Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 23, 2015 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Entity Registrant Name | Employers Holdings, Inc. | |
Entity Central Index Key | 1,379,041 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well Know Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock Shares Outstanding | 32,078,443 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Available for sale: | ||
Fixed maturity securities at fair value (amortized cost $2,241,600 at September 30, 2015 and $2,186,100 at December 31, 2014) | $ 2,320,300 | $ 2,275,700 |
Equity securities at fair value (cost $159,100 at September 30, 2015 and $97,800 at December 31, 2014) | 199,100 | 172,700 |
Short-term investments at fair value (amortized cost $18,300 at September 30, 2015) | 18,300 | 0 |
Total investments | 2,537,700 | 2,448,400 |
Cash and cash equivalents | 56,200 | 103,600 |
Restricted cash and cash equivalents | 3,100 | 10,800 |
Accrued investment income | 20,000 | 20,500 |
Premiums receivable (less bad debt allowance of $11,600 at September 30, 2015 and $7,900 at December 31, 2014) | 306,400 | 295,800 |
Reinsurance recoverable for: | ||
Paid losses | 7,400 | 10,700 |
Unpaid losses | 634,800 | 669,500 |
Deferred policy acquisition costs | 46,900 | 44,600 |
Deferred income taxes, net | 61,200 | 49,700 |
Property and equipment, net | 22,900 | 21,000 |
Intangible assets, net | 8,700 | 9,000 |
Goodwill | 36,200 | 36,200 |
Contingent commission receivable—LPT Agreement | 29,200 | 26,400 |
Other assets | 35,600 | 23,500 |
Total assets | 3,806,300 | 3,769,700 |
Claims and policy liabilities: | ||
Unpaid losses and loss adjustment expenses | 2,357,900 | 2,369,700 |
Unearned premiums | 327,100 | 310,800 |
Total claims and policy liabilities | 2,685,000 | 2,680,500 |
Commissions and premium taxes payable | 49,600 | 46,300 |
Accounts payable and accrued expenses | 19,300 | 20,400 |
Deferred reinsurance gain—LPT Agreement | 192,400 | 207,000 |
Notes payable | 92,000 | 92,000 |
Other liabilities | 42,000 | 36,700 |
Total liabilities | $ 3,080,300 | $ 3,082,900 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 150,000,000 shares authorized; 55,451,417 and 54,866,802 shares issued and 32,078,443 and 31,493,828 shares outstanding at September 30, 2015 and December 31, 2014, respectively | $ 600 | $ 600 |
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued | 0 | 0 |
Additional paid-in capital | 353,600 | 346,600 |
Retained earnings | 657,300 | 595,300 |
Accumulated other comprehensive income, net | 77,100 | 106,900 |
Treasury stock, at cost (23,372,974 shares at September 30, 2015 and December 31, 2014) | (362,600) | (362,600) |
Total stockholders’ equity | 726,000 | 686,800 |
Total liabilities and stockholders’ equity | $ 3,806,300 | $ 3,769,700 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Available for sale: | ||
Fixed maturity securities, amortized cost | $ 2,419,000 | $ 2,283,900 |
Available for sale, short-term investments, at amortized cost | 18,300 | 0 |
Premiums receivable, bad debt allowance | 11,600 | 7,900 |
Reinsurance Recoverables on Unpaid Losses, Allowance | $ 0 | $ 0 |
Stockholders' equity | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 55,451,417 | 54,866,802 |
Common stock, shares outstanding (in shares) | 32,078,443 | 31,493,828 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Treasury stock, at cost (in shares) | 23,372,974 | 23,372,974 |
Debt Securities [Member] | ||
Available for sale: | ||
Fixed maturity securities, amortized cost | $ 2,241,600 | $ 2,186,100 |
Equity Securities [Member] | ||
Available for sale: | ||
Fixed maturity securities, amortized cost | 159,100 | $ 97,800 |
Short-term Investments [Member] | ||
Available for sale: | ||
Fixed maturity securities, amortized cost | $ 18,300 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues | ||||
Net premiums earned | $ 179,000 | $ 172,100 | $ 508,600 | $ 511,900 |
Net investment income | 18,500 | 18,200 | 53,800 | 54,500 |
Net realized gains on investments | 2,000 | 1,800 | 5,100 | 14,200 |
Other income | 0 | 0 | 100 | 300 |
Total revenues | 199,500 | 192,100 | 567,600 | 580,900 |
Expenses | ||||
Losses and loss adjustment expenses | 115,800 | 122,300 | 323,500 | 343,100 |
Commission expense | 21,000 | 20,600 | 62,600 | 61,000 |
Underwriting and other operating expenses | 31,600 | 31,900 | 97,600 | 98,300 |
Interest expense | 700 | 800 | 2,100 | 2,300 |
Total expenses | 169,100 | 175,600 | 485,800 | 504,700 |
Net income before income taxes | 30,400 | 16,500 | 81,800 | 76,200 |
Income tax expense | 5,900 | 1,300 | 14,100 | 4,600 |
Net income | 24,500 | 15,200 | 67,700 | 71,600 |
Comprehensive income | ||||
Unrealized (losses) gains during the period (net of tax (benefit) expense of $(5,900) and $(3,100) for the three months ended September 30, 2015 and 2014, respectively, and $(14,200) and $11,000 for the nine months ended September 30, 2015 and 2014, respectively) | (11,100) | (5,800) | (26,500) | 20,500 |
Reclassification adjustment for realized gains in net income (net of taxes of $700 and $600 for the three months ended September 30, 2015 and 2014, respectively, and $1,800 and $5,000 for the nine months ended September 30, 2015 and 2014, respectively) | (1,300) | (1,200) | (3,300) | (9,200) |
Other comprehensive (loss) income, net of tax | (12,400) | (7,000) | (29,800) | 11,300 |
Total comprehensive income | 12,100 | 8,200 | 37,900 | 82,900 |
Net realized gains on investments | ||||
Net realized gains on investments before credit related impairments | 2,100 | 1,900 | 5,300 | 14,300 |
Other than temporary impairment, credit losses recognized in earnings | (100) | (100) | (200) | (100) |
Net realized gains on investments | $ 2,000 | $ 1,800 | $ 5,100 | $ 14,200 |
Earnings per common share (Note 11): | ||||
Basic | $ 0.76 | $ 0.48 | $ 2.12 | $ 2.27 |
Diluted | 0.75 | 0.47 | 2.08 | 2.23 |
Cash dividends declared per common share | $ 0.06 | $ 0.06 | $ 0.18 | $ 0.18 |
Conolidated Statements of Compr
Conolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement Parenthetical [Abstract] | ||||
Other comprehensive income (loss), unrealized holding gain (loss) on securities arising during period, tax | $ (5,900) | $ (3,100) | $ (14,200) | $ 11,000 |
Other comprehensive income (loss), reclassification adjustment for sale of securities included in net income, tax | $ 700 | $ 600 | $ 1,800 | $ 5,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating activities | ||
Net income | $ 67,700 | $ 71,600 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 5,900 | 5,200 |
Stock-based compensation | 3,200 | 4,300 |
Amortization of premium on investments, net | 9,500 | 7,800 |
Allowance for doubtful accounts | 3,700 | 800 |
Deferred income tax expense | 4,500 | 700 |
Realized gains on investments, net | (5,100) | (14,200) |
Excess tax benefits from stock-based compensation | (800) | (1,200) |
Other | (100) | (500) |
Change in operating assets and liabilities: | ||
Premiums receivable | (14,300) | (36,800) |
Reinsurance recoverable for paid and unpaid losses | 38,000 | 53,000 |
Federal income taxes | 2,200 | 4,400 |
Unpaid losses and loss adjustment expenses | (11,800) | 39,800 |
Unearned premiums | 16,300 | 31,900 |
Accounts payable, accrued expenses and other liabilities | 2,000 | 8,700 |
Deferred reinsurance gain—LPT Agreement | (14,600) | (30,400) |
Contingent commission receivable—LPT Agreement | (2,800) | 2,000 |
Other | (9,900) | (10,700) |
Net cash provided by operating activities | 93,600 | 136,400 |
Investing activities | ||
Purchase of fixed maturity securities | (384,100) | (293,700) |
Purchase of equity securities | (77,700) | (20,600) |
Proceeds from sale of fixed maturity securities | 87,000 | 42,200 |
Proceeds from sale of equity securities | 21,400 | 27,600 |
Proceeds from maturities and redemptions of investments | 214,000 | 158,300 |
Capital expenditures | (7,400) | (8,500) |
Change in restricted cash and cash equivalents | 7,700 | (14,200) |
Net cash used in investing activities | (139,100) | (108,900) |
Financing activities | ||
Cash transactions related to stock-based compensation | 3,100 | 1,500 |
Dividends paid to stockholders | (5,800) | (5,700) |
Excess tax benefits from stock-based compensation, financing activities | 800 | 1,200 |
Net cash used in financing activities | (1,900) | (3,000) |
Net (decrease) increase in cash and cash equivalents | (47,400) | 24,500 |
Cash and cash equivalents at the beginning of the period | 103,600 | 34,500 |
Cash and cash equivalents at the end of the period | $ 56,200 | $ 59,000 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Basis of Presentation and Summary of Operations Employers Holdings, Inc. (EHI) is a Nevada holding company. Through its wholly owned insurance subsidiaries, Employers Insurance Company of Nevada (EICN), Employers Compensation Insurance Company (ECIC), Employers Preferred Insurance Company (EPIC), and Employers Assurance Company (EAC), EHI is engaged in the commercial property and casualty insurance industry, specializing in workers' compensation products and services. Unless otherwise indicated, all references to the “Company” refer to EHI, together with its subsidiaries. The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of the Company’s consolidated financial position and results of operations for the periods presented have been included. The results of operations for an interim period are not necessarily indicative of the results for an entire year. These financial statements have been prepared consistent with the accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 . The Company considers an operating segment to be any component of its business whose operating results are regularly reviewed by the Company’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance based on discrete financial information. Currently, the Company has one operating segment, workers’ compensation insurance and related services. Use of Estimates The preparation of the consolidated 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 assets and liabilities, at the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. As a result, actual results could differ from these estimates. The most significant areas that require management judgment are the estimate of unpaid losses and loss adjustment expenses (LAE), evaluation of reinsurance recoverables, recognition of premium revenue, deferred income taxes, valuation of investments, and the valuation of goodwill and intangible assets. |
Changes in Estimates Level 1 (N
Changes in Estimates Level 1 (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
Changes in Estimates [Abstract] | |
Accounting Changes and Error Corrections | Change in Estimates During the second quarter of 2015, the Company reduced its estimated reserves ceded under the Loss Portfolio Transfer Agreement (LPT Reserve Adjustment) as a result of the determination that an adjustment was necessary to reflect observed favorable paid loss trends. The following table shows the financial statement impact related to the reduction in estimated reserves ceded under the Loss Portfolio Transfer Agreement (LPT Agreement). Nine Months Ended September 30, 2015 (in millions, except per share data) Change in estimated reserves ceded under the LPT Agreement $ (10.0 ) Cumulative adjustment to the Deferred Gain (1) (6.4 ) Net income impact of change in estimate 6.4 EPS impact of change in estimate Basic and Diluted 0.20 (1) The cumulative adjustment to the Deferred reinsurance gain–LPT Agreement (Deferred Gain) was also recognized in losses and LAE incurred in the Consolidated Statement of Comprehensive Income, so that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement. During the second quarter of 2015, the Company increased its estimate of contingent commission receivable – LPT Agreement (LPT Contingent Commission Adjustment) as a result of the determination that an adjustment was necessary to reflect observed favorable paid loss trends. The following table shows the impact to the Consolidated Statements of Comprehensive Income related to these changes in estimates. Nine Months Ended September 30, 2015 (in millions, except per share data) Change in estimate of contingent commission receivable – LPT Agreement $ 2.8 Cumulative adjustment to the Deferred Gain (1) (2.6 ) Net income impact of change in estimate 2.6 EPS impact of change in estimate Basic and Diluted 0.08 (1) The cumulative adjustment to the Deferred Gain was also recognized in losses and LAE incurred in the Consolidated Statement of Comprehensive Income, so that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement. During the second quarter of 2015, the Company reallocated reserves from non-taxable periods prior to January 1, 2000 to taxable years, which reduced our effective tax rate (Note 6 ). This change in estimate was the result of the determination that a reallocation of reserves among accident years was appropriate to address the observed loss trends. The following table shows the financial statement impact of this change in estimate. Nine Months Ended September 30, 2015 (in millions, except per share data) Reserves reallocated to taxable years $ 19.4 Net income impact of change in estimate 3.8 EPS impact of change in estimate Basic and Diluted 0.12 |
New Accounting Standards (Notes
New Accounting Standards (Notes) | 9 Months Ended |
Sep. 30, 2015 | |
New Accounting Standards [Abstract] | |
New Accounting Standards | New Accounting Standards In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) Number 2015-05, Intangibles - Goodwill and Other - Internal - Use Software (Subtopic 350-40). The update provides guidance to purchasers to assist in determining whether a cloud computing arrangement includes a software license and how to account for such an arrangement. This update becomes effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2015 and early adoption is permitted. The Company does not expect the adoption to have a material impact, if any, on its consolidated financial condition and results of operations. In May 2015, the Financial Accounting Standards Board issued ASU Number 2015-07, Fair Value Measurement (Topic 820). This update removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value (NAV) per share. Additionally, this update removes the requirement to make certain disclosures for all investments that are eligible to be measured as a practical expedient at fair value using the NAV per share. This update becomes effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2015 and early adoption is permitted. As this update focuses only on disclosures, it will not impact the Company's consolidated financial condition and results of operations. In May 2015, the Financial Accounting Standards Board issued ASU Number 2015-09, Financial Services - Insurance (Topic 944). This update expands the breadth of disclosures that an insurance entity must provide about its short-duration insurance contracts. This expanded disclosure includes the presentation of incurred and paid claims development tables by accident year for a period of up to 10 years. This update becomes effective for annual reporting periods beginning after December 15, 2015 and interim periods beginning after December 15, 2016 and early adoption is permitted. As this update focuses only on disclosures, it will not impact the Company's consolidated financial condition and results of operations. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value and the estimated fair value of the Company’s financial instruments were as follows: September 30, 2015 December 31, 2014 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value (in millions) Financial assets Investments $ 2,537.7 $ 2,537.7 $ 2,448.4 $ 2,448.4 Cash and cash equivalents 56.2 56.2 103.6 103.6 Restricted cash and cash equivalents 3.1 3.1 10.8 10.8 Financial liabilities Notes payable 92.0 96.5 92.0 97.8 Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based upon the levels of judgment associated with the inputs used to measure their fair value. Level inputs are defined as follows: • Level 1 - Inputs are unadjusted quoted market prices for identical assets or liabilities in active markets at the measurement date. • Level 2 - Inputs other than Level 1 prices that are observable for similar assets or liabilities through corroboration with market data at the measurement date. • Level 3 - Inputs that are unobservable that reflect management's best estimate of what willing market participants would use in pricing the assets or liabilities at the measurement date. Fair values of available-for-sale fixed maturity and equity securities are based on quoted market prices, where available. If quoted market prices and an estimate determined by using objectively verifiable information are unavailable, the Company produces an estimate of fair value based on internally developed valuation techniques, which, depending on the level of observable market inputs, will render the fair value estimate as Level 2 or Level 3. The Company bases all of its estimates of fair value for assets on the bid price, as it represents what a third-party market participant would be willing to pay in an arm's length transaction. These methods of valuation will only produce an estimate of fair value if there is objectively verifiable information to produce a valuation. If objectively verifiable information is not available, the Company would be required to produce an estimate of fair value using some of the same methodologies, making assumptions for market-based inputs that are unavailable. The Company's estimates of fair value for financial liabilities are based on a combination of the variable interest rates for the Company's existing line of credit and other notes with similar durations to discount the projection of future payments on notes payable. The fair value measurements for notes payable have been determined to be Level 2. The following table presents the items on the accompanying consolidated balance sheets that are stated at fair value and the corresponding fair value measurements. September 30, 2015 December 31, 2014 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (in millions) Fixed maturity securities U.S. Treasuries $ — $ 145.2 $ — $ — $ 166.7 $ — U.S. Agencies — 37.9 — — 39.6 — States and municipalities — 852.7 — — 745.8 — Corporate securities — 909.4 — — 908.3 — Residential mortgage-backed securities — 240.3 — — 288.4 — Commercial mortgage-backed securities — 72.5 — — 65.4 — Asset-backed securities — 62.3 — — 61.5 — Total fixed maturity securities $ — $ 2,320.3 $ — $ — $ 2,275.7 $ — Equity securities $ 199.1 $ — $ — $ 172.7 $ — $ — Short-term investments $ — $ 18.3 $ — $ — $ — $ — |
Investments
Investments | 9 Months Ended |
Sep. 30, 2015 | |
Investments [Abstract] | |
Investments | Investments The cost or amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the Company’s investments were as follows: Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (in millions) At September 30, 2015 Fixed maturity securities U.S. Treasuries $ 140.1 $ 5.1 $ — $ 145.2 U.S. Agencies 36.1 1.8 — 37.9 States and municipalities 811.4 41.6 (0.3 ) 852.7 Corporate securities 888.0 26.1 (4.7 ) 909.4 Residential mortgage-backed securities 231.8 8.9 (0.4 ) 240.3 Commercial mortgage-backed securities 72.0 0.7 (0.2 ) 72.5 Asset-backed securities 62.2 0.1 — 62.3 Total fixed maturity securities 2,241.6 84.3 (5.6 ) 2,320.3 Equity securities 159.1 61.0 (21.0 ) 199.1 Short-term investments 18.3 — — 18.3 Total investments $ 2,419.0 $ 145.3 $ (26.6 ) $ 2,537.7 At December 31, 2014 Fixed maturity securities U.S. Treasuries $ 160.9 $ 5.8 $ — $ 166.7 U.S. Agencies 37.2 2.4 — 39.6 States and municipalities 701.6 44.4 (0.2 ) 745.8 Corporate securities 880.7 30.8 (3.2 ) 908.3 Residential mortgage-backed securities 278.6 10.6 (0.8 ) 288.4 Commercial mortgage-backed securities 65.5 0.5 (0.6 ) 65.4 Asset-backed securities 61.6 — (0.1 ) 61.5 Total fixed maturity securities 2,186.1 94.5 (4.9 ) 2,275.7 Equity securities 97.8 75.5 (0.6 ) 172.7 Total investments $ 2,283.9 $ 170.0 $ (5.5 ) $ 2,448.4 The amortized cost and estimated fair value of fixed maturity securities at September 30, 2015 , by contractual maturity, are shown below. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Cost Estimated Fair Value (in millions) Due in one year or less $ 133.7 $ 134.7 Due after one year through five years 843.3 876.2 Due after five years through ten years 660.6 682.9 Due after ten years 238.0 251.4 Mortgage and asset-backed securities 366.0 375.1 Total $ 2,241.6 $ 2,320.3 The following is a summary of investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or greater as of September 30, 2015 and December 31, 2014 . September 30, 2015 December 31, 2014 Estimated Fair Value Gross Unrealized Losses Number of Issues Estimated Fair Value Gross Unrealized Losses Number of Issues (in millions, except number of issues data) Less than 12 months: Fixed maturity securities States and municipalities $ 36.5 $ (0.3 ) 8 $ 20.6 $ (0.2 ) 5 Corporate securities 184.7 (2.7 ) 73 109.9 (0.8 ) 42 Residential mortgage-backed securities 33.6 (0.3 ) 17 — — — Commercial mortgage-backed securities 21.3 (0.2 ) 7 — — — Total fixed maturity securities 276.1 (3.5 ) 105 130.5 (1.0 ) 47 Equity securities 73.6 (20.4 ) 69 10.1 (0.6 ) 15 Total less than 12 months $ 349.7 $ (23.9 ) 174 $ 140.6 $ (1.6 ) 62 12 months or greater: Fixed maturity securities Corporate securities $ 47.9 $ (2.0 ) 17 $ 129.4 $ (2.4 ) 39 Residential mortgage-backed securities 7.5 (0.1 ) 26 44.1 (0.8 ) 36 Commercial mortgage-backed securities — — — 31.3 (0.6 ) 8 Asset-backed securities — — — 18.3 (0.1 ) 6 Total fixed maturity securities 55.4 (2.1 ) 43 223.1 (3.9 ) 89 Equity securities 2.1 (0.6 ) 3 — — — Total 12 months or greater $ 57.5 $ (2.7 ) 46 $ 223.1 $ (3.9 ) 89 Total available-for-sale: Fixed maturity securities States and municipalities $ 36.5 $ (0.3 ) 8 $ 20.6 $ (0.2 ) 5 Corporate securities 232.6 (4.7 ) 90 239.3 (3.2 ) 81 Residential mortgage-backed securities 41.1 (0.4 ) 43 44.1 (0.8 ) 36 Commercial mortgage-backed securities 21.3 (0.2 ) 7 31.3 (0.6 ) 8 Asset-backed securities — — — 18.3 (0.1 ) 6 Total fixed maturity securities 331.5 (5.6 ) 148 353.6 (4.9 ) 136 Equity securities 75.7 (21.0 ) 72 10.1 (0.6 ) 15 Total available-for-sale $ 407.2 $ (26.6 ) 220 $ 363.7 $ (5.5 ) 151 Based on reviews of the fixed maturity securities, the Company determined that unrealized losses for the nine months ended September 30, 2015 were primarily the result of changes in prevailing interest rates and not the credit quality of the issuers. The fixed maturity securities whose total fair value was less than amortized cost were not determined to be other-than-temporarily impaired given the severity and duration of the impairment, the credit quality of the issuers, the Company’s intent to not sell the securities, and a determination that it is not more likely than not that the Company will be required to sell the securities until fair value recovers to above amortized cost, or maturity. Based on reviews of the equity securities, the Company recognized a total impairment of $0.2 million in the fair value of five equity securities for the nine months ended September 30, 2015 , as a result of the severity and duration of the change in fair value of the securities. The remaining unrealized losses on equity securities were not considered to be other-than-temporary due to the financial condition and near-term prospects of the issuers. Net realized gains on investments and the change in unrealized gains (losses) on fixed maturity and equity securities are determined on a specific-identification basis and were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in millions) Net realized gains on investments Fixed maturity securities Gross gains $ 0.2 $ — $ 0.5 $ 0.9 Gross losses (0.2 ) — (0.4 ) — Net realized gains on fixed maturity securities $ — $ — $ 0.1 $ 0.9 Equity securities Gross gains $ 2.2 $ 1.9 $ 5.6 $ 13.4 Gross losses (0.2 ) (0.1 ) (0.6 ) (0.1 ) Net realized gains on equity securities $ 2.0 $ 1.8 $ 5.0 $ 13.3 Total $ 2.0 $ 1.8 $ 5.1 $ 14.2 Change in unrealized gains (losses) Fixed maturity securities $ 8.0 $ (9.9 ) $ (11.0 ) $ 21.4 Equity securities (27.0 ) (0.7 ) (34.8 ) (4.0 ) Total $ (19.0 ) $ (10.6 ) $ (45.8 ) $ 17.4 Net investment income was as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in millions) Fixed maturity securities $ 17.3 $ 17.9 $ 51.6 $ 53.4 Equity securities 1.7 1.0 4.0 3.0 Cash equivalents and restricted cash 0.1 — 0.1 — Gross investment income 19.1 18.9 55.7 56.4 Investment expenses (0.6 ) (0.7 ) (1.9 ) (1.9 ) Net investment income $ 18.5 $ 18.2 $ 53.8 $ 54.5 The Company is required by various state laws and regulations to keep securities or letters of credit in depository accounts with certain states in which it does business. As of September 30, 2015 and December 31, 2014 , securities having a fair value of $893.6 million and $783.9 million , respectively, were on deposit. These laws and regulations govern not only the amount, but also the types of securities that are eligible for deposit. Certain reinsurance contracts require Company funds to be held in trust for the benefit of the ceding reinsurer to secure the outstanding liabilities assumed by the Company. The fair value of fixed maturity securities held in trust for the benefit of ceding reinsurers at September 30, 2015 and December 31, 2014 was $30.7 million and $31.2 million , respectively. Pursuant to the Third Amended and Restated Credit Agreement with Wells Fargo (Amended Credit Facility), a portion of the Company's debt was secured by fixed maturity securities and restricted cash and cash equivalents that had a fair value of $75.8 million and $74.6 million at September 30, 2015 and December 31, 2014 , respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes [Abstract] | |
Income Taxes | Income Taxes Income tax expense for interim periods is measured using an estimated effective tax rate for the annual period. The following is a reconciliation of the federal statutory income tax rate to the Company’s effective tax rates for the periods presented. Nine Months Ended September 30, 2015 2014 Expense computed at statutory rate 35.0 % 35.0 % Dividends received deduction and tax-exempt interest (7.6 ) (9.4 ) LPT deferred gain amortization (4.3 ) (7.7 ) LPT reserve adjustment (2.0 ) (8.4 ) Pre-privatization reserve adjustment, excluding LPT (4.6 ) (3.5 ) Other 0.7 — Effective tax rate 17.2 % 6.0 % |
Liability for Unpaid Losses and
Liability for Unpaid Losses and Loss Adjustment Expenses | 9 Months Ended |
Sep. 30, 2015 | |
Liability for Unpaid Losses and Loss Adjustment Expenses [Abstract] | |
Liability for Unpaid Losses and Loss Adjustment Expenses | Liability for Unpaid Losses and Loss Adjustment Expenses The following table represents a reconciliation of changes in the liability for unpaid losses and LAE. Nine Months Ended September 30, 2015 2014 (in millions) Unpaid losses and LAE, gross of reinsurance, at beginning of period $ 2,369.7 $ 2,330.5 Less reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE 669.5 743.1 Net unpaid losses and LAE at beginning of period 1,700.2 1,587.4 Losses and LAE, net of reinsurance, incurred during the period related to: Current period 339.7 379.2 Prior periods 1.3 4.0 Total net losses and LAE incurred during the period 341.0 383.2 Paid losses and LAE, net of reinsurance, related to: Current period 43.9 44.5 Prior periods 274.2 246.3 Total net paid losses and LAE during the period 318.1 290.8 Ending unpaid losses and LAE, net of reinsurance 1,723.1 1,679.8 Reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE 634.8 690.5 Unpaid losses and LAE, gross of reinsurance, at end of period $ 2,357.9 $ 2,370.3 Total net losses and LAE included in the above table excludes the impact of the aggregate of amortization of the deferred reinsurance gain—LPT Agreement, LPT Reserve Adjustments, and LPT Contingent Commission Adjustments, which totaled $17.5 million and $40.1 million for the nine months ended September 30, 2015 and 2014 , respectively (Note 8 ). The increase in the estimates of incurred losses and LAE attributable to insured events for prior periods was related to the Company's assigned risk business. |
LPT Agreement
LPT Agreement | 9 Months Ended |
Sep. 30, 2015 | |
LPT Agreement [Abstract] | |
LPT Agreement | LPT Agreement The Company is party to a 100% quota share retroactive reinsurance agreement (LPT Agreement) under which $1.5 billion in liabilities for losses and LAE related to claims incurred by EICN prior to July 1, 1995 were reinsured for consideration of $775.0 million . The LPT Agreement provides coverage up to $2.0 billion . The initial Deferred Gain resulting from the LPT Agreement was recorded as a liability in the accompanying consolidated balance sheets as Deferred reinsurance gain–LPT Agreement. The Company is also entitled to receive a contingent profit commission under the LPT Agreement. The contingent profit commission is an amount based on the favorable difference between actual paid losses and LAE and expected paid losses and LAE as established in the LPT Agreement. The Company records its estimate of contingent profit commission in the accompanying consolidated balance sheets as Contingent commission receivable–LPT Agreement and a corresponding liability is recorded in the accompanying consolidated balance sheets in Deferred reinsurance gain–LPT Agreement. The Deferred Gain is being amortized using the recovery method. Amortization is determined by the proportion of actual reinsurance recoveries to total estimated recoveries over the life of the LPT Agreement, except for the contingent profit commission, which is amortized through June 30, 2024, the date through which the Company is entitled to receive a contingent profit commission under the LPT Agreement. The amortization is recorded in losses and LAE incurred in the accompanying consolidated statements of comprehensive income. Any adjustments to the Deferred Gain are recorded in losses and LAE incurred in the accompanying consolidated statements of comprehensive income. The Company amortized $8.5 million and $9.9 million of the Deferred Gain for the nine months ended September 30, 2015 and 2014 , respectively. Additionally, the Deferred Gain was reduced by $6.4 million and $22.3 million for the nine months ended September 30, 2015 and 2014 , respectively, due to a favorable LPT Reserve Adjustment and by $2.6 million and $7.9 million for the nine months ended September 30, 2015 and 2014 , respectively, due to favorable LPT Contingent Commission Adjustments. The remaining Deferred Gain was $192.4 million and $207.0 million as of September 30, 2015 and December 31, 2014 , respectively. The estimated remaining liabilities subject to the LPT Agreement were $504.7 million and $534.8 million as of September 30, 2015 and December 31, 2014 , respectively. Losses and LAE paid with respect to the LPT Agreement totaled $688.5 million and $668.4 million from inception through September 30, 2015 and December 31, 2014 , respectively. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2015 | |
Accumulated Other Comprehensive Income [Abstract] | |
Accumulated Other Comprehensive Income, Net | Accumulated Other Comprehensive Income, net Accumulated other comprehensive income, net, is comprised of unrealized gains on investments classified as available-for-sale, net of deferred tax expense. The following table summarizes the components of accumulated other comprehensive income, net: September 30, 2015 December 31, 2014 (in millions) Net unrealized gain on investments, before taxes $ 118.7 $ 164.5 Deferred tax expense on net unrealized gains (41.6 ) (57.6 ) Total accumulated other comprehensive income, net $ 77.1 $ 106.9 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Stock-Based Compensation [Abstract] | |
Stock-Based compensation | Stock-Based Compensation The Company awarded stock options, restricted stock units (RSUs) and performance share units (PSUs) to certain officers and non-employee Directors of the Company as follows: Number Awarded Weighted Average Fair Value on Date of Grant Weighted Average Exercise Price Aggregate Fair Value on Date of Grant (in millions) March 2015 Stock options (1) 80,800 $ 7.63 $ 24.20 $ 0.6 RSUs (1) 89,602 24.20 — 2.2 PSUs (2) 110,000 24.20 — 2.7 May 2015 RSUs (1) 19,904 24.11 — 0.5 (1) The stock options and RSUs awarded in March 2015 were awarded to certain officers of the Company and vest 25% on March 15, 2016, and each of the subsequent three anniversaries of that date . The stock options and RSUs are subject to accelerated vesting in certain circumstances, including but not limited to: death, disability, retirement, or in connection with change of control of the Company. The stock options expire seven years from the date of grant. The RSUs awarded in May 2015 were awarded to non-employee Directors of the Company and have a service vesting period of one year from the date of grant. (2) The PSUs awarded in March 2015 were awarded to certain officers of the Company and have a performance period of two years followed by an additional one year vesting period. The PSU awards are subject to certain performance goals with payouts that range from 0% to 200% of the target awards. The value shown in the table represents the aggregate number of PSUs awarded at the target level. A total of 325,429 and 120,494 stock options were exercised during the nine months ended September 30, 2015 and the year ended December 31, 2014 , respectively. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share excludes dilution and is computed by dividing income applicable to stockholders by the weighted average number of shares outstanding for the period. Diluted earnings per share reflects the potential dilutive impact of all convertible securities on earnings per share. Diluted earnings per share includes shares assumed issued under the “treasury stock method,” which reflects the potential dilution that would occur if outstanding options were to be exercised. The following table presents the net income and the weighted average number of shares outstanding used in the earnings per common share calculations. Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in millions, except share data) Net income available to stockholders—basic and diluted $ 24.5 $ 15.2 $ 67.7 $ 71.6 Weighted average number of shares outstanding—basic 32,184,143 31,591,457 32,000,142 31,507,097 Effect of dilutive securities: PSUs 72,612 279,550 161,335 252,532 Stock options 245,708 202,010 289,348 230,961 RSUs 21,877 36,403 47,268 53,538 Dilutive potential shares 340,197 517,963 497,951 537,031 Weighted average number of shares outstanding—diluted 32,524,340 32,109,420 32,498,093 32,044,128 Diluted earnings per share excludes outstanding options and other common stock equivalents in periods where the inclusion of such options and common stock equivalents would be anti-dilutive. The following table presents options and RSUs that were excluded from diluted earnings per share. Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Options excluded as the exercise price was greater than the average market price 80,800 271,944 26,933 141,900 Options and RSUs excluded under the treasury method as the potential proceeds on settlement or exercise price were greater than the value of shares acquired 336,006 296,867 316,273 154,044 |
Changes in Estimates (Tables)
Changes in Estimates (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Changes in Estimates [Abstract] | |
Change to Contingent Profit Commission [Table Text Block] | During the second quarter of 2015, the Company increased its estimate of contingent commission receivable – LPT Agreement (LPT Contingent Commission Adjustment) as a result of the determination that an adjustment was necessary to reflect observed favorable paid loss trends. The following table shows the impact to the Consolidated Statements of Comprehensive Income related to these changes in estimates. Nine Months Ended September 30, 2015 (in millions, except per share data) Change in estimate of contingent commission receivable – LPT Agreement $ 2.8 Cumulative adjustment to the Deferred Gain (1) (2.6 ) Net income impact of change in estimate 2.6 EPS impact of change in estimate Basic and Diluted 0.08 (1) The cumulative adjustment to the Deferred Gain was also recognized in losses and LAE incurred in the Consolidated Statement of Comprehensive Income, so that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement. |
Change Due to Estmated Reserves Ceded Under the LPT Agreement [Table Text Block] | During the second quarter of 2015, the Company reduced its estimated reserves ceded under the Loss Portfolio Transfer Agreement (LPT Reserve Adjustment) as a result of the determination that an adjustment was necessary to reflect observed favorable paid loss trends. The following table shows the financial statement impact related to the reduction in estimated reserves ceded under the Loss Portfolio Transfer Agreement (LPT Agreement). Nine Months Ended September 30, 2015 (in millions, except per share data) Change in estimated reserves ceded under the LPT Agreement $ (10.0 ) Cumulative adjustment to the Deferred Gain (1) (6.4 ) Net income impact of change in estimate 6.4 EPS impact of change in estimate Basic and Diluted 0.20 (1) The cumulative adjustment to the Deferred reinsurance gain–LPT Agreement (Deferred Gain) was also recognized in losses and LAE incurred in the Consolidated Statement of Comprehensive Income, so that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement. |
Change in Reserves for Non-taxable Periods [Table Text Block] | During the second quarter of 2015, the Company reallocated reserves from non-taxable periods prior to January 1, 2000 to taxable years, which reduced our effective tax rate (Note 6 ). This change in estimate was the result of the determination that a reallocation of reserves among accident years was appropriate to address the observed loss trends. The following table shows the financial statement impact of this change in estimate. Nine Months Ended September 30, 2015 (in millions, except per share data) Reserves reallocated to taxable years $ 19.4 Net income impact of change in estimate 3.8 EPS impact of change in estimate Basic and Diluted 0.12 |
Fair Value of Financial Instr19
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value of Financial Instruments [Abstract] | |
Estimated fair value of financial instruments table | The carrying value and the estimated fair value of the Company’s financial instruments were as follows: September 30, 2015 December 31, 2014 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value (in millions) Financial assets Investments $ 2,537.7 $ 2,537.7 $ 2,448.4 $ 2,448.4 Cash and cash equivalents 56.2 56.2 103.6 103.6 Restricted cash and cash equivalents 3.1 3.1 10.8 10.8 Financial liabilities Notes payable 92.0 96.5 92.0 97.8 |
Fair value, assets and liabilities measured on recurring basis table | The following table presents the items on the accompanying consolidated balance sheets that are stated at fair value and the corresponding fair value measurements. September 30, 2015 December 31, 2014 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (in millions) Fixed maturity securities U.S. Treasuries $ — $ 145.2 $ — $ — $ 166.7 $ — U.S. Agencies — 37.9 — — 39.6 — States and municipalities — 852.7 — — 745.8 — Corporate securities — 909.4 — — 908.3 — Residential mortgage-backed securities — 240.3 — — 288.4 — Commercial mortgage-backed securities — 72.5 — — 65.4 — Asset-backed securities — 62.3 — — 61.5 — Total fixed maturity securities $ — $ 2,320.3 $ — $ — $ 2,275.7 $ — Equity securities $ 199.1 $ — $ — $ 172.7 $ — $ — Short-term investments $ — $ 18.3 $ — $ — $ — $ — |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Investments [Abstract] | |
Available-for-sale securities table | The cost or amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the Company’s investments were as follows: Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (in millions) At September 30, 2015 Fixed maturity securities U.S. Treasuries $ 140.1 $ 5.1 $ — $ 145.2 U.S. Agencies 36.1 1.8 — 37.9 States and municipalities 811.4 41.6 (0.3 ) 852.7 Corporate securities 888.0 26.1 (4.7 ) 909.4 Residential mortgage-backed securities 231.8 8.9 (0.4 ) 240.3 Commercial mortgage-backed securities 72.0 0.7 (0.2 ) 72.5 Asset-backed securities 62.2 0.1 — 62.3 Total fixed maturity securities 2,241.6 84.3 (5.6 ) 2,320.3 Equity securities 159.1 61.0 (21.0 ) 199.1 Short-term investments 18.3 — — 18.3 Total investments $ 2,419.0 $ 145.3 $ (26.6 ) $ 2,537.7 At December 31, 2014 Fixed maturity securities U.S. Treasuries $ 160.9 $ 5.8 $ — $ 166.7 U.S. Agencies 37.2 2.4 — 39.6 States and municipalities 701.6 44.4 (0.2 ) 745.8 Corporate securities 880.7 30.8 (3.2 ) 908.3 Residential mortgage-backed securities 278.6 10.6 (0.8 ) 288.4 Commercial mortgage-backed securities 65.5 0.5 (0.6 ) 65.4 Asset-backed securities 61.6 — (0.1 ) 61.5 Total fixed maturity securities 2,186.1 94.5 (4.9 ) 2,275.7 Equity securities 97.8 75.5 (0.6 ) 172.7 Total investments $ 2,283.9 $ 170.0 $ (5.5 ) $ 2,448.4 |
Investments classified by contractual maturity date table | The amortized cost and estimated fair value of fixed maturity securities at September 30, 2015 , by contractual maturity, are shown below. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Cost Estimated Fair Value (in millions) Due in one year or less $ 133.7 $ 134.7 Due after one year through five years 843.3 876.2 Due after five years through ten years 660.6 682.9 Due after ten years 238.0 251.4 Mortgage and asset-backed securities 366.0 375.1 Total $ 2,241.6 $ 2,320.3 |
Unrealized loss on investments table | The following is a summary of investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or greater as of September 30, 2015 and December 31, 2014 . September 30, 2015 December 31, 2014 Estimated Fair Value Gross Unrealized Losses Number of Issues Estimated Fair Value Gross Unrealized Losses Number of Issues (in millions, except number of issues data) Less than 12 months: Fixed maturity securities States and municipalities $ 36.5 $ (0.3 ) 8 $ 20.6 $ (0.2 ) 5 Corporate securities 184.7 (2.7 ) 73 109.9 (0.8 ) 42 Residential mortgage-backed securities 33.6 (0.3 ) 17 — — — Commercial mortgage-backed securities 21.3 (0.2 ) 7 — — — Total fixed maturity securities 276.1 (3.5 ) 105 130.5 (1.0 ) 47 Equity securities 73.6 (20.4 ) 69 10.1 (0.6 ) 15 Total less than 12 months $ 349.7 $ (23.9 ) 174 $ 140.6 $ (1.6 ) 62 12 months or greater: Fixed maturity securities Corporate securities $ 47.9 $ (2.0 ) 17 $ 129.4 $ (2.4 ) 39 Residential mortgage-backed securities 7.5 (0.1 ) 26 44.1 (0.8 ) 36 Commercial mortgage-backed securities — — — 31.3 (0.6 ) 8 Asset-backed securities — — — 18.3 (0.1 ) 6 Total fixed maturity securities 55.4 (2.1 ) 43 223.1 (3.9 ) 89 Equity securities 2.1 (0.6 ) 3 — — — Total 12 months or greater $ 57.5 $ (2.7 ) 46 $ 223.1 $ (3.9 ) 89 Total available-for-sale: Fixed maturity securities States and municipalities $ 36.5 $ (0.3 ) 8 $ 20.6 $ (0.2 ) 5 Corporate securities 232.6 (4.7 ) 90 239.3 (3.2 ) 81 Residential mortgage-backed securities 41.1 (0.4 ) 43 44.1 (0.8 ) 36 Commercial mortgage-backed securities 21.3 (0.2 ) 7 31.3 (0.6 ) 8 Asset-backed securities — — — 18.3 (0.1 ) 6 Total fixed maturity securities 331.5 (5.6 ) 148 353.6 (4.9 ) 136 Equity securities 75.7 (21.0 ) 72 10.1 (0.6 ) 15 Total available-for-sale $ 407.2 $ (26.6 ) 220 $ 363.7 $ (5.5 ) 151 |
Net realized gains and change in unrealized gains (losses), available for sale securities table | ealized gains on investments and the change in unrealized gains (losses) on fixed maturity and equity securities are determined on a specific-identification basis and were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in millions) Net realized gains on investments Fixed maturity securities Gross gains $ 0.2 $ — $ 0.5 $ 0.9 Gross losses (0.2 ) — (0.4 ) — Net realized gains on fixed maturity securities $ — $ — $ 0.1 $ 0.9 Equity securities Gross gains $ 2.2 $ 1.9 $ 5.6 $ 13.4 Gross losses (0.2 ) (0.1 ) (0.6 ) (0.1 ) Net realized gains on equity securities $ 2.0 $ 1.8 $ 5.0 $ 13.3 Total $ 2.0 $ 1.8 $ 5.1 $ 14.2 Change in unrealized gains (losses) Fixed maturity securities $ 8.0 $ (9.9 ) $ (11.0 ) $ 21.4 Equity securities (27.0 ) (0.7 ) (34.8 ) (4.0 ) Total $ (19.0 ) $ (10.6 ) $ (45.8 ) $ 17.4 |
Investment income table | Net investment income was as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in millions) Fixed maturity securities $ 17.3 $ 17.9 $ 51.6 $ 53.4 Equity securities 1.7 1.0 4.0 3.0 Cash equivalents and restricted cash 0.1 — 0.1 — Gross investment income 19.1 18.9 55.7 56.4 Investment expenses (0.6 ) (0.7 ) (1.9 ) (1.9 ) Net investment income $ 18.5 $ 18.2 $ 53.8 $ 54.5 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes [Abstract] | |
Reconciliation of federal staturoty income tax rates to the effective tax rates table | The following is a reconciliation of the federal statutory income tax rate to the Company’s effective tax rates for the periods presented. Nine Months Ended September 30, 2015 2014 Expense computed at statutory rate 35.0 % 35.0 % Dividends received deduction and tax-exempt interest (7.6 ) (9.4 ) LPT deferred gain amortization (4.3 ) (7.7 ) LPT reserve adjustment (2.0 ) (8.4 ) Pre-privatization reserve adjustment, excluding LPT (4.6 ) (3.5 ) Other 0.7 — Effective tax rate 17.2 % 6.0 % |
Liability for Unpaid Losses a22
Liability for Unpaid Losses and Loss Adjustment Expenses (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Liability for Unpaid Losses and Loss Adjustment Expenses [Abstract] | |
Changes in the liability for unpaid losses and LAE table | The following table represents a reconciliation of changes in the liability for unpaid losses and LAE. Nine Months Ended September 30, 2015 2014 (in millions) Unpaid losses and LAE, gross of reinsurance, at beginning of period $ 2,369.7 $ 2,330.5 Less reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE 669.5 743.1 Net unpaid losses and LAE at beginning of period 1,700.2 1,587.4 Losses and LAE, net of reinsurance, incurred during the period related to: Current period 339.7 379.2 Prior periods 1.3 4.0 Total net losses and LAE incurred during the period 341.0 383.2 Paid losses and LAE, net of reinsurance, related to: Current period 43.9 44.5 Prior periods 274.2 246.3 Total net paid losses and LAE during the period 318.1 290.8 Ending unpaid losses and LAE, net of reinsurance 1,723.1 1,679.8 Reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE 634.8 690.5 Unpaid losses and LAE, gross of reinsurance, at end of period $ 2,357.9 $ 2,370.3 |
Accumulated Other Comprehensi23
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accumulated Other Comprehensive Income [Abstract] | |
Schedule of accumulated other comprehensive income (loss) table | The following table summarizes the components of accumulated other comprehensive income, net: September 30, 2015 December 31, 2014 (in millions) Net unrealized gain on investments, before taxes $ 118.7 $ 164.5 Deferred tax expense on net unrealized gains (41.6 ) (57.6 ) Total accumulated other comprehensive income, net $ 77.1 $ 106.9 |
Stock-Based Compensation Stock-
Stock-Based Compensation Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stock-Based Compensation [Abstract] | |
Share-based compensation arrangements by share-based payment award table | The Company awarded stock options, restricted stock units (RSUs) and performance share units (PSUs) to certain officers and non-employee Directors of the Company as follows: Number Awarded Weighted Average Fair Value on Date of Grant Weighted Average Exercise Price Aggregate Fair Value on Date of Grant (in millions) March 2015 Stock options (1) 80,800 $ 7.63 $ 24.20 $ 0.6 RSUs (1) 89,602 24.20 — 2.2 PSUs (2) 110,000 24.20 — 2.7 May 2015 RSUs (1) 19,904 24.11 — 0.5 (1) The stock options and RSUs awarded in March 2015 were awarded to certain officers of the Company and vest 25% on March 15, 2016, and each of the subsequent three anniversaries of that date . The stock options and RSUs are subject to accelerated vesting in certain circumstances, including but not limited to: death, disability, retirement, or in connection with change of control of the Company. The stock options expire seven years from the date of grant. The RSUs awarded in May 2015 were awarded to non-employee Directors of the Company and have a service vesting period of one year from the date of grant. (2) The PSUs awarded in March 2015 were awarded to certain officers of the Company and have a performance period of two years followed by an additional one year vesting period. The PSU awards are subject to certain performance goals with payouts that range from 0% to 200% of the target awards. The value shown in the table represents the aggregate number of PSUs awarded at the target level. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Net income and weighted average common shares outstanding used in earnings per share calculations table | The following table presents the net income and the weighted average number of shares outstanding used in the earnings per common share calculations. Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in millions, except share data) Net income available to stockholders—basic and diluted $ 24.5 $ 15.2 $ 67.7 $ 71.6 Weighted average number of shares outstanding—basic 32,184,143 31,591,457 32,000,142 31,507,097 Effect of dilutive securities: PSUs 72,612 279,550 161,335 252,532 Stock options 245,708 202,010 289,348 230,961 RSUs 21,877 36,403 47,268 53,538 Dilutive potential shares 340,197 517,963 497,951 537,031 Weighted average number of shares outstanding—diluted 32,524,340 32,109,420 32,498,093 32,044,128 |
Antidilutive securities excluded from computation of earnings per share table | The following table presents options and RSUs that were excluded from diluted earnings per share. Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Options excluded as the exercise price was greater than the average market price 80,800 271,944 26,933 141,900 Options and RSUs excluded under the treasury method as the potential proceeds on settlement or exercise price were greater than the value of shares acquired 336,006 296,867 316,273 154,044 |
Basis of Presentation (Details)
Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation [Abstract] | |
Number of Operating Segments | 1 |
Changes in Estimates (Details)
Changes in Estimates (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Change in Accounting Estimate [Line Items] | |||||
Net income | $ 24,500 | $ 15,200 | $ 67,700 | $ 71,600 | |
Change Due to Estimated Reserves Ceded Under the LPT Agreement [Member] | |||||
Change in Accounting Estimate [Line Items] | |||||
Change to estimated reserves ceded under the LPT agreement | (10,000) | ||||
Cumulative adjustment to the Deferred Gain | (6,400) | [1] | (22,300) | ||
Net income | $ 6,400 | ||||
Basic and Diluted | $ 0.20 | ||||
Change to Contingent Profit Commission [Member] | |||||
Change in Accounting Estimate [Line Items] | |||||
Change in estimate of contingent commission receivable - LPT Agreement | $ 2,800 | ||||
Cumulative adjustment to the Deferred Gain | (2,600) | [2] | $ (7,900) | ||
Net income | $ 2,600 | ||||
Basic and Diluted | $ 0.08 | ||||
Due to change in reserves for non-taxable Periods [Member] | |||||
Change in Accounting Estimate [Line Items] | |||||
Reserves reallocated to taxable years | $ 19,400 | ||||
Net income | $ 3,800 | ||||
Basic and Diluted | $ 0.12 | ||||
[1] | The cumulative adjustment to the Deferred reinsurance gain–LPT Agreement (Deferred Gain) was also recognized in losses and LAE incurred in the Consolidated Statement of Comprehensive Income, so that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement. | ||||
[2] | The cumulative adjustment to the Deferred Gain was also recognized in losses and LAE incurred in the Consolidated Statement of Comprehensive Income, so that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement. |
Fair Value of Financial Instr28
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Investments | $ 2,537,700 | $ 2,448,400 | ||
Investments, fair value | 2,537,700 | 2,448,400 | ||
Cash and cash equivalents | 56,200 | 103,600 | $ 59,000 | $ 34,500 |
Cash and cash equivalents, estimated fair value | 56,200 | 103,600 | ||
Restricted cash and cash equivalents | 3,100 | 10,800 | ||
Notes payable | 92,000 | 92,000 | ||
Notes Payable, fair value | 96,500 | 97,800 | ||
Estimate of Fair Value, Fair Value Disclosure [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Investments | 30,700 | 31,200 | ||
Restricted cash and cash equivalents | $ 3,100 | $ 10,800 |
Fair Value of Financial Instr29
Fair Value of Financial Instruments, Fair Value Inputs (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | $ 2,537.7 | $ 2,448.4 |
Debt Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 2,320.3 | 2,275.7 |
Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 2,320.3 | 2,275.7 |
Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
US Treasury Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 145.2 | 166.7 |
US Treasury Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
US Treasury Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 166.7 | |
US Treasury Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
US Government Agencies Debt Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 37.9 | 39.6 |
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 39.6 | |
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
US States and Political Subdivisions Debt Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 852.7 | 745.8 |
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 745.8 | |
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Corporate Debt Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 909.4 | 908.3 |
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 908.3 | |
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Residential Mortgage Backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 240.3 | 288.4 |
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 288.4 | |
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Commercial Mortgage Backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 72.5 | 65.4 |
Commercial Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Commercial Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 65.4 | |
Commercial Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Asset-backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 62.3 | 61.5 |
Asset-backed Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Asset-backed Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 61.5 | |
Asset-backed Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Equity Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 199.1 | 172.7 |
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 172.7 | |
Equity Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Equity Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Short-term Investments [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Short-term Investments [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 18.3 | 0 |
Short-term Investments [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | $ 0 | $ 0 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | $ 2,419,000 | $ 2,283,900 |
Gross unrealized gain | 145,300 | 170,000 |
Gross unrealized loss | (26,600) | (5,500) |
Investments | 2,537,700 | 2,448,400 |
Deposit Assets | ||
Investments | 2,537,700 | 2,448,400 |
Assets Held-in-trust | ||
Investments | 2,537,700 | 2,448,400 |
Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 2,241,600 | 2,186,100 |
Gross unrealized gain | 84,300 | 94,500 |
Gross unrealized loss | (5,600) | (4,900) |
Investments | 2,320,300 | 2,275,700 |
Deposit Assets | ||
Investments | 2,320,300 | 2,275,700 |
Assets Held-in-trust | ||
Investments | 2,320,300 | 2,275,700 |
US Treasury Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 140,100 | 160,900 |
Gross unrealized gain | 5,100 | 5,800 |
Gross unrealized loss | 0 | 0 |
Investments | 145,200 | 166,700 |
Deposit Assets | ||
Investments | 145,200 | 166,700 |
Assets Held-in-trust | ||
Investments | 145,200 | 166,700 |
US Government Agencies Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 36,100 | 37,200 |
Gross unrealized gain | 1,800 | 2,400 |
Gross unrealized loss | 0 | 0 |
Investments | 37,900 | 39,600 |
Deposit Assets | ||
Investments | 37,900 | 39,600 |
Assets Held-in-trust | ||
Investments | 37,900 | 39,600 |
US States and Political Subdivisions Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 811,400 | 701,600 |
Gross unrealized gain | 41,600 | 44,400 |
Gross unrealized loss | (300) | (200) |
Investments | 852,700 | 745,800 |
Deposit Assets | ||
Investments | 852,700 | 745,800 |
Assets Held-in-trust | ||
Investments | 852,700 | 745,800 |
Corporate Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 888,000 | 880,700 |
Gross unrealized gain | 26,100 | 30,800 |
Gross unrealized loss | (4,700) | (3,200) |
Investments | 909,400 | 908,300 |
Deposit Assets | ||
Investments | 909,400 | 908,300 |
Assets Held-in-trust | ||
Investments | 909,400 | 908,300 |
Residential Mortgage Backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 231,800 | 278,600 |
Gross unrealized gain | 8,900 | 10,600 |
Gross unrealized loss | (400) | (800) |
Investments | 240,300 | 288,400 |
Deposit Assets | ||
Investments | 240,300 | 288,400 |
Assets Held-in-trust | ||
Investments | 240,300 | 288,400 |
Commercial Mortgage Backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 72,000 | 65,500 |
Gross unrealized gain | 700 | 500 |
Gross unrealized loss | (200) | (600) |
Investments | 72,500 | 65,400 |
Deposit Assets | ||
Investments | 72,500 | 65,400 |
Assets Held-in-trust | ||
Investments | 72,500 | 65,400 |
Asset-backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 62,200 | 61,600 |
Gross unrealized gain | 100 | 0 |
Gross unrealized loss | 0 | (100) |
Investments | 62,300 | 61,500 |
Deposit Assets | ||
Investments | 62,300 | 61,500 |
Assets Held-in-trust | ||
Investments | 62,300 | 61,500 |
Equity Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 159,100 | 97,800 |
Gross unrealized gain | 61,000 | 75,500 |
Gross unrealized loss | (21,000) | (600) |
Investments | 199,100 | 172,700 |
Deposit Assets | ||
Investments | 199,100 | 172,700 |
Assets Held-in-trust | ||
Investments | 199,100 | 172,700 |
Short-term Investments [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 18,300 | |
Gross unrealized gain | 0 | |
Gross unrealized loss | 0 | |
Fair Value Measurement [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Investments | 30,700 | 31,200 |
Deposit Assets | ||
Investments | 30,700 | 31,200 |
Assets Held-in-trust | ||
Investments | 30,700 | 31,200 |
Fair Value Measurement [Member] | Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Investments | 893,600 | 783,900 |
Deposit Assets | ||
Investments | 893,600 | 783,900 |
Assets Held-in-trust | ||
Investments | 893,600 | 783,900 |
Fair Value Measurement [Member] | Fixed Maturities and Restricted Cash Equivalents [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Investments | 75,800 | 74,600 |
Deposit Assets | ||
Investments | 75,800 | 74,600 |
Assets Held-in-trust | ||
Investments | $ 75,800 | $ 74,600 |
Investments, Amortized Cost and
Investments, Amortized Cost and Estimated Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Amortized Cost | ||
Due in one year or less, amortized cost | $ 133,700 | |
Due after one year through five years, amortized cost | 843,300 | |
Due after five years through ten years, amortized cost | 660,600 | |
Due after ten years, amortized cost | 238,000 | |
Mortgage and asset-backed securities, amortized cost | 366,000 | |
Total, amortized cost | 2,241,600 | |
Estimated Fair Value | ||
Due in one year or less, fair value | 134,700 | |
Due after one year through five years, fair value | 876,200 | |
Due after five years through ten years, fair value | 682,900 | |
Due after ten years, fair value | 251,400 | |
Mortgage and asset-backed securities, fair value | 375,100 | |
Total, fair value | $ 2,320,300 | $ 2,275,700 |
Investments, Continuous Loss Po
Investments, Continuous Loss Position (Details) | 9 Months Ended | |
Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) | |
Estimated Fair Value | ||
Estimated fair value, less than 12 months | $ 349,700,000 | $ 140,600,000 |
Estimated fair value, 12 months or greater | 57,500,000 | 223,100,000 |
Estimated fair value, total | 407,200,000 | 363,700,000 |
Gross Unrealized Losses | ||
Gross unrealized losses, less than 12 months | (23,900,000) | (1,600,000) |
Gross unrealized losses, 12 months or greater | 2,700,000 | 3,900,000 |
Estimated unrealized losses, total | $ (26,600,000) | $ (5,500,000) |
Number of issues in loss position, less than 12 months | 174 | 62 |
Number of Issues in loss position, 12 months or greater | 46 | 89 |
Number of issues loss position, aggregate | 220 | 151 |
Total impairments, value | $ 200,000 | |
Total impairments, number of securities | 5 | |
Debt Securities [Member] | ||
Estimated Fair Value | ||
Estimated fair value, less than 12 months | $ 276,100,000 | $ 130,500,000 |
Estimated fair value, 12 months or greater | 55,400,000 | 223,100,000 |
Estimated fair value, total | 331,500,000 | 353,600,000 |
Gross Unrealized Losses | ||
Gross unrealized losses, less than 12 months | (3,500,000) | (1,000,000) |
Gross unrealized losses, 12 months or greater | 2,100,000 | 3,900,000 |
Estimated unrealized losses, total | $ (5,600,000) | $ (4,900,000) |
Number of issues in loss position, less than 12 months | 105 | 47 |
Number of Issues in loss position, 12 months or greater | 43 | 89 |
Number of issues loss position, aggregate | 148 | 136 |
US States and Political Subdivisions Debt Securities [Member] | ||
Estimated Fair Value | ||
Estimated fair value, less than 12 months | $ 36,500,000 | $ 20,600,000 |
Estimated fair value, total | 36,500,000 | 20,600,000 |
Gross Unrealized Losses | ||
Gross unrealized losses, less than 12 months | (300,000) | (200,000) |
Estimated unrealized losses, total | $ (300,000) | $ (200,000) |
Number of issues in loss position, less than 12 months | 8 | 5 |
Number of issues loss position, aggregate | 8 | 5 |
Corporate Debt Securities [Member] | ||
Estimated Fair Value | ||
Estimated fair value, less than 12 months | $ 184,700,000 | $ 109,900,000 |
Estimated fair value, 12 months or greater | 47,900,000 | 129,400,000 |
Estimated fair value, total | 232,600,000 | 239,300,000 |
Gross Unrealized Losses | ||
Gross unrealized losses, less than 12 months | (2,700,000) | (800,000) |
Gross unrealized losses, 12 months or greater | 2,000,000 | 2,400,000 |
Estimated unrealized losses, total | $ (4,700,000) | $ (3,200,000) |
Number of issues in loss position, less than 12 months | 73 | 42 |
Number of Issues in loss position, 12 months or greater | 17 | 39 |
Number of issues loss position, aggregate | 90 | 81 |
Residential Mortgage Backed Securities [Member] | ||
Estimated Fair Value | ||
Estimated fair value, less than 12 months | $ 33,600,000 | $ 0 |
Estimated fair value, 12 months or greater | 7,500,000 | 44,100,000 |
Estimated fair value, total | 41,100,000 | 44,100,000 |
Gross Unrealized Losses | ||
Gross unrealized losses, less than 12 months | (300,000) | 0 |
Gross unrealized losses, 12 months or greater | 100,000 | 800,000 |
Estimated unrealized losses, total | $ (400,000) | $ (800,000) |
Number of issues in loss position, less than 12 months | 17 | 0 |
Number of Issues in loss position, 12 months or greater | 26 | 36 |
Number of issues loss position, aggregate | 43 | 36 |
Commercial Mortgage Backed Securities [Member] | ||
Estimated Fair Value | ||
Estimated fair value, less than 12 months | $ 21,300,000 | $ 0 |
Estimated fair value, 12 months or greater | 0 | 31,300,000 |
Estimated fair value, total | 21,300,000 | 31,300,000 |
Gross Unrealized Losses | ||
Gross unrealized losses, less than 12 months | (200,000) | 0 |
Gross unrealized losses, 12 months or greater | 0 | 600,000 |
Estimated unrealized losses, total | $ (200,000) | $ (600,000) |
Number of issues in loss position, less than 12 months | 7 | 0 |
Number of Issues in loss position, 12 months or greater | 0 | 8 |
Number of issues loss position, aggregate | 7 | 8 |
Asset-backed Securities [Member] | ||
Estimated Fair Value | ||
Estimated fair value, 12 months or greater | $ 0 | $ 18,300,000 |
Estimated fair value, total | 0 | 18,300,000 |
Gross Unrealized Losses | ||
Gross unrealized losses, 12 months or greater | 0 | 100,000 |
Estimated unrealized losses, total | $ 0 | $ (100,000) |
Number of Issues in loss position, 12 months or greater | 0 | 6 |
Number of issues loss position, aggregate | 0 | 0 |
Equity Securities [Member] | ||
Estimated Fair Value | ||
Estimated fair value, less than 12 months | $ 73,600,000 | $ 10,100,000 |
Estimated fair value, 12 months or greater | 2,100,000 | 0 |
Estimated fair value, total | 75,700,000 | 10,100,000 |
Gross Unrealized Losses | ||
Gross unrealized losses, less than 12 months | (20,400,000) | (600,000) |
Gross unrealized losses, 12 months or greater | 600,000 | 0 |
Estimated unrealized losses, total | $ (21,000,000) | $ (600,000) |
Number of issues in loss position, less than 12 months | 69 | 15 |
Number of Issues in loss position, 12 months or greater | 3 | 0 |
Number of issues loss position, aggregate | 72 | 15 |
Investments, Net Realized Gains
Investments, Net Realized Gains (Losses) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net realized gains (losses) | ||||
Net realized gains (losses) on fixed maturity and equity securities | $ 2 | $ 1.8 | $ 5.1 | $ 14.2 |
Change in unrealized gains (losses) | ||||
Change in unrealized gains (losses) on fixed maturity and equity securities | (19) | (10.6) | (45.8) | 17.4 |
Debt Securities [Member] | ||||
Net realized gains (losses) | ||||
Gross gains from sales | 0.2 | 0 | 0.5 | 0.9 |
Gross losses from sales | 0.2 | 0 | 0.4 | 0 |
Net realized gains (losses) on fixed maturity and equity securities | 0 | 0 | 0.1 | 0.9 |
Change in unrealized gains (losses) | ||||
Change in unrealized gains (losses) on fixed maturity and equity securities | 8 | (9.9) | (11) | 21.4 |
Equity Securities [Member] | ||||
Net realized gains (losses) | ||||
Gross gains from sales | 2.2 | 1.9 | 5.6 | 13.4 |
Gross losses from sales | 0.2 | 0.1 | 0.6 | 0.1 |
Net realized gains (losses) on fixed maturity and equity securities | 2 | 1.8 | 5 | 13.3 |
Change in unrealized gains (losses) | ||||
Change in unrealized gains (losses) on fixed maturity and equity securities | $ (27) | $ (0.7) | $ (34.8) | $ (4) |
Net Investment Income (Details)
Net Investment Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment income | $ 19.1 | $ 18.9 | $ 55.7 | $ 56.4 |
Investment expenses | 0.6 | 0.7 | 1.9 | 1.9 |
Net investment income | 18.5 | 18.2 | 53.8 | 54.5 |
Debt Securities [Member] | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment income related to fixed maturity securities and short-term investments and cash equivalents | 17.3 | 17.9 | 51.6 | 53.4 |
Equity Securities [Member] | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment income related to equity securities | 1.7 | 1 | 4 | 3 |
Short-term Investments [Member] | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Investment income related to fixed maturity securities and short-term investments and cash equivalents | $ 0.1 | $ 0 | $ 0.1 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract] | ||
Expense computed at statutory rate | 35.00% | 35.00% |
Dividends received deduction and tax-exempt interest | (7.60%) | (9.40%) |
LPT deferred gain amortization | (4.30%) | (7.70%) |
LPT reserve adjustment | (2.00%) | (8.40%) |
Pre-privatization reserve adjustment, excluding LPT | (4.60%) | (3.50%) |
Other | 0.70% | 0.00% |
Effective tax rate | 17.20% | 6.00% |
Liability for Unpaid Losses a36
Liability for Unpaid Losses and Loss Adjustment Expenses (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Unpaid losses and LAE, gross of reinsurance, at beginning of period | $ 2,369,700 | $ 2,330,500 |
Less reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE | 669,500 | 743,100 |
Net unpaid losses and LAE at beginning of period | 1,700,200 | 1,587,400 |
Losses and LAE, net of reinsurance, incurred during the period related to: | ||
Current period | 339,700 | 379,200 |
Prior periods | 1,300 | 4,000 |
Total net losses and LAE incurred during the period | 341,000 | 383,200 |
Deduct payments for losses and LAE, net of reinsurance, related to: | ||
Current period | 43,900 | 44,500 |
Prior periods | 274,200 | 246,300 |
Total net paid losses and LAE during the period | 318,100 | 290,800 |
Ending unpaid losses and LAE, net of reinsurance | 1,723,100 | 1,679,800 |
Reinsurance recoverable, excluding bad debt allowance, on unpaid losses and LAE | 634,800 | 690,500 |
Unpaid losses and LAE, gross of reinsurance, at end of period | 2,357,900 | 2,370,300 |
LPT Agreement [Abstract] | ||
Impact of the LPT Agreement | $ 17,500 | $ 40,100 |
LPT Agreement LPT Agreement (De
LPT Agreement LPT Agreement (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | ||
Reinsurance Agreement [Line Items] | ||||
Reinsurance quota share, percentage | 100.00% | |||
Liabilities for the incurred but unpaid losses and LAE related to claims prior to July 1, 1995 | $ 1,500,000 | |||
Ceded premiums written | 775,000 | |||
Amortization of deferred gain | 8,500 | $ 9,900 | ||
Deferred reinsurance gain—LPT Agreement | 192,400 | $ 207,000 | ||
Estimated remaining liabilities - LPT Agreement | 504,700 | 534,800 | ||
Paid losses and LAE claims related to LPT | 688,500 | $ 668,400 | ||
Change Due to Estimated Reserves Ceded Under the LPT Agreement [Member] | ||||
Reinsurance Agreement [Line Items] | ||||
Cumulative adjustment to the Deferred Gain | 6,400 | [1] | 22,300 | |
Change to Contingent Profit Commission [Member] | ||||
Reinsurance Agreement [Line Items] | ||||
Cumulative adjustment to the Deferred Gain | 2,600 | [2] | $ 7,900 | |
Indemnification Agreement [Member] | ||||
Reinsurance Agreement [Line Items] | ||||
Coverage provided under LPT Agreement | $ 2,000,000 | |||
[1] | The cumulative adjustment to the Deferred reinsurance gain–LPT Agreement (Deferred Gain) was also recognized in losses and LAE incurred in the Consolidated Statement of Comprehensive Income, so that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement. | |||
[2] | The cumulative adjustment to the Deferred Gain was also recognized in losses and LAE incurred in the Consolidated Statement of Comprehensive Income, so that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement. |
Accumulated Other Comprehensi38
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Net unrealized gain on investments, before taxes | $ 118,700 | $ 164,500 |
Deferred tax expense on net unrealized gains | (41,600) | (57,600) |
Total accumulated other comprehensive income, net | $ 77,100 | $ 106,900 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
May. 31, 2015 | Mar. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock-options exercised | 325,429 | 120,494 | |||||
Officer [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting rights for options awarded | vest 25% on March 15, 2016, and each of the subsequent three anniversaries of that date | ||||||
Performance share awards performance period | two years | ||||||
Performance share awards, minimum payout | 0.00% | ||||||
Performance share awards, maximum payout | 200.00% | ||||||
Stock Option [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based compensation award, shares issued | [1] | 80,800 | |||||
Share-based compensation options, exercise price on grant date | [1] | $ 7.63 | |||||
Share-based compensation award, fair value assumptions, exercise price | [1] | $ 24.20 | |||||
Fair value of awards awarded on grant date | [1] | $ 0.6 | |||||
Stock Option [Member] | Officer [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based compensation arrangement by share-based payment award, expiration period | 7 years | ||||||
Restricted Stock Units (RSUs) [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based compensation award, shares issued | [1] | 19,904 | 89,602 | ||||
Share-based compensation options, exercise price on grant date | $ 24.11 | [1] | $ 24.20 | [2] | |||
Share-based compensation award, fair value assumptions, exercise price | $ 0 | $ 0 | |||||
Fair value of awards awarded on grant date | [1] | $ 0.5 | $ 2.2 | ||||
Restricted Stock Units (RSUs) [Member] | Director [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 1 year | ||||||
Performance Shares [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based compensation award, shares issued | [2] | 110,000 | |||||
Share-based compensation options, exercise price on grant date | [2] | $ 24.20 | |||||
Share-based compensation award, fair value assumptions, exercise price | $ 0 | ||||||
Fair value of awards awarded on grant date | [2] | $ 2.7 | |||||
Performance Shares [Member] | Officer [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 1 year | ||||||
[1] | The stock options and RSUs awarded in March 2015 were awarded to certain officers of the Company and vest 25% on March 15, 2016, and each of the subsequent three anniversaries of that date. The stock options and RSUs are subject to accelerated vesting in certain circumstances, including but not limited to: death, disability, retirement, or in connection with change of control of the Company. The stock options expire seven years from the date of grant.The RSUs awarded in May 2015 were awarded to non-employee Directors of the Company and have a service vesting period of one year from the date of grant.(2) | ||||||
[2] | The PSUs awarded in March 2015 were awarded to certain officers of the Company and have a performance period of two years followed by an additional one year vesting period. The PSU awards are subject to certain performance goals with payouts that range from 0% to 200% of the target awards. The value shown in the table represents the aggregate number of PSUs awarded at the target level. |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share, Basic and Diluted, by Common Class [Line Items] | ||||
Net income available to stockholders - basic and diluted | $ 24,500 | $ 15,200 | $ 67,700 | $ 71,600 |
Weighted average number of shares outstanding - basic | 32,184,143 | 31,591,457 | 32,000,142 | 31,507,097 |
Effect of dilutive securities: | ||||
Dilutive securities | 340,197 | 517,963 | 497,951 | 537,031 |
Weighted average number of shares outstanding - diluted | 32,524,340 | 32,109,420 | 32,498,093 | 32,044,128 |
Antidilutive securities excluded from computation of earnings per share | 80,800 | 271,944 | 26,933 | 141,900 |
Antidilutive securites excluded under the treasury method from computation of earnings per share | 336,006 | 296,867 | 316,273 | 154,044 |
Employee Stock Option [Member] | ||||
Effect of dilutive securities: | ||||
Dilutive securities | 245,708 | 202,010 | 289,348 | 230,961 |
Restricted Stock Units (RSUs) [Member] | ||||
Effect of dilutive securities: | ||||
Dilutive securities | 21,877 | 36,403 | 47,268 | 53,538 |
Performance Shares [Member] | ||||
Effect of dilutive securities: | ||||
Dilutive securities | 72,612 | 279,550 | 161,335 | 252,532 |