Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 08, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Conifer Holdings, Inc. | |
Entity Central Index Key | 0001502292 | |
Trading Symbol | cnfr | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 8,353,051 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Investment securities: | ||
Debt securities, at fair value (amortized cost of $124,599 and $122,678, respectively) | $ 124,057 | $ 120,440 |
Equity securities, at fair value (cost of $9,594 and $9,559, respectively) | 12,038 | 10,737 |
Short-term investments, at fair value | 8,069 | 8,925 |
Total investments | 144,164 | 140,102 |
Cash and cash equivalents | 10,411 | 10,792 |
Premiums and agents' balances receivable, net | 18,684 | 21,247 |
Receivable from Affiliate | 2,279 | 3,582 |
Reinsurance recoverables on unpaid losses | 24,551 | 29,685 |
Reinsurance recoverables on paid losses | 9,567 | 5,060 |
Prepaid reinsurance premiums | 3,659 | 1,829 |
Deferred policy acquisition costs | 12,153 | 12,011 |
Other assets | 12,680 | 8,444 |
Total assets | 238,148 | 232,752 |
Liabilities: | ||
Unpaid losses and loss adjustment expenses | 93,966 | 92,807 |
Unearned premiums | 51,519 | 52,852 |
Debt | 34,583 | 33,502 |
Deferred gain on ADC | 3,394 | 5,677 |
Accounts payable and other liabilities | 11,771 | 5,751 |
Total liabilities | 195,233 | 190,589 |
Commitments and contingencies | 0 | 0 |
Shareholders' equity: | ||
Common stock, no par value (100,000,000 shares authorized; 8,353,051 and 8,478,202 issued and outstanding, respectively) | 86,268 | 86,533 |
Accumulated deficit | (42,438) | (41,758) |
Accumulated other comprehensive income (loss) | (915) | (2,612) |
Total shareholders' equity | 42,915 | 42,163 |
Total liabilities and shareholders' equity | $ 238,148 | $ 232,752 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Total debt securities | $ 124,599 | $ 122,678 |
Equity securities, amortized cost | $ 9,594 | $ 9,559 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 8,353,051 | 8,478,202 |
Common stock, shares outstanding (in shares) | 8,353,051 | 8,478,202 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Premiums | ||
Gross earned premiums | $ 25,550 | $ 27,724 |
Ceded earned premiums | (3,863) | (3,924) |
Net earned premiums | 21,687 | 23,800 |
Net investment income | 910 | 802 |
Net realized investment gains | 19 | 161 |
Change in fair value of equity securities | 1,265 | (297) |
Other income | 422 | 357 |
Total revenue | 24,303 | 24,823 |
Expenses | ||
Losses and loss adjustment expenses, net | 14,456 | 13,328 |
Policy acquisition costs | 5,589 | 6,513 |
Operating expenses | 4,323 | 4,187 |
Interest expense | 710 | 619 |
Total expenses | 25,078 | 24,647 |
Income (loss) before equity earnings of affiliates and income taxes | (775) | 176 |
Equity earnings of affiliates, net of tax | 106 | 55 |
Income tax expense | 11 | 18 |
Net income (loss) | $ (680) | $ 213 |
Earnings (loss) per per common share, basic and diluted (in dollars per share) | $ (0.08) | $ 0.02 |
Weighted average common shares outstanding, basic and diluted (in shares) | 8,453,570 | 8,520,328 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ (680) | $ 213 |
Unrealized investment gains (losses): | ||
Unrealized investment gains (losses) during the period | 1,557 | (1,846) |
Income tax (benefit) expense | 0 | 0 |
Unrealized investment gains (losses), net of tax | 1,557 | (1,846) |
Less: reclassification adjustments to: | ||
Net realized investment gains (losses) included in net income (loss) | (140) | 0 |
Income tax (benefit) expense | 0 | 0 |
Total reclassifications included in net income (loss), net of tax | (140) | 0 |
Other comprehensive income (loss) | 1,697 | (1,846) |
Total comprehensive income (loss) | $ 1,017 | $ (1,633) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | No Par, Common Stock | Retained Earnings (Accumulated deficit) | Accumulated Other Comprehensive Income (Loss) |
Balance at beginning of period (in shares) at Dec. 31, 2017 | 8,520,328 | |||
Balance at beginning of period at Dec. 31, 2017 | $ 52,826 | $ 86,199 | $ (33,010) | $ (363) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 213 | 213 | ||
Restricted stock unit expense, net (in shares) | 0 | |||
Restricted stock unit expense, net | 231 | $ 231 | ||
Other comprehensive income (loss) | (1,846) | (1,846) | ||
Balance at end of period (in shares) at Mar. 31, 2018 | 8,520,328 | |||
Balance at end of period at Mar. 31, 2018 | 51,424 | $ 86,430 | (32,318) | (2,688) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (9,440) | (9,440) | ||
Repurchase of common stock (in shares) | (137,228) | |||
Repurchase of common stock | (636) | $ (636) | ||
Restricted stock unit expense, net (in shares) | 95,102 | |||
Restricted stock unit expense, net | 739 | $ 739 | ||
Other comprehensive income (loss) | 76 | 76 | ||
Balance at end of period (in shares) at Dec. 31, 2018 | 8,478,202 | |||
Balance at end of period at Dec. 31, 2018 | 42,163 | $ 86,533 | (41,758) | (2,612) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (680) | (680) | ||
Repurchase of common stock (in shares) | (125,151) | |||
Repurchase of common stock | (510) | $ (510) | ||
Restricted stock unit expense, net (in shares) | 0 | |||
Restricted stock unit expense, net | 245 | $ 245 | ||
Other comprehensive income (loss) | 1,697 | 1,697 | ||
Balance at end of period (in shares) at Mar. 31, 2019 | 8,353,051 | |||
Balance at end of period at Mar. 31, 2019 | $ 42,915 | $ 86,268 | $ (42,438) | $ (915) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Cash Flows From Operating Activities | |||
Net income (loss) | $ (680) | $ 213 | $ (9,440) |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | |||
Depreciation and amortization | 39 | 88 | |
Amortization of bond premium and discount, net | 81 | 139 | |
Net realized investment (gains) losses | 101 | (161) | |
Other gains | (19) | 0 | |
Change in fair value of equity securities | (1,265) | 297 | |
Restricted stock unit expenses | 245 | 231 | |
Other | (106) | (55) | |
(Increase) decrease in: | |||
Premiums and agents' balances and other receivables | 3,866 | 2,362 | |
Reinsurance recoverables | 627 | (119) | |
Prepaid reinsurance premiums | (1,830) | 31 | |
Deferred policy acquisition costs | (142) | 731 | |
Other assets | (4,145) | (2,075) | |
Increase (decrease) in: | |||
Unpaid losses and loss adjustment expenses | 1,159 | (2,405) | |
Unearned premiums | (1,333) | (3,987) | |
Accounts payable and other liabilities | 1,202 | 802 | |
Net cash provided by (used in) operating activities | (2,200) | (3,908) | |
Cash Flows From Investing Activities | |||
Purchase of investments | (24,797) | (25,175) | |
Proceeds from maturities and redemptions of investments | 2,929 | 5,079 | |
Proceeds from sales of investments | 23,220 | 26,563 | |
Purchases of property and equipment | (23) | (21) | |
Net cash provided by (used in) investing activities | 1,329 | 6,446 | |
Cash Flows From Financing Activities | |||
Repurchase of common stock | (510) | 0 | |
Borrowings under debt arrangements | 1,000 | 0 | |
Net cash provided by (used in) financing activities | 490 | 0 | |
Net increase (decrease) in cash | (381) | 2,538 | |
Cash and cash equivalents at beginning of period | 10,792 | 11,868 | 14,406 |
Cash and cash equivalents at end of period | 10,411 | 14,406 | $ 10,792 |
Supplemental Disclosure of Cash Flow Information: | |||
Interest paid | 626 | 619 | |
Payable for securities - non cash item | $ 3,026 | $ 3,094 |
Investments
Investments | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 and December 31, 2018 , were as follows (dollars in thousands): March 31, 2019 Cost or Amortized Cost Gross Unrealized Estimated Fair Value Gains Losses Debt Securities: U.S. Government $ 15,236 $ 9 $ (103 ) $ 15,142 State and local government 17,135 334 (31 ) 17,438 Corporate debt 32,550 353 (213 ) 32,690 Asset-backed securities 23,551 26 (152 ) 23,425 Mortgage-backed securities 28,826 39 (770 ) 28,095 Commercial mortgage-backed securities 5,191 20 (40 ) 5,171 Collateralized mortgage obligations 2,110 10 (24 ) 2,096 Total debt securities available for sale $ 124,599 $ 791 $ (1,333 ) $ 124,057 December 31, 2018 Cost or Amortized Cost Gross Unrealized Estimated Fair Value Gains Losses Debt Securities: U.S. Government $ 15,360 $ 3 $ (178 ) $ 15,185 State and local government 15,847 115 (174 ) 15,788 Corporate debt 30,423 74 (651 ) 29,846 Asset-backed securities 24,468 24 (208 ) 24,284 Mortgage-backed securities 30,377 18 (1,155 ) 29,240 Commercial mortgage-backed securities 4,025 5 (77 ) 3,953 Collateralized mortgage obligations 2,178 9 (43 ) 2,144 Total debt securities available for sale $ 122,678 $ 248 $ (2,486 ) $ 120,440 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): March 31, 2019 Less than 12 months Greater than 12 months Total No. of Issues Fair Value of Investments with Unrealized Losses Gross Unrealized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Unrealized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Unrealized Losses Debt Securities: U.S. Government — $ — $ — 17 $ 14,147 $ (103 ) 17 $ 14,147 $ (103 ) State and local government 1 249 — 13 3,484 (31 ) 14 3,733 (31 ) Corporate debt 1 1,049 (2 ) 32 13,952 (211 ) 33 15,001 (213 ) Asset-backed securities 18 12,388 (99 ) 10 5,020 (53 ) 28 17,408 (152 ) Mortgage-backed securities 8 292 (3 ) 35 25,672 (767 ) 43 25,964 (770 ) Commercial mortgage-backed securities 2 180 — 4 3,103 (40 ) 6 3,283 (40 ) Collateralized mortgage obligations 5 156 (1 ) 5 1,543 (23 ) 10 1,699 (24 ) Total debt securities available for sale 35 $ 14,314 $ (105 ) 116 $ 66,921 $ (1,228 ) 151 $ 81,235 $ (1,333 ) December 31, 2018 Less than 12 months Greater than 12 months Total No. of Issues Fair Value of Investments with Unrealized Losses Gross Unrealized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Unrealized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Unrealized Losses Debt Securities: U.S. Government 1 $ 2,470 $ (24 ) 16 $ 11,725 $ (154 ) 17 $ 14,195 $ (178 ) State and local government 21 4,935 (40 ) 16 4,273 (134 ) 37 9,208 (174 ) Corporate debt 36 12,096 (140 ) 25 11,993 (511 ) 61 24,089 (651 ) Asset-backed securities 25 17,743 (148 ) 9 4,166 (60 ) 34 21,909 (208 ) Mortgage-backed securities 20 5,474 (138 ) 30 21,715 (1,017 ) 50 27,189 (1,155 ) Commercial mortgage-backed securities 4 1,082 (12 ) 3 2,632 (65 ) 7 3,714 (77 ) Collateralized mortgage obligations 4 116 (1 ) 6 1,587 (42 ) 10 1,703 (43 ) Total debt securities available for sale 111 $ 43,916 $ (503 ) 105 $ 58,091 $ (1,983 ) 216 $ 102,007 $ (2,486 ) 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 three months ended March 31, 2019 and 2018 . The Company’s sources of net investment income are as follows (dollars in thousands): Three Months Ended March 31, 2019 2018 Debt securities $ 857 $ 826 Equity securities 40 27 Cash and cash equivalents, and short-term investments 70 23 Total investment income 967 876 Investment expenses (57 ) (74 ) Net investment income $ 910 $ 802 The following table summarizes the gross realized gains and losses from sales or maturities of available-for-sale debt and equity securities (dollars in thousands): Three Months Ended March 31, 2019 2018 Debt securities: Gross realized gains $ 20 $ 2 Gross realized losses (50 ) (5 ) Total debt securities (30 ) (3 ) Equity securities: Gross realized gains 49 170 Gross realized losses — (6 ) Total equity securities 49 164 Total net realized investment gains (losses) $ 19 $ 161 Proceeds from the sales of available-for-sale securities were $4.1 million and $2.7 million for the three months ended March 31, 2019 and 2018 , respectively. The Company carries other equity investments that do not have a readily determinable fair value at cost, less impairment or observable changes in price. We review these investments for impairment during each reporting period. There was no impairment or observable changes in price recorded during 2019 related to the Company's equity securities without readily determinable fair value. These investments are a component of Other Assets in the Consolidated Balance Sheets. The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at March 31, 2019 . 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 $ 10,496 $ 10,469 Due after one year through five years 29,491 29,580 Due after five years through ten years 14,256 14,392 Due after ten years 10,678 10,829 Securities with contractual maturities 64,921 65,270 Asset-backed securities 23,551 23,425 Mortgage-backed securities 28,826 28,095 Commercial mortgage-backed securities 5,191 5,171 Collateralized mortgage obligations 2,110 2,096 Total debt securities $ 124,599 $ 124,057 At March 31, 2019 and December 31, 2018 , the Insurance Company Subsidiaries had an aggregate of $8.6 million and $8.5 million , respectively, on deposit in trust accounts to meet the deposit requirements of various state insurance departments. At March 31, 2019 and December 31, 2018 , the Company had $46.7 million and $45.4 million , respectively, 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
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." 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 three months ended March 31, 2019 , are not necessarily indicative of the results expected for the year ended December 31, 2019 . 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, 2018 , as filed with the SEC. Business The Company is engaged in the sale of property and casualty insurance products and has organized its operations into three insurance businesses: commercial insurance lines, personal insurance lines, and agency business. 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. Cash, Cash Equivalents, and Short-term Investments Cash consists of cash deposits in banks, generally in operating accounts. Cash equivalents consist of money-market funds that are specifically used as overnight investments tied to cash deposit accounts. Short-term investments, consisting of money-market funds, are classified as investments in the consolidated balance sheets as they relate to the Company’s investment activities. Lease Accounting Effective January 1, 2019, the Company adopted FASB Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) , which addresses the financial reporting of leasing transactions. This update required the recognition of a right-of-use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the consolidated statement of cash flows. We do not have any financing leases. The Company elected to use the transition option of practical expedients permitted within the new standard, which allows for the adoption of the new standard at the effective date without adjusting the comparative prior periods presented. Our operating leases consist primarily of real estate utilized in the operation of our businesses with lease terms ranging from 5 to 10 years . Management has determined the appropriate discount rate to use in calculating the right-to-use asset and lease liability is 6.75% . The Company recorded a right-of-use asset of $3.8 million and lease liabilities of $3.9 million included in Other Assets and Other Liabilities in the Consolidated Balance Sheets. Recently Issued Accounting Guidance 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. 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, 2019. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 840) , which modifies the disclosure requirements for assets and liabilities measured at fair value. The requirements to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation processes for Level 3 fair value measurements have all been removed. However, the changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period must be disclosed along with the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements (or other quantitative information if it is more reasonable). Finally, for investments measured at net asset value, the requirements have been modified so that the timing of liquidation and the date when restrictions from redemption might lapse are only disclosed if the investee has communicated the timing to the entity or announced the timing publicly. This ASU is effective for annual and interim reporting periods beginning after December 15, 2019. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
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. Net Asset Value (NAV) —The fair values of investment company limited partnership investments are based on the capital account balances reported by the investment funds subject to their management review and adjustment. These capital account balances reflect the fair value of the investment funds. 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 March 31, 2019 and December 31, 2018 (dollars in thousands): March 31, 2019 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: Debt Securities: U.S. Government $ 15,142 $ — $ 15,142 $ — State and local government 17,438 — 17,438 — Corporate debt 32,690 — 32,690 — Asset-backed securities 23,425 — 23,425 — Mortgage-backed securities 28,095 — 28,095 — Commercial mortgage-backed securities 5,171 — 5,171 — Collateralized mortgage obligations 2,096 — 2,096 — Total debt securities 124,057 — 124,057 — Equity Securities 7,784 7,520 264 — Short-term investments 8,069 8,069 — — Total marketable investments measured at fair value $ 139,910 $ 15,589 $ 124,321 $ — Investments measured at NAV: Investment in limited partnership $ 4,254 Total investments measured at NAV $ 4,254 Total assets measured at fair value $ 144,164 Liabilities: Senior Unsecured Notes * $ 22,730 $ 22,730 $ — Subordinated Notes * 10,861 — — 10,861 Total Liabilities measured at fair value $ 33,591 $ — $ 22,730 $ 10,861 * Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheet December 31, 2018 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: Debt Securities: U.S. Government $ 15,185 $ — $ 15,185 $ — State and local government 15,788 — 15,788 — Corporate debt 29,846 — 29,846 — Asset-backed securities 24,284 — 24,284 — Mortgage-backed securities 29,240 29,240 Commercial mortgage-backed securities 3,953 3,953 Collateralized mortgage obligations 2,144 2,144 Total debt securities 120,440 — 120,440 — Equity securities 6,587 6,323 264 — Short-term investments 8,925 8,925 — Total marketable investments measured at fair value $ 135,952 $ 15,248 $ 120,704 $ — Investments measured at NAV: Investment in limited partnership $ 4,150 Total investments measured at NAV $ 4,150 Total assets measured at fair value $ 140,102 Liabilities: Senior Unsecured Notes * $ 21,252 $ — $ 21,252 $ — Subordinated Notes * 10,640 — — 10,640 Total Liabilities measured at fair value $ 31,892 $ — $ 21,252 $ 10,640 * Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheet 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 10.8% of the fair value of the total investment portfolio as of March 31, 2019 . Level 2 investments include debt 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 fair value of securities included in the Level 2 category were based on the market values obtained from a third party pricing service that 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 86.2% of the fair value of the total investment portfolio as of March 31, 2019 . 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. 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 at period-ends. Based on these procedures, the Company did not adjust the prices or quotes provided from independent pricing services, investment managers or consultants. As of March 31, 2019 , Level 3 is entirely comprised of the Company's subordinated debt. In determining the fair value of the subordinated debt outstanding at March 31, 2019 , the security attributes (issue date, maturity, coupon, calls, etc.) and market rates on September 24, 2018 (the date of issuance) were fed into a valuation model. A lognormal trinomial interest rate lattice was created within the model to compute the option adjusted spread (“OAS”) which is the amount, in basis points, of interest rate required to be paid under the debt agreement over the risk-free U.S. Treasury rates. The OAS was then fed back into the model along with the March 31, 2019 , U.S. Treasury rates. A new lattice was generated and the fair value was computed from the OAS. There were no changes in assumptions of credit risk from the issuance date. 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 three months ended March 31, 2019 and 2018 , respectively. |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs | 3 Months Ended |
Mar. 31, 2019 | |
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 three months ended March 31, 2019 and 2018 . The activity in deferred policy acquisition costs, net of reinsurance transactions, is as follows (dollars in thousands): Three Months Ended 2019 2018 Balance at beginning of period $ 12,011 $ 12,781 Deferred policy acquisition costs 5,731 5,782 Amortization of policy acquisition costs (5,589 ) (6,513 ) Net change 142 (731 ) Balance at end of period $ 12,153 $ 12,050 |
Unpaid Losses and Loss Adjustme
Unpaid Losses and Loss Adjustment Expenses | 3 Months Ended |
Mar. 31, 2019 | |
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 2019 2018 Gross reserves - beginning of period $ 92,807 $ 87,896 Less: reinsurance recoverables on unpaid losses (29,685 ) (20,066 ) Plus: deferred gain on ADC 5,677 — Net reserves - beginning of period 68,799 67,830 Add: incurred losses and LAE, net of reinsurance: Current period 12,472 13,344 Prior period 1,984 (16 ) Total net incurred losses and LAE 14,456 13,328 Deduct: loss and LAE payments, net of reinsurance: Current period 1,050 1,588 Prior period 9,396 12,711 Total net loss and LAE payments 10,446 14,299 Net reserves - end of period 72,809 66,859 Plus: reinsurance recoverables on unpaid losses 24,551 20,063 Less: deferred gain on ADC (3,394 ) (1,431 ) Gross reserves - end of period $ 93,966 $ 85,491 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). As of March 31, 2019 , the Company has ceded to the limit of the ADC. The Company’s incurred losses during the three months ended March 31, 2019 , include prior-year adverse reserve development of $2.0 million . Of the $2.0 million of adverse development, $913,000 was related to commercial lines, and $1.1 million was related to personal lines. The reported reserve development is net of the amortization of the deferred gain on the ADC of $2.1 million and $137,000 for commercial and personal lines, respectively. The Company’s incurred losses during the three months ended March 31, 2018 , included favorable prior-year reserve development of $16,000 . Excluding the effect of the ADC, the commercial lines of business reported $104,000 of favorable prior-year development offset by $366,000 of unfavorable development from the personal lines of business of which $266,000 was attributable to additional 2017 losses from Hurricane Harvey. The ADC had a favorable impact of $278,000 on prior year reserve development. |
Reinsurance
Reinsurance | 3 Months Ended |
Mar. 31, 2019 | |
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 property risks in excess of $300,000 in both 2019 and 2018 and primarily ceded all specific liability risks in excess of $400,000 in 2019 , and $500,000 in 2018 . 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 of 2017 was a payment of $7.2 million , which resulted in a one-time charge to ceded premiums fully earned in the third quarter of 2017. 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 2019 ceded written and earned premium amounts include $250,000 of reinsurance reinstatement costs relating to Hurricane Irma. Three Months Ended 2019 2018 Written premiums: Direct $ 18,464 $ 18,855 Assumed 5,752 4,882 Ceded (3,894 ) (3,892 ) Net written premiums $ 20,322 $ 19,845 Earned premiums: Direct $ 18,004 $ 21,224 Assumed 7,546 6,500 Ceded (3,863 ) (3,924 ) Net earned premiums $ 21,687 $ 23,800 Losses and LAE: Direct $ 16,799 $ 12,958 Assumed 4,513 3,554 Ceded (6,856 ) (3,184 ) Net Losses and LAE $ 14,456 $ 13,328 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt The Company's debt is comprised of three instruments: $25.3 million of publicly traded senior unsecured notes which were issued in September and October of 2018, a $10.0 million line of credit which commenced in June 2018, and $10.5 million of privately placed subordinated notes (the “Subordinated Notes”). A summary of the Company's outstanding debt is as follows (dollars in thousands): March 31, 2019 December 31, 2018 Senior unsecured notes $ 24,086 $ 24,018 Subordinated notes 9,497 9,484 Line of credit 1,000 — Total $ 34,583 $ 33,502 On September 24, 2018, the Company issued $22.0 million of public senior unsecured notes (the "Notes"). Maturing on September 30, 2023, the Notes bear interest at a rate of 6.75% per annum, payable quarterly at the end of March, June, September and December. The Company may redeem the Notes, in whole or in part, at face value at any time after September 30, 2021. On October 12, 2018 the Company issued an additional $3.3 million of the Notes as the underwriters fully exercised their over-allotment option. The total aggregate principal amount of Notes sold by the Company in the public offering increased to $ 25.3 million . Proceeds from the Notes were primarily used to pay down $19.5 million of the Subordinated Notes. Effective September 24, 2018, the Company amended the terms of the Subordinated Notes to reduce the principle value to $10.5 million , change the maturity to September 30, 2038 and modify the call provisions. The amended Subordinated Notes bear interest at a rate of 7.5% per annum until September 30, 2023, and 12.5% thereafter, and allow for four quarterly interest payment deferrals. Interest is payable quarterly at the end of March, June, September and December. Beginning September 30, 2021, the Company may redeem the Subordinated Notes, in whole or in part, for a call premium of $1.1 million . The call premium escalates each quarter to ultimately $1.75 million on September 30, 2023, then steps up to $3.05 million on December 31, 2023, and increases quarterly at a 12.5% per annum rate thereafter. The debt covenants are consistent with the original Subordinated Note terms. The Company paid a $105,000 loan origination fee on the effective date. The Company recorded the Subordinated Notes amendment as a debt modification and retained the unamortized debt issuance costs from the original loan which will be amortized over the 20 -year life of the amended Subordinated Notes in conjunction with the $105,000 origination fee. The carrying value of the Notes and Subordinated Notes are offset by $1.3 million and $1.0 million of debt issuance costs, respectively. The debt issuance costs will be amortized through interest expense over the life of the loans. On June 21, 2018, the Company entered into a $10.0 million line of credit. The agreement has a maturity date of June 21, 2019 and bears interest at the London Interbank rate ("LIBOR") plus 2.75% per annum, payable monthly. The agreement includes several covenants, including but not limited to a minimum tangible net worth, a minimum fixed-charge coverage ratio, and minimum statutory risk-based capital levels. As of March 31, 2019 , the Company has drawn down $1.0 million on the line of credit. On September 29, 2017, the Company executed $30.0 million of Subordinated Notes. These Subordinated Notes were amended as described above, and $19.5 million was paid down with proceeds from the Notes. These Subordinated Notes had a maturity date of September 29, 2032, bore interest, payable quarterly at a fixed annual rate of 8.0% , and allowed for up to four quarterly interest deferrals. On the fifth and tenth anniversary of the notes, the interest rate reset to 1,250 basis points and 1,500 basis points, respectively, above the 5 -year mid-swap rate. The Subordinated 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. As of March 31, 2019, the Company was not in compliance with the tangible net worth financial covenants for the Subordinated Notes and line of credit (which are identical). In May of 2019, the holders of the Subordinated Notes and the line of credit (the “Lenders”) waived the March 31, 2019, tangible net worth requirement. Management is currently working with the Lenders to amend the existing agreements to ensure compliance in future periods. Management expects to be in compliance with all debt covenants in future periods. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity On December 5, 2018, the Company's Board of Directors authorized a stock repurchase program, under which the Company may repurchase up to one million shares of the Company's common stock. Shares may be purchased in the open market or through negotiated transactions. The program may be terminated or suspended at any time, at the discretion of the Company. The Company may in the future enter into a Rule 10b5-1 trading plan to effect a portion of the authorized purchases, if criteria set forth in the plan are met. Such a plan would enable the Company to repurchase its shares during periods outside of its normal trading windows, when the Company typically would not be active in the market. The timing of purchases, and the exact number of any shares to be purchased, will depend on market conditions. The repurchase program does not include specific price targets or timetables. For the three months ended March 31, 2019 , the Company had repurchased 125,151 shares of stock valued at approximately $510,000 . For the year ended December 31, 2018 the Company had repurchased 129,175 shares of stock valued at approximately $584,000 related to the stock repurchase program. The Company also repurchased 8,053 shares of stock valued at approximately $52,000 related to the vesting of the Company’s restricted stock units. Upon the repurchase of the Company's shares, the shares remain authorized, but not issued or outstanding. In September 2017, the Company issued $5.0 million of common equity through a private placement for 800,000 shares priced at $6.25 per share. 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 used 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. As of March 31, 2019 and December 31, 2018 the Company had 8,353,051 and 8,478,202 issued and outstanding shares of common stock, respectively. Holders of common stock are entitled to one vote per share and to receive dividends only when and if declared by the board of directors. The holders have no preemptive, conversion or subscription rights. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | 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 2019 2018 Balance at beginning of period $ (2,612 ) $ (363 ) Plus: cumulative effect of adoption of ASU No. 2016-01, net of taxes — (556 ) Plus: cumulative effect of adoption of ASU No. 2018-02, net of taxes — 77 Balance after cumulative effects (2,612 ) (842 ) Other comprehensive income (loss) before reclassifications 1,557 (1,846 ) Less: amounts reclassified from accumulated other comprehensive income (loss) (140 ) — Net current period other comprehensive income (loss) 1,697 (2,325 ) Balance at end of period $ (915 ) $ (2,688 ) |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2019 | |
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 2019 2018 Net income (loss) $ (680 ) $ 213 Weighted average common shares, basic and diluted* 8,453,570 8,520,328 Earnings (loss) per common share, basic and diluted $ (0.08 ) $ 0.02 * The nonvested shares of the restricted stock units were anti-dilutive as of March 31, 2019 and March 31, 2018 . Therefore, the basic and diluted weighted average common shares are equal for the three and three months ended March 31, 2019 and March 31, 2018 . |
Stock-based Compensation
Stock-based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation | Stock-based Compensation In 2015, the Company issued 390,352 restricted stock units ("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 dates 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. In 2018, the Company issued 70,000 RSUs to executive officers and other employees valued at $404,000 on the dates of grant. The following summarizes our RSU activity (units in thousands): Number of Units Weighted Average Grant-Date Fair Value Outstanding at December 31, 2017 307 $ 9.84 Units forfeited (3 ) 9.91 Outstanding at March 31, 2018 304 9.84 Units granted 70 5.76 Units vested (95 ) 9.84 Units forfeited (15 ) 8.77 Outstanding at December 31, 2018 264 8.91 Units forfeited (1 ) 9.56 Outstanding at March 31, 2019 263 $ 8.91 The Company recorded $245,000 and $231,000 of compensation expense related to the RSUs for the three months ended March 31, 2019 and 2018 , respectively. The total compensation cost related to the non-vested portion of the restricted stock units which has not been recognized as of March 31, 2019 , was $2.1 million . |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
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 | 3 Months Ended |
Mar. 31, 2019 | |
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 three classes of insurance businesses: commercial lines, personal lines, and wholesale agency business. Within these three businesses, the Company offers various insurance products and insurance agency services. Such insurance businesses are engaged in underwriting and marketing insurance coverages, and administering claims processing for such policies. The Company views the commercial and personal lines segments as underwriting business (business that takes on insurance underwriting risk). The wholesale agency business provides non-risk bearing revenue through commissions and policy fees. The wholesale agency business offers more insurance product options to the Company’s independent retail agents by both insurance products offered by the Company’s Insurance Subsidiaries as well as products offered by other insurers. This segment has expanded in 2019, resulting in its separate disclosure. Prior periods have been recast to reflect the separate disclosure of the wholesale agency segment. 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, and other revenue and expenses. The primary measure used for making decisions about resources to be allocated to an operating segment and assessing its 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 operating expenses of the operating segments. Operating expenses primarily include compensation and related benefits for personnel, policy issuance and claims systems, rent and utilities. The Company markets, distributes and sells its insurance products through its own insurance agencies and 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 three months ended March 31, 2019 and 2018 , gross written premiums attributable to these four states were 57% and 60% , respectively, of the Company’s total gross written premiums. The Agency business sells insurance products on behalf of the Company’s commercial and personal lines businesses as well as to third-party insurers. Certain acquisition costs incurred by the commercial and personal lines businesses are reflected as commission revenue for the Agency business and are eliminated in the Eliminations category. In addition to the reportable operating segments, the Company maintains a Corporate category to reconcile segment results to the consolidated totals. The Corporate 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, net realized investment gains, and change in fair value of equity securities 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 March 31, 2019 Commercial Lines Personal Lines Total Underwriting Wholesale Agency Corporate Eliminations Total Gross written premiums $ 22,584 $ 1,632 $ 24,216 $ — $ — $ — $ 24,216 Net written premiums $ 19,306 $ 1,016 $ 20,322 $ — $ — $ — $ 20,322 Net earned premiums $ 20,698 $ 989 $ 21,687 $ — $ — $ — $ 21,687 Other income 23 30 53 1,906 86 (1,623 ) 422 Total revenue 20,721 1,019 21,740 1,906 86 (1,623 ) 22,109 Losses and loss adjustment expenses, net 12,545 1,911 14,456 — — — 14,456 Policy acquisition costs 5,414 409 5,823 1,389 — (1,623 ) 5,589 Operating expenses 2,963 264 3,227 603 493 — 4,323 Total expenses 20,922 2,584 23,506 1,992 493 (1,623 ) 24,368 Underwriting gain (loss) $ (201 ) $ (1,565 ) $ (1,766 ) $ (86 ) $ (407 ) $ — $ (2,259 ) Net investment income 910 — 910 Net realized investment gains 19 — 19 Change in fair value of equity securities 1,265 — 1,265 Interest expense (710 ) — (710 ) Income (loss) before equity earnings of affiliates and income taxes $ 1,077 $ — $ (775 ) Three Months Ended March 31, 2018 Commercial Lines Personal Lines Total Underwriting Wholesale Agency Corporate Eliminations Total Gross written premiums $ 21,788 $ 1,949 $ 23,737 $ — $ — $ — $ 23,737 Net written premiums $ 19,422 $ 423 $ 19,845 $ — $ — $ — $ 19,845 Net earned premiums $ 20,127 $ 3,673 $ 23,800 $ — $ — $ — $ 23,800 Other income 34 74 108 1,764 29 (1,544 ) 357 Total revenue 20,161 3,747 23,908 1,764 29 (1,544 ) 24,157 Losses and loss adjustment expenses, net 10,200 3,128 13,328 — — — 13,328 Policy acquisition costs 5,833 1,033 6,866 1,191 — (1,544 ) 6,513 Operating expenses 3,384 275 3,659 408 120 — 4,187 Total expenses 19,417 4,436 23,853 1,599 120 (1,544 ) 24,028 Underwriting gain (loss) $ 744 $ (689 ) 55 165 (91 ) — 129 Net investment income 802 — 802 Net realized investment gains 161 — 161 Change in fair value of equity securities (297 ) — (297 ) Interest expense (619 ) — (619 ) Income (loss) before equity earnings of affiliates and income taxes $ (44 ) $ — $ 176 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
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." 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 three months ended March 31, 2019 , are not necessarily indicative of the results expected for the year ended December 31, 2019 . 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, 2018 , as filed with the SEC. |
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. |
Cash, Cash Equivalents, and Short-term Investments | Cash, Cash Equivalents, and Short-term Investments Cash consists of cash deposits in banks, generally in operating accounts. Cash equivalents consist of money-market funds that are specifically used as overnight investments tied to cash deposit accounts. Short-term investments, consisting of money-market funds, are classified as investments in the consolidated balance sheets as they relate to the Company’s investment activities. |
Lease Accounting | Lease Accounting Effective January 1, 2019, the Company adopted FASB Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) , which addresses the financial reporting of leasing transactions. This update required the recognition of a right-of-use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the consolidated statement of cash flows. We do not have any financing leases. The Company elected to use the transition option of practical expedients permitted within the new standard, which allows for the adoption of the new standard at the effective date without adjusting the comparative prior periods presented. Our operating leases consist primarily of real estate utilized in the operation of our businesses with lease terms ranging from 5 to 10 years . Management has determined the appropriate discount rate to use in calculating the right-to-use asset and lease liability is 6.75% . The Company recorded a right-of-use asset of $3.8 million and lease liabilities of $3.9 million included in Other Assets and Other Liabilities in the Consolidated Balance Sheets. |
Recently Issued Accounting Guidance | Recently Issued Accounting Guidance 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. 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, 2019. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 840) , which modifies the disclosure requirements for assets and liabilities measured at fair value. The requirements to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation processes for Level 3 fair value measurements have all been removed. However, the changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period must be disclosed along with the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements (or other quantitative information if it is more reasonable). Finally, for investments measured at net asset value, the requirements have been modified so that the timing of liquidation and the date when restrictions from redemption might lapse are only disclosed if the investee has communicated the timing to the entity or announced the timing publicly. This ASU is effective for annual and interim reporting periods beginning after December 15, 2019. |
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 10.8% of the fair value of the total investment portfolio as of March 31, 2019 . Level 2 investments include debt 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 fair value of securities included in the Level 2 category were based on the market values obtained from a third party pricing service that 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 86.2% of the fair value of the total investment portfolio as of March 31, 2019 . 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. 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 at period-ends. Based on these procedures, the Company did not adjust the prices or quotes provided from independent pricing services, investment managers or consultants. As of March 31, 2019 , Level 3 is entirely comprised of the Company's subordinated debt. In determining the fair value of the subordinated debt outstanding at March 31, 2019 , the security attributes (issue date, maturity, coupon, calls, etc.) and market rates on September 24, 2018 (the date of issuance) were fed into a valuation model. A lognormal trinomial interest rate lattice was created within the model to compute the option adjusted spread (“OAS”) which is the amount, in basis points, of interest rate required to be paid under the debt agreement over the risk-free U.S. Treasury rates. The OAS was then fed back into the model along with the March 31, 2019 , U.S. Treasury rates. A new lattice was generated and the fair value was computed from the OAS. There were no changes in assumptions of credit risk from the issuance date. 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 three months ended March 31, 2019 and 2018 , 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. Net Asset Value (NAV) —The fair values of investment company limited partnership investments are based on the capital account balances reported by the investment funds subject to their management review and adjustment. These capital account balances reflect the fair value of the investment funds. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 and December 31, 2018 , were as follows (dollars in thousands): March 31, 2019 Cost or Amortized Cost Gross Unrealized Estimated Fair Value Gains Losses Debt Securities: U.S. Government $ 15,236 $ 9 $ (103 ) $ 15,142 State and local government 17,135 334 (31 ) 17,438 Corporate debt 32,550 353 (213 ) 32,690 Asset-backed securities 23,551 26 (152 ) 23,425 Mortgage-backed securities 28,826 39 (770 ) 28,095 Commercial mortgage-backed securities 5,191 20 (40 ) 5,171 Collateralized mortgage obligations 2,110 10 (24 ) 2,096 Total debt securities available for sale $ 124,599 $ 791 $ (1,333 ) $ 124,057 December 31, 2018 Cost or Amortized Cost Gross Unrealized Estimated Fair Value Gains Losses Debt Securities: U.S. Government $ 15,360 $ 3 $ (178 ) $ 15,185 State and local government 15,847 115 (174 ) 15,788 Corporate debt 30,423 74 (651 ) 29,846 Asset-backed securities 24,468 24 (208 ) 24,284 Mortgage-backed securities 30,377 18 (1,155 ) 29,240 Commercial mortgage-backed securities 4,025 5 (77 ) 3,953 Collateralized mortgage obligations 2,178 9 (43 ) 2,144 Total debt securities available for sale $ 122,678 $ 248 $ (2,486 ) $ 120,440 |
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): March 31, 2019 Less than 12 months Greater than 12 months Total No. of Issues Fair Value of Investments with Unrealized Losses Gross Unrealized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Unrealized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Unrealized Losses Debt Securities: U.S. Government — $ — $ — 17 $ 14,147 $ (103 ) 17 $ 14,147 $ (103 ) State and local government 1 249 — 13 3,484 (31 ) 14 3,733 (31 ) Corporate debt 1 1,049 (2 ) 32 13,952 (211 ) 33 15,001 (213 ) Asset-backed securities 18 12,388 (99 ) 10 5,020 (53 ) 28 17,408 (152 ) Mortgage-backed securities 8 292 (3 ) 35 25,672 (767 ) 43 25,964 (770 ) Commercial mortgage-backed securities 2 180 — 4 3,103 (40 ) 6 3,283 (40 ) Collateralized mortgage obligations 5 156 (1 ) 5 1,543 (23 ) 10 1,699 (24 ) Total debt securities available for sale 35 $ 14,314 $ (105 ) 116 $ 66,921 $ (1,228 ) 151 $ 81,235 $ (1,333 ) December 31, 2018 Less than 12 months Greater than 12 months Total No. of Issues Fair Value of Investments with Unrealized Losses Gross Unrealized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Unrealized Losses No. of Issues Fair Value of Investments with Unrealized Losses Gross Unrealized Losses Debt Securities: U.S. Government 1 $ 2,470 $ (24 ) 16 $ 11,725 $ (154 ) 17 $ 14,195 $ (178 ) State and local government 21 4,935 (40 ) 16 4,273 (134 ) 37 9,208 (174 ) Corporate debt 36 12,096 (140 ) 25 11,993 (511 ) 61 24,089 (651 ) Asset-backed securities 25 17,743 (148 ) 9 4,166 (60 ) 34 21,909 (208 ) Mortgage-backed securities 20 5,474 (138 ) 30 21,715 (1,017 ) 50 27,189 (1,155 ) Commercial mortgage-backed securities 4 1,082 (12 ) 3 2,632 (65 ) 7 3,714 (77 ) Collateralized mortgage obligations 4 116 (1 ) 6 1,587 (42 ) 10 1,703 (43 ) Total debt securities available for sale 111 $ 43,916 $ (503 ) 105 $ 58,091 $ (1,983 ) 216 $ 102,007 $ (2,486 ) |
Schedule of Investment Income | The Company’s sources of net investment income are as follows (dollars in thousands): Three Months Ended March 31, 2019 2018 Debt securities $ 857 $ 826 Equity securities 40 27 Cash and cash equivalents, and short-term investments 70 23 Total investment income 967 876 Investment expenses (57 ) (74 ) Net investment income $ 910 $ 802 |
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 debt and equity securities (dollars in thousands): Three Months Ended March 31, 2019 2018 Debt securities: Gross realized gains $ 20 $ 2 Gross realized losses (50 ) (5 ) Total debt securities (30 ) (3 ) Equity securities: Gross realized gains 49 170 Gross realized losses — (6 ) Total equity securities 49 164 Total net realized investment gains (losses) $ 19 $ 161 |
Summary of Amortized Cost and Fair Value of Securities | The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at March 31, 2019 . 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 $ 10,496 $ 10,469 Due after one year through five years 29,491 29,580 Due after five years through ten years 14,256 14,392 Due after ten years 10,678 10,829 Securities with contractual maturities 64,921 65,270 Asset-backed securities 23,551 23,425 Mortgage-backed securities 28,826 28,095 Commercial mortgage-backed securities 5,191 5,171 Collateralized mortgage obligations 2,110 2,096 Total debt securities $ 124,599 $ 124,057 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 and December 31, 2018 (dollars in thousands): March 31, 2019 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: Debt Securities: U.S. Government $ 15,142 $ — $ 15,142 $ — State and local government 17,438 — 17,438 — Corporate debt 32,690 — 32,690 — Asset-backed securities 23,425 — 23,425 — Mortgage-backed securities 28,095 — 28,095 — Commercial mortgage-backed securities 5,171 — 5,171 — Collateralized mortgage obligations 2,096 — 2,096 — Total debt securities 124,057 — 124,057 — Equity Securities 7,784 7,520 264 — Short-term investments 8,069 8,069 — — Total marketable investments measured at fair value $ 139,910 $ 15,589 $ 124,321 $ — Investments measured at NAV: Investment in limited partnership $ 4,254 Total investments measured at NAV $ 4,254 Total assets measured at fair value $ 144,164 Liabilities: Senior Unsecured Notes * $ 22,730 $ 22,730 $ — Subordinated Notes * 10,861 — — 10,861 Total Liabilities measured at fair value $ 33,591 $ — $ 22,730 $ 10,861 * Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheet December 31, 2018 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: Debt Securities: U.S. Government $ 15,185 $ — $ 15,185 $ — State and local government 15,788 — 15,788 — Corporate debt 29,846 — 29,846 — Asset-backed securities 24,284 — 24,284 — Mortgage-backed securities 29,240 29,240 Commercial mortgage-backed securities 3,953 3,953 Collateralized mortgage obligations 2,144 2,144 Total debt securities 120,440 — 120,440 — Equity securities 6,587 6,323 264 — Short-term investments 8,925 8,925 — Total marketable investments measured at fair value $ 135,952 $ 15,248 $ 120,704 $ — Investments measured at NAV: Investment in limited partnership $ 4,150 Total investments measured at NAV $ 4,150 Total assets measured at fair value $ 140,102 Liabilities: Senior Unsecured Notes * $ 21,252 $ — $ 21,252 $ — Subordinated Notes * 10,640 — — 10,640 Total Liabilities measured at fair value $ 31,892 $ — $ 21,252 $ 10,640 * Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheet |
Deferred Policy Acquisition C_2
Deferred Policy Acquisition Costs (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 2019 2018 Balance at beginning of period $ 12,011 $ 12,781 Deferred policy acquisition costs 5,731 5,782 Amortization of policy acquisition costs (5,589 ) (6,513 ) Net change 142 (731 ) Balance at end of period $ 12,153 $ 12,050 |
Unpaid Losses and Loss Adjust_2
Unpaid Losses and Loss Adjustment Expenses (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 2019 2018 Gross reserves - beginning of period $ 92,807 $ 87,896 Less: reinsurance recoverables on unpaid losses (29,685 ) (20,066 ) Plus: deferred gain on ADC 5,677 — Net reserves - beginning of period 68,799 67,830 Add: incurred losses and LAE, net of reinsurance: Current period 12,472 13,344 Prior period 1,984 (16 ) Total net incurred losses and LAE 14,456 13,328 Deduct: loss and LAE payments, net of reinsurance: Current period 1,050 1,588 Prior period 9,396 12,711 Total net loss and LAE payments 10,446 14,299 Net reserves - end of period 72,809 66,859 Plus: reinsurance recoverables on unpaid losses 24,551 20,063 Less: deferred gain on ADC (3,394 ) (1,431 ) Gross reserves - end of period $ 93,966 $ 85,491 |
Reinsurance (Tables)
Reinsurance (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 2019 ceded written and earned premium amounts include $250,000 of reinsurance reinstatement costs relating to Hurricane Irma. Three Months Ended 2019 2018 Written premiums: Direct $ 18,464 $ 18,855 Assumed 5,752 4,882 Ceded (3,894 ) (3,892 ) Net written premiums $ 20,322 $ 19,845 Earned premiums: Direct $ 18,004 $ 21,224 Assumed 7,546 6,500 Ceded (3,863 ) (3,924 ) Net earned premiums $ 21,687 $ 23,800 Losses and LAE: Direct $ 16,799 $ 12,958 Assumed 4,513 3,554 Ceded (6,856 ) (3,184 ) Net Losses and LAE $ 14,456 $ 13,328 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Senior Debt | A summary of the Company's outstanding debt is as follows (dollars in thousands): March 31, 2019 December 31, 2018 Senior unsecured notes $ 24,086 $ 24,018 Subordinated notes 9,497 9,484 Line of credit 1,000 — Total $ 34,583 $ 33,502 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 2019 2018 Balance at beginning of period $ (2,612 ) $ (363 ) Plus: cumulative effect of adoption of ASU No. 2016-01, net of taxes — (556 ) Plus: cumulative effect of adoption of ASU No. 2018-02, net of taxes — 77 Balance after cumulative effects (2,612 ) (842 ) Other comprehensive income (loss) before reclassifications 1,557 (1,846 ) Less: amounts reclassified from accumulated other comprehensive income (loss) (140 ) — Net current period other comprehensive income (loss) 1,697 (2,325 ) Balance at end of period $ (915 ) $ (2,688 ) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 2019 2018 Net income (loss) $ (680 ) $ 213 Weighted average common shares, basic and diluted* 8,453,570 8,520,328 Earnings (loss) per common share, basic and diluted $ (0.08 ) $ 0.02 * The nonvested shares of the restricted stock units were anti-dilutive as of March 31, 2019 and March 31, 2018 . Therefore, the basic and diluted weighted average common shares are equal for the three and three months ended March 31, 2019 and March 31, 2018 . |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Nonvested Restricted Stock Units Activity | The following summarizes our RSU activity (units in thousands): Number of Units Weighted Average Grant-Date Fair Value Outstanding at December 31, 2017 307 $ 9.84 Units forfeited (3 ) 9.91 Outstanding at March 31, 2018 304 9.84 Units granted 70 5.76 Units vested (95 ) 9.84 Units forfeited (15 ) 8.77 Outstanding at December 31, 2018 264 8.91 Units forfeited (1 ) 9.56 Outstanding at March 31, 2019 263 $ 8.91 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | The following tables present information by reportable operating segment (dollars in thousands): Three Months Ended March 31, 2019 Commercial Lines Personal Lines Total Underwriting Wholesale Agency Corporate Eliminations Total Gross written premiums $ 22,584 $ 1,632 $ 24,216 $ — $ — $ — $ 24,216 Net written premiums $ 19,306 $ 1,016 $ 20,322 $ — $ — $ — $ 20,322 Net earned premiums $ 20,698 $ 989 $ 21,687 $ — $ — $ — $ 21,687 Other income 23 30 53 1,906 86 (1,623 ) 422 Total revenue 20,721 1,019 21,740 1,906 86 (1,623 ) 22,109 Losses and loss adjustment expenses, net 12,545 1,911 14,456 — — — 14,456 Policy acquisition costs 5,414 409 5,823 1,389 — (1,623 ) 5,589 Operating expenses 2,963 264 3,227 603 493 — 4,323 Total expenses 20,922 2,584 23,506 1,992 493 (1,623 ) 24,368 Underwriting gain (loss) $ (201 ) $ (1,565 ) $ (1,766 ) $ (86 ) $ (407 ) $ — $ (2,259 ) Net investment income 910 — 910 Net realized investment gains 19 — 19 Change in fair value of equity securities 1,265 — 1,265 Interest expense (710 ) — (710 ) Income (loss) before equity earnings of affiliates and income taxes $ 1,077 $ — $ (775 ) Three Months Ended March 31, 2018 Commercial Lines Personal Lines Total Underwriting Wholesale Agency Corporate Eliminations Total Gross written premiums $ 21,788 $ 1,949 $ 23,737 $ — $ — $ — $ 23,737 Net written premiums $ 19,422 $ 423 $ 19,845 $ — $ — $ — $ 19,845 Net earned premiums $ 20,127 $ 3,673 $ 23,800 $ — $ — $ — $ 23,800 Other income 34 74 108 1,764 29 (1,544 ) 357 Total revenue 20,161 3,747 23,908 1,764 29 (1,544 ) 24,157 Losses and loss adjustment expenses, net 10,200 3,128 13,328 — — — 13,328 Policy acquisition costs 5,833 1,033 6,866 1,191 — (1,544 ) 6,513 Operating expenses 3,384 275 3,659 408 120 — 4,187 Total expenses 19,417 4,436 23,853 1,599 120 (1,544 ) 24,028 Underwriting gain (loss) $ 744 $ (689 ) 55 165 (91 ) — 129 Net investment income 802 — 802 Net realized investment gains 161 — 161 Change in fair value of equity securities (297 ) — (297 ) Interest expense (619 ) — (619 ) Income (loss) before equity earnings of affiliates and income taxes $ (44 ) $ — $ 176 |
Investments - Available-for-sal
Investments - Available-for-sale Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Debt maturity securities, amortized cost | $ 124,599 | $ 122,678 |
Debt securities, gross unrealized gain | 791 | 248 |
Debt securities, gross unrealized loss | (1,333) | (2,486) |
Total debt securities | 124,057 | 120,440 |
U.S. Government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt maturity securities, amortized cost | 15,236 | 15,360 |
Debt securities, gross unrealized gain | 9 | 3 |
Debt securities, gross unrealized loss | (103) | (178) |
Total debt securities | 15,142 | 15,185 |
State and local government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt maturity securities, amortized cost | 17,135 | 15,847 |
Debt securities, gross unrealized gain | 334 | 115 |
Debt securities, gross unrealized loss | (31) | (174) |
Total debt securities | 17,438 | 15,788 |
Corporate debt | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt maturity securities, amortized cost | 32,550 | 30,423 |
Debt securities, gross unrealized gain | 353 | 74 |
Debt securities, gross unrealized loss | (213) | (651) |
Total debt securities | 32,690 | 29,846 |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt maturity securities, amortized cost | 23,551 | 24,468 |
Debt securities, gross unrealized gain | 26 | 24 |
Debt securities, gross unrealized loss | (152) | (208) |
Total debt securities | 23,425 | 24,284 |
Mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt maturity securities, amortized cost | 28,826 | 30,377 |
Debt securities, gross unrealized gain | 39 | 18 |
Debt securities, gross unrealized loss | (770) | (1,155) |
Total debt securities | 28,095 | 29,240 |
Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt maturity securities, amortized cost | 5,191 | 4,025 |
Debt securities, gross unrealized gain | 20 | 5 |
Debt securities, gross unrealized loss | (40) | (77) |
Total debt securities | 5,171 | 3,953 |
Collateralized mortgage obligations | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt maturity securities, amortized cost | 2,110 | 2,178 |
Debt securities, gross unrealized gain | 10 | 9 |
Debt securities, gross unrealized loss | (24) | (43) |
Total debt securities | $ 2,096 | $ 2,144 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Narrative (Details) $ in Millions | Mar. 31, 2019state | Jan. 01, 2019USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Number of states in which entity operates | state | 50 | |
Discount rate | 6.75% | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use asset | $ 3.8 | |
Lease liability | $ 3.9 | |
Affiliate | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Ownership percentage | 50.00% | |
Minimum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Lease term | 5 years | |
Maximum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Lease term | 10 years |
Investments - Available-for-s_2
Investments - Available-for-sale Securities in Unrealized Loss Positions (Details) $ in Thousands | Mar. 31, 2019USD ($)security | Dec. 31, 2018USD ($)security |
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract] | ||
Debt securities, less than 12 months, number of issues | security | 35 | |
Debt securities, greater than 12 months, number of issues | security | 116 | |
Debt securities, number of issues | security | 151 | |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 14,314 | |
Debt securities, greater than 12 months, fair value | 66,921 | |
Debt securities, fair value | 81,235 | |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (105) | |
Debt securities, greater than 12 months, unrealized losses | (1,228) | |
Debt securities, total unrealized losses | $ (1,333) | |
Asset-backed securities | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract] | ||
Debt securities, less than 12 months, number of issues | security | 18 | 25 |
Debt securities, greater than 12 months, number of issues | security | 10 | 9 |
Debt securities, number of issues | security | 28 | 34 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 12,388 | $ 17,743 |
Debt securities, greater than 12 months, fair value | 5,020 | 4,166 |
Debt securities, fair value | 17,408 | 21,909 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (99) | (148) |
Debt securities, greater than 12 months, unrealized losses | (53) | (60) |
Debt securities, total unrealized losses | $ (152) | $ (208) |
Corporate debt | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract] | ||
Debt securities, less than 12 months, number of issues | security | 1 | 36 |
Debt securities, greater than 12 months, number of issues | security | 32 | 25 |
Debt securities, number of issues | security | 33 | 61 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 1,049 | $ 12,096 |
Debt securities, greater than 12 months, fair value | 13,952 | 11,993 |
Debt securities, fair value | 15,001 | 24,089 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (2) | (140) |
Debt securities, greater than 12 months, unrealized losses | (211) | (511) |
Debt securities, total unrealized losses | $ (213) | $ (651) |
State and local government | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract] | ||
Debt securities, less than 12 months, number of issues | security | 1 | 21 |
Debt securities, greater than 12 months, number of issues | security | 13 | 16 |
Debt securities, number of issues | security | 14 | 37 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 249 | $ 4,935 |
Debt securities, greater than 12 months, fair value | 3,484 | 4,273 |
Debt securities, fair value | 3,733 | 9,208 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | 0 | (40) |
Debt securities, greater than 12 months, unrealized losses | (31) | (134) |
Debt securities, total unrealized losses | $ (31) | $ (174) |
U.S. Government | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract] | ||
Debt securities, less than 12 months, number of issues | security | 0 | 1 |
Debt securities, greater than 12 months, number of issues | security | 17 | 16 |
Debt securities, number of issues | security | 17 | 17 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 0 | $ 2,470 |
Debt securities, greater than 12 months, fair value | 14,147 | 11,725 |
Debt securities, fair value | 14,147 | 14,195 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | 0 | (24) |
Debt securities, greater than 12 months, unrealized losses | (103) | (154) |
Debt securities, total unrealized losses | $ (103) | $ (178) |
Mortgage-backed securities | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract] | ||
Debt securities, less than 12 months, number of issues | security | 8 | 20 |
Debt securities, greater than 12 months, number of issues | security | 35 | 30 |
Debt securities, number of issues | security | 43 | 50 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 292 | $ 5,474 |
Debt securities, greater than 12 months, fair value | 25,672 | 21,715 |
Debt securities, fair value | 25,964 | 27,189 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (3) | (138) |
Debt securities, greater than 12 months, unrealized losses | (767) | (1,017) |
Debt securities, total unrealized losses | $ (770) | $ (1,155) |
Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract] | ||
Debt securities, less than 12 months, number of issues | security | 2 | 4 |
Debt securities, greater than 12 months, number of issues | security | 4 | 3 |
Debt securities, number of issues | security | 6 | 7 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 180 | $ 1,082 |
Debt securities, greater than 12 months, fair value | 3,103 | 2,632 |
Debt securities, fair value | 3,283 | 3,714 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | 0 | (12) |
Debt securities, greater than 12 months, unrealized losses | (40) | (65) |
Debt securities, total unrealized losses | $ (40) | $ (77) |
Collateralized mortgage obligations | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract] | ||
Debt securities, less than 12 months, number of issues | security | 5 | 4 |
Debt securities, greater than 12 months, number of issues | security | 5 | 6 |
Debt securities, number of issues | security | 10 | 10 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 156 | $ 116 |
Debt securities, greater than 12 months, fair value | 1,543 | 1,587 |
Debt securities, fair value | 1,699 | 1,703 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (1) | (1) |
Debt securities, greater than 12 months, unrealized losses | (23) | (42) |
Debt securities, total unrealized losses | $ (24) | $ (43) |
Total debt securities available for sale | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract] | ||
Debt securities, less than 12 months, number of issues | security | 111 | |
Debt securities, greater than 12 months, number of issues | security | 105 | |
Debt securities, number of issues | security | 216 | |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 43,916 | |
Debt securities, greater than 12 months, fair value | 58,091 | |
Debt securities, fair value | 102,007 | |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (503) | |
Debt securities, greater than 12 months, unrealized losses | (1,983) | |
Debt securities, total unrealized losses | $ (2,486) |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net Investment Income [Line Items] | ||
Investment income | $ 967 | $ 876 |
Investment expenses | (57) | (74) |
Net investment income | 910 | 802 |
Debt securities | ||
Net Investment Income [Line Items] | ||
Investment income | 857 | 826 |
Equity securities | ||
Net Investment Income [Line Items] | ||
Investment income | 40 | 27 |
Cash and cash equivalents, and short-term investments | ||
Net Investment Income [Line Items] | ||
Investment income | $ 70 | $ 23 |
Investments - Gross Realized Ga
Investments - Gross Realized Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Debt securities: | ||
Gross realized gains | $ 20 | $ 2 |
Gross realized losses | (50) | (5) |
Total debt securities | (30) | (3) |
Equity securities: | ||
Gross realized gains | 49 | 170 |
Gross realized losses | 0 | (6) |
Total equity securities | 49 | 164 |
Total net realized investment gains (losses) | $ 19 | $ 161 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |||
Proceeds from sale of available-for-sale debt securities | $ 4.1 | $ 2.7 | |
Deposits held in trust accounts | 8.6 | $ 8.5 | |
Deposits, held in trust for collateral requirements | $ 46.7 | $ 45.4 |
Investments - Available-for-s_3
Investments - Available-for-sale Fixed Maturity Securities by Contractual Maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Amortized Cost | ||
Due in one year or less | $ 10,496 | |
Due after one year through five years | 29,491 | |
Due after five years through ten years | 14,256 | |
Due after ten years | 10,678 | |
Securities with contractual maturities | 64,921 | |
Total debt securities | 124,599 | $ 122,678 |
Estimated Fair Value | ||
Due in one year or less | 10,469 | |
Due after one year through five years | 29,580 | |
Due after five years through ten years | 14,392 | |
Due after ten years | 10,829 | |
Securities with contractual maturities | 65,270 | |
Total debt securities | 124,057 | 120,440 |
Asset-backed securities | ||
Amortized Cost | ||
Total debt securities | 23,551 | 24,468 |
Estimated Fair Value | ||
Total debt securities | 23,425 | 24,284 |
Mortgage-backed securities | ||
Amortized Cost | ||
Total debt securities | 28,826 | 30,377 |
Estimated Fair Value | ||
Total debt securities | 28,095 | 29,240 |
Commercial mortgage-backed securities | ||
Amortized Cost | ||
Total debt securities | 5,191 | 4,025 |
Estimated Fair Value | ||
Total debt securities | 5,171 | 3,953 |
Collateralized mortgage obligations | ||
Amortized Cost | ||
Total debt securities | 2,110 | 2,178 |
Estimated Fair Value | ||
Total debt securities | $ 2,096 | $ 2,144 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets: | ||
Total debt securities | $ 124,057 | $ 120,440 |
Equity securities | 7,784 | 6,587 |
Short-term investments | 8,069 | 8,925 |
Total marketable investments measured at fair value | 139,910 | 135,952 |
Investments measured at NAV | 4,254 | 4,150 |
Total assets measured at fair value | 144,164 | 140,102 |
Liabilities: | ||
Total Liabilities measured at fair value | 33,591 | 31,892 |
U.S. Government | ||
Assets: | ||
Total debt securities | 15,142 | 15,185 |
State and local government | ||
Assets: | ||
Total debt securities | 17,438 | 15,788 |
Corporate debt | ||
Assets: | ||
Total debt securities | 32,690 | 29,846 |
Asset-backed securities | ||
Assets: | ||
Total debt securities | 23,425 | 24,284 |
Mortgage-backed securities | ||
Assets: | ||
Total debt securities | 28,095 | 29,240 |
Commercial mortgage-backed securities | ||
Assets: | ||
Total debt securities | 5,171 | 3,953 |
Collateralized mortgage obligations | ||
Assets: | ||
Total debt securities | 2,096 | 2,144 |
Senior Unsecured Notes | ||
Liabilities: | ||
Debt | 22,730 | 21,252 |
Subordinated notes | ||
Liabilities: | ||
Debt | 10,861 | 10,640 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Total debt securities | 0 | 0 |
Equity securities | 7,520 | 6,323 |
Short-term investments | 8,069 | 8,925 |
Total marketable investments measured at fair value | 15,589 | 15,248 |
Liabilities: | ||
Total Liabilities measured at fair value | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Government | ||
Assets: | ||
Total debt securities | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | State and local government | ||
Assets: | ||
Total debt securities | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate debt | ||
Assets: | ||
Total debt securities | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Asset-backed securities | ||
Assets: | ||
Total debt securities | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Mortgage-backed securities | ||
Assets: | ||
Total debt securities | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Commercial mortgage-backed securities | ||
Assets: | ||
Total debt securities | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Collateralized mortgage obligations | ||
Assets: | ||
Total debt securities | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Senior Unsecured Notes | ||
Liabilities: | ||
Debt | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Subordinated notes | ||
Liabilities: | ||
Debt | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Total debt securities | 124,057 | 120,440 |
Equity securities | 264 | 264 |
Short-term investments | 0 | |
Total marketable investments measured at fair value | 124,321 | 120,704 |
Liabilities: | ||
Total Liabilities measured at fair value | 22,730 | 21,252 |
Significant Other Observable Inputs (Level 2) | U.S. Government | ||
Assets: | ||
Total debt securities | 15,142 | 15,185 |
Significant Other Observable Inputs (Level 2) | State and local government | ||
Assets: | ||
Total debt securities | 17,438 | 15,788 |
Significant Other Observable Inputs (Level 2) | Corporate debt | ||
Assets: | ||
Total debt securities | 32,690 | 29,846 |
Significant Other Observable Inputs (Level 2) | Asset-backed securities | ||
Assets: | ||
Total debt securities | 23,425 | 24,284 |
Significant Other Observable Inputs (Level 2) | Mortgage-backed securities | ||
Assets: | ||
Total debt securities | 28,095 | 29,240 |
Significant Other Observable Inputs (Level 2) | Commercial mortgage-backed securities | ||
Assets: | ||
Total debt securities | 5,171 | 3,953 |
Significant Other Observable Inputs (Level 2) | Collateralized mortgage obligations | ||
Assets: | ||
Total debt securities | 2,096 | 2,144 |
Significant Other Observable Inputs (Level 2) | Senior Unsecured Notes | ||
Liabilities: | ||
Debt | 22,730 | 21,252 |
Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Total debt securities | 0 | |
Equity securities | 0 | 0 |
Short-term investments | 0 | 0 |
Total marketable investments measured at fair value | 0 | |
Liabilities: | ||
Total Liabilities measured at fair value | 10,861 | 10,640 |
Significant Unobservable Inputs (Level 3) | U.S. Government | ||
Assets: | ||
Total debt securities | 0 | 0 |
Significant Unobservable Inputs (Level 3) | State and local government | ||
Assets: | ||
Total debt securities | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Corporate debt | ||
Assets: | ||
Total debt securities | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Asset-backed securities | ||
Assets: | ||
Total debt securities | 0 | |
Significant Unobservable Inputs (Level 3) | Senior Unsecured Notes | ||
Liabilities: | ||
Debt | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Subordinated notes | ||
Liabilities: | ||
Debt | 10,861 | 10,640 |
Partnership interest | ||
Assets: | ||
Investments measured at NAV | $ 4,254 | $ 4,150 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | Mar. 31, 2019 |
Level 1 | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Investment portfolio percentage | 10.80% |
Level 2 | |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | |
Investment portfolio percentage | 86.20% |
Deferred Policy Acquisition C_3
Deferred Policy Acquisition Costs - Activity in Deferred Policy Acquisition Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | ||
Balance at beginning of period | $ 12,011 | $ 12,781 |
Deferred policy acquisition costs | 5,731 | 5,782 |
Amortization of policy acquisition costs | (5,589) | (6,513) |
Net change | 142 | (731) |
Balance at end of period | $ 12,153 | $ 12,050 |
Unpaid Losses and Loss Adjust_3
Unpaid Losses and Loss Adjustment Expenses - Changes in the Liability for Unpaid Losses and Loss Adjustment Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Gross reserves - beginning of period | $ 92,807 | $ 87,896 | ||
Less: reinsurance recoverables on unpaid losses | (29,685) | (20,066) | ||
Plus: deferred gain on ADC | (3,394) | (1,431) | $ (5,677) | $ 0 |
Net reserves - beginning of period | 68,799 | 67,830 | ||
Add: incurred losses and LAE, net of reinsurance: | ||||
Current period | 12,472 | 13,344 | ||
Prior period | (1,984) | 16 | ||
Total net incurred losses and LAE | 14,456 | 13,328 | ||
Deduct: loss and LAE payments, net of reinsurance: | ||||
Current period | 1,050 | 1,588 | ||
Prior period | 9,396 | 12,711 | ||
Total net loss and LAE payments | 10,446 | 14,299 | ||
Net reserves - end of period | 72,809 | 66,859 | ||
Plus: reinsurance recoverables on unpaid losses | (24,551) | (20,063) | ||
Less: deferred gain on ADC | 3,394 | 1,431 | $ 5,677 | $ 0 |
Gross reserves - end of period | $ 93,966 | $ 85,491 |
Unpaid Losses and Loss Adjust_4
Unpaid Losses and Loss Adjustment Expenses - Narrative (Details) - USD ($) | Sep. 28, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Unpaid losses and loss adjustment expenses | $ 93,966,000 | $ 85,491,000 | $ 92,807,000 | $ 87,896,000 | ||
Prior-year adverse (favorable) reserve development | 1,984,000 | (16,000) | ||||
Offset amount by favorable development | 278,000 | |||||
Commercial Lines | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Prior-year adverse (favorable) reserve development | 913,000 | (104,000) | ||||
Amortization of deferred gain on ADC | 2,100,000 | |||||
Personal Lines | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Prior-year adverse (favorable) reserve development | 1,100,000 | 366,000 | ||||
Amortization of deferred gain on ADC | $ 137,000 | |||||
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 | Personal Lines | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Prior-year adverse (favorable) reserve development | $ 266,000 | |||||
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 | ||
Mar. 31, 2019 | Mar. 31, 2018 | Sep. 30, 2017 | |
Effects of Reinsurance [Line Items] | |||
Consideration payment | $ 7,200,000 | ||
Contingent recovery, percentage | 35.00% | ||
Reinsurance reinstatement cost | $ 250,000 | ||
Property Risk | Maximum | |||
Effects of Reinsurance [Line Items] | |||
Amount retained (excess of) | 300,000 | $ 300,000 | |
Liability Risk | Maximum | |||
Effects of Reinsurance [Line Items] | |||
Amount retained (excess of) | $ 400,000 | $ 500,000 |
Reinsurance - Effects of Reinsu
Reinsurance - Effects of Reinsurance and Assumption Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Written premiums: | ||
Direct | $ 18,464 | $ 18,855 |
Assumed | 5,752 | 4,882 |
Ceded | (3,894) | (3,892) |
Net written premiums | 20,322 | 19,845 |
Earned premiums: | ||
Direct | 18,004 | 21,224 |
Assumed | 7,546 | 6,500 |
Ceded | (3,863) | (3,924) |
Net earned premiums | 21,687 | 23,800 |
Losses and LAE: | ||
Direct | 16,799 | 12,958 |
Assumed | 4,513 | 3,554 |
Ceded | (6,856) | (3,184) |
Total net incurred losses and LAE | $ 14,456 | $ 13,328 |
Debt - Narrative (Details)
Debt - Narrative (Details) | Oct. 12, 2018USD ($) | Sep. 24, 2018USD ($) | Jun. 21, 2018USD ($) | Sep. 29, 2017USD ($) | Mar. 31, 2019USD ($)debt_instrument |
Debt Instrument [Line Items] | |||||
Number of debt instruments | debt_instrument | 3 | ||||
Senior Unsecured Notes | Senior Unsecured Notes | |||||
Debt Instrument [Line Items] | |||||
Face amount of debt | $ 25,300,000 | $ 25,300,000 | |||
Debt issued | 3,300,000 | $ 22,000,000 | |||
Interest rate | 6.75% | ||||
Debt issuance costs | 1,300,000 | ||||
Subordinated notes | Subordinated notes | |||||
Debt Instrument [Line Items] | |||||
Face amount of debt | $ 10,500,000 | $ 30,000,000 | 10,500,000 | ||
Debt repaid | $ 19,500,000 | ||||
Call premium percentage | 12.50% | ||||
Loan origination fee | $ 105,000 | ||||
Debt term | 20 years | ||||
Debt issuance costs | 1,000,000 | ||||
Derivative, basis spread on fixed rate | 8.00% | ||||
Subordinated notes | Swap rate | Subordinated notes | |||||
Debt Instrument [Line Items] | |||||
Debt term | 5 years | ||||
Line of credit | |||||
Debt Instrument [Line Items] | |||||
Borrowing capacity | $ 10,000,000 | $ 10,000,000 | |||
Line of credit | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Variable interest rate | 2.75% | ||||
Debt Instrument, Redemption, Period One | Subordinated notes | Subordinated notes | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 7.50% | ||||
Call premium | $ 1,100,000 | ||||
Debt Instrument, Redemption, Period Two | Subordinated notes | Subordinated notes | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 12.50% | ||||
Call premium | $ 1,750,000 | ||||
Debt Instrument, Redemption, Period Three | Subordinated notes | Subordinated notes | |||||
Debt Instrument [Line Items] | |||||
Call premium | $ 3,050,000 | ||||
Period One | Subordinated notes | Swap rate | Subordinated notes | |||||
Debt Instrument [Line Items] | |||||
Derivative, basis spread on fixed rate | 1250.00% | ||||
Period Two | Subordinated notes | Swap rate | Subordinated notes | |||||
Debt Instrument [Line Items] | |||||
Derivative, basis spread on variable rate | 1500.00% |
Debt - Outstanding Senior Debt
Debt - Outstanding Senior Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Debt | $ 34,583 | $ 33,502 |
Senior Unsecured Notes | ||
Debt Instrument [Line Items] | ||
Debt | 24,086 | 24,018 |
Subordinated notes | ||
Debt Instrument [Line Items] | ||
Debt | 9,497 | 9,484 |
Line of credit | ||
Debt Instrument [Line Items] | ||
Debt | $ 1,000 | $ 0 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 05, 2018 | Mar. 31, 2018 | |
Equity, Class of Treasury Stock [Line Items] | |||||
Common equity issued | $ 5,000 | ||||
Common stock, shares issued (in shares) | 8,353,051 | 8,478,202 | |||
Common stock, shares outstanding (in shares) | 8,353,051 | 8,478,202 | |||
Common stocks | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Common stock, shares issued (in shares) | 8,353,051 | 8,478,202 | |||
Common stock, shares outstanding (in shares) | 8,353,051 | 8,478,202 | |||
Stock Repurchase Program, December 2018 | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Number of shares authorized for repurchase (in shares) | 1,000,000 | ||||
Shares repurchased (in shares) | 125,151 | 129,175 | |||
Shares repurchased | $ 510 | $ 584 | |||
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 | ||||
Restricted Stock Units (RSUs) | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Shares repurchased (in shares) | 8,053 | ||||
Shares repurchased | $ 52 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Jan. 01, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | $ 42,163 | $ 52,826 | |
Other comprehensive income (loss) before reclassifications | 1,557 | (1,846) | |
Less: amounts reclassified from accumulated other comprehensive income (loss) | (140) | 0 | |
Net current period other comprehensive income (loss) | 1,697 | (2,325) | |
Balance at end of period | 42,915 | 51,424 | |
Accumulated Other Comprehensive Income (Loss) | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | (2,612) | (363) | |
Balance after cumulative effects | $ (842) | ||
Balance at end of period | $ (915) | $ (2,688) | |
Accounting Standards Update 2016-01 | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Cumulative effect of adoption of ASU, net of taxes | 0 | ||
Accounting Standards Update 2016-01 | Accumulated Other Comprehensive Income (Loss) | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Cumulative effect of adoption of ASU, net of taxes | (556) | ||
Accounting Standards Update 2018-02 | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Cumulative effect of adoption of ASU, net of taxes | 0 | ||
Accounting Standards Update 2018-02 | Accumulated Other Comprehensive Income (Loss) | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Cumulative effect of adoption of ASU, net of taxes | $ 77 |
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 | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |||
Net income (loss) | $ (680) | $ 213 | $ (9,440) |
Weighted average common shares outstanding, basic and diluted (in shares) | 8,453,570 | 8,520,328 | |
Earnings (loss) per per common share, basic and diluted (in dollars per share) | $ (0.08) | $ 0.02 |
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 | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares granted in period (in shares) | 70,000 | 70,000 | 111,281 | 390,352 | ||
Shares granted in period | $ 404 | $ 909 | $ 4,100 | |||
Share-based compensation expense | $ 245 | $ 231 | ||||
Share-based compensation expense not yet recognized | $ 2,100 |
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 | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Units | ||||||
Beginning period, outstanding (in shares) | 264,000 | 307,000 | 304,000 | 307,000 | ||
Units granted (in shares) | 70,000 | 70,000 | 111,281 | 390,352 | ||
Units vested (in shares) | (95,000) | |||||
Units forfeited (in shares) | (1,000) | (3,000) | (15,000) | |||
Ending period, outstanding (in shares) | 263,000 | 304,000 | 264,000 | 264,000 | ||
Weighted Average Grant-Date Fair Value | ||||||
Beginning period, outstanding (in dollars per share) | $ 8.91 | $ 9.84 | $ 9.84 | $ 9.84 | ||
Units granted (in dollars per share) | 5.76 | |||||
Units vested (in dollars per share) | 9.84 | |||||
Units forfeited (in dollars per share) | 9.56 | 9.91 | 8.77 | |||
Ending period, outstanding (in dollars per share) | $ 8.91 | $ 9.84 | $ 8.91 | $ 8.91 |
Segment Information - Narrative
Segment Information - Narrative (Details) - business | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Number of businesses | 3 | |
Gross Written Premiums | Geographic Concentration Risk | Florida, Michigan, Pennsylvania and Texas | ||
Segment Reporting Information [Line Items] | ||
Concentration risk | 57.00% | 60.00% |
Segment Information - Informati
Segment Information - Information by Reportable Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Gross written premiums | $ 24,216 | $ 23,737 |
Net written premiums | 20,322 | 19,845 |
Net earned premiums | 21,687 | 23,800 |
Other income | 422 | 357 |
Total revenue | 22,109 | 24,157 |
Losses and loss adjustment expenses, net | 14,456 | 13,328 |
Policy acquisition costs | 5,589 | 6,513 |
Operating expenses | 4,323 | 4,187 |
Total expenses | 24,368 | 24,028 |
Underwriting gain (loss) | (2,259) | 129 |
Net investment income | 910 | 802 |
Net realized investment gains | 19 | 161 |
Change in fair value of equity securities | 1,265 | (297) |
Interest expense | (710) | (619) |
Income (loss) before equity earnings of affiliates and income taxes | (775) | 176 |
Operating Segments | Commercial Lines | ||
Segment Reporting Information [Line Items] | ||
Gross written premiums | 22,584 | 21,788 |
Net written premiums | 19,306 | 19,422 |
Net earned premiums | 20,698 | 20,127 |
Other income | 23 | 34 |
Total revenue | 20,721 | 20,161 |
Losses and loss adjustment expenses, net | 12,545 | 10,200 |
Policy acquisition costs | 5,414 | 5,833 |
Operating expenses | 2,963 | 3,384 |
Total expenses | 20,922 | 19,417 |
Underwriting gain (loss) | (201) | 744 |
Operating Segments | Personal Lines | ||
Segment Reporting Information [Line Items] | ||
Gross written premiums | 1,632 | 1,949 |
Net written premiums | 1,016 | 423 |
Net earned premiums | 989 | 3,673 |
Other income | 30 | 74 |
Total revenue | 1,019 | 3,747 |
Losses and loss adjustment expenses, net | 1,911 | 3,128 |
Policy acquisition costs | 409 | 1,033 |
Operating expenses | 264 | 275 |
Total expenses | 2,584 | 4,436 |
Underwriting gain (loss) | (1,565) | (689) |
Operating Segments | Total Underwriting | ||
Segment Reporting Information [Line Items] | ||
Gross written premiums | 24,216 | |
Net written premiums | 20,322 | |
Net earned premiums | 21,687 | |
Other income | 53 | |
Total revenue | 21,740 | |
Losses and loss adjustment expenses, net | 14,456 | |
Policy acquisition costs | 5,823 | |
Operating expenses | 3,227 | |
Total expenses | 23,506 | |
Underwriting gain (loss) | (1,766) | |
Operating Segments | Wholesale Agency | ||
Segment Reporting Information [Line Items] | ||
Gross written premiums | 0 | |
Net written premiums | 0 | |
Net earned premiums | 0 | |
Other income | 1,906 | |
Total revenue | 1,906 | |
Losses and loss adjustment expenses, net | 0 | |
Policy acquisition costs | 1,389 | |
Operating expenses | 603 | |
Total expenses | 1,992 | |
Underwriting gain (loss) | (86) | |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Gross written premiums | 0 | 0 |
Net written premiums | 0 | 0 |
Net earned premiums | 0 | 0 |
Other income | 86 | (1,544) |
Total revenue | 86 | (1,544) |
Losses and loss adjustment expenses, net | 0 | 0 |
Policy acquisition costs | 0 | (1,544) |
Operating expenses | 493 | 0 |
Total expenses | 493 | (1,544) |
Underwriting gain (loss) | (407) | 0 |
Net investment income | 910 | 0 |
Net realized investment gains | 19 | 0 |
Change in fair value of equity securities | 1,265 | 0 |
Interest expense | (710) | 0 |
Income (loss) before equity earnings of affiliates and income taxes | 1,077 | $ 0 |
Eliminations | ||
Segment Reporting Information [Line Items] | ||
Gross written premiums | 0 | |
Net written premiums | 0 | |
Net earned premiums | 0 | |
Other income | (1,623) | |
Total revenue | (1,623) | |
Losses and loss adjustment expenses, net | 0 | |
Policy acquisition costs | (1,623) | |
Operating expenses | 0 | |
Total expenses | (1,623) | |
Underwriting gain (loss) | 0 | |
Net investment income | 0 | |
Net realized investment gains | 0 | |
Change in fair value of equity securities | 0 | |
Interest expense | 0 | |
Income (loss) before equity earnings of affiliates and income taxes | $ 0 |
Uncategorized Items - cnfr-2019
Label | Element | Value |
Accounting Standards Update 2016-01 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 556,000 |
Accounting Standards Update 2018-02 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (77,000) |