Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 06, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Conifer Holdings, Inc. | |
Entity Central Index Key | 1,502,292 | |
Trading Symbol | cnfr | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 8,518,488 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Investment securities: | ||
Fixed maturity securities, at fair value (amortized cost of $121,914 and $113,915, respectively) | $ 121,883 | $ 113,163 |
Equity securities, at fair value (cost of $9,386 and $4,283, respectively) | 10,157 | 4,579 |
Short-term investments, at fair value | 13,815 | 10,788 |
Total investments | 145,855 | 128,530 |
Cash | 30,846 | 12,493 |
Premiums and agents' balances receivable, net | 22,233 | 24,538 |
Receivable from affiliate | 589 | 1,751 |
Reinsurance recoverables on unpaid losses | 13,528 | 6,658 |
Reinsurance recoverables on paid losses | 2,244 | 840 |
Ceded unearned premiums | 1,082 | 4,120 |
Deferred policy acquisition costs | 12,753 | 13,290 |
Other assets | 7,179 | 11,481 |
Total assets | 236,309 | 203,701 |
Liabilities: | ||
Unpaid losses and loss adjustment expenses | 82,756 | 54,651 |
Unearned premiums | 55,669 | 58,126 |
Reinsurance premiums payable | 7,349 | 0 |
Debt | 29,010 | 17,750 |
Accounts payable and other liabilities | 9,031 | 5,380 |
Total liabilities | 183,815 | 135,907 |
Commitments and contingencies | 0 | 0 |
Shareholders' equity: | ||
Common stock, no par value (100,000,000 shares authorized; 8,518,488 and 7,633,070 issued and outstanding, respectively) | 85,979 | 80,342 |
Accumulated deficit | (33,231) | (11,468) |
Accumulated other comprehensive income (loss) | (254) | (1,080) |
Total shareholders' equity | 52,494 | 67,794 |
Total liabilities and shareholders' equity | $ 236,309 | $ 203,701 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Fixed maturity securities, amortized cost | $ 121,914 | $ 113,915 |
Equity securities, amortized cost | $ 9,386 | $ 4,283 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 8,518,488 | 7,633,070 |
Common stock, shares outstanding (in shares) | 8,518,488 | 7,633,070 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Premiums | ||||
Gross earned premiums | $ 28,891 | $ 27,253 | $ 85,493 | $ 76,057 |
Ceded earned premiums | (11,232) | (3,873) | (19,198) | (10,893) |
Net earned premiums | 17,659 | 23,380 | 66,295 | 65,164 |
Net investment income | 768 | 560 | 2,008 | 1,625 |
Net realized investment gains | 39 | 71 | 31 | 604 |
Other gains | 0 | 0 | 750 | 0 |
Other income | 477 | 303 | 1,203 | 829 |
Total revenue | 18,943 | 24,314 | 70,287 | 68,222 |
Expenses | ||||
Losses and loss adjustment expenses, net | 26,468 | 14,582 | 58,875 | 40,822 |
Policy acquisition costs | 6,655 | 6,266 | 19,555 | 18,282 |
Operating expenses | 4,474 | 4,710 | 13,374 | 13,384 |
Interest expense | 303 | 168 | 745 | 468 |
Total expenses | 37,900 | 25,726 | 92,549 | 72,956 |
Income (loss) before equity earnings of affiliates and income taxes | (18,957) | (1,412) | (22,262) | (4,734) |
Equity earnings of affiliates, net of tax | (76) | (47) | 89 | 111 |
Income tax (benefit) expense | (135) | 16 | (410) | (607) |
Net income (loss) | $ (18,898) | $ (1,475) | $ (21,763) | $ (4,016) |
Earnings (loss) per per common share, basic and diluted (in dollars per share) | $ (2.46) | $ (0.19) | $ (2.85) | $ (0.53) |
Weighted average common shares outstanding, basic and diluted (in shares) | 7,675,952 | 7,608,284 | 7,647,520 | 7,613,954 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (18,898) | $ (1,475) | $ (21,763) | $ (4,016) |
Unrealized investment gains (losses): | ||||
Unrealized investment gains (losses) during the period | 377 | (109) | 1,281 | 1,629 |
Income tax (benefit) expense | 117 | (23) | 398 | 564 |
Unrealized investment gains (losses), net of tax | 260 | (86) | 883 | 1,065 |
Less: reclassification adjustments to: | ||||
Net realized investment gains (losses) included in net income (loss) | 7 | (43) | 57 | (301) |
Income tax benefit | 0 | (17) | 0 | (104) |
Total reclassifications included in net income (loss), net of tax | 7 | (26) | 57 | (197) |
Other comprehensive income (loss) | 253 | (60) | 826 | 1,262 |
Total comprehensive income (loss) | $ (18,645) | $ (1,535) | $ (20,937) | $ (2,754) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | No Par, Common Stock | Accumulated deficit | Accumulated Other Comprehensive Income (Loss) |
Balance at beginning of period (in shares) at Dec. 31, 2015 | 7,644,492 | |||
Balance at beginning of period at Dec. 31, 2015 | $ 77,262 | $ 80,111 | $ (3,031) | $ 182 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (4,016) | (4,016) | ||
Repurchase of common stock (in shares) | (88,650) | |||
Repurchase of common stock | (625) | $ (625) | ||
Restricted stock unit expense (in shares) | 75,388 | |||
Restricted stock unit expense | 621 | $ 621 | ||
Other comprehensive loss | 1,262 | 1,262 | ||
Balance at end of period (in shares) at Sep. 30, 2016 | 7,631,230 | |||
Balance at end of period at Sep. 30, 2016 | 74,504 | $ 80,107 | (7,047) | 1,444 |
Balance at beginning of period at Jun. 30, 2016 | 1,504 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (1,475) | |||
Other comprehensive loss | (60) | |||
Balance at end of period (in shares) at Sep. 30, 2016 | 7,631,230 | |||
Balance at end of period at Sep. 30, 2016 | 74,504 | $ 80,107 | (7,047) | 1,444 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (4,421) | (4,421) | ||
Restricted stock unit expense (in shares) | 1,840 | |||
Restricted stock unit expense | 235 | $ 235 | ||
Other comprehensive loss | (2,524) | (2,524) | ||
Balance at end of period (in shares) at Dec. 31, 2016 | 7,633,070 | |||
Balance at end of period at Dec. 31, 2016 | 67,794 | $ 80,342 | (11,468) | (1,080) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (21,763) | (21,763) | ||
Restricted stock unit expense (in shares) | 85,418 | |||
Restricted stock unit expense | 650 | $ 650 | ||
Other comprehensive loss | 826 | 826 | ||
Issuance of common stock private placement (in shares) | 800,000 | |||
Issuance of common stock private placement | 5,000 | $ 5,000 | ||
Private placement expenses | (13) | $ (13) | ||
Balance at end of period (in shares) at Sep. 30, 2017 | 8,518,488 | |||
Balance at end of period at Sep. 30, 2017 | 52,494 | $ 85,979 | (33,231) | (254) |
Balance at beginning of period at Jun. 30, 2017 | (507) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (18,898) | |||
Other comprehensive loss | 253 | |||
Balance at end of period (in shares) at Sep. 30, 2017 | 8,518,488 | |||
Balance at end of period at Sep. 30, 2017 | $ 52,494 | $ 85,979 | $ (33,231) | $ (254) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows From Operating Activities | ||
Net income (loss) | $ (21,763) | $ (4,016) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization of property and equipment, and intangibles | 296 | 298 |
Amortization of bond premium and discount, net | 395 | 432 |
Net realized gains on investments | (31) | (604) |
Incentive awards expenses - vesting of restricted stock units | 650 | 621 |
Equity earnings of affiliate | (89) | (111) |
(Increase) decrease in: | ||
Premiums and agents' balances receivable | 3,467 | (1,323) |
Reinsurance recoverables | (8,274) | (2,909) |
Ceded unearned premiums | 3,038 | (1,368) |
Deferred policy acquisition costs | 537 | (1,101) |
Other assets | 4,025 | (1,490) |
Increase (decrease) in: | ||
Unpaid losses and loss adjustment expenses | 28,105 | 10,572 |
Unearned premiums | (2,457) | 7,559 |
Accounts payable and other liabilities | 9,607 | (346) |
Net cash provided by operating activities | 17,506 | 6,214 |
Purchase of investments: | ||
Fixed maturity securities | (26,448) | (43,284) |
Equity securities | (4,847) | (1,099) |
Short-term investments | (127,947) | (85,806) |
Proceeds from maturities and redemptions of investments: | ||
Fixed maturity securities | 6,350 | 12,315 |
Other redemptions | 11,778 | 0 |
Proceeds from sales of investments: | ||
Fixed maturity securities | 966 | 27,426 |
Equity securities | 453 | 1,200 |
Short-term investments | 124,926 | 78,144 |
Purchases of property and equipment | (6) | (148) |
Net cash used in investing activities | (14,775) | (11,252) |
Cash Flows From Financing Activities | ||
Proceeds received from issuance of shares of common stock | 4,375 | 0 |
Repurchase of common stock | 0 | (625) |
Borrowings under debt arrangements | 32,000 | 3,000 |
Repayment of borrowings under debt arrangements | (19,750) | (1,500) |
Payment of equity issuance costs | (13) | 0 |
Payment of debt issuance costs | (990) | 0 |
Net cash provided by financing activities | 15,622 | 875 |
Net increase (decrease) in cash | 18,353 | (4,163) |
Cash at beginning of period | 12,493 | 12,703 |
Cash at end of period | 30,846 | 8,540 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 860 | 343 |
Net income taxes paid | 0 | 47 |
Payable for securities - non cash item | $ 1,500 | $ 1,464 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements include accounts, after elimination of intercompany accounts and transactions, of Conifer Holdings, Inc. (the “Company” or “Conifer”), its wholly owned subsidiaries, Conifer Insurance Company ("CIC"), White Pine Insurance Company ("WPIC"), Red Cedar Insurance Company ("RCIC"), and Sycamore Insurance Agency, Inc ("SIA"). CIC, WPIC, and RCIC are collectively referred to as the "Insurance Company Subsidiaries." On a stand-alone basis, Conifer Holdings, Inc. is referred to as the "Parent Company." On December 30, 2016, the Company's wholly owned subsidiary, American Colonial Insurance Company ("ACIC") was merged into WPIC, with WPIC as the surviving entity. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company has applied the rules and regulations of the United States Securities and Exchange Commission (“SEC”) regarding interim financial reporting and therefore the consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments, consisting of items of a normal recurring nature, necessary for a fair presentation of the consolidated interim financial statements, have been included. The results of operations for the nine months ended September 30, 2017 , are not necessarily indicative of the results expected for the year ended December 31, 2017 . These consolidated financial statements and the notes thereto should be read in conjunction with the Company's audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2016 , as filed with the SEC on March 15, 2017. Business The Company is engaged in the sale of property and casualty insurance products and has organized its business model around two classes of insurance businesses: commercial and personal lines. The Company underwrites a variety of specialty insurance products, including property, general liability, liquor liability, automobile, homeowners and dwelling policies. The Company markets and sells its insurance products through a network of independent agents and managing general agents. Policies are written in all 50 states. The Company’s corporate headquarters is located in Birmingham, Michigan with additional office facilities in Florida, Pennsylvania and Tennessee. The Company also generates other revenues through investment income and other income which mainly consists of installment fees and policy issuance fees generally related to the policies we write. We also generate equity earnings from SIA's 50% owned agency (the "Affiliate"). The Affiliate places small commercial risks mainly for alarm and security guard markets. Use of 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 assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While management believes the amounts included in the consolidated financial statements reflect management's best estimates and assumptions, actual results may differ from these estimates. Recently Issued Accounting Guidance In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities . The ASU significantly changes the income statement impact of equity investments and the recognition of changes in fair value of financial liabilities attributable to an entity's own credit risk when the fair value option is elected. The ASU requires equity instruments that are not accounted for under the equity method to be measured at fair value and to recognize any changes in fair value in net income rather than other comprehensive income. ASU No. 2016-01 becomes effective for the Company in 2018 and will be applied using a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The provisions related to equity investments without a readily determinable fair value will be applied prospectively to equity investments as of the adoption date. Adoption of this ASU is not expected to have a material impact on the Company's financial position, cash flows, or total comprehensive income, but may have a material impact on the Company's results of operations as changes in fair value of equity instruments will be presented in net income rather than other comprehensive income. For the nine months ended September 30, 2017 , other comprehensive income includes $476,000 of net unrealized gains on equity securities, net of taxes. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . The ASU requires lessees to record most leases on their balance sheets as a lease liability with a corresponding right-of-use asset, but continue to recognize the related leasing expense within net income. ASU No. 2016-02 becomes effective for the Company in 2019 and will be applied using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company's future minimum lease payments, which represent minimum annual rental commitments excluding taxes, insurance and other operating costs for noncancelable operating leases, and will be subject to this new guidance, totaled $5.2 million at December 31, 2016. The calculation of the lease liability and right-of-use asset requires further analysis of the underlying leases to determine which portions of the underlying lease payments are required to be included in the calculation, however, the Company does not believe that this standard will have a material impact on the financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), which amends the current methodology and timing for recognizing credit losses, except for debt securities measured at fair value. This amendment will replace the current GAAP "incurred loss" methodology for credit losses with a methodology based on expected credit losses. The new guidance will also require expanded consideration of a broader range of reasonable and increased supportable information for the credit loss estimates. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018. The Company does not believe this standard will have a material impact on the financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) , which clarifies how certain cash receipts and cash payments should be presented and classified in the statement of cash flow under Topic 230, Statement of Cash Flows . This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU becomes effective for the Company beginning in 2018. Early adoption is permitted. The Company does not believe that this standard will have a material impact to the statement of cash flows. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments The cost or amortized cost, gross unrealized gain or loss, and estimated fair value of the investments in securities classified as available for sale at September 30, 2017 and December 31, 2016 , were as follows (dollars in thousands): September 30, 2017 Cost or Amortized Cost Gross Unrealized Estimated Fair Value Gains Losses Fixed Maturity Securities: U.S. Government obligations $ 9,252 $ 26 $ (43 ) $ 9,235 State and local government 16,009 246 (53 ) 16,202 Corporate debt 40,219 279 (162 ) 40,336 Commercial mortgage-backed and other asset-backed 56,434 156 (480 ) 56,110 Total fixed maturity securities available for sale 121,914 707 (738 ) 121,883 Equity Securities 9,386 923 (152 ) 10,157 Total securities available for sale $ 131,300 $ 1,630 $ (890 ) $ 132,040 December 31, 2016 Cost or Amortized Cost Gross Unrealized Estimated Fair Value Gains Losses Fixed Maturity Securities: U.S. Government obligations $ 5,908 $ 31 $ (36 ) $ 5,903 State and local government 13,618 106 (205 ) 13,519 Corporate debt 34,105 205 (254 ) 34,056 Commercial mortgage-backed and other asset-backed 60,284 132 (731 ) 59,685 Total fixed maturity securities available for sale 113,915 474 (1,226 ) 113,163 Equity Securities 4,283 366 (70 ) 4,579 Total securities available for sale $ 118,198 $ 840 $ (1,296 ) $ 117,742 The following table summarizes the aggregate fair value and gross unrealized losses, by security type, of the available-for-sale securities in unrealized loss positions. The table segregates the holdings based on the length of time that individual securities have been in a continuous unrealized loss position, as follows (dollars in thousands): September 30, 2017 Less than 12 months Greater than 12 months Total No. of Issues Fair Value of Investments with Unrealized Losses Gross Un realized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Un realized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Un realized Losses Fixed Maturity Securities: U.S. Government obligations 10 $ 6,177 $ (37 ) 4 $ 914 $ (6 ) 14 $ 7,091 $ (43 ) State and local government 23 6,108 (35 ) 3 506 (18 ) 26 6,614 (53 ) Corporate debt 13 7,568 (143 ) 5 2,037 (19 ) 18 9,605 (162 ) Commercial mortgage and asset-backed 42 31,653 (424 ) 6 1,656 (56 ) 48 33,309 (480 ) Total fixed maturity securities available for sale 88 51,506 (639 ) 18 5,113 (99 ) 106 56,619 (738 ) Equity Securities: Common stocks 19 1,087 (141 ) 1 33 (11 ) 20 1,120 (152 ) Total equity securities available for sale 19 1,087 (141 ) 1 33 (11 ) 20 1,120 (152 ) Total securities 107 $ 52,593 $ (780 ) 19 $ 5,146 $ (110 ) 126 $ 57,739 $ (890 ) December 31, 2016 Less than 12 months Greater than 12 months Total No. of Issues Fair Value of Investments with Unrealized Losses Gross Un realized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Un realized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Un realized Losses Fixed Maturity Securities: U.S. Government obligations 15 $ 4,539 $ (36 ) — $ — $ — 15 $ 4,539 $ (36 ) State and local government 29 8,217 (202 ) 1 104 (3 ) 30 8,321 (205 ) Corporate debt 22 9,031 (239 ) 7 3,369 (15 ) 29 12,400 (254 ) Commercial mortgage and asset-backed 59 38,048 (722 ) 5 802 (9 ) 64 38,850 (731 ) Total fixed maturity securities available for sale 125 59,835 (1,199 ) 13 4,275 (27 ) 138 64,110 (1,226 ) Equity Securities: Common stock 76 2,472 (61 ) 2 66 (9 ) 78 2,538 (70 ) Total equity securities available for sale 76 2,472 (61 ) 2 66 (9 ) 78 2,538 (70 ) Total securities 201 $ 62,307 $ (1,260 ) 15 $ 4,341 $ (36 ) 216 $ 66,648 $ (1,296 ) The Company analyzed its investment portfolio in accordance with its other-than-temporary impairment ("OTTI") review procedures and determined the Company did not need to record a credit-related OTTI loss in net income, nor recognize a non-credit related OTTI loss in other comprehensive income for the nine months ended September 30, 2017 and 2016 . The Company’s sources of net investment income are as follows (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Fixed maturity securities $ 733 $ 616 $ 2,030 $ 1,772 Equity securities 44 23 94 75 Cash and short-term investments 64 7 91 13 Total investment income 841 646 2,215 1,860 Investment expenses (73 ) (86 ) (207 ) (235 ) Net investment income $ 768 $ 560 $ 2,008 $ 1,625 The following table summarizes the gross realized gains and losses from sales or maturities of available-for-sale fixed maturity and equity securities (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Fixed maturity securities: Gross realized gains $ 29 $ 7 $ 29 $ 524 Gross realized losses (1 ) — (8 ) (22 ) Total fixed maturity securities 28 7 21 502 Equity securities: Gross realized gains 11 79 40 230 Gross realized losses — (15 ) (30 ) (128 ) Total equity securities 11 64 10 102 Total realized gains (losses) $ 39 $ 71 $ 31 $ 604 Proceeds from the sales of debt and equity securities available for sale, maturities and other redemptions (primarily the return of capital) were $19.5 million and $40.9 million for the nine months ended September 30, 2017 and 2016 , respectively. The table below summarizes the amortized cost and fair value of available-for-sale fixed maturity securities by contractual maturity at September 30, 2017 . Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties (dollars in thousands): Amortized Cost Estimated Fair Value Due in one year or less $ 11,122 $ 11,136 Due after one year through five years 34,171 34,327 Due after five years through ten years 11,255 11,392 Due after ten years 8,932 8,918 Securities with contractual maturities 65,480 65,773 Commercial mortgage and asset backed 56,434 56,110 Total Fixed maturity securities $ 121,914 $ 121,883 At September 30, 2017 and December 31, 2016 , the Insurance Company Subsidiaries had an aggregate of $8.2 million and $9.6 million respectively, on deposit in trust accounts to meet the deposit requirements of various state insurance departments. At September 30, 2017 and December 31, 2016 , the Company had $12.8 million and $10.3 million held in trust accounts to meet collateral requirements with other third-party insurers, relating to various fronting arrangements. There are withdrawal and other restrictions on these deposits, including the type of investments that may be held, however, the Company may generally invest in high-grade bonds and short-term investments and earn interest on the funds. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company’s financial instruments include assets and liabilities carried at fair value, as well as assets and liabilities carried at cost or amortized cost but disclosed at fair value in these consolidated financial statements. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in the principally most advantageous market for the asset or liability in an orderly transaction between market participants. In determining fair value, the Company applies the market approach, which uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities. The inputs to valuation techniques used to measure fair value are prioritized into a three-level hierarchy. The hierarchy gives the highest priority to quoted prices from sources independent of the reporting entity (“observable inputs”) and the lowest priority to prices determined by the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (“unobservable inputs”). The fair value hierarchy is as follows: Level 1 —Valuations that are based on quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 —Valuations that are based on observable inputs (other than Level 1 prices) such as quoted prices for similar assets or liabilities at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 —Unobservable inputs that are supported by little or no market activity. The unobservable inputs represent the Company’s best assumption of how market participants would price the assets or liabilities. The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis, classified by the valuation hierarchy as of September 30, 2017 and December 31, 2016 (dollars in thousands): September 30, 2017 Fair Value Measurements Using Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Fixed Maturity Securities: U.S. Government obligations $ 9,235 $ — $ 9,235 $ — State and local government 16,202 — 16,202 — Corporate debt 40,336 — 40,336 — Commercial mortgage-backed and other asset-backed 56,110 — 56,110 — Total fixed maturity securities 121,883 — 121,883 — Equity Securities 10,157 5,055 5,102 — Short-term investments 13,815 13,815 — — Total assets measured at fair value $ 145,855 $ 18,870 $ 126,985 $ — Liabilities: Debt $ 29,010 $ — $ 29,010 $ — Total Liabilities measured at fair value $ 29,010 $ — $ 29,010 $ — December 31, 2016 Fair Value Measurements Using Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Fixed Maturity Securities: U.S. Government obligations $ 5,903 $ — $ 5,903 $ — State and local government 13,519 — 13,519 — Corporate debt 34,056 — 34,056 — Commercial mortgage-backed and other asset-backed 59,685 — 59,685 — Total fixed maturity securities 113,163 — 113,163 — Equity Securities 4,579 4,469 110 — Short-term investments 10,788 10,788 — — Total assets measured at fair value $ 128,530 $ 15,257 $ 113,273 $ — Liabilities: Debt $ 17,750 $ — $ 17,750 $ — Total Liabilities measured at fair value $ 17,750 $ — $ 17,750 $ — Level 1 investments consist of equity securities traded in an active exchange market. The Company uses unadjusted quoted prices for identical instruments to measure fair value. Level 1 also includes money market funds and other interest-bearing deposits at banks, which are reported as short-term investments. The fair value measurements that were based on Level 1 inputs comprise 12.9% of the fair value of the total investment portfolio as of September 30, 2017 . Level 2 investments include fixed maturity securities, which consist of U.S. government agency securities, state and local municipal bonds (including those held as restricted securities), corporate debt securities, mortgage-backed and asset-backed securities. The Company obtains pricing for each security from independent pricing services, investment managers or consultants to assist in determining fair value for its Level 2 investments. The fair value of securities included in the Level 2 category based on the market values obtained from a third party pricing service were evaluated using pricing models that vary by asset class and incorporate available trade, bid and other observable market information. The third party pricing service monitors market indicators, as well as industry and economic events. The fair value measurements that were based on Level 2 inputs comprise 87.1% of the fair value of the total investment portfolio as of September 30, 2017 . To validate that these quoted prices are reasonable estimates of fair value, the Company performs various quantitative and qualitative procedures, such as (i) evaluation of the underlying methodologies, (ii) analysis of recent sales activity, (iii) analytical review of our fair values against current market prices and (iv) comparison of the pricing services’ fair value to other pricing services’ fair value for the same investment. No markets for the investments were determined to be inactive for the periods presented. Based on these procedures, the Company did not adjust the prices or quotes provided from independent pricing services, investment managers or consultants. The Level 2 financial instruments also include our debt. At September 30, 2017 the fair value of borrowings, consisting of fifteen year subordinated notes, approximate its carrying amount. At December 31, 2016 , the fair value of borrowings under the debt, consisting of the revolving credit facility and term loans, approximates its carrying amount because interest is based on a short-term, variable, market-based rate. The Company’s policy on recognizing transfers between hierarchy levels is applied at the end of each reporting period. There were no transfers between Levels 1, 2 and 3 for the nine months ended September 30, 2017 and 2016 , respectively. |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs | 9 Months Ended |
Sep. 30, 2017 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs The Company defers costs incurred which are incremental and directly related to the successful acquisition of new or renewal insurance business, net of corresponding amounts of ceded reinsurance commissions. Net deferred policy acquisition costs are amortized and charged to expense in proportion to premium earned over the estimated policy term. The Company anticipates that its deferred policy acquisition costs will be fully recoverable and there were no premium deficiencies for the nine months ended September 30, 2017 and 2016 . The activity in deferred policy acquisition costs, net of reinsurance transactions, is as follows (dollars in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Balance at beginning of period $ 12,649 $ 13,182 $ 13,290 $ 12,102 Deferred policy acquisition costs 6,759 6,287 19,018 19,383 Amortization of policy acquisition costs (6,655 ) (6,266 ) (19,555 ) (18,282 ) Net change 104 21 (537 ) 1,101 Balance at end of period $ 12,753 $ 13,203 $ 12,753 $ 13,203 |
Unpaid Losses and Loss Adjustme
Unpaid Losses and Loss Adjustment Expenses | 9 Months Ended |
Sep. 30, 2017 | |
Insurance Loss Reserves [Abstract] | |
Unpaid Losses and Loss Adjustment Expenses | Unpaid Losses and Loss Adjustment Expenses The Company establishes reserves for unpaid losses and loss adjustment expenses ("LAE") which represent the estimated ultimate cost of all losses incurred that were both reported and unreported (i.e., incurred but not yet reported losses; or “IBNR”) and LAE incurred that remain unpaid at the balance sheet date. The Company’s reserving process takes into account known facts and interpretations of circumstances and factors including the Company’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix and contractual terms, changes in law and regulation, judicial decisions, and economic conditions. In the normal course of business, the Company may also supplement its claims processes by utilizing third party adjusters, appraisers, engineers, inspectors, and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process. Reserves are estimates of unpaid portions of losses that have occurred, including IBNR losses; therefore the establishment of appropriate reserves is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates. The highest degree of uncertainty is associated with reserves for losses incurred in the current reporting period as it contains the greatest proportion of losses that have not been reported or settled. The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in reserve estimates, which may be material, are reported in the results of operations in the period such changes are determined to be needed and recorded. Management believes that the reserve for losses and LAE, net of reinsurance recoverables, is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the consolidated financial statements based on available facts and in accordance with applicable laws and regulations. The table below provides the changes in the reserves for losses and LAE, net of reinsurance recoverables, for the periods indicated as follows (dollars in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Gross reserves - beginning of period $ 66,917 $ 41,832 $ 54,651 $ 35,422 Less: reinsurance recoverables on unpaid losses 10,552 5,890 6,658 5,405 Net reserves - beginning of period 56,365 35,942 47,993 30,017 Add: incurred losses and LAE, net of reinsurance: Current period 24,398 11,989 49,449 35,135 Prior period 2,070 2,593 9,426 5,687 Total net incurred losses and LAE 26,468 14,582 58,875 40,822 Deduct: loss and LAE payments, net of reinsurance: Current period 7,194 6,938 14,410 14,730 Prior period 6,411 3,926 23,230 16,449 Total net loss and LAE payments 13,605 10,864 37,640 31,179 Net reserves - end of period 69,228 39,660 69,228 39,660 Plus: reinsurance recoverables on unpaid losses 13,528 6,334 13,528 6,334 Gross reserves - end of period $ 82,756 $ 45,994 $ 82,756 $ 45,994 On September 28, 2017, the Company entered into an adverse development cover reinsurance agreement (the "ADC") to cover loss development of up to $17.5 million in excess of stated reserves as of June 30, 2017. The agreement provides up to $17.5 million of reinsurance for adverse net loss reserve development for accident years 2005 through 2016. The agreement attaches when net losses exceed $1.4 million of the $36.6 million carried reserves at June 30, 2017, and extends to $19.5 million in coverage up to $57.5 million (inclusive of a 10% co-participation). The Company’s incurred losses during the three and nine months ended September 30, 2017 , included prior-year adverse reserve development of $2.1 million and $9.4 million , respectively. The $2.1 million of net adverse development was comprised of $865,000 from the commercial liability line of business, $697,000 from the Florida homeowners line, $604,000 from the commercial auto line of business, $350,000 from the commercial property line, offset by $446,000 of favorable development from other lines. For the nine months ended September 30, 2017 , there was adverse development of $4.2 million from the commercial liability line of business, $2.4 million from the Florida homeowners line, $2.2 million from the commercial property line, $932,000 from the commercial auto line of business, offset by $277,000 of favorable development in other lines. Incurred losses during the three months ended September 30, 2017 also included $5.0 million in net catastrophe losses in the current accident year related to Hurricane Harvey and Hurricane Irma in Texas and Florida. The Company’s incurred losses during the three and nine months ended September 30, 2016 included prior-year adverse reserve development of $2.6 million and $5.7 million , respectively. In the third quarter of 2016, there was $759,000 and $584,000 of adverse development in the Florida homeowners and commercial automobile lines, respectively. For the nine months ended September 30, 2016, there was adverse development of $2.2 million from the Florida homeowners line and $2.1 million from the commercial automobile line. The balance of the adverse development stemmed from the general liability products, mostly related to the hospitality lines. On a year-to-date basis, however, the reserve development on general liability products was slightly favorable. |
Reinsurance
Reinsurance | 9 Months Ended |
Sep. 30, 2017 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Reinsurance In the normal course of business, the Company seeks to minimize the loss that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk in various areas of exposure with reinsurers. The Company participates in reinsurance agreements in order to limit its loss exposure including protecting against catastrophe losses. The Company primarily ceded all specific commercial risks in excess of $500 thousand in both 2017 and 2016 . Reinsurance does not discharge the direct insurer from liability to its policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors the concentration of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. To date, the Company has not experienced any significant difficulties in collecting reinsurance recoverables. The Company assumes written premiums under a few fronting arrangements, most of which are net of other reinsurance arrangements. The fronting arrangements are with unaffiliated insurers who write on behalf of the Company in markets that require a higher A.M. Best rating than the Company’s current rating, where the policies are written in a state where the Company is not licensed or for other strategic reasons. The consideration for the ADC entered into in the third quarter was a payment of $7.2 million , which resulted in a one-time charge to ceded premiums fully earned in the third quarter. There is a 35% contingent recovery depending on the performance of the reserves over time. No recovery is currently reflected in the financial statements. The following table presents the effects of such reinsurance and assumption transactions on premiums and losses and LAE (dollars in thousands). The 2017 ceded written and earned premium amounts include $600,000 of reinsurance reinstatement costs relating to Hurricane Irma. Three Months Ended Nine Months Ended 2017 2016 2017 2016 Written premiums: Direct $ 20,112 $ 22,340 $ 61,731 $ 66,473 Assumed 9,469 6,157 21,305 17,143 Ceded (11,186 ) (3,863 ) (19,235 ) (10,755 ) Net written premiums $ 18,395 $ 24,634 $ 63,801 $ 72,861 Earned premiums: Direct $ 21,797 $ 23,057 $ 65,817 $ 67,871 Assumed 7,094 4,196 19,676 8,186 Ceded (11,232 ) (3,873 ) (19,198 ) (10,893 ) Net earned premiums $ 17,659 $ 23,380 $ 66,295 $ 65,164 Losses and LAE: Direct $ 27,268 $ 13,616 $ 59,496 $ 41,460 Assumed 5,313 1,750 14,017 4,106 Ceded (6,113 ) (784 ) (14,638 ) (4,744 ) Net Losses and LAE $ 26,468 $ 14,582 $ 58,875 $ 40,822 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt On September 29, 2017, the Company executed $30.0 million in private placement subordinated notes (the "Notes"). The Notes have a maturity date of September 29, 2032, bear interest, payable quarterly at a fixed annual rate of 8.0% , and allow for up to four quarterly interest deferrals. On the fifth and tenth anniversary of the notes, the interest rate resets to 1,250 basis points and 1,500 basis points, respectively, above the 5 -year mid-swap rate. The Notes include an issuer call option at par from July 31, 2018, through October 31, 2018, and at 105% of par any time after September 29, 2020. The carrying value of the Notes is offset by $990,000 of debt issuance costs that will be amortized through interest expense over the life of the loan. The Notes replaced the Company's senior debt facility ("Credit Facility"), which was terminated upon execution of the Notes. The Credit Facility was comprised of three notes: a $17.5 million revolving line of credit ("Revolver") which commenced in October 2013; a $5.0 million five -year term note ("Term Note") which commenced in October 2013; and a $7.5 million five -year term note which commenced in September 2014 ("2014 Term Note"). A summary of the outstanding debt is as follows (dollars in thousands): September 30, 2017 December 31, 2016 Subordinated Debt $ 29,010 $ — Revolver — 10,500 Term Note — 1,750 2014 Term Note — 5,500 Total $ 29,010 $ 17,750 The proceeds from the Notes were utilized to repay the outstanding balances on the Credit Facility, consisting of the $11.0 million Revolver and $5.4 million term notes. The Notes contain various restrictive covenants that relate to the Company’s tangible net worth, fixed-charge coverage ratios, dividend paying capacity, reinsurance retentions, and risk-based capital ratios. At September 30, 2017 , the Company was in compliance with all of its subordinated debt financial covenants. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity In September 2017, the Company issued $5.0 million of common equity through a private placement for 800,000 shares priced at $6.25 . The participants in the private placement consisted mainly of members of the Company’s management team and insiders, including Chairman and CEO James Petcoff. The Company will use the proceeds to strengthen its balance sheet through contributions to the subsidiaries to support their future growth, as well as cover the cost of the ADC and reserve strengthening. At September 30, 2017, $625,000 of the total issuance was receivable; those funds were fully collected within ten days of period end. On February 25, 2016, the Company's Board of Directors authorized a stock repurchase program, under which the Company may repurchase up to $2.1 million of its outstanding common stock over a one -year period. Under this program, management was authorized to repurchase shares at prevailing market prices through open market purchases, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended. The actual timing, number and value of shares repurchased under the program was determined by management in its discretion and depended on a number of factors, including the market price of the Company’s stock, general market conditions, and other factors. The plan expired on February 25, 2017. For the nine months ended September 30, 2017 , the Company had not repurchased or retired any shares of stock. In 2016, the Company repurchased and retired 88,650 shares of stock valued at approximately $625 thousand . |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) The following table presents changes in accumulated other comprehensive income (loss) for unrealized gains and losses on available-for-sale securities (dollars in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Balance at beginning of period $ (507 ) $ 1,504 $ (1,080 ) $ 182 Other comprehensive income (loss) before reclassifications 260 (86 ) 883 1,065 Less: amounts reclassified from accumulated other comprehensive income (loss) 7 (26 ) 57 (197 ) Net current period other comprehensive income (loss) 253 (60 ) 826 1,262 Balance at end of period $ (254 ) $ 1,444 $ (254 ) $ 1,444 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. The following table presents the calculation of basic and diluted earnings (loss) per common share, as follows (dollars in thousands, except per share amounts): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Net income (loss) $ (18,898 ) $ (1,475 ) $ (21,763 ) $ (4,016 ) Weighted average common shares, basic and diluted* 7,675,952 7,608,284 7,647,520 7,613,954 Earnings (loss) per common share, basic and diluted $ (2.46 ) $ (0.19 ) $ (2.85 ) $ (0.53 ) * The 309,000 nonvested shares of the restricted stock units were anti-dilutive as of September 30, 2017 . Therefore, the basic and diluted weighted average common shares are equal for the three and nine months ended September 30, 2017 . |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation | Stock-based Compensation In 2015, the Company issued 390,352 RSUs to executive officers and other employees to be settled in shares of common stock. The total RSUs were valued at $4.1 million on the date of grant. In 2016, the Company issued 111,281 RSUs to executive officers and other employees valued at $909,000 on the date of grant. The following summarizes our restricted stock unit "RSU" activity (units in thousands): Number of Units Weighted Average Grant-Date Fair Value Outstanding at December 31, 2015 390 $ 10.48 Units granted 111 8.17 Units vested (75 ) 10.5 Units forfeited — — Outstanding at September 30, 2016 426 $ 9.88 Units granted — — Units vested (2 ) 9.56 Units forfeited (8 ) 9.95 Outstanding at December 31, 2016 416 $ 9.87 Units granted — — Units vested (93 ) 9.97 Units forfeited (14 ) 9.95 Outstanding at September 30, 2017 309 $ 9.84 The Company recorded $650,000 and $621,000 of compensation expense related to the RSUs for the nine months ended September 30, 2017 and 2016 , respectively. The total compensation cost related to the non-vested portion of the restricted stock units which has not been recognized as of September 30, 2017 , was $3.0 million . |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal proceedings The Company and its subsidiaries are subject at times to various claims, lawsuits and proceedings relating principally to alleged errors or omissions in the placement of insurance, claims administration, and other business transactions arising in the ordinary course of business. Where appropriate, the Company vigorously defends such claims, lawsuits and proceedings. Some of these claims, lawsuits and proceedings seek damages, including consequential, exemplary or punitive damages, in amounts that could, if awarded, be significant. Most of the claims, lawsuits and proceedings arising in the ordinary course of business are related to the insurance policy issued. On the basis of current information, the Company does not believe that there is a reasonable possibility that any material loss exceeding amounts already accrued, if any, will result from any of the claims, lawsuits and proceedings to which the Company is subject, either individually, or in the aggregate. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company is engaged in the sale of property and casualty insurance products and has organized its business model around two classes of insurance businesses: commercial and personal lines. Within these two insurance businesses, the Company offers various insurance products. Such insurance businesses are engaged in underwriting and marketing insurance coverages, and administering claims processing for such policies. The Company defines its operating segments as components of the business where separate financial information is available and used by the chief operating decision maker in deciding how to allocate resources to its segments and in assessing its performance. In assessing performance of its operating segments, the Company’s chief operating decision maker, the Chief Executive Officer, reviews a number of financial measures including gross written premiums, net earned premiums, losses and LAE, net of reinsurance recoveries. However, the primary measure used for making decisions about resources to be allocated to an operating segment and assessing performance is segment underwriting gain or loss which is defined as segment revenues, consisting of net earned premiums and other income, less segment expenses, consisting of losses and LAE, policy acquisition costs and other underwriting and operating expenses of the operating segments. Other underwriting and operating expenses primarily include compensation and related benefits for underwriting personnel, licensing of policy issuance and claims systems, rent and utilities. The Company markets, distributes and sells its insurance products primarily through a network of independent agents. All of the Company’s insurance activities are conducted in the United States with a concentration of activity in Florida, Michigan, Texas and Pennsylvania. For the nine months ended September 30, 2017 and 2016 , gross written premiums attributable to these four states were 60% and 58% of the Company’s total gross written premiums. In addition to the reportable operating segments, the Company maintains a Corporate and Other category to reconcile segment results to the consolidated totals. The Corporate and Other category includes: (i) corporate operating expenses such as salaries and related benefits of the Company’s executive management team and finance and information technology personnel, and other corporate headquarters expenses, (ii) interest expense on the Company’s debt obligations; (iii) depreciation and amortization on property and equipment, and (iv) all investment income activity. All investment income activity is reported within net investment income and net realized investment gains on the consolidated statements of operations. The Company’s assets on the consolidated balance sheet are not allocated to the reportable segments. The following tables present information by reportable operating segment (dollars in thousands): Three Months Ended September 30, 2017 Commercial Lines Personal Lines Corporate & Other Total Gross written premiums $ 23,509 $ 6,072 $ — $ 29,581 Net written premiums $ 16,221 $ 2,174 $ — $ 18,395 Net earned premiums $ 15,658 $ 2,001 $ — $ 17,659 Other income 162 281 34 477 Segment revenue 15,820 2,282 34 18,136 Losses and loss adjustment expenses, net 19,589 6,879 — 26,468 Policy acquisition costs 5,161 1,494 — 6,655 Operating expenses 3,322 808 344 4,474 Segment expenses 28,072 9,181 344 37,597 Segment underwriting gain (loss) $ (12,252 ) $ (6,899 ) $ (310 ) $ (19,461 ) Net investment income 768 768 Net realized investment gains 39 39 Interest expense $ (303 ) $ (303 ) Income (loss) before equity earnings of affiliates and income taxes $ 194 $ (18,957 ) Three Months Ended September 30, 2016 Commercial Lines Personal Lines Corporate & Other Total Gross written premiums $ 20,759 $ 7,738 $ — $ 28,497 Net written premiums $ 18,230 $ 6,404 $ — $ 24,634 Net earned premiums $ 17,878 $ 5,502 $ — $ 23,380 Other income 81 101 121 303 Segment revenue 17,959 5,603 121 23,683 Losses and loss adjustment expenses, net 9,564 5,018 — 14,582 Policy acquisition costs 4,868 1,398 — 6,266 Operating expenses 1,803 779 2,128 4,710 Segment expenses 16,235 7,195 2,128 25,558 Segment underwriting gain (loss) $ 1,724 $ (1,592 ) $ (2,007 ) $ (1,875 ) Net investment income 560 560 Net realized investment gains 71 71 Interest expense (168 ) (168 ) Income (loss) before equity earnings of affiliates and income taxes $ (1,544 ) $ (1,412 ) Nine Months Ended September 30, 2017 Commercial Lines Personal Lines Corporate & Other Total Gross written premiums $ 66,258 $ 16,778 $ — $ 83,036 Net written premiums $ 54,616 $ 9,185 $ — $ 63,801 Net earned premiums $ 55,443 $ 10,852 $ — $ 66,295 Other income 485 601 117 1,203 Segment revenue 55,928 11,453 117 67,498 Losses and loss adjustment expenses, net 43,819 15,056 — 58,875 Policy acquisition costs 15,180 4,375 — 19,555 Operating expenses 8,231 1,967 3,176 13,374 Segment expenses 67,230 21,398 3,176 91,804 Segment underwriting gain (loss) $ (11,302 ) $ (9,945 ) $ (3,059 ) (24,306 ) Net investment income 2,008 2,008 Net realized investment gains 31 31 Other Gains 750 750 Interest Expense $ (745 ) $ (745 ) Income (loss) before equity earnings of affiliates and income taxes $ (1,015 ) $ (22,262 ) Nine Months Ended September 30, 2016 Commercial Lines Personal Lines Corporate & Other Total Gross written premiums $ 62,725 $ 20,891 $ — $ 83,616 Net written premiums $ 55,767 $ 17,094 $ — $ 72,861 Net earned premiums $ 49,641 $ 15,523 $ — $ 65,164 Other income 263 419 147 829 Segment revenue 49,904 15,942 147 65,993 Losses and loss adjustment expenses, net 27,543 13,279 — 40,822 Policy acquisition costs 13,619 4,663 — 18,282 Operating expenses 5,147 2,214 6,023 13,384 Segment expenses 46,309 20,156 6,023 72,488 Segment underwriting gain (loss) $ 3,595 $ (4,214 ) $ (5,876 ) (6,495 ) Net investment income 1,625 1,625 Net realized investment gains 604 604 Interest expense (468 ) (468 ) Income (loss) before equity earnings of affiliates and income taxes $ (4,115 ) $ (4,734 ) |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements include accounts, after elimination of intercompany accounts and transactions, of Conifer Holdings, Inc. (the “Company” or “Conifer”), its wholly owned subsidiaries, Conifer Insurance Company ("CIC"), White Pine Insurance Company ("WPIC"), Red Cedar Insurance Company ("RCIC"), and Sycamore Insurance Agency, Inc ("SIA"). CIC, WPIC, and RCIC are collectively referred to as the "Insurance Company Subsidiaries." On a stand-alone basis, Conifer Holdings, Inc. is referred to as the "Parent Company." On December 30, 2016, the Company's wholly owned subsidiary, American Colonial Insurance Company ("ACIC") was merged into WPIC, with WPIC as the surviving entity. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company has applied the rules and regulations of the United States Securities and Exchange Commission (“SEC”) regarding interim financial reporting and therefore the consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments, consisting of items of a normal recurring nature, necessary for a fair presentation of the consolidated interim financial statements, have been included. The results of operations for the nine months ended September 30, 2017 , are not necessarily indicative of the results expected for the year ended December 31, 2017 . These consolidated financial statements and the notes thereto should be read in conjunction with the Company's audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2016 , as filed with the SEC on March 15, 2017. |
Use of Estimates | Use of 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 assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While management believes the amounts included in the consolidated financial statements reflect management's best estimates and assumptions, actual results may differ from these estimates. |
Recently Issued Accounting Guidance | Recently Issued Accounting Guidance In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities . The ASU significantly changes the income statement impact of equity investments and the recognition of changes in fair value of financial liabilities attributable to an entity's own credit risk when the fair value option is elected. The ASU requires equity instruments that are not accounted for under the equity method to be measured at fair value and to recognize any changes in fair value in net income rather than other comprehensive income. ASU No. 2016-01 becomes effective for the Company in 2018 and will be applied using a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The provisions related to equity investments without a readily determinable fair value will be applied prospectively to equity investments as of the adoption date. Adoption of this ASU is not expected to have a material impact on the Company's financial position, cash flows, or total comprehensive income, but may have a material impact on the Company's results of operations as changes in fair value of equity instruments will be presented in net income rather than other comprehensive income. For the nine months ended September 30, 2017 , other comprehensive income includes $476,000 of net unrealized gains on equity securities, net of taxes. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . The ASU requires lessees to record most leases on their balance sheets as a lease liability with a corresponding right-of-use asset, but continue to recognize the related leasing expense within net income. ASU No. 2016-02 becomes effective for the Company in 2019 and will be applied using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company's future minimum lease payments, which represent minimum annual rental commitments excluding taxes, insurance and other operating costs for noncancelable operating leases, and will be subject to this new guidance, totaled $5.2 million at December 31, 2016. The calculation of the lease liability and right-of-use asset requires further analysis of the underlying leases to determine which portions of the underlying lease payments are required to be included in the calculation, however, the Company does not believe that this standard will have a material impact on the financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), which amends the current methodology and timing for recognizing credit losses, except for debt securities measured at fair value. This amendment will replace the current GAAP "incurred loss" methodology for credit losses with a methodology based on expected credit losses. The new guidance will also require expanded consideration of a broader range of reasonable and increased supportable information for the credit loss estimates. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018. The Company does not believe this standard will have a material impact on the financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) , which clarifies how certain cash receipts and cash payments should be presented and classified in the statement of cash flow under Topic 230, Statement of Cash Flows . This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU becomes effective for the Company beginning in 2018. Early adoption is permitted. The Company does not believe that this standard will have a material impact to the statement of cash flows. |
Fair Value Measurements | Level 1 investments consist of equity securities traded in an active exchange market. The Company uses unadjusted quoted prices for identical instruments to measure fair value. Level 1 also includes money market funds and other interest-bearing deposits at banks, which are reported as short-term investments. The fair value measurements that were based on Level 1 inputs comprise 12.9% of the fair value of the total investment portfolio as of September 30, 2017 . Level 2 investments include fixed maturity securities, which consist of U.S. government agency securities, state and local municipal bonds (including those held as restricted securities), corporate debt securities, mortgage-backed and asset-backed securities. The Company obtains pricing for each security from independent pricing services, investment managers or consultants to assist in determining fair value for its Level 2 investments. The fair value of securities included in the Level 2 category based on the market values obtained from a third party pricing service were evaluated using pricing models that vary by asset class and incorporate available trade, bid and other observable market information. The third party pricing service monitors market indicators, as well as industry and economic events. The fair value measurements that were based on Level 2 inputs comprise 87.1% of the fair value of the total investment portfolio as of September 30, 2017 . To validate that these quoted prices are reasonable estimates of fair value, the Company performs various quantitative and qualitative procedures, such as (i) evaluation of the underlying methodologies, (ii) analysis of recent sales activity, (iii) analytical review of our fair values against current market prices and (iv) comparison of the pricing services’ fair value to other pricing services’ fair value for the same investment. No markets for the investments were determined to be inactive for the periods presented. Based on these procedures, the Company did not adjust the prices or quotes provided from independent pricing services, investment managers or consultants. The Level 2 financial instruments also include our debt. At September 30, 2017 the fair value of borrowings, consisting of fifteen year subordinated notes, approximate its carrying amount. At December 31, 2016 , the fair value of borrowings under the debt, consisting of the revolving credit facility and term loans, approximates its carrying amount because interest is based on a short-term, variable, market-based rate. The Company’s policy on recognizing transfers between hierarchy levels is applied at the end of each reporting period. There were no transfers between Levels 1, 2 and 3 for the nine months ended September 30, 2017 and 2016 , respectively. The Company’s financial instruments include assets and liabilities carried at fair value, as well as assets and liabilities carried at cost or amortized cost but disclosed at fair value in these consolidated financial statements. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in the principally most advantageous market for the asset or liability in an orderly transaction between market participants. In determining fair value, the Company applies the market approach, which uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities. The inputs to valuation techniques used to measure fair value are prioritized into a three-level hierarchy. The hierarchy gives the highest priority to quoted prices from sources independent of the reporting entity (“observable inputs”) and the lowest priority to prices determined by the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (“unobservable inputs”). The fair value hierarchy is as follows: Level 1 —Valuations that are based on quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 —Valuations that are based on observable inputs (other than Level 1 prices) such as quoted prices for similar assets or liabilities at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 —Unobservable inputs that are supported by little or no market activity. The unobservable inputs represent the Company’s best assumption of how market participants would price the assets or liabilities. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Available-for-sale Securities | The cost or amortized cost, gross unrealized gain or loss, and estimated fair value of the investments in securities classified as available for sale at September 30, 2017 and December 31, 2016 , were as follows (dollars in thousands): September 30, 2017 Cost or Amortized Cost Gross Unrealized Estimated Fair Value Gains Losses Fixed Maturity Securities: U.S. Government obligations $ 9,252 $ 26 $ (43 ) $ 9,235 State and local government 16,009 246 (53 ) 16,202 Corporate debt 40,219 279 (162 ) 40,336 Commercial mortgage-backed and other asset-backed 56,434 156 (480 ) 56,110 Total fixed maturity securities available for sale 121,914 707 (738 ) 121,883 Equity Securities 9,386 923 (152 ) 10,157 Total securities available for sale $ 131,300 $ 1,630 $ (890 ) $ 132,040 December 31, 2016 Cost or Amortized Cost Gross Unrealized Estimated Fair Value Gains Losses Fixed Maturity Securities: U.S. Government obligations $ 5,908 $ 31 $ (36 ) $ 5,903 State and local government 13,618 106 (205 ) 13,519 Corporate debt 34,105 205 (254 ) 34,056 Commercial mortgage-backed and other asset-backed 60,284 132 (731 ) 59,685 Total fixed maturity securities available for sale 113,915 474 (1,226 ) 113,163 Equity Securities 4,283 366 (70 ) 4,579 Total securities available for sale $ 118,198 $ 840 $ (1,296 ) $ 117,742 |
Schedule of Unrealized Loss Positions | The following table summarizes the aggregate fair value and gross unrealized losses, by security type, of the available-for-sale securities in unrealized loss positions. The table segregates the holdings based on the length of time that individual securities have been in a continuous unrealized loss position, as follows (dollars in thousands): September 30, 2017 Less than 12 months Greater than 12 months Total No. of Issues Fair Value of Investments with Unrealized Losses Gross Un realized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Un realized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Un realized Losses Fixed Maturity Securities: U.S. Government obligations 10 $ 6,177 $ (37 ) 4 $ 914 $ (6 ) 14 $ 7,091 $ (43 ) State and local government 23 6,108 (35 ) 3 506 (18 ) 26 6,614 (53 ) Corporate debt 13 7,568 (143 ) 5 2,037 (19 ) 18 9,605 (162 ) Commercial mortgage and asset-backed 42 31,653 (424 ) 6 1,656 (56 ) 48 33,309 (480 ) Total fixed maturity securities available for sale 88 51,506 (639 ) 18 5,113 (99 ) 106 56,619 (738 ) Equity Securities: Common stocks 19 1,087 (141 ) 1 33 (11 ) 20 1,120 (152 ) Total equity securities available for sale 19 1,087 (141 ) 1 33 (11 ) 20 1,120 (152 ) Total securities 107 $ 52,593 $ (780 ) 19 $ 5,146 $ (110 ) 126 $ 57,739 $ (890 ) December 31, 2016 Less than 12 months Greater than 12 months Total No. of Issues Fair Value of Investments with Unrealized Losses Gross Un realized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Un realized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Un realized Losses Fixed Maturity Securities: U.S. Government obligations 15 $ 4,539 $ (36 ) — $ — $ — 15 $ 4,539 $ (36 ) State and local government 29 8,217 (202 ) 1 104 (3 ) 30 8,321 (205 ) Corporate debt 22 9,031 (239 ) 7 3,369 (15 ) 29 12,400 (254 ) Commercial mortgage and asset-backed 59 38,048 (722 ) 5 802 (9 ) 64 38,850 (731 ) Total fixed maturity securities available for sale 125 59,835 (1,199 ) 13 4,275 (27 ) 138 64,110 (1,226 ) Equity Securities: Common stock 76 2,472 (61 ) 2 66 (9 ) 78 2,538 (70 ) Total equity securities available for sale 76 2,472 (61 ) 2 66 (9 ) 78 2,538 (70 ) Total securities 201 $ 62,307 $ (1,260 ) 15 $ 4,341 $ (36 ) 216 $ 66,648 $ (1,296 ) |
Schedule of Investment Income | The Company’s sources of net investment income are as follows (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Fixed maturity securities $ 733 $ 616 $ 2,030 $ 1,772 Equity securities 44 23 94 75 Cash and short-term investments 64 7 91 13 Total investment income 841 646 2,215 1,860 Investment expenses (73 ) (86 ) (207 ) (235 ) Net investment income $ 768 $ 560 $ 2,008 $ 1,625 |
Schedule of Gross Realized Gains and Losses on Securities | The following table summarizes the gross realized gains and losses from sales or maturities of available-for-sale fixed maturity and equity securities (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Fixed maturity securities: Gross realized gains $ 29 $ 7 $ 29 $ 524 Gross realized losses (1 ) — (8 ) (22 ) Total fixed maturity securities 28 7 21 502 Equity securities: Gross realized gains 11 79 40 230 Gross realized losses — (15 ) (30 ) (128 ) Total equity securities 11 64 10 102 Total realized gains (losses) $ 39 $ 71 $ 31 $ 604 |
Summary of Amortized Cost and Fair Value of Securities | The table below summarizes the amortized cost and fair value of available-for-sale fixed maturity securities by contractual maturity at September 30, 2017 . Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties (dollars in thousands): Amortized Cost Estimated Fair Value Due in one year or less $ 11,122 $ 11,136 Due after one year through five years 34,171 34,327 Due after five years through ten years 11,255 11,392 Due after ten years 8,932 8,918 Securities with contractual maturities 65,480 65,773 Commercial mortgage and asset backed 56,434 56,110 Total Fixed maturity securities $ 121,914 $ 121,883 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets and Liabilities Measured at Fair Value | The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis, classified by the valuation hierarchy as of September 30, 2017 and December 31, 2016 (dollars in thousands): September 30, 2017 Fair Value Measurements Using Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Fixed Maturity Securities: U.S. Government obligations $ 9,235 $ — $ 9,235 $ — State and local government 16,202 — 16,202 — Corporate debt 40,336 — 40,336 — Commercial mortgage-backed and other asset-backed 56,110 — 56,110 — Total fixed maturity securities 121,883 — 121,883 — Equity Securities 10,157 5,055 5,102 — Short-term investments 13,815 13,815 — — Total assets measured at fair value $ 145,855 $ 18,870 $ 126,985 $ — Liabilities: Debt $ 29,010 $ — $ 29,010 $ — Total Liabilities measured at fair value $ 29,010 $ — $ 29,010 $ — December 31, 2016 Fair Value Measurements Using Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Fixed Maturity Securities: U.S. Government obligations $ 5,903 $ — $ 5,903 $ — State and local government 13,519 — 13,519 — Corporate debt 34,056 — 34,056 — Commercial mortgage-backed and other asset-backed 59,685 — 59,685 — Total fixed maturity securities 113,163 — 113,163 — Equity Securities 4,579 4,469 110 — Short-term investments 10,788 10,788 — — Total assets measured at fair value $ 128,530 $ 15,257 $ 113,273 $ — Liabilities: Debt $ 17,750 $ — $ 17,750 $ — Total Liabilities measured at fair value $ 17,750 $ — $ 17,750 $ — |
Deferred Policy Acquisition C24
Deferred Policy Acquisition Costs (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | |
Summary of Deferred Policy Acquisition Costs | The activity in deferred policy acquisition costs, net of reinsurance transactions, is as follows (dollars in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Balance at beginning of period $ 12,649 $ 13,182 $ 13,290 $ 12,102 Deferred policy acquisition costs 6,759 6,287 19,018 19,383 Amortization of policy acquisition costs (6,655 ) (6,266 ) (19,555 ) (18,282 ) Net change 104 21 (537 ) 1,101 Balance at end of period $ 12,753 $ 13,203 $ 12,753 $ 13,203 |
Unpaid Losses and Loss Adjust25
Unpaid Losses and Loss Adjustment Expenses (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Insurance Loss Reserves [Abstract] | |
Schedule of the Changes in the Reserves for Losses and Loss Adjustment Expense | The table below provides the changes in the reserves for losses and LAE, net of reinsurance recoverables, for the periods indicated as follows (dollars in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Gross reserves - beginning of period $ 66,917 $ 41,832 $ 54,651 $ 35,422 Less: reinsurance recoverables on unpaid losses 10,552 5,890 6,658 5,405 Net reserves - beginning of period 56,365 35,942 47,993 30,017 Add: incurred losses and LAE, net of reinsurance: Current period 24,398 11,989 49,449 35,135 Prior period 2,070 2,593 9,426 5,687 Total net incurred losses and LAE 26,468 14,582 58,875 40,822 Deduct: loss and LAE payments, net of reinsurance: Current period 7,194 6,938 14,410 14,730 Prior period 6,411 3,926 23,230 16,449 Total net loss and LAE payments 13,605 10,864 37,640 31,179 Net reserves - end of period 69,228 39,660 69,228 39,660 Plus: reinsurance recoverables on unpaid losses 13,528 6,334 13,528 6,334 Gross reserves - end of period $ 82,756 $ 45,994 $ 82,756 $ 45,994 |
Reinsurance (Tables)
Reinsurance (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Reinsurance Disclosures [Abstract] | |
Summary of the Effects of Reinsurance | The following table presents the effects of such reinsurance and assumption transactions on premiums and losses and LAE (dollars in thousands). The 2017 ceded written and earned premium amounts include $600,000 of reinsurance reinstatement costs relating to Hurricane Irma. Three Months Ended Nine Months Ended 2017 2016 2017 2016 Written premiums: Direct $ 20,112 $ 22,340 $ 61,731 $ 66,473 Assumed 9,469 6,157 21,305 17,143 Ceded (11,186 ) (3,863 ) (19,235 ) (10,755 ) Net written premiums $ 18,395 $ 24,634 $ 63,801 $ 72,861 Earned premiums: Direct $ 21,797 $ 23,057 $ 65,817 $ 67,871 Assumed 7,094 4,196 19,676 8,186 Ceded (11,232 ) (3,873 ) (19,198 ) (10,893 ) Net earned premiums $ 17,659 $ 23,380 $ 66,295 $ 65,164 Losses and LAE: Direct $ 27,268 $ 13,616 $ 59,496 $ 41,460 Assumed 5,313 1,750 14,017 4,106 Ceded (6,113 ) (784 ) (14,638 ) (4,744 ) Net Losses and LAE $ 26,468 $ 14,582 $ 58,875 $ 40,822 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt | A summary of the outstanding debt is as follows (dollars in thousands): September 30, 2017 December 31, 2016 Subordinated Debt $ 29,010 $ — Revolver — 10,500 Term Note — 1,750 2014 Term Note — 5,500 Total $ 29,010 $ 17,750 |
Other Comprehensive Income (L28
Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table presents changes in accumulated other comprehensive income (loss) for unrealized gains and losses on available-for-sale securities (dollars in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Balance at beginning of period $ (507 ) $ 1,504 $ (1,080 ) $ 182 Other comprehensive income (loss) before reclassifications 260 (86 ) 883 1,065 Less: amounts reclassified from accumulated other comprehensive income (loss) 7 (26 ) 57 (197 ) Net current period other comprehensive income (loss) 253 (60 ) 826 1,262 Balance at end of period $ (254 ) $ 1,444 $ (254 ) $ 1,444 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share | The following table presents the calculation of basic and diluted earnings (loss) per common share, as follows (dollars in thousands, except per share amounts): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Net income (loss) $ (18,898 ) $ (1,475 ) $ (21,763 ) $ (4,016 ) Weighted average common shares, basic and diluted* 7,675,952 7,608,284 7,647,520 7,613,954 Earnings (loss) per common share, basic and diluted $ (2.46 ) $ (0.19 ) $ (2.85 ) $ (0.53 ) * The 309,000 nonvested shares of the restricted stock units were anti-dilutive as of September 30, 2017 . Therefore, the basic and diluted weighted average common shares are equal for the three and nine months ended September 30, 2017 . |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Nonvested Restricted Stock Units Activity | The following summarizes our restricted stock unit "RSU" activity (units in thousands): Number of Units Weighted Average Grant-Date Fair Value Outstanding at December 31, 2015 390 $ 10.48 Units granted 111 8.17 Units vested (75 ) 10.5 Units forfeited — — Outstanding at September 30, 2016 426 $ 9.88 Units granted — — Units vested (2 ) 9.56 Units forfeited (8 ) 9.95 Outstanding at December 31, 2016 416 $ 9.87 Units granted — — Units vested (93 ) 9.97 Units forfeited (14 ) 9.95 Outstanding at September 30, 2017 309 $ 9.84 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | The following tables present information by reportable operating segment (dollars in thousands): Three Months Ended September 30, 2017 Commercial Lines Personal Lines Corporate & Other Total Gross written premiums $ 23,509 $ 6,072 $ — $ 29,581 Net written premiums $ 16,221 $ 2,174 $ — $ 18,395 Net earned premiums $ 15,658 $ 2,001 $ — $ 17,659 Other income 162 281 34 477 Segment revenue 15,820 2,282 34 18,136 Losses and loss adjustment expenses, net 19,589 6,879 — 26,468 Policy acquisition costs 5,161 1,494 — 6,655 Operating expenses 3,322 808 344 4,474 Segment expenses 28,072 9,181 344 37,597 Segment underwriting gain (loss) $ (12,252 ) $ (6,899 ) $ (310 ) $ (19,461 ) Net investment income 768 768 Net realized investment gains 39 39 Interest expense $ (303 ) $ (303 ) Income (loss) before equity earnings of affiliates and income taxes $ 194 $ (18,957 ) Three Months Ended September 30, 2016 Commercial Lines Personal Lines Corporate & Other Total Gross written premiums $ 20,759 $ 7,738 $ — $ 28,497 Net written premiums $ 18,230 $ 6,404 $ — $ 24,634 Net earned premiums $ 17,878 $ 5,502 $ — $ 23,380 Other income 81 101 121 303 Segment revenue 17,959 5,603 121 23,683 Losses and loss adjustment expenses, net 9,564 5,018 — 14,582 Policy acquisition costs 4,868 1,398 — 6,266 Operating expenses 1,803 779 2,128 4,710 Segment expenses 16,235 7,195 2,128 25,558 Segment underwriting gain (loss) $ 1,724 $ (1,592 ) $ (2,007 ) $ (1,875 ) Net investment income 560 560 Net realized investment gains 71 71 Interest expense (168 ) (168 ) Income (loss) before equity earnings of affiliates and income taxes $ (1,544 ) $ (1,412 ) Nine Months Ended September 30, 2017 Commercial Lines Personal Lines Corporate & Other Total Gross written premiums $ 66,258 $ 16,778 $ — $ 83,036 Net written premiums $ 54,616 $ 9,185 $ — $ 63,801 Net earned premiums $ 55,443 $ 10,852 $ — $ 66,295 Other income 485 601 117 1,203 Segment revenue 55,928 11,453 117 67,498 Losses and loss adjustment expenses, net 43,819 15,056 — 58,875 Policy acquisition costs 15,180 4,375 — 19,555 Operating expenses 8,231 1,967 3,176 13,374 Segment expenses 67,230 21,398 3,176 91,804 Segment underwriting gain (loss) $ (11,302 ) $ (9,945 ) $ (3,059 ) (24,306 ) Net investment income 2,008 2,008 Net realized investment gains 31 31 Other Gains 750 750 Interest Expense $ (745 ) $ (745 ) Income (loss) before equity earnings of affiliates and income taxes $ (1,015 ) $ (22,262 ) Nine Months Ended September 30, 2016 Commercial Lines Personal Lines Corporate & Other Total Gross written premiums $ 62,725 $ 20,891 $ — $ 83,616 Net written premiums $ 55,767 $ 17,094 $ — $ 72,861 Net earned premiums $ 49,641 $ 15,523 $ — $ 65,164 Other income 263 419 147 829 Segment revenue 49,904 15,942 147 65,993 Losses and loss adjustment expenses, net 27,543 13,279 — 40,822 Policy acquisition costs 13,619 4,663 — 18,282 Operating expenses 5,147 2,214 6,023 13,384 Segment expenses 46,309 20,156 6,023 72,488 Segment underwriting gain (loss) $ 3,595 $ (4,214 ) $ (5,876 ) (6,495 ) Net investment income 1,625 1,625 Net realized investment gains 604 604 Interest expense (468 ) (468 ) Income (loss) before equity earnings of affiliates and income taxes $ (4,115 ) $ (4,734 ) |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($)state | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)class_businessstate | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Schedule of Available-for-sale Securities [Line Items] | |||||
Unrealized investment gains (losses), net of tax | $ 260 | $ (86) | $ 883 | $ 1,065 | |
Number of business classes | class_business | 2 | ||||
Number of states in which entity operates | state | 50 | 50 | |||
Ownership percentage | 50.00% | 50.00% | |||
Future minimum operating lease obligations | $ 5,200 | ||||
Equity securities | |||||
Schedule of Available-for-sale Securities [Line Items] | |||||
Unrealized investment gains (losses), net of tax | $ 476 |
Investments - Available-for-sal
Investments - Available-for-sale Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Fixed Maturity Securities: | ||
Fixed maturity securities, amortized cost | $ 121,914 | $ 113,915 |
Fixed maturity securities, gross unrealized gain | 707 | 474 |
Fixed maturity securities, gross unrealized loss | (738) | (1,226) |
Fixed maturity securities, estimated fair value | 121,883 | 113,163 |
Equity Securities | ||
Equity securities, amortized cost | 9,386 | 4,283 |
Equity securities, gross unrealized gain | 923 | 366 |
Equity securities, gross unrealized loss | (152) | (70) |
Equity securities, estimated fair value | 10,157 | 4,579 |
Securities, cost or amortized cost | 131,300 | 118,198 |
Securities, gross unrealized gain | 1,630 | 840 |
Securities, gross unrealized loss | (890) | (1,296) |
Securities, estimated fair value | 132,040 | 117,742 |
U.S. Government obligations | ||
Fixed Maturity Securities: | ||
Fixed maturity securities, amortized cost | 9,252 | 5,908 |
Fixed maturity securities, gross unrealized gain | 26 | 31 |
Fixed maturity securities, gross unrealized loss | (43) | (36) |
Fixed maturity securities, estimated fair value | 9,235 | 5,903 |
State and local government | ||
Fixed Maturity Securities: | ||
Fixed maturity securities, amortized cost | 16,009 | 13,618 |
Fixed maturity securities, gross unrealized gain | 246 | 106 |
Fixed maturity securities, gross unrealized loss | (53) | (205) |
Fixed maturity securities, estimated fair value | 16,202 | 13,519 |
Corporate debt | ||
Fixed Maturity Securities: | ||
Fixed maturity securities, amortized cost | 40,219 | 34,105 |
Fixed maturity securities, gross unrealized gain | 279 | 205 |
Fixed maturity securities, gross unrealized loss | (162) | (254) |
Fixed maturity securities, estimated fair value | 40,336 | 34,056 |
Commercial mortgage-backed and other asset-backed | ||
Fixed Maturity Securities: | ||
Fixed maturity securities, amortized cost | 56,434 | 60,284 |
Fixed maturity securities, gross unrealized gain | 156 | 132 |
Fixed maturity securities, gross unrealized loss | (480) | (731) |
Fixed maturity securities, estimated fair value | $ 56,110 | $ 59,685 |
Investments - Available-for-s34
Investments - Available-for-sale Securities in Unrealized Loss Positions (Details) $ in Thousands | Sep. 30, 2017USD ($)security | Dec. 31, 2016USD ($)security |
Available-for-sale Securities, Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract] | ||
Less than 12 months, number of issues | security | 107 | 201 |
Greater than 12 months, number of issues | security | 19 | 15 |
Total Number of Issues | security | 126 | 216 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 months, fair value | $ 52,593 | $ 62,307 |
Greater than 12 months, fair value | 5,146 | 4,341 |
Total Fair Value | 57,739 | 66,648 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Loss [Abstract] | ||
Less than 12 months, unrealized losses | (780) | (1,260) |
Greater than 12 months, unrealized losses | (110) | (36) |
Total Unrealized losses | $ (890) | $ (1,296) |
Total fixed maturity securities available for sale | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract] | ||
Less than 12 months, number of issues | security | 88 | 125 |
Greater than 12 months, number of issues | security | 18 | 13 |
Total Number of Issues | security | 106 | 138 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 months, fair value | $ 51,506 | $ 59,835 |
Greater than 12 months, fair value | 5,113 | 4,275 |
Total Fair Value | 56,619 | 64,110 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Loss [Abstract] | ||
Less than 12 months, unrealized losses | (639) | (1,199) |
Greater than 12 months, unrealized losses | (99) | (27) |
Total Unrealized losses | $ (738) | $ (1,226) |
U.S. Government obligations | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract] | ||
Less than 12 months, number of issues | security | 10 | 15 |
Greater than 12 months, number of issues | security | 4 | 0 |
Total Number of Issues | security | 14 | 15 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 months, fair value | $ 6,177 | $ 4,539 |
Greater than 12 months, fair value | 914 | 0 |
Total Fair Value | 7,091 | 4,539 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Loss [Abstract] | ||
Less than 12 months, unrealized losses | (37) | (36) |
Greater than 12 months, unrealized losses | (6) | 0 |
Total Unrealized losses | $ (43) | $ (36) |
State and local government | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract] | ||
Less than 12 months, number of issues | security | 23 | 29 |
Greater than 12 months, number of issues | security | 3 | 1 |
Total Number of Issues | security | 26 | 30 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 months, fair value | $ 6,108 | $ 8,217 |
Greater than 12 months, fair value | 506 | 104 |
Total Fair Value | 6,614 | 8,321 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Loss [Abstract] | ||
Less than 12 months, unrealized losses | (35) | (202) |
Greater than 12 months, unrealized losses | (18) | (3) |
Total Unrealized losses | $ (53) | $ (205) |
Corporate debt | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract] | ||
Less than 12 months, number of issues | security | 13 | 22 |
Greater than 12 months, number of issues | security | 5 | 7 |
Total Number of Issues | security | 18 | 29 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 months, fair value | $ 7,568 | $ 9,031 |
Greater than 12 months, fair value | 2,037 | 3,369 |
Total Fair Value | 9,605 | 12,400 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Loss [Abstract] | ||
Less than 12 months, unrealized losses | (143) | (239) |
Greater than 12 months, unrealized losses | (19) | (15) |
Total Unrealized losses | $ (162) | $ (254) |
Commercial mortgage-backed and other asset-backed | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract] | ||
Less than 12 months, number of issues | security | 42 | 59 |
Greater than 12 months, number of issues | security | 6 | 5 |
Total Number of Issues | security | 48 | 64 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 months, fair value | $ 31,653 | $ 38,048 |
Greater than 12 months, fair value | 1,656 | 802 |
Total Fair Value | 33,309 | 38,850 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Loss [Abstract] | ||
Less than 12 months, unrealized losses | (424) | (722) |
Greater than 12 months, unrealized losses | (56) | (9) |
Total Unrealized losses | $ (480) | $ (731) |
Total equity securities available for sale | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract] | ||
Less than 12 months, number of issues | security | 19 | 76 |
Greater than 12 months, number of issues | security | 1 | 2 |
Total Number of Issues | security | 20 | 78 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 months, fair value | $ 1,087 | $ 2,472 |
Greater than 12 months, fair value | 33 | 66 |
Total Fair Value | 1,120 | 2,538 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Loss [Abstract] | ||
Less than 12 months, unrealized losses | (141) | (61) |
Greater than 12 months, unrealized losses | (11) | (9) |
Total Unrealized losses | $ (152) | $ (70) |
Common stocks | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Qualitative Disclosure [Abstract] | ||
Less than 12 months, number of issues | security | 19 | 76 |
Greater than 12 months, number of issues | security | 1 | 2 |
Total Number of Issues | security | 20 | 78 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 months, fair value | $ 1,087 | $ 2,472 |
Greater than 12 months, fair value | 33 | 66 |
Total Fair Value | 1,120 | 2,538 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Loss [Abstract] | ||
Less than 12 months, unrealized losses | (141) | (61) |
Greater than 12 months, unrealized losses | (11) | (9) |
Total Unrealized losses | $ (152) | $ (70) |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net Investment Income [Line Items] | ||||
Investment income | $ 841 | $ 646 | $ 2,215 | $ 1,860 |
Investment expenses | (73) | (86) | (207) | (235) |
Net investment income | 768 | 560 | 2,008 | 1,625 |
Fixed maturity securities | ||||
Net Investment Income [Line Items] | ||||
Investment income | 733 | 616 | 2,030 | 1,772 |
Equity securities | ||||
Net Investment Income [Line Items] | ||||
Investment income | 44 | 23 | 94 | 75 |
Cash and short-term investments | ||||
Net Investment Income [Line Items] | ||||
Investment income | $ 64 | $ 7 | $ 91 | $ 13 |
Investments - Gross Realized Ga
Investments - Gross Realized Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Schedule of Available-for-sale Securities [Line Items] | ||||
Net realized investment gains | $ 39 | $ 71 | $ 31 | $ 604 |
Fixed maturity securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Gross realized gains | 29 | 7 | 29 | 524 |
Gross realized losses | (1) | 0 | (8) | (22) |
Net realized investment gains | 28 | 7 | 21 | 502 |
Equity securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Gross realized gains | 11 | 79 | 40 | 230 |
Gross realized losses | 0 | (15) | (30) | (128) |
Net realized investment gains | $ 11 | $ 64 | $ 10 | $ 102 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |||
Proceeds from sale of available for sale securities | $ 19.5 | $ 40.9 | |
Deposits held in trust accounts | 8.2 | $ 9.6 | |
Deposits, held in trust for collateral requirements | $ 12.8 | $ 10.3 |
Investments - Available-for-s38
Investments - Available-for-sale Fixed Maturity Securities by Contractual Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Amortized Cost | ||
Due in one year or less, amortized cost | $ 11,122 | |
Due after one year through five years, amortized cost | 34,171 | |
Due after five years through ten years, amortized cost | 11,255 | |
Due after ten years, amortized cost | 8,932 | |
Securities with contractual maturities, amortized cost | 65,480 | |
Commercial mortgage and asset-backed, amortized cost | 56,434 | |
Fixed maturity securities, amortized cost | 121,914 | $ 113,915 |
Estimated Fair Value | ||
Due in one year or less, fair value | 11,136 | |
Due after one year through five years, fair value | 34,327 | |
Due after five years through ten years, fair value | 11,392 | |
Due after ten years, fair value | 8,918 | |
Securities with contractual maturities, fair value | 65,773 | |
Commercial mortgage and asset-backed, fair value | 56,110 | |
Fixed maturity securities | $ 121,883 | $ 113,163 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets: | ||
Fixed maturity securities | $ 121,883 | $ 113,163 |
Equity Securities | 10,157 | 4,579 |
Short-term investments | 13,815 | 10,788 |
Total assets measured at fair value | 145,855 | 128,530 |
Liabilities: | ||
Total Liabilities measured at fair value | 29,010 | 17,750 |
Debt | ||
Liabilities: | ||
Debt | 29,010 | 17,750 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Short-term investments | 13,815 | 10,788 |
Total assets measured at fair value | 18,870 | 15,257 |
Liabilities: | ||
Total Liabilities measured at fair value | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Debt | ||
Liabilities: | ||
Debt | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Short-term investments | 0 | 0 |
Total assets measured at fair value | 126,985 | 113,273 |
Liabilities: | ||
Total Liabilities measured at fair value | 29,010 | 17,750 |
Significant Other Observable Inputs (Level 2) | Debt | ||
Liabilities: | ||
Debt | 29,010 | 17,750 |
Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Short-term investments | 0 | 0 |
Total assets measured at fair value | 0 | |
Liabilities: | ||
Total Liabilities measured at fair value | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Debt | ||
Liabilities: | ||
Debt | 0 | 0 |
U.S. Government obligations | ||
Assets: | ||
Fixed maturity securities | 9,235 | 5,903 |
U.S. Government obligations | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Fixed maturity securities | 0 | 0 |
U.S. Government obligations | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Fixed maturity securities | 9,235 | 5,903 |
U.S. Government obligations | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Fixed maturity securities | 0 | 0 |
State and local government | ||
Assets: | ||
Fixed maturity securities | 16,202 | 13,519 |
State and local government | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Fixed maturity securities | 0 | 0 |
State and local government | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Fixed maturity securities | 16,202 | 13,519 |
State and local government | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Fixed maturity securities | 0 | 0 |
Corporate debt | ||
Assets: | ||
Fixed maturity securities | 40,336 | 34,056 |
Corporate debt | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Fixed maturity securities | 0 | 0 |
Corporate debt | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Fixed maturity securities | 40,336 | 34,056 |
Corporate debt | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Fixed maturity securities | 0 | 0 |
Commercial mortgage-backed and other asset-backed | ||
Assets: | ||
Fixed maturity securities | 56,110 | 59,685 |
Commercial mortgage-backed and other asset-backed | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Fixed maturity securities | 0 | 0 |
Commercial mortgage-backed and other asset-backed | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Fixed maturity securities | 56,110 | 59,685 |
Commercial mortgage-backed and other asset-backed | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Fixed maturity securities | 0 | |
Fixed maturity securities | ||
Assets: | ||
Fixed maturity securities | 121,883 | 113,163 |
Fixed maturity securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Fixed maturity securities | 0 | 0 |
Fixed maturity securities | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Fixed maturity securities | 121,883 | 113,163 |
Fixed maturity securities | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Fixed maturity securities | 0 | |
Common stocks | ||
Assets: | ||
Equity Securities | 10,157 | 4,579 |
Common stocks | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Equity Securities | 5,055 | 4,469 |
Common stocks | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Equity Securities | 5,102 | 110 |
Common stocks | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Equity Securities | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | Sep. 30, 2017 |
Level 1 | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Investment portfolio percentage | 12.90% |
Level 2 | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Investment portfolio percentage | 87.10% |
Deferred Policy Acquisition C41
Deferred Policy Acquisition Costs - Activity in Deferred Policy Acquisition Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | ||||
Balance at beginning of period | $ 12,649 | $ 13,182 | $ 13,290 | $ 12,102 |
Deferred policy acquisition costs | 6,759 | 6,287 | 19,018 | 19,383 |
Amortization of policy acquisition costs | (6,655) | (6,266) | (19,555) | (18,282) |
Net change | 104 | 21 | (537) | 1,101 |
Balance at end of period | $ 12,753 | $ 13,203 | $ 12,753 | $ 13,203 |
Unpaid Losses and Loss Adjust42
Unpaid Losses and Loss Adjustment Expenses - Changes in the Liability for Unpaid Losses and Loss Adjustment Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||||||
Gross reserves - beginning of period | $ 66,917 | $ 41,832 | $ 54,651 | $ 35,422 | ||||
Less: reinsurance recoverables on unpaid losses | 10,552 | 5,890 | 6,658 | 5,405 | ||||
Net reserves - beginning of period | 69,228 | 39,660 | 69,228 | 39,660 | $ 56,365 | $ 47,993 | $ 35,942 | $ 30,017 |
Add: incurred losses and LAE, net of reinsurance: | ||||||||
Current period | 24,398 | 11,989 | 49,449 | 35,135 | ||||
Prior period | 2,070 | 2,593 | 9,426 | 5,687 | ||||
Total net incurred losses and LAE | 26,468 | 14,582 | 58,875 | 40,822 | ||||
Deduct: loss and LAE payments, net of reinsurance: | ||||||||
Current period | 7,194 | 6,938 | 14,410 | 14,730 | ||||
Prior period | 6,411 | 3,926 | 23,230 | 16,449 | ||||
Total net loss and LAE payments | 13,605 | 10,864 | 37,640 | 31,179 | ||||
Net reserves - end of period | 69,228 | 39,660 | 69,228 | 39,660 | ||||
Plus: reinsurance recoverables on unpaid losses | 13,528 | 6,334 | 13,528 | 6,334 | ||||
Gross reserves - end of period | $ 82,756 | $ 45,994 | $ 82,756 | $ 45,994 |
Unpaid Losses and Loss Adjust43
Unpaid Losses and Loss Adjustment Expenses - Narrative (Details) - USD ($) | Sep. 28, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Liability for Claims and Claims Adjustment Expense [Line Items] | |||||||||
Unpaid losses and loss adjustment expenses | $ 82,756,000 | $ 45,994,000 | $ 82,756,000 | $ 45,994,000 | $ 66,917,000 | $ 54,651,000 | $ 41,832,000 | $ 35,422,000 | |
Prior-year adverse (favorable) reserve development | 2,070,000 | 2,593,000 | 9,426,000 | 5,687,000 | |||||
Offset amount by favorable development | 446,000 | 277,000 | |||||||
Net catastrophe losses | 26,468,000 | 14,582,000 | 58,875,000 | 40,822,000 | |||||
Liability line of business | |||||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||||||||
Prior-year adverse (favorable) reserve development | 865,000 | 4,200,000 | |||||||
Florida homeowners line | |||||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||||||||
Prior-year adverse (favorable) reserve development | 697,000 | 759,000 | 2,400,000 | 2,200,000 | |||||
Commercial property line | |||||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||||||||
Prior-year adverse (favorable) reserve development | 350,000 | 2,200,000 | |||||||
Personal automobile line | |||||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||||||||
Prior-year adverse (favorable) reserve development | 604,000 | $ 584,000 | $ 932,000 | $ 2,100,000 | |||||
Adverse development cover reinsurance agreement (ADC) | |||||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||||||||
ADC loss development cover, maximum amount | $ 17,500,000 | ||||||||
Reinsurance retention policy, co-participation (percentage) | 10.00% | ||||||||
Hurricane | |||||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||||||||
Net catastrophe losses | $ 5,000,000 | ||||||||
Minimum | Adverse development cover reinsurance agreement (ADC) | |||||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||||||||
Reinsurance retention policy carried reserves threshold | $ 1,400,000 | ||||||||
Unpaid losses and loss adjustment expenses | 36,600,000 | ||||||||
Maximum | Adverse development cover reinsurance agreement (ADC) | |||||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||||||||
Reinsurance retention policy carried reserves threshold | $ 19,500,000 | ||||||||
Unpaid losses and loss adjustment expenses | $ 57,500,000 |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2016 | |
Effects of Reinsurance [Line Items] | ||
Consideration payment | $ 7,200,000 | |
Contingent recovery, percentage | 35.00% | |
Reinsurance reinstatement cost | $ 600,000 | |
Maximum | ||
Effects of Reinsurance [Line Items] | ||
Amount retained (excess of) | $ 500,000 |
Reinsurance - Effects of Reinsu
Reinsurance - Effects of Reinsurance and Assumption Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Written premiums: | ||||
Direct | $ 20,112 | $ 22,340 | $ 61,731 | $ 66,473 |
Assumed | 9,469 | 6,157 | 21,305 | 17,143 |
Ceded | (11,186) | (3,863) | (19,235) | (10,755) |
Net written premiums | 18,395 | 24,634 | 63,801 | 72,861 |
Earned premiums: | ||||
Direct | 21,797 | 23,057 | 65,817 | 67,871 |
Assumed | 7,094 | 4,196 | 19,676 | 8,186 |
Ceded | (11,232) | (3,873) | (19,198) | (10,893) |
Net earned premiums | 17,659 | 23,380 | 66,295 | 65,164 |
Losses and LAE: | ||||
Direct | 27,268 | 13,616 | 59,496 | 41,460 |
Assumed | 5,313 | 1,750 | 14,017 | 4,106 |
Ceded | (6,113) | (784) | (14,638) | (4,744) |
Total net incurred losses and LAE | $ 26,468 | $ 14,582 | $ 58,875 | $ 40,822 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 9 Months Ended | |||
Sep. 30, 2017USD ($)debt_instrument | Sep. 29, 2017USD ($) | Sep. 30, 2014USD ($) | Oct. 31, 2013USD ($) | |
Debt Instrument [Line Items] | ||||
Debt issuance costs | $ (990,000) | |||
Revolver | ||||
Debt Instrument [Line Items] | ||||
Repayments of lines of credit | $ 11,000,000 | |||
Secured debt | ||||
Debt Instrument [Line Items] | ||||
Number of debt instruments | debt_instrument | 3 | |||
Secured debt | Revolver | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 17,500,000 | |||
Private placement, subordinated note | Subordinated debt | ||||
Debt Instrument [Line Items] | ||||
Face amount of debt instrument | $ 30,000,000 | |||
Bearing fixed annual interest rate (percentage) | 105.00% | 8.00% | ||
Term Note | ||||
Debt Instrument [Line Items] | ||||
Repayments of secured of debt | $ 5,400,000 | |||
Term Note | Secured debt | ||||
Debt Instrument [Line Items] | ||||
Face amount of debt instrument | $ 5,000,000 | |||
2014 Term Note | Secured debt | ||||
Debt Instrument [Line Items] | ||||
Face amount of debt instrument | $ 7,500,000 | |||
Fifth Anniversary | Swap rate | Private placement, subordinated note | Subordinated debt | ||||
Debt Instrument [Line Items] | ||||
Derivative, basis spread on variable rate | 1250.00% | |||
10th Anniversary | Swap rate | Private placement, subordinated note | Subordinated debt | ||||
Debt Instrument [Line Items] | ||||
Derivative, basis spread on variable rate | 1500.00% |
Debt - Outstanding Debt (Detail
Debt - Outstanding Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Debt | $ 29,010 | $ 17,750 |
Revolver | ||
Debt Instrument [Line Items] | ||
Debt | 0 | 10,500 |
Term Note | ||
Debt Instrument [Line Items] | ||
Debt | 0 | 1,750 |
2014 Term Note | ||
Debt Instrument [Line Items] | ||
Debt | 0 | 5,500 |
Subordinated debt | ||
Debt Instrument [Line Items] | ||
Debt | $ 29,010 | $ 0 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) - USD ($) | Feb. 25, 2016 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
Equity, Class of Treasury Stock [Line Items] | ||||
Common equity issued | $ 5,000,000 | |||
Common stocks | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Stock repurchased and retired during period, shares | 0 | 88,650 | ||
Stock repurchased and retired during period, value | $ 625,000 | |||
Stock Repurchase Program, February 2016 | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Authorized amount of stock repurchase program | $ 2,100,000 | |||
Stock repurchase program, period | 1 year | |||
Private placement | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Common equity issued (in shares) | 800,000 | |||
Offering price per share (in dollars per share) | $ 6.25 | $ 6.25 | ||
Receivable from issuance of stock | $ 625,000 | $ 625,000 |
Other Comprehensive Income (L49
Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||
Balance at beginning of period | $ 74,504 | $ 67,794 | $ 77,262 | ||
Other comprehensive income (loss) before reclassifications | $ 260 | $ (86) | 883 | 1,065 | |
Less: amounts reclassified from accumulated other comprehensive income (loss) | 7 | (26) | 57 | (197) | |
Other comprehensive income (loss) | 253 | (2,524) | (60) | 826 | 1,262 |
Balance at end of period | 52,494 | 67,794 | 74,504 | 52,494 | 74,504 |
Accumulated Other Comprehensive Income (Loss) | |||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||
Balance at beginning of period | (507) | 1,444 | 1,504 | (1,080) | 182 |
Other comprehensive income (loss) | (2,524) | 826 | 1,262 | ||
Balance at end of period | $ (254) | $ (1,080) | $ 1,444 | $ (254) | $ 1,444 |
Earnings Per Share - Basic and
Earnings Per Share - Basic and Diluted Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ (18,898) | $ (1,475) | $ (21,763) | $ (4,016) |
Weighted average common shares outstanding, basic and diluted (in shares) | 7,675,952 | 7,608,284 | 7,647,520 | 7,613,954 |
Earnings (loss) per per common share, basic and diluted (in dollars per share) | $ (2.46) | $ (0.19) | $ (2.85) | $ (0.53) |
Restricted Stock Units (RSUs) | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 309,000 |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) - 2015 Omnibus Incentive Plan - Restricted Stock Units (RSUs) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2016 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares granted in period | 0 | 111,000 | 0 | 111,281 | 390,352 | |
Stock granted, value | $ 909 | $ 4,100 | ||||
Share-based compensation expense | $ 650 | $ 621 | ||||
Share-based compensation expense not yet recognized | $ 3,000 |
Stock-based Compensation - RSU
Stock-based Compensation - RSU Activity (Details) - 2015 Omnibus Incentive Plan - Restricted Stock Units (RSUs) - $ / shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Units | |||||
Beginning period, outstanding (in shares) | 426,000 | 416,000 | 390,000 | ||
Units granted (in shares) | 0 | 111,000 | 0 | 111,281 | 390,352 |
Units vested (in shares) | (2,000) | (75,000) | (93,000) | ||
Units forfeited (in shares) | (8,000) | 0 | (14,000) | ||
Ending period, outstanding (in shares) | 416,000 | 426,000 | 309,000 | 416,000 | 390,000 |
Weighted Average Grant-Date Fair Value | |||||
Beginning period, outstanding (in dollars per share) | $ 9.88 | $ 9.87 | $ 10.48 | ||
Units granted (in dollars per share) | 0 | $ 8.17 | 0 | ||
Units vested (in dollars per share) | 9.56 | 10.50 | 9.97 | ||
Units forfeited (in dollars per share) | 9.95 | 0 | 9.95 | ||
Ending period, outstanding (in dollars per share) | $ 9.87 | $ 9.88 | $ 9.84 | $ 9.87 | $ 10.48 |
Segment Information - Narrative
Segment Information - Narrative (Details) - class_business | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||
Number of business classes | 2 | |
Gross Written Premiums | Geographic Concentration Risk | Florida, Michigan, Pennsylvania and Texas | ||
Segment Reporting Information [Line Items] | ||
Concentration risk | 60.00% | 58.00% |
Segment Information - Informati
Segment Information - Information by Reportable Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Gross written premiums | $ 29,581 | $ 28,497 | $ 83,036 | $ 83,616 |
Net written premiums | 18,395 | 24,634 | 63,801 | 72,861 |
Net earned premiums | 17,659 | 23,380 | 66,295 | 65,164 |
Other income | 477 | 303 | 1,203 | 829 |
Segment revenue | 18,136 | 23,683 | 67,498 | 65,993 |
Losses and loss adjustment expenses, net | 26,468 | 14,582 | 58,875 | 40,822 |
Policy acquisition costs | 6,655 | 6,266 | 19,555 | 18,282 |
Operating expenses | 4,474 | 4,710 | 13,374 | 13,384 |
Segment expenses | 37,597 | 25,558 | 91,804 | 72,488 |
Segment underwriting gain (loss) | (19,461) | (1,875) | (24,306) | (6,495) |
Net investment income | 768 | 560 | 2,008 | 1,625 |
Net realized investment gains | 39 | 71 | 31 | 604 |
Other gains | 0 | 0 | 750 | 0 |
Interest expense | (303) | (168) | (745) | (468) |
Income (loss) before equity earnings of affiliates and income taxes | (18,957) | (1,412) | (22,262) | (4,734) |
Operating Segments | Commercial Lines | ||||
Segment Reporting Information [Line Items] | ||||
Gross written premiums | 23,509 | 20,759 | 66,258 | 62,725 |
Net written premiums | 16,221 | 18,230 | 54,616 | 55,767 |
Net earned premiums | 15,658 | 17,878 | 55,443 | 49,641 |
Other income | 162 | 81 | 485 | 263 |
Segment revenue | 15,820 | 17,959 | 55,928 | 49,904 |
Losses and loss adjustment expenses, net | 19,589 | 9,564 | 43,819 | 27,543 |
Policy acquisition costs | 5,161 | 4,868 | 15,180 | 13,619 |
Operating expenses | 3,322 | 1,803 | 8,231 | 5,147 |
Segment expenses | 28,072 | 16,235 | 67,230 | 46,309 |
Segment underwriting gain (loss) | (12,252) | 1,724 | (11,302) | 3,595 |
Operating Segments | Personal Lines | ||||
Segment Reporting Information [Line Items] | ||||
Gross written premiums | 6,072 | 7,738 | 16,778 | 20,891 |
Net written premiums | 2,174 | 6,404 | 9,185 | 17,094 |
Net earned premiums | 2,001 | 5,502 | 10,852 | 15,523 |
Other income | 281 | 101 | 601 | 419 |
Segment revenue | 2,282 | 5,603 | 11,453 | 15,942 |
Losses and loss adjustment expenses, net | 6,879 | 5,018 | 15,056 | 13,279 |
Policy acquisition costs | 1,494 | 1,398 | 4,375 | 4,663 |
Operating expenses | 808 | 779 | 1,967 | 2,214 |
Segment expenses | 9,181 | 7,195 | 21,398 | 20,156 |
Segment underwriting gain (loss) | (6,899) | (1,592) | (9,945) | (4,214) |
Corporate & Other | ||||
Segment Reporting Information [Line Items] | ||||
Gross written premiums | 0 | 0 | 0 | 0 |
Net written premiums | 0 | 0 | 0 | 0 |
Net earned premiums | 0 | 0 | 0 | 0 |
Other income | 34 | 121 | 117 | 147 |
Segment revenue | 34 | 121 | 117 | 147 |
Losses and loss adjustment expenses, net | 0 | 0 | 0 | 0 |
Policy acquisition costs | 0 | 0 | 0 | 0 |
Operating expenses | 344 | 2,128 | 3,176 | 6,023 |
Segment expenses | 344 | 2,128 | 3,176 | 6,023 |
Segment underwriting gain (loss) | (310) | (2,007) | (3,059) | (5,876) |
Net investment income | 768 | 560 | 2,008 | 1,625 |
Net realized investment gains | 39 | 71 | 31 | 604 |
Other gains | 750 | |||
Interest expense | (303) | (168) | (745) | (468) |
Income (loss) before equity earnings of affiliates and income taxes | $ 194 | $ (1,544) | $ (1,015) | $ (4,115) |