13,570 - 13,570 151,525 - 151,525 SCOR Reinsurance Company 449,429 5,255,054 5,704,483 396,192 4,002,194 4,398,386 Endurance Specialty 95 - 95 19,853 - 19,853 Houston Casualty 343 - 343 7,804 - 7,804 R+V Versicherung AG 1,688,897 19,856,279 21,545,176 590,652 4,913,513 5,504,165 Everest Re 692,351 7,882,580 8,574,931 490,410 8,024,397 8,514,807 Taiping 112,658 1,313,764 1,426,422 94,895 1,600,877 1,695,772 Qatar Re 633,719 7,446,105 8,079,824 276,910 4,894,615 5,171,525 Odyssey RE 120,878 1,313,764 1,434,642 137,195 2,001,097 2,138,292 SCOR Global 2,776 - 2,776 68,541 - 68,541 Lloyds Syndicates 22,446 - 22,446 60,451 - 60,451 Shelter Mutual Insurance Co 4,706 - 4,706 - - - Sirius International Insurance Corp 88,041 - 88,041 - - - Markel Bermuda Limited 23,263 - 23,263 - - - XL Re Limited 55,832 - 55,832 - - - Allianz Risk Transfer Limited - 1,562,640 1,562,640 - - - Total $ 4,232,344 $ 47,257,712 $ 51,490,056 $ 3,471,403 $ 35,442,177 $ 38,913,580 |
CONCENTRATION OF CREDIT RISK
CONCENTRATION OF CREDIT RISK | 12 Months Ended |
Dec. 31, 2015 | |
CONCENTRATION OF CREDIT RISK [Abstract] | |
CONCENTRATION OF CREDIT RISK | 14. 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, money market accounts on deposit with financial institutions, money market funds, certificates of deposit and fixed-maturity securities, as well as premium balance in the course of collection. 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 | 12 Months Ended |
Dec. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 15. 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 2019. Future minimum lease payments required under the non-cancelable operating leases are as follows for the years ending December 31: 2016 $ 219,832 2017 110,085 2018 22,188 2019 12,519 $ 364,624 Rent expense under such leases in the year ended December 31, 2015 and December 31, 2014 was $182,624 and $167,119, respectively. Litigation The Company is the defendant in routine litigation involving matters that are incidental to the claims function of the Company's insurance 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 RES
REGULATORY REQUIREMENTS AND RESTRICTIONS | 12 Months Ended |
Dec. 31, 2015 | |
REGULATORY REQUIREMENTS AND RESTRICTIONS [Abstract] | |
REGULATORY REQUIREMENTS AND RESTRICTIONS | 16. 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 a minimum of $2.5 million in capital stock and $2.5 million in surplus. HAIC has capital and surplus in excess of this requirement. As of December 31, 2014, HAIC's total statutory surplus was $12,317,735 (capital stock of $3,000,000 and surplus of $9,317,735). As of December 31, 2015, HAIC's total statutory surplus was $15,081,420 (capital stock of $3,000,000 and surplus of $12,081,420). As of December 31, 2015 and December 31, 2014, HAIC had restricted cash and investments totaling $3.3 million and $4.3 million, respectively, pledged to the Department of Insurance in certain states as a condition of its Certificate of Authority for the purpose of meeting obligations to policyholders and creditors. See Note 1 Organization and Summary of Significant Accounting Policies, Investments for additional disclosure. 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 2015 or 2014. 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 December 31, 2015 and 2014, there were no material permitted statutory accounting practice utilized by HAIC. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS On February 1, 2016, the Company issued 164,836 shares of common stock at $0.91 a share to Inter-Atlantic Management, Inc. or "Inter-Atlantic". A number of our directors are among the beneficial owners of Inter-Atlantic. Per the terms of the Advisory Agreement dated August 1, 2013, Inter-Atlantic Management, Inc. will be issued annually on February 1 st |
SCHEDULE VI. SUPPLEMENTAL INFOR
SCHEDULE VI. SUPPLEMENTAL INFORMATION CONCERNING CONSOLIDATED PROPERTY AND CASUALTY INSURANCE OPERATIONS | 12 Months Ended |
Dec. 31, 2015 | |
Schedule VI. Supplemental Information Concerning Consolidated Property and Casualty Insurance Operations [Abstract] | |
Schedule VI. Supplemental Information Concerning Consolidated Property and Casualty Insurance Operations | Schedule VI. Supplemental Information Concerning Consolidated Property and Casualty Insurance Operations The following table provides certain information related to the Company's property and casualty operations as of, and for the periods presented (in thousands): As of December 31, For the Year Ended December 31, Reserves for Unpaid Losses and LAE Incurred Loss and LAE current year Incurred Loss and LAE prior years Paid Losses and LAE Net Investment Income 2015 $ 27,972 $ 4,978 $ 224 $ 4,016 $ 139 2014 $ 15,010 $ 2,882 $ 48 $ 2,710 $ 44 As of December 31, For the Year Ended December 31, As of December 31, Policy Deferred Acquisition Cost (DAC) Amortization of DAC Net Premiums Written Net Premiums Earned Unearned Premiums 2015 $ 10,548 $ (15,961 ) $ 12,817 $ 5,368 $ 54,119 2014 $ 7,898 $ (12,746 ) $ 8,541 $ 4,411 $ 40,022 |
ORGANIZATION AND SUMMARY OF S26
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Principles of Consolidation | 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 | 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"). Certain reclassifications of prior year amounts have been made to conform to the current year presentation. |
Cash and Cash Equivalents | 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 December 31, 2015 and 2014, cash and cash equivalents consist of cash on deposit with financial institutions, as well as money market mutual funds. General and other accrued expenses payable as of December 31, 2015 and December 31, 2014, include $4.5 million and $1.7 million, respectively, of both claim and general operating expense checks issued in excess of cash book balances, not yet presented for payment. |
Investments | Investments The Company's investments are comprised of short-term, restricted, long-term investments and fixed-maturity securities classified as available-for-sale as of December 31, 2015 and 2014. Restricted investments and long-term investments are described below. Short-term investments include 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, certificates of deposit are carried at cost, which approximates fair value. Fixed-maturity securities are classified as available-for-sale when it is not management's intent to make profits by buying and selling the securities within a short period of time or when it is not management's intent to hold the securities to maturity. As of December 31, 2015 and 2014, the Company has restricted cash and investments, in the amount of $3.3 million and $4.3 million, respectively, pledged to the Department of Insurance in certain states as a condition of its Certificate of Authority for the purpose of meeting obligations to policyholders and creditors. Restricted assets are shown separately in the accompanying consolidated balance sheets as "Restricted cash and investments" and include money market accounts and certificates of deposits. "Restricted fixed-maturity securities, classified as available-for-sale" are shown separately in the accompanying consolidated balance sheets and recorded at fair value. With the approval of the Departments of Insurance, the Company may exchange the investments with other funds or investments. In respect to certificates of deposit, management intends to hold the portion of these restricted investments to their maturity. As such, these 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 following table provides the Company's restricted cash and investments as of December 31, 2015 and December 31, 2014. Restricted cash and investments December 31, 2015 December 31, 2014 Money Market $ 300,000 $ 300,000 Certificates of Deposit 2,460,038 3,490,000 US Treasury Bond 539,472 539,654 $ 3,299,510 $ 4,329,654 As of December 31, 2015 and December 31, 2014, 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, these investments are 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 the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 320, Investment – Debt and Equity Securities. Accordingly, the fair value disclosures required by FASB ASC Topic 820, Fair Value Measurements and Disclosures are not provided. The Company's fixed-maturity securities classified as available-for-sale are "marked to market" as of the end of each calendar quarter. As of that date, unrealized gains and losses are recorded to Accumulated Other Comprehensive Income, except where such securities are deemed to be other-than-temporarily impaired. 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 | Comprehensive Income FASB ASC Topic 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 when it is not management's intent to make profits by buying and selling the securities within a short period of time or when it is not management's intent to hold the securities to maturity, with appropriate adjustments to other comprehensive income. For the year ended December 31, 2015 and 2014, the Company recorded $10,851 and $73, respectively, of unrealized gains on ava |
Recognition of Premium Revenues | 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 Commissions and Reinsurance Profit Share | Ceding Commissions and Reinsurance Profit Share Ceding commissions represent acquisition costs associated with insurance risk ceded to reinsurers and is earned on a pro-rata basis over the life of the associated policy. Reinsurance profit share is additional ceding commissions payable to the Company based upon attaining specified loss ratios within individual treaty years. Reinsurance profit share income is recognized when earned, which includes adjustments to earned reinsurance profit share based on changes in incurred losses. |
Policy Fees | Policy Fees Policy fee income collected by the Company's MGA, 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. |
Loss Adjustment and Other Fee Income | Loss Adjustment and Other Fee Income Loss adjustment and other fee income is recognized as income when collected. Loss adjustment fee income for the year ended December 31, 2015 was in excess of 5% of total revenue on the consolidated statement of operations. For the year ended December 31, 2014, loss adjustment and other fee income did not exceed |
Property, Equipment and Software | 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 statements 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 | 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 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 December 31, 2015 and 2014, no impairment has been recorded. |
Deferred Policy and Acquisition Costs | Deferred Policy and Acquisition Costs Deferred policy acquisitions costs ("DAC") as of December 31, 2015 and 2014, 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 management's estimates of future premium and investment income is reduced which could impair the Company's ability to recover these costs. |
Reserve for Losses and Loss Adjustment Expenses | 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 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 | 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 analysis of liquidity and its 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 | 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 | 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 December 31, 2015, the Company's tax years from 2012 through 2015 remain subject to examination. |
Estimates | 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 consolidated 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 asset valuation, and reinsurance. Actual results could differ significantly from those estimates. |
Fair Value of Cash, Cash Equivalents and Short-term Investments | Fair Value of Cash, Cash Equivalents and Short-term Investments The carrying value for the Company's cash and cash equivalents and short-term investments approximate fair values as of December 31, 2015 and 2014 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. |
Fair Value of Fixed-Maturity Securities held as Available-for-Sale | Fair Value of Fixed-Maturity Securities held as Available-for-Sale The Company's fixed-maturity securities held as available-for-sale are carried at fair value as of December 31, 2015 and 2014. Fair value for securities are based on the framework for measuring fair value established by FASB ASC Topic 820, Fair Value Measurements and Disclosures. |
Stock Based Compensation | 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. For those stock awards vesting 100 % at the issue date, the Company recognizes stock-based compensation immediately. |
Earnings (Loss) Per Share | 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. Diluted earnings (loss) per share of common stock is computed by dividing net income or loss attributable to common stockholders, adjusted for the effect of potentially dilutive securities, 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 using the treasury stock method. Potentially dilutive securities include convertible notes payable, outstanding convertible preferred stock and common stock options. |
ORGANIZATION AND SUMMARY OF S27
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Restricted Cash and Investments | The following table provides the Company's restricted cash and investments as of December 31, 2015 and December 31, 2014. Restricted cash and investments December 31, 2015 December 31, 2014 Money Market $ 300,000 $ 300,000 Certificates of Deposit 2,460,038 3,490,000 US Treasury Bond 539,472 539,654 $ 3,299,510 $ 4,329,654 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
INVESTMENTS [Abstract] | |
Short-Term, Restricted and Long-Term Investment Holdings | The following table provides the Company's short-term, restricted and long-term investment holdings by type of financial instruments that were used to estimate the fair value disclosures for financial instruments: December 31, 2015 December 31, 2014 Book Value Fair Value Carrying Value Book Value Fair Value Carrying Value Financial Assets: Restricted certificates of deposit $ 2,460,038 $ 2,460,038 $ 3,490,000 $ 3,490,000 Restricted money markets 300,000 300,000 300,000 300,000 Long-term investments 9,265,000 9,265,000 3,430,000 3,430,000 Short-term investments 9,105,000 9,105,000 1,231,881 1,231,881 $ 21,130,038 $ 21,130,038 $ 8,451,881 $ 8,451,881 December 31, 2015 December 31, 2014 Range of Maturities Interest Rates Range of Maturities Interest Rates Restricted certificates of deposit Less than 1 year 0.35% - 0.80% Less than 1 year 0.10% - 0.40% Restricted certificates of deposit More than 1 year 0.10% - 1.40% More than 1 year 0.35% - 1.40% Restricted money markets Less than 1 year - Less than 1 year - Long-term investments More than 1 year 0.65% - 1.50% More than 1 year 0.75% - 1.50% Short-term investments Less than 1 year 0.35% - 1.10% Less than 1 year 0.35% - 0.70% |
Fixed-Maturity Securities Classified as Available-for-Sale | The following table provides the Company's fixed-maturity securities classified as available-for-sale which are carried at fair value as of December 31, 2015 and December 31, 2014: December 31, 2015 Gross Unrealized Amortized Cost Gains Losses Fair Value Fixed Maturities: Obligations of states, municipalities and political subdivisions $ 3,655,617 $ 22,755 $ (7,785 ) $ 3,670,587 U.S. Treasury - held as restricted 539,735 - (263 ) 539,472 Total Fixed Maturities $ 4,195,352 $ 22,755 $ (8,048 ) $ 4,210,059 December 31, 2014 Gross Unrealized Amortized Cost Gains Losses Fair Value Fixed Maturities: Obligations of states, municipalities and political subdivisions $ 3,827,268 $ 6,331 $ (6,354 ) $ 3,827,245 U.S. Treasury - held as restricted 539,558 96 - 539,654 Total Fixed Maturities $ 4,366,826 $ 6,427 $ (6,354 ) $ 4,366,899 |
Available-for-Sale Fixed-Maturity Securities by Contractual Maturity | The amortized cost and fair value of available-for-sale fixed-maturity securities at December 31, 2015 and 2014, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. December 31, 2015 Remaining Time to Maturity Amortized Cost Basis Fair Value Less than one year $ 594,408 $ 594,536 One to five years 2,373,494 2,375,769 Five to ten years 688,367 700,582 More than ten years 539,083 539,172 Total $ 4,195,352 $ 4,210,059 December 31, 2014 Remaining Time to Maturity Amortized Cost Basis Fair Value Less than one year $ 570,236 $ 569,734 One to five years 1,985,297 1,981,134 Five to ten years 162,124 162,519 More than ten years 1,649,169 1,653,512 Total $ 4,366,826 $ 4,366,899 |
Available-for-sale Securities in a Continuous Unrealized Loss Position | Securities with gross unrealized loss positions at December 31, 2015 and December 31, 2014, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows: Less Than Twelve Months Twelve Months or Greater Total As of December 31, 2015 Gross Unrealized Loss Estimated Fair Value Gross Unrealized Loss Estimated Fair Value Gross Unrealized Loss Estimated Fair Value Fixed-maturity securities Obligations of states, municipalities and political subdivisions $ (7,595 ) $ 2,021,197 $ (453 ) $ 143,896 $ (8,048 ) $ 2,165,093 U.S. Treasury - held as restricted - - - - - - Total available-for-sale securities $ (7,595 ) $ 2,021,197 $ (453 ) $ 143,896 $ (8,048 ) $ 2,165,093 At December 31, 2015, there were 32 securities in an unrealized loss position. Of these securities, three securities had been in an unrealized loss position for 12 months or greater. Less Than Twelve Months Twelve Months or Greater Total As of December 31, 2014 Gross Unrealized Loss Estimated Fair Value Gross Unrealized Loss Estimated Fair Value Gross Unrealized Loss Estimated Fair Value Fixed-maturity securities Obligations of states, municipalities and political subdivisions $ (6,354 ) $ 2,392,217 $ - $ - $ (6,354 ) $ 2,392,217 U.S. Treasury - held as restricted - - - - - - Total available-for-sale securities $ (6,354 ) $ 2,392,217 $ - $ - $ (6,354 ) $ 2,392,217 |
FAIR VALUE OF FINANCIAL INSTR29
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |
Financial Assets Measured at Fair Value on a Recurring Basis | The Company's short-term investments comprised of certificates of deposit held at financial institutions which are not measured at fair value on a recurring basis. A portion of the Company's cash and cash equivalents include money market mutual fund accounts held at financial institutions which are measured at fair value on a recurring basis. Fixed-maturity securities held as available-for-sale are carried at fair value in our consolidated financial statements. The following tables provide information as of December 31, 2015 and 2014, 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 December 31, 2015 Money market mutual funds $ 2,107,223 $ - $ - $ 2,107,223 Restricted money market mutual funds 300,000 - - 300,000 Securities-available-for-sale fixed-maturity: Obligations of states, municipalities and political subdivisions - 3,670,587 - 3,670,587 U.S. Treasury - 539,472 - 539,472 Total $ 2,407,223 $ 4,210,059 $ - $ 6,617,282 Fair Value Measurements Using Level 1 Level 2 Level 3 Total As of December 31, 2014 Money market mutual funds $ 3,372,527 $ - $ - $ 3,372,527 Restricted money market mutual funds 300,000 - - 300,000 Securities-available-for-sale fixed-maturity: Obligations of states, municipalities and political subdivisions - 3,827,245 - 3,827,245 U.S. Treasury - 539,654 - 539,654 Total $ 3,672,527 $ 4,366,899 $ - $ 8,039,426 |
PROPERTY, EQUIPMENT, AND SOFT30
PROPERTY, EQUIPMENT, AND SOFTWARE NET (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
PROPERTY, EQUIPMENT, AND SOFTWARE NET [Abstract] | |
Property, Equipment and Software, Net | Property, equipment, and software net consist of the following as of December 31, 2015 and 2014, respectively: December 31, 2015 December 31, 2014 Useful Life Computer equipment $ 250,343 $ 231,860 3 years Office equipment 17,409 17,409 5 years Furniture and fixtures 142,450 142,450 5 years Software installation and development 973,535 929,316 3 years Total, at cost 1,383,737 1,321,035 Less accumulated depreciation and amortization (1,123,854 ) (976,540 ) Property and equipment, net $ 259,883 $ 344,495 |
DEFERRED POLICY ACQUISITION C31
DEFERRED POLICY ACQUISITION COSTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
DEFERRED POLICY ACQUISITION COSTS [Abstract] | |
Deferred Policy Acquisition Costs | Changes in deferred policy acquisition costs for the years ended December 31, 2015 and 2014 are as follows: 2015 2014 Deferred policy acquisition charges, beginning of the period $ 7,897,806 $ 6,214,334 Capitalized costs 18,611,214 14,429,241 Amortized costs (15,960,817 ) (12,745,769 ) Deferred policy acquisition charges, end of the period $ 10,548,203 $ 7,897,806 |
UNPAID LOSSES AND LOSS ADJUST32
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES [Abstract] | |
Liability for Unpaid Claims Adjustment Expense by Expense Type | The following table provides the reconciliation of the beginning and ending reserve balances for losses and LAE, gross of reinsurance for 2015 and 2014: 2015 2014 Reserve for losses and LAE, beginning of year $ 15,009,506 $ 15,884,062 Reinsurance recoverables on losses and LAE (13,995,400 ) (15,090,175 ) Reserve for losses and LAE, net of reinsurance recoverables at beginning of year 1,014,106 793,887 Add provision for claims and LAE occurring in: Current year 4,978,121 2,882,295 Prior years 224,455 48,000 Net incurred losses and LAE during the current year 5,202,576 2,930,295 Deduct payments for claims and LAE occurring in: Current year 3,303,363 2,111,930 Prior years 712,982 598,146 Net claim and LAE payments during the current year 4,016,345 2,710,076 Reserve for losses and LAE, net of reinsurance recoverables, at end of year 2,200,337 1,014,106 Reinsurance recoverables on losses and LAE 25,771,700 13,995,400 Losses and loss adjustment expenses at December 31 $ 27,972,037 $ 15,009,506 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
EARNINGS (LOSS) PER SHARE [Abstract] | |
Basic and Diluted Earnings per Share | The following table represents the reconciliation of the Company's basic earnings per common share and diluted earnings per common share computations reported on the Consolidated Statements of Operations for the year ended December 31, 2015 and 2014: Year Ended December 31, 2015 2014 Basic earnings per common share Net income $ 4,038,807 $ 2,164,125 Cumulative dividend - - Adjusted net income $ 4,038,807 $ 2,164,125 Weighted average common shares outstanding 16,379,019 16,126,689 Basic earnings per common share $ 0.25 $ 0.13 Year Ended December 31, 2015 2014 Diluted earnings per common share Net income $ 4,038,807 $ 2,164,125 Add interest expense on convertible promissory notes - - Adjusted net income $ 4,038,807 $ 2,164,125 Weighted average common shares outstanding 16,379,019 16,162,352 Effect of diluted securities: Stock options 1,086,752 1,287,250 Diluted common shares outstanding 17,465,771 17,449,602 Diluted earnings per common share $ 0.23 $ 0.12 |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
STOCK BASED COMPENSATION [Abstract] | |
Stock Option Plan Activity | A summary of the activity of the Company's stock option plan for the years ended December 31, 2015 and 2014 is as follows: Number of Options Weighted Avg. Exercise Price Weighted Avg Remaining Cont. Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2013 2,708,750 $ 0.58 8.41 $ 4 Granted 40,000 $ 1.00 Exercised (10,250 ) $ 0.50 Outstanding at December 31, 2014 2,738,500 $ 0.59 7.32 $ 226 Granted - $ - Exercised (1,000 ) $ 0.40 Outstanding at December 31, 2015 2,737,500 $ 0.59 6.46 $ 1,354 Exercisable at December 31, 2015 1,670,500 $ 0.63 5.57 $ 748 |
Valuation Assumptions | 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 year ended and December 31, 2014: Year Ending December 31, 2014 Dividend Yield 0.00 % Expected Volatility 22 % Risk-free interest rate 1.65 % Expected life (in years) 5.21 |
Stock-Based Compensation Expense | The Company records stock-based compensation expense related to granting stock options in general and administrative expenses. The Company recognized compensation expense as follows for the year ended December 31, 2015 and 2014: Year Ending December 31, 2015 2014 Total gross compensation expense $ 34,944 $ 61,623 Total tax benefit associated with compensation expense (686 ) (7,677 ) Total net compensation expense $ 34,258 $ 53,946 |
Unrecognized Compensation Expense | As of December 31, 2015, the Company expects to record compensation expense in the future as follows: Year Ending December 31, 2016 2017 2018 2019 Total gross unrecognized compensation expense $ 34,944 $ 34,944 $ 28,365 $ 81 Tax benefit associated with unrecognized compensation expense (686 ) (686 ) (556 ) - Total net unrecognized compensation expense $ 34,258 $ 34,258 $ 27,809 $ 81 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES [Abstract] | |
Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows: 2015 2014 Gross Deferred Tax Assets: Loss reserve discount $ 26,206 $ 14,915 Unearned premium reserve discount 477,812 339,224 Organization costs (net of amortization) 58,581 64,390 Unearned ceding commissions 5,379,065 3,808,108 Stock-based compensation 8,363 7,677 Capital loss carryover 1,286 - Total Deferred Tax Assets 5,951,313 4,234,314 Valuation allowance - - Total Adjusted Deferred Tax Assets $ 5,951,313 $ 4,234,314 Deferred Tax Liabilities Deferred policy acquisition costs $ 3,586,389 $ 2,685,253 Property, equipment and software 48,379 31,126 Total deferred tax liabilities 3,634,768 2,716,379 Net Deferred Tax Assets $ 2,316,545 $ 1,517,935 |
Effective Income Tax Rate Reconciliation | The total income tax provision (benefit) incurred is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The significant items causing this difference for 2015 and 2014 are as follows: 2015 Tax Effect Tax Rate Income before taxes at statutory rate $ 2,094,707 34.0 % Tax exempt interest (15,881 ) -0.26 % Meals and entertainment 11,275 0.18 % Other 31,994 0.52 % Total $ 2,122,095 34.44 % 2014 Tax Effect Tax Rate Income before taxes at statutory rate $ 1,131,629 34.0 % Meals and entertainment 9,613 0.29 % Other 22,955 0.69 % Total $ 1,164,197 34.98 % |
REINSURANCE (Tables)
REINSURANCE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
REINSURANCE [Abstract] | |
Effects of Reinsurance | The effects of reinsurance on premiums written and earned were as follows, for the years ended December 31, 2015 and December 31, 2014: 2015 2014 Written Earned Written Earned Direct premiums $ 97,491,905 $ 83,394,739 $ 73,620,300 $ 64,895,484 Ceded premiums (84,675,104 ) (78,026,288 ) (65,079,700 ) (60,484,640 ) Net Premiums $ 12,816,801 $ 5,368,451 $ 8,540,600 $ 4,410,844 Following is a summary of HAIC's reinsurance balances under the above described reinsurance treaties as of December 31, 2015 and December 31, 2014: 2015 2014 Ceded premiums payable $ 6,101,956 $ 4,342,874 Ceded loss adjustment expenses 5,968,731 4,763,808 Ceded loss and loss adjustment expense reserve 25,771,700 13,995,400 Ceded unearned premium reserve 47,257,712 35,442,177 Ceded earned premiums 78,026,288 60,484,640 |
Significant Reinsurers | The following is a summary of the names of each of HAIC's significant reinsurer and the amount due from each for paid losses, LAE and unearned premium. 2015 2014 Paid Losses & LAE Unearned Premium Total Receivable Paid Losses & LAE Unearned Premium Total Receivable Maiden Reinsurance Company $ 1,443 $ - $ 1,443 $ 85,203 $ - $ 85,203 NGM Insurance Company 244 - 244 53,033 - 53,033 Arch Reinsurance Company 52,008 - 52,008 378,977 - 378,977 Endurance Reinsurance Corp. of America 17,746 - 17,746 138,392 - 138,392 Catlin RE 224,485 2,627,526 2,852,011 214,945 4,002,194 4,217,139 Montpelier Insurance Company 10,874 - 10,874 107,472 2,001,097 2,108,569 Swiss Re 16,540 - 16,540 198,953 4,002,193 4,201,146 RLI Insurance Company 13,570 - 13,570 151,525 - 151,525 SCOR Reinsurance Company 449,429 5,255,054 5,704,483 396,192 4,002,194 4,398,386 Endurance Specialty 95 - 95 19,853 - 19,853 Houston Casualty 343 - 343 7,804 - 7,804 R+V Versicherung AG 1,688,897 19,856,279 21,545,176 590,652 4,913,513 5,504,165 Everest Re 692,351 7,882,580 8,574,931 490,410 8,024,397 8,514,807 Taiping 112,658 1,313,764 1,426,422 94,895 1,600,877 1,695,772 Qatar Re 633,719 7,446,105 8,079,824 276,910 4,894,615 5,171,525 Odyssey RE 120,878 1,313,764 1,434,642 137,195 2,001,097 2,138,292 SCOR Global 2,776 - 2,776 68,541 - 68,541 Lloyds Syndicates 22,446 - 22,446 60,451 - 60,451 Shelter Mutual Insurance Co 4,706 - 4,706 - - - Sirius International Insurance Corp 88,041 - 88,041 - - - Markel Bermuda Limited 23,263 - 23,263 - - - XL Re Limited 55,832 - 55,832 - - - Allianz Risk Transfer Limited - 1,562,640 1,562,640 - - - Total $ 4,232,344 $ 47,257,712 $ 51,490,056 $ 3,471,403 $ 35,442,177 $ 38,913,580 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Future Minimum Lease Payments Under Operating Leases | The Company leases its corporate office space and certain office equipment under non-cancelable operating leases which expire at various dates through 2019. Future minimum lease payments required under the non-cancelable operating leases are as follows for the years ending December 31: 2016 $ 219,832 2017 110,085 2018 22,188 2019 12,519 $ 364,624 |
ORGANIZATION AND SUMMARY OF S38
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Organization through Loss Adjustment and Other Fee Income (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash and Cash Equivalents [Abstract] | ||
Checks issued in excess of cash book balances not yet presented for payment | $ 4,500,000 | $ 1,700,000 |
Restricted Cash and Investments [Abstract] | ||
Restricted cash and investments | 3,299,510 | 4,329,654 |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||
Unrealized gain arising from the period | 10,851 | 73 |
Money Market [Member] | ||
Restricted Cash and Investments [Abstract] | ||
Restricted cash and investments | 300,000 | 300,000 |
Certificates of Deposit [Member] | ||
Restricted Cash and Investments [Abstract] | ||
Restricted cash and investments | 2,460,038 | 3,490,000 |
US Treasury Bond [Member] | ||
Restricted Cash and Investments [Abstract] | ||
Restricted cash and investments | $ 539,472 | $ 539,654 |
Loss Adjustment and Other Fee Income [Member] | Revenue [Member] | Minimum [Member] | ||
Loss Adjustment and Other Fee Income [Abstract] | ||
Concentration percentage | 5.00% | |
Loss Adjustment and Other Fee Income [Member] | Revenue [Member] | Maximum [Member] | ||
Loss Adjustment and Other Fee Income [Abstract] | ||
Concentration percentage | 5.00% | |
Homeowners of America Insurance Company [Member] | ||
Organization [Abstract] | ||
Ownership interest percentage | 100.00% | |
Homeowners of America MGA, Inc. [Member] | ||
Organization [Abstract] | ||
Ownership interest percentage | 100.00% |
ORGANIZATION AND SUMMARY OF S39
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Property, Equipment and Software through Stock Based Compensation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Impairment of Long-Lived Assets [Abstract] | ||
Impairment charges | $ 0 | $ 0 |
Stock Based Compensation [Abstract] | ||
Vesting percentage of stock awards | 100.00% | |
Property and Equipment [Member] | Minimum [Member] | ||
Property, Equipment and Software [Abstract] | ||
Useful life | 3 years | |
Property and Equipment [Member] | Maximum [Member] | ||
Property, Equipment and Software [Abstract] | ||
Useful life | 5 years | |
Software Installation and Development [Member] | ||
Property, Equipment and Software [Abstract] | ||
Useful life | 3 years |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Aug. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Inter-Atlantic Advisors III, Ltd. [Member] | |||
Related Party Transactions [Abstract] | |||
Initial term of Advisory Agreement | 6 years | ||
Number of days notice required for termination of Advisory Agreement | 60 days | ||
Inter-Atlantic Advisors III, Ltd. [Member] | Annual Advisory Fee [Member] | |||
Related Party Transactions [Abstract] | |||
Related party transaction amount | $ 300,000 | $ 450,000 | $ 450,000 |
Inter-Atlantic Advisors III, Ltd. [Member] | Annual Grant of Shares [Member] | |||
Related Party Transactions [Abstract] | |||
Common stock issued | $ 150,000 | ||
Directors [Member] | Annual Grant of Shares [Member] | |||
Related Party Transactions [Abstract] | |||
Common stock issued | $ 150,000 | $ 150,000 | |
Shares of common stock issued (in shares) | 227,273 | 288,462 |
INVESTMENTS (Details)
INVESTMENTS (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($)Security | Dec. 31, 2014USD ($)Security | |
INVESTMENTS [Abstract] | ||
Investment income, net of investment expenses | $ 138,517 | $ 43,603 |
Unrealized gain arising from the period | 10,851 | 73 |
Realized gains | 1,049 | 0 |
Realized losses | (4,832) | 0 |
Investment Holdings [Abstract] | ||
Book value | 21,130,038 | 8,451,881 |
Fair value carrying value | 21,130,038 | 8,451,881 |
Fixed-Maturity Securities Classified as Available-for-Sale [Abstract] | ||
Amortized cost | 3,655,617 | 3,827,268 |
Fair value | 3,670,587 | 3,827,245 |
Amortized Cost Basis, Remaining Time to Maturity [Abstract] | ||
Amortized cost basis, due in one year or less | 594,408 | 570,236 |
Amortized cost basis, due after one year through five years | 2,373,494 | 1,985,297 |
Amortized cost basis, due after five years through ten years | 688,367 | 162,124 |
Amortized cost basis, due after ten years | 539,083 | 1,649,169 |
Amortized cost basis, total | 4,195,352 | 4,366,826 |
Fair Value, Remaining Time to Maturity [Abstract] | ||
Fair value, due in one year or less | 594,536 | 569,734 |
Fair value, due after one year through five years | 2,375,769 | 1,981,134 |
Fair value, due after five years through ten years | 700,582 | 162,519 |
Fair value, due after ten years | 539,172 | 1,653,512 |
Fair value, total | 4,210,059 | 4,366,899 |
Continuous Unrealized Loss Position [Abstract] | ||
Gross unrealized loss, less than twelve months | (7,595) | (6,354) |
Gross unrealized loss, twelve months or greater | (453) | 0 |
Gross unrealized loss, total | (8,048) | (6,354) |
Estimated fair value, less than twelve months | 2,021,197 | 2,392,217 |
Estimated fair value, twelve months or greater | 143,896 | 0 |
Estimated fair value, total | $ 2,165,093 | $ 2,392,217 |
Number of securities in unrealized loss position | Security | 32 | 31 |
Number of securities in unrealized loss position for twelve months or greater | Security | 3 | 0 |
Fixed Maturities [Member] | ||
Fixed-Maturity Securities Classified as Available-for-Sale [Abstract] | ||
Amortized cost | $ 4,195,352 | $ 4,366,826 |
Gross unrealized gains | 22,755 | 6,427 |
Gross unrealized losses | (8,048) | (6,354) |
Fair value | 4,210,059 | 4,366,899 |
Obligations of States, Municipalities and Political Subdivisions [Member] | ||
Fixed-Maturity Securities Classified as Available-for-Sale [Abstract] | ||
Amortized cost | 3,655,617 | 3,827,268 |
Gross unrealized gains | 22,755 | 6,331 |
Gross unrealized losses | (7,785) | (6,354) |
Fair value | 3,670,587 | 3,827,245 |
Continuous Unrealized Loss Position [Abstract] | ||
Gross unrealized loss, less than twelve months | (7,595) | (6,354) |
Gross unrealized loss, twelve months or greater | (453) | 0 |
Gross unrealized loss, total | (8,048) | (6,354) |
Estimated fair value, less than twelve months | 2,021,197 | 2,392,217 |
Estimated fair value, twelve months or greater | 143,896 | 0 |
Estimated fair value, total | 2,165,093 | 2,392,217 |
U.S. Treasury - Held as Restricted [Member] | ||
Fixed-Maturity Securities Classified as Available-for-Sale [Abstract] | ||
Amortized cost | 539,735 | 539,558 |
Gross unrealized gains | 0 | 96 |
Gross unrealized losses | (263) | 0 |
Fair value | 539,472 | 539,654 |
Continuous Unrealized Loss Position [Abstract] | ||
Gross unrealized loss, less than twelve months | 0 | 0 |
Gross unrealized loss, twelve months or greater | 0 | 0 |
Gross unrealized loss, total | 0 | 0 |
Estimated fair value, less than twelve months | 0 | 0 |
Estimated fair value, twelve months or greater | 0 | 0 |
Estimated fair value, total | 0 | 0 |
Restricted Certificates of Deposit [Member] | ||
Investment Holdings [Abstract] | ||
Book value | 2,460,038 | 3,490,000 |
Fair value carrying value | $ 2,460,038 | $ 3,490,000 |
Restricted Certificates of Deposit Maturing in Less than One Year [Member] | ||
Investment Holdings [Abstract] | ||
Range of maturities | Less than 1 year | Less than 1 year |
Restricted Certificates of Deposit Maturing in Less than One Year [Member] | Maximum [Member] | ||
Investment Holdings [Abstract] | ||
Interest rate | 0.80% | 0.40% |
Restricted Certificates of Deposit Maturing in Less than One Year [Member] | Minimum [Member] | ||
Investment Holdings [Abstract] | ||
Interest rate | 0.35% | 0.10% |
Restricted Certificates of Deposit Maturing in More than One Year [Member] | ||
Investment Holdings [Abstract] | ||
Range of maturities | More than 1 year | More than 1 year |
Restricted Certificates of Deposit Maturing in More than One Year [Member] | Maximum [Member] | ||
Investment Holdings [Abstract] | ||
Interest rate | 1.40% | 1.40% |
Restricted Certificates of Deposit Maturing in More than One Year [Member] | Minimum [Member] | ||
Investment Holdings [Abstract] | ||
Interest rate | 0.10% | 0.35% |
Restricted Money Markets [Member] | ||
Investment Holdings [Abstract] | ||
Book value | $ 300,000 | $ 300,000 |
Fair value carrying value | $ 300,000 | $ 300,000 |
Interest rate | 0.00% | 0.00% |
Long-term Investments [Member] | ||
Investment Holdings [Abstract] | ||
Book value | $ 9,265,000 | $ 3,430,000 |
Fair value carrying value | $ 9,265,000 | $ 3,430,000 |
Range of maturities | More than 1 year | More than 1 year |
Long-term Investments [Member] | Maximum [Member] | ||
Investment Holdings [Abstract] | ||
Interest rate | 1.50% | 1.50% |
Long-term Investments [Member] | Minimum [Member] | ||
Investment Holdings [Abstract] | ||
Interest rate | 0.65% | 0.75% |
Short-term Investments [Member] | ||
Investment Holdings [Abstract] | ||
Book value | $ 9,105,000 | $ 1,231,881 |
Fair value carrying value | $ 9,105,000 | $ 1,231,881 |
Range of maturities | Less than 1 year | Less than 1 year |
Short-term Investments [Member] | Maximum [Member] | ||
Investment Holdings [Abstract] | ||
Interest rate | 1.10% | 0.70% |
Short-term Investments [Member] | Minimum [Member] | ||
Investment Holdings [Abstract] | ||
Interest rate | 0.35% | 0.35% |
FAIR VALUE OF FINANCIAL INSTR42
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Fair Value of Financial Assets [Abstract] | ||
Money market mutual funds | $ 2,107,223 | $ 3,372,527 |
Restricted money market mutual funds | 300,000 | 300,000 |
Total assets | 6,617,282 | 8,039,426 |
Transfers Between Level 1 and Level 2 [Abstract] | ||
Transfers from Level 1 to Level 2 | 0 | 0 |
Transfers from Level 2 to Level 1 | 0 | 0 |
Obligations of States, Municipalities and Political Subdivisions [Member] | ||
Fair Value of Financial Assets [Abstract] | ||
Securities-available-for-sale fixed-maturity | 3,670,587 | 3,827,245 |
U.S. Treasury [Member] | ||
Fair Value of Financial Assets [Abstract] | ||
Securities-available-for-sale fixed-maturity | 539,472 | 539,654 |
Level 1 [Member] | ||
Fair Value of Financial Assets [Abstract] | ||
Money market mutual funds | 2,107,223 | 3,372,527 |
Restricted money market mutual funds | 300,000 | 300,000 |
Total assets | 2,407,223 | 3,672,527 |
Level 1 [Member] | Obligations of States, Municipalities and Political Subdivisions [Member] | ||
Fair Value of Financial Assets [Abstract] | ||
Securities-available-for-sale fixed-maturity | 0 | 0 |
Level 1 [Member] | U.S. Treasury [Member] | ||
Fair Value of Financial Assets [Abstract] | ||
Securities-available-for-sale fixed-maturity | 0 | 0 |
Level 2 [Member] | ||
Fair Value of Financial Assets [Abstract] | ||
Money market mutual funds | 0 | 0 |
Restricted money market mutual funds | 0 | 0 |
Total assets | 4,210,059 | 4,366,899 |
Level 2 [Member] | Obligations of States, Municipalities and Political Subdivisions [Member] | ||
Fair Value of Financial Assets [Abstract] | ||
Securities-available-for-sale fixed-maturity | 3,670,587 | 3,827,245 |
Level 2 [Member] | U.S. Treasury [Member] | ||
Fair Value of Financial Assets [Abstract] | ||
Securities-available-for-sale fixed-maturity | 539,472 | 539,654 |
Level 3 [Member] | ||
Fair Value of Financial Assets [Abstract] | ||
Money market mutual funds | 0 | 0 |
Restricted money market mutual funds | 0 | 0 |
Total assets | 0 | 0 |
Level 3 [Member] | Obligations of States, Municipalities and Political Subdivisions [Member] | ||
Fair Value of Financial Assets [Abstract] | ||
Securities-available-for-sale fixed-maturity | 0 | 0 |
Level 3 [Member] | U.S. Treasury [Member] | ||
Fair Value of Financial Assets [Abstract] | ||
Securities-available-for-sale fixed-maturity | $ 0 | $ 0 |
PROPERTY, EQUIPMENT, AND SOFT43
PROPERTY, EQUIPMENT, AND SOFTWARE NET (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Equipment, and Software Net [Abstract] | ||
Property and equipment, at cost | $ 1,383,737 | $ 1,321,035 |
Less accumulated depreciation and amortization | (1,123,854) | (976,540) |
Property and equipment, net | 259,883 | 344,495 |
Depreciation and amortization expense | 147,314 | 128,107 |
Computer Equipment [Member] | ||
Property, Equipment, and Software Net [Abstract] | ||
Property and equipment, at cost | $ 250,343 | 231,860 |
Property, plant and equipment, useful life | 3 years | |
Office Equipment [Member] | ||
Property, Equipment, and Software Net [Abstract] | ||
Property and equipment, at cost | $ 17,409 | 17,409 |
Property, plant and equipment, useful life | 5 years | |
Furniture and Fixtures [Member] | ||
Property, Equipment, and Software Net [Abstract] | ||
Property and equipment, at cost | $ 142,450 | 142,450 |
Property, plant and equipment, useful life | 5 years | |
Software Installation and Development [Member] | ||
Property, Equipment, and Software Net [Abstract] | ||
Property and equipment, at cost | $ 973,535 | $ 929,316 |
Property, plant and equipment, useful life | 3 years |
DEFERRED POLICY ACQUISITION C44
DEFERRED POLICY ACQUISITION COSTS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
DEFERRED POLICY ACQUISITION COSTS [Abstract] | ||
Deferred policy acquisition charges, beginning of the period | $ 7,897,806 | $ 6,214,334 |
Capitalized costs | 18,611,214 | 14,429,241 |
Amortized costs | (15,960,817) | (12,745,769) |
Deferred policy acquisition charges, end of the period | $ 10,548,203 | $ 7,897,806 |
UNPAID LOSSES AND LOSS ADJUST45
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES [Abstract] | ||
Reserve for losses and LAE, beginning of year | $ 15,009,506 | $ 15,884,062 |
Reinsurance recoverables on losses and LAE | (13,995,400) | (15,090,175) |
Reserve for losses and LAE, net of reinsurance recoverables at beginning of year | 1,014,106 | 793,887 |
Add provision for claims and LAE occurring in [Abstract] | ||
Current year | 4,978,121 | 2,882,295 |
Prior years | 224,455 | 48,000 |
Net incurred losses and LAE during the current period | 5,202,576 | 2,930,295 |
Deduct payments for claims and LAE occurring in [Abstract] | ||
Current year | 3,303,363 | 2,111,930 |
Prior years | 712,982 | 598,146 |
Net claim and LAE payments during the current year | 4,016,345 | 2,710,076 |
Reserve for losses and LAE, net of reinsurance recoverables, at end of year | 2,200,337 | 1,014,106 |
Reinsurance recoverables on losses and LAE | 25,771,700 | 13,995,400 |
Losses and loss adjustment expenses at December 31 | $ 27,972,037 | $ 15,009,506 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($)Vote$ / sharesshares | Dec. 31, 2014USD ($)Vote$ / sharesshares | |
STOCKHOLDERS' EQUITY [Abstract] | ||
Preferred stock, shares authorized (in shares) | 20,500,000 | 20,500,000 |
Preferred stock, convertible cumulative percentage | 12.50% | 12.50% |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock, shares issued (in shares) | 17,708,125 | 17,479,852 |
Common stock, shares outstanding (in shares) | 16,400,125 | 16,168,852 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 |
Number of votes for each share of common stock held | Vote | 1 | 1 |
Common stock warrants issued | $ | $ 0 | $ 0 |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Basic earnings per common share [Abstract] | ||
Net income | $ 4,038,807 | $ 2,164,125 |
Cumulative dividend | 0 | 0 |
Net income available to common stockholders | $ 4,038,807 | $ 2,164,125 |
Weighted average common shares outstanding (in shares) | 16,379,019 | 16,126,689 |
Basic earnings per common share (in dollars per share) | $ 0.25 | $ 0.13 |
Diluted earnings per common share [Abstract] | ||
Net income | $ 4,038,807 | $ 2,164,125 |
Add interest expense on covertible promissory notes | 0 | 0 |
Adjusted net income | $ 4,038,807 | $ 2,164,125 |
Weighted average common shares outstanding (in shares) | 16,379,019 | 16,162,352 |
Effect of diluted securities [Abstract] | ||
Stock options (in shares) | 1,086,752 | 1,287,250 |
Diluted common shares outstanding (in shares) | 17,465,771 | 17,449,602 |
Diluted earnings per common share (in dollars per share) | $ 0.23 | $ 0.12 |
STOCK BASED COMPENSATION, Incen
STOCK BASED COMPENSATION, Incentive Plans (Details) - shares | Dec. 31, 2015 | Dec. 31, 2014 |
2005 Management Incentive Plan [Member] | ||
Incentive Awards [Abstract] | ||
Shares authorized (in shares) | 789,475 | |
2005 Management Incentive Plan [Member] | Stock Options [Member] | ||
Incentive Awards [Abstract] | ||
Cumulative awards granted (in shares) | 783,750 | 783,750 |
2013 Equity Compensation Plan [Member] | ||
Incentive Awards [Abstract] | ||
Shares authorized (in shares) | 2,925,000 | |
2013 Equity Compensation Plan [Member] | Stock Options [Member] | ||
Incentive Awards [Abstract] | ||
Cumulative awards granted (in shares) | 1,965,000 | 1,965,000 |
2013 Equity Compensation Plan [Member] | Stock Award [Member] | ||
Incentive Awards [Abstract] | ||
Cumulative awards granted (in shares) | 3,000 | 39,000 |
STOCK BASED COMPENSATION, Stock
STOCK BASED COMPENSATION, Stock Option Plan (Details) - Management Incentive Plan 2005 and Equity Compensation Plan 2013 [Member] - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Number of Options [Roll Forward] | |||
Outstanding (in shares) | 2,738,500 | 2,708,750 | |
Granted (in shares) | 0 | 40,000 | |
Exercised (in shares) | (1,000) | (10,250) | |
Outstanding (in shares) | 2,737,500 | 2,738,500 | 2,708,750 |
Exercisable (in shares) | 1,670,500 | ||
Weighted Average Exercise Price [Abstract] | |||
Outstanding (in dollars per shares) | $ 0.59 | $ 0.58 | |
Granted (in dollars per share) | 0 | 1 | |
Exercised (in dollars per share) | 0.40 | 0.50 | |
Outstanding (in dollars per shares) | 0.59 | $ 0.59 | $ 0.58 |
Exercisable (in dollars per share) | $ 0.63 | ||
Weighted Average Remaining Contractual Term and Aggregate Intrinsic Value [Abstract] | |||
Weighted average remaining contractual term, outstanding | 6 years 5 months 16 days | 7 years 3 months 25 days | 8 years 4 months 28 days |
Weighted average remaining contractual term, exercisable | 5 years 6 months 25 days | ||
Aggregate intrinsic value, outstanding | $ 1,354 | $ 226 | $ 4 |
Aggregate intrinsic value, exercisable | $ 748 | ||
Weighted average grant date fair value (in dollars per share) | $ 0 | $ 0.02 |
STOCK BASED COMPENSATION, Assum
STOCK BASED COMPENSATION, Assumptions (Details) - Management Incentive Plan 2005 and Equity Compensation Plan 2013 [Member] - Stock Options [Member] | 12 Months Ended |
Dec. 31, 2014 | |
Fair Value Assumptions [Abstract] | |
Dividend yield | 0.00% |
Expected volatility | 22.00% |
Risk-free interest rate | 1.65% |
Expected life | 5 years 2 months 16 days |
STOCK BASED COMPENSATION, Compe
STOCK BASED COMPENSATION, Compensation Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock-Based Compensation Expense [Abstract] | ||
Total tax benefit associated with compensation expense | $ (686) | $ (7,677) |
Total net compensation expense | 34,258 | 53,946 |
General and Administrative Expenses [Member] | ||
Stock-Based Compensation Expense [Abstract] | ||
Total gross compensation expense | $ 34,944 | $ 61,623 |
STOCK BASED COMPENSATION, Futur
STOCK BASED COMPENSATION, Future Compensation Expense (Details) | Dec. 31, 2015USD ($) |
STOCK BASED COMPENSATION [Abstract] | |
Gross unrecognized compensation expense, Year ending December 31, 2016 | $ 34,944 |
Tax benefit associated with unrecognized compensation expense, Year ending December 31, 2016 | (686) |
Net unrecognized compensation expense, Year ending December 31, 2016 | 34,258 |
Gross unrecognized compensation expense, Year ending December 31, 2017 | 34,944 |
Tax benefit associated with unrecognized compensation expense, Year ending December 31, 2017 | (686) |
Net unrecognized compensation expense, Year ending December 31, 2017 | 34,258 |
Gross unrecognized compensation expense, Year ending December 31, 2018 | 28,365 |
Tax benefit associated with unrecognized compensation expense, Year ending December 31, 2018 | (556) |
Net unrecognized compensation expense, Year ending December 31, 2018 | 27,809 |
Gross unrecognized compensation expense, Year ending December 31, 2019 | 81 |
Tax benefit associated with unrecognized compensation expense, Year ending December 31, 2019 | 0 |
Net unrecognized compensation expense, Year ending December 31, 2019 | $ 81 |
INCOME TAXES, Deferred Tax Asse
INCOME TAXES, Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Gross Deferred Tax Assets [Abstract] | ||
Loss reserve discount | $ 26,206 | $ 14,915 |
Unearned premium reserve discount | 477,812 | 339,224 |
Organization costs (net of amortization) | 58,581 | 64,390 |
Unearned ceding commissions | 5,379,065 | 3,808,108 |
Stock-based compensation | 8,363 | 7,677 |
Capital loss carryover | 1,286 | 0 |
Total deferred tax assets | 5,951,313 | 4,234,314 |
Valuation allowance | 0 | 0 |
Total adjusted deferred tax assets | 5,951,313 | 4,234,314 |
Deferred Tax Liabilities [Abstract] | ||
Deferred policy acquisition costs | 3,586,389 | 2,685,253 |
Property, equipment and software | 48,379 | 31,126 |
Total deferred tax liabilities | 3,634,768 | 2,716,379 |
Net deferred tax assets | $ 2,316,545 | $ 1,517,935 |
INCOME TAXES, Reconciliation of
INCOME TAXES, Reconciliation of Statutory to Effective Tax Rate (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
INCOME TAXES [Abstract] | ||
Income before taxes at statutory rate | $ 2,094,707 | $ 1,131,629 |
Tax exempt interest | (15,881) | |
Meals and entertainment | 11,275 | 9,613 |
Other | 31,994 | 22,955 |
Total income taxes | $ 2,122,095 | $ 1,164,197 |
Income before taxes at statutory rate | 34.00% | 34.00% |
Tax exempt interest | (0.26%) | |
Meals and entertainment | 0.18% | 0.29% |
Other | 0.52% | 0.69% |
Total | 34.44% | 34.98% |
REINSURANCE, Reinsurance Agreem
REINSURANCE, Reinsurance Agreements (Details) | 4 Months Ended | 12 Months Ended | ||
Nov. 30, 2014USD ($)Layer | Dec. 31, 2015USD ($)OccurenceReinstatementLayer | Mar. 31, 2015USD ($)Layer | Dec. 31, 2014USD ($)Occurence | |
Property Insurance on Any One Loss Occurrence not to Exceed $20 Million [Member] | Maximum [Member] | ||||
Reinsurance[Abstract] | ||||
Percentage reinsured | 40.00% | |||
Reinsurance recoverables on losses and LAE | $ 20,000,000 | |||
Property Insurance on Any One Loss Occurrence not to Exceed $175 Million [Member] | Maximum [Member] | ||||
Reinsurance[Abstract] | ||||
Percentage reinsured | 50.00% | |||
Reinsurance recoverables on losses and LAE | $ 175,000,000 | |||
Casualty Coverage [Member] | Maximum [Member] | ||||
Reinsurance[Abstract] | ||||
Percentage reinsured | 35.00% | 64.00% | ||
Non-Weather Losses in Excess of Gross Loss of $500,000 per Occurrence [Member] | ||||
Reinsurance[Abstract] | ||||
Number of loss occurrences | Occurence | 10 | 2 | ||
Non-Weather Losses in Excess of Gross Loss of $500,000 per Occurrence [Member] | Minimum [Member] | ||||
Reinsurance[Abstract] | ||||
Gross loss covered | $ 500,000 | $ 500,000 | ||
Net loss covered | 50,000 | $ 50,000 | ||
Per Risk Casualty Excess of Loss [Member] | Maximum [Member] | ||||
Reinsurance[Abstract] | ||||
Gross loss covered | $ 7,150,000 | |||
Number of reinstatements | Reinstatement | 10 | |||
Per occurrence limit | $ 650,000 | |||
Property Catastrophe Treaties [Member] | ||||
Reinsurance[Abstract] | ||||
Number of layers for reinsurance | Layer | 5 | 4 | 4 | |
Property Catastrophe Treaties [Member] | Minimum [Member] | ||||
Reinsurance[Abstract] | ||||
Term of treaty period | 12 months | |||
Property Catastrophe Treaties [Member] | Maximum [Member] | ||||
Reinsurance[Abstract] | ||||
Percentage reinsured | 20.00% | |||
Gross loss covered | $ 140,000,000 | $ 175,000,000 | $ 110,000,000 | |
Retention payable per occurrence | 4,000,000 | 5,000,000 | 4,000,000 | |
Net retention per loss occurrence | $ 400,000 | $ 500,000 | $ 400,000 | |
Term of treaty period | 24 months | |||
Named Tropical Cyclone Storm Insurance [Member] | Maximum [Member] | ||||
Reinsurance[Abstract] | ||||
Percentage reinsured | 90.00% | |||
Gross loss covered | $ 75,000,000 | |||
Return period | 250 years | |||
Property Insurance on Any One Loss Occurrence not to Exceed $110 Million [Member] | Maximum [Member] | ||||
Reinsurance[Abstract] | ||||
Percentage reinsured | 80.00% | |||
Reinsurance recoverables on losses and LAE | $ 110,000,000 | |||
Property Insurance on Any One Loss Occurrence not to Exceed $4 Million [Member] | Maximum [Member] | ||||
Reinsurance[Abstract] | ||||
Percentage reinsured | 10.00% | |||
Reinsurance recoverables on losses and LAE | $ 4,000,000 |
REINSURANCE, Effects of Reinsur
REINSURANCE, Effects of Reinsurance on Premiums Written and Earned (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
REINSURANCE [Abstract] | ||
Direct premiums written | $ 97,491,905 | $ 73,620,300 |
Ceded premiums written | (84,675,104) | (65,079,700) |
Net premiums written | 12,816,801 | 8,540,600 |
Direct premiums earned | 83,394,739 | 64,895,484 |
Ceded premiums earned | (78,026,288) | (60,484,640) |
Net premiums earned | $ 5,368,451 | $ 4,410,844 |
REINSURANCE, Reinsurance Balanc
REINSURANCE, Reinsurance Balances (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
REINSURANCE [Abstract] | |||
Ceded premiums payable | $ 6,101,956 | $ 4,342,874 | |
Ceded loss adjustment expenses | 5,968,731 | 4,763,808 | |
Ceded loss and loss adjustment expense reserve | 25,771,700 | 13,995,400 | $ 15,090,175 |
Ceded unearned premium reserve | 47,257,712 | 35,442,177 | |
Ceded earned premiums | $ 78,026,288 | $ 60,484,640 |
REINSURANCE, Significant Reinsu
REINSURANCE, Significant Reinsurers (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Reinsurance [Abstract] | ||
Unearned premium | $ 47,257,712 | $ 35,442,177 |
Total receivable | 77,825,489 | 54,157,528 |
Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 4,232,344 | 3,471,403 |
Unearned premium | 47,257,712 | 35,442,177 |
Total receivable | 51,490,056 | 38,913,580 |
Maiden Reinsurance Company [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 1,443 | 85,203 |
Unearned premium | 0 | 0 |
Total receivable | 1,443 | 85,203 |
NGM Insurance Company [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 244 | 53,033 |
Unearned premium | 0 | 0 |
Total receivable | 244 | 53,033 |
Arch Reinsurance Company [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 52,008 | 378,977 |
Unearned premium | 0 | 0 |
Total receivable | 52,008 | 378,977 |
Endurance Reinsurance Corp. of America [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 17,746 | 138,392 |
Unearned premium | 0 | 0 |
Total receivable | 17,746 | 138,392 |
Catlin RE [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 224,485 | 214,945 |
Unearned premium | 2,627,526 | 4,002,194 |
Total receivable | 2,852,011 | 4,217,139 |
Montpelier Insurance Company [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 10,874 | 107,472 |
Unearned premium | 0 | 2,001,097 |
Total receivable | 10,874 | 2,108,569 |
Swiss RE [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 16,540 | 198,953 |
Unearned premium | 0 | 4,002,193 |
Total receivable | 16,540 | 4,201,146 |
RLI Insurance Company [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 13,570 | 151,525 |
Unearned premium | 0 | 0 |
Total receivable | 13,570 | 151,525 |
SCOR Reinsurance Company [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 449,429 | 396,192 |
Unearned premium | 5,255,054 | 4,002,194 |
Total receivable | 5,704,483 | 4,398,386 |
Endurance Specialty [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 95 | 19,853 |
Unearned premium | 0 | 0 |
Total receivable | 95 | 19,853 |
Houston Casualty [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 343 | 7,804 |
Unearned premium | 0 | 0 |
Total receivable | 343 | 7,804 |
R+V Versicherung AG [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 1,688,897 | 590,652 |
Unearned premium | 19,856,279 | 4,913,513 |
Total receivable | 21,545,176 | 5,504,165 |
Everest Re [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 692,351 | 490,410 |
Unearned premium | 7,882,580 | 8,024,397 |
Total receivable | 8,574,931 | 8,514,807 |
Taiping [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 112,658 | 94,895 |
Unearned premium | 1,313,764 | 1,600,877 |
Total receivable | 1,426,422 | 1,695,772 |
Qatar Re [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 633,719 | 276,910 |
Unearned premium | 7,446,105 | 4,894,615 |
Total receivable | 8,079,824 | 5,171,525 |
Odyssey RE [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 120,878 | 137,195 |
Unearned premium | 1,313,764 | 2,001,097 |
Total receivable | 1,434,642 | 2,138,292 |
SCOR Global [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 2,776 | 68,541 |
Unearned premium | 0 | 0 |
Total receivable | 2,776 | 68,541 |
Lloyds Syndicates [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 22,446 | 60,451 |
Unearned premium | 0 | 0 |
Total receivable | 22,446 | 60,451 |
Shelter Mutual Insurance Co [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 4,706 | 0 |
Unearned premium | 0 | 0 |
Total receivable | 4,706 | 0 |
Sirius International Insurance Corp [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 88,041 | 0 |
Unearned premium | 0 | 0 |
Total receivable | 88,041 | 0 |
Markel Bermuda Limited [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 23,263 | 0 |
Unearned premium | 0 | 0 |
Total receivable | 23,263 | 0 |
XL Re Limited [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 55,832 | 0 |
Unearned premium | 0 | 0 |
Total receivable | 55,832 | 0 |
Allianz Risk Transfer Limited [Member] | Reinsurance Receivable [Member] | Reinsurer Concentration Risk [Member] | ||
Reinsurance [Abstract] | ||
Paid losses & LAE | 0 | 0 |
Unearned premium | 1,562,640 | 0 |
Total receivable | $ 1,562,640 | $ 0 |
COMMITMENTS AND CONTINGENCIES59
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | ||
2,016 | $ 219,832 | |
2,017 | 110,085 | |
2,018 | 22,188 | |
2,019 | 12,519 | |
Total | 364,624 | |
Operating leases, rent expense | $ 182,624 | $ 167,119 |
REGULATORY REQUIREMENTS AND R60
REGULATORY REQUIREMENTS AND RESTRICTIONS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Regulatory Requirements and Restrictions [Abstract] | ||
Restricted cash and investments | $ 3,299,510 | $ 4,329,654 |
Dividends paid | 0 | 0 |
Texas [Member] | ||
Regulatory Requirements and Restrictions [Abstract] | ||
Minimum required capital stock | 2,500,000 | |
Minimum required surplus | 2,500,000 | |
Total statutory capital stock and surplus | 15,081,420 | 12,317,735 |
Statutory capital stock | 3,000,000 | 3,000,000 |
Statutory surplus | $ 12,081,420 | 9,317,735 |
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 | |
Percentage of statutory surplus used to determine maximum dividend that may be paid | 10.00% | |
Department of Insurance in Certain States [Member] | ||
Regulatory Requirements and Restrictions [Abstract] | ||
Restricted cash and investments | $ 3,300,000 | $ 4,300,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - Inter Atlantic Management Inc [Member] | Feb. 01, 2016USD ($)$ / sharesshares |
Subsequent Events [Abstract] | |
Stock issued for services (in shares) | shares | 164,836 |
Sale of stock (in dollars per share) | $ / shares | $ 0.91 |
Common stock issued | $ | $ 150,000 |
SCHEDULE VI. SUPPLEMENTAL INF62
SCHEDULE VI. SUPPLEMENTAL INFORMATION CONCERNING CONSOLIDATED PROPERTY AND CASUALTY INSURANCE OPERATIONS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule VI. Supplemental Information Concerning Consolidated Property and Casualty Insurance Operations [Abstract] | ||
Reserves for unpaid losses and LAE | $ 27,972,037 | $ 15,009,506 |
Incurred loss and LAE current year | 4,978,121 | 2,882,295 |
Incurred loss and LAE prior years | 224,455 | 48,000 |
Paid losses and LAE | 4,016,345 | 2,710,076 |
Net investment income | 138,517 | 43,603 |
Deferred policy acquisition cost (DAC) | 10,548,203 | 7,897,806 |
Amortization of DAC | (15,960,817) | (12,745,771) |
Net premiums written | 12,816,801 | 8,540,600 |
Net premiums earned | 5,368,451 | 4,410,844 |
Unearned premiums | $ 54,119,100 | $ 40,021,934 |