Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 09, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | Conifer Holdings, Inc. | |
Entity Central Index Key | 0001502292 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 12,216,324 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Title of 12(b) Security | Common Stock, no par value | |
Trading Symbol | CNFR | |
Security Exchange Name | NASDAQ | |
Entity File Number | 001-37536 | |
Entity Incorporation, State or Country Code | MI | |
Entity Tax Identification Number | 27-1298795 | |
Entity Address, Address Line One | 3001 West Big Beaver Road | |
Entity Address, Address Line Two | Suite 200 | |
Entity Address, City or Town | Troy | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48084 | |
City Area Code | 248 | |
Local Phone Number | 559-0840 | |
Entity Interactive Data Current | Yes | |
Document Quarterly Report | true | |
Document Transition Report | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Investment securities: | ||
Debt securities, at fair value (amortized cost of $129,372 and $150,732, respectively) | $ 111,847 | $ 149,783 |
Equity securities, at fair value (cost of $1,906 and $10,972, respectively) | 1,312 | 9,931 |
Short-term investments, at fair value | 30,562 | 23,013 |
Total investments | 143,721 | 182,727 |
Cash and cash equivalents | 35,413 | 9,913 |
Premiums and agents' balances receivable, net | 21,856 | 21,197 |
Receivable from Affiliate | 5,862 | 5,784 |
Reinsurance recoverables on unpaid losses | 41,749 | 40,344 |
Reinsurance recoverables on paid losses | 2,489 | 1,347 |
Prepaid reinsurance premiums | 15,333 | 8,301 |
Deferred policy acquisition costs | 10,483 | 12,267 |
Other assets | 9,096 | 8,524 |
Total assets | 286,002 | 290,404 |
Liabilities: | ||
Unpaid losses and loss adjustment expenses | 144,557 | 139,085 |
Unearned premiums | 67,792 | 65,269 |
Reinsurance premiums payable | 3,352 | 5,318 |
Debt | 48,298 | 33,564 |
Accounts payable and accrued expenses | 5,838 | 6,665 |
Total liabilities | 269,837 | 249,901 |
Commitments and contingencies | 0 | 0 |
Shareholders' equity: | ||
Common stock, no par value (100,000,000 shares authorized; 12,215,324 and 9,707,817 issued and outstanding, respectively) | 97,857 | 92,692 |
Accumulated deficit | (62,871) | (50,079) |
Accumulated other comprehensive income (loss) | (18,821) | (2,110) |
Total shareholders' equity | 16,165 | 40,503 |
Total liabilities and shareholders' equity | $ 286,002 | $ 290,404 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Statement Of Financial Position [Abstract] | ||
Debt securities, amortized cost | $ 129,372 | $ 150,732 |
Equity securities, amortized cost | $ 1,906 | $ 10,972 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 12,215,324 | 9,707,817 |
Common stock, shares outstanding (in shares) | 12,215,324 | 9,707,817 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Revenue and Other Income | |||||
Gross earned premiums | $ 34,401 | $ 31,770 | $ 100,947 | $ 90,245 | |
Ceded earned premiums | (9,443) | (6,829) | (27,458) | (17,631) | |
Net earned premiums | 24,958 | 24,941 | 73,489 | 72,614 | |
Net investment income | 860 | 514 | 1,931 | 1,549 | |
Net realized investment gains (losses) | (101) | (1,505) | 3,883 | ||
Change in fair value of equity securities | (151) | (2,169) | 446 | (3,234) | |
Other gains (losses) | 66 | 2,778 | 60 | 11,688 | |
Other income | 603 | 752 | 1,964 | 1,974 | |
Total revenue and other income | 26,336 | 26,715 | 76,385 | 88,474 | |
Expenses | |||||
Losses and loss adjustment expenses, net | 16,671 | 16,159 | 56,940 | 53,447 | |
Policy acquisition costs | 6,230 | 7,173 | 17,419 | 20,819 | |
Operating expenses | 4,380 | 4,077 | 13,010 | 12,768 | |
Interest expense | 778 | 701 | 2,216 | 2,154 | |
Total expenses | 28,059 | 28,110 | 89,585 | 89,188 | |
Income (loss) before equity earnings in Affiliate and income taxes | (1,723) | (1,395) | (13,200) | (714) | |
Equity earnings in Affiliate, net of tax | 199 | 184 | 368 | 612 | |
Income tax expense (benefit) | (1) | (2) | (40) | 191 | |
Net income (loss) | $ (1,523) | $ (1,209) | $ (12,792) | $ (293) | |
Earnings (loss) per common share, basic | $ (0.14) | $ (0.12) | $ (1.26) | $ (0.03) | |
Earnings (loss) per common share, diluted | $ (0.14) | $ (0.12) | $ (1.26) | $ (0.03) | |
Weighted average common shares outstanding, basic | [1] | 11,101,194 | 9,692,150 | 10,178,975 | 9,686,874 |
Weighted average common shares outstanding, diluted | [1] | 11,101,194 | 9,692,150 | 10,178,975 | 9,686,874 |
[1]The non-vested shares of the restricted stock units and stock options were anti-dilutive as of September 30, 2022 and 2021. Therefore, the basic and diluted weighted average common shares are equal for the three months and nine months ended September 30, 2022 and 2021 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (1,523) | $ (1,209) | $ (12,792) | $ (293) |
Unrealized investment gains (losses): | ||||
Unrealized investment gains (losses) during the period | (4,347) | (570) | (16,641) | (2,100) |
Income tax (benefit) expense | 0 | 0 | 0 | 0 |
Unrealized investment gains (losses), net of tax | (4,347) | (570) | (16,641) | (2,100) |
Less: reclassification adjustments to: | ||||
Net realized investment gains (losses) included in net income (loss) | 0 | 44 | 70 | 85 |
Income tax (benefit) expense | 0 | 0 | 0 | 0 |
Total reclassifications included in net income (loss), net of tax | 0 | 44 | 70 | 85 |
Other comprehensive income (loss) | (4,347) | (614) | (16,711) | (2,185) |
Total comprehensive income (loss) | $ (5,870) | $ (1,823) | $ (29,503) | $ (2,478) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | No Par, Common Stock | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Balance at beginning of period at Dec. 31, 2020 | $ 44,413 | $ 92,486 | $ (48,985) | $ 912 |
Balance at beginning of period (in shares) at Dec. 31, 2020 | 9,681,728 | |||
Net income (loss) | (293) | (293) | ||
Repurchase of common stock | (11) | $ (11) | ||
Repurchase of common stock (in shares) | (3,547) | |||
Stock-based compensation expense | 184 | $ 184 | ||
Stock-based compensation expense, Shares | 27,975 | |||
Other comprehensive income (loss) | (2,185) | (2,185) | ||
Balance at end of period at Sep. 30, 2021 | 42,108 | $ 92,659 | (49,278) | (1,273) |
Balance at ending of period (in shares) at Sep. 30, 2021 | 9,706,156 | |||
Balance at beginning of period at Jun. 30, 2021 | 43,884 | $ 92,612 | (48,069) | (659) |
Balance at beginning of period (in shares) at Jun. 30, 2021 | 9,689,421 | |||
Net income (loss) | (1,209) | (1,209) | ||
Repurchase of common stock | (4) | $ (4) | ||
Repurchase of common stock (in shares) | (1,240) | |||
Stock-based compensation expense | 51 | $ 51 | ||
Stock-based compensation expense, Shares | 17,975 | |||
Other comprehensive income (loss) | (614) | (614) | ||
Balance at end of period at Sep. 30, 2021 | 42,108 | $ 92,659 | (49,278) | (1,273) |
Balance at ending of period (in shares) at Sep. 30, 2021 | 9,706,156 | |||
Balance at beginning of period at Dec. 31, 2021 | 40,503 | $ 92,692 | (50,079) | (2,110) |
Balance at beginning of period (in shares) at Dec. 31, 2021 | 9,707,817 | |||
Net income (loss) | (12,792) | (12,792) | ||
Repurchase of common stock | 11 | $ 11 | ||
Repurchase of common stock (in shares) | (1,493) | |||
Issuance of common stock private placement | 5,000 | $ 5,000 | ||
Issuance of common stock private placement (in shares) | 2,500,000 | |||
Stock-based compensation expense | 154 | $ 154 | ||
Stock-based compensation expense, Shares | 9,000 | |||
Other comprehensive income (loss) | (16,711) | (16,711) | ||
Balance at end of period at Sep. 30, 2022 | 16,165 | $ 97,857 | (62,871) | (18,821) |
Balance at ending of period (in shares) at Sep. 30, 2022 | 12,215,324 | |||
Balance at beginning of period at Jun. 30, 2022 | 16,977 | $ 92,799 | (61,348) | (14,474) |
Balance at beginning of period (in shares) at Jun. 30, 2022 | 9,715,324 | |||
Net income (loss) | (1,523) | (1,523) | ||
Issuance of common stock private placement | 5,000 | $ 5,000 | ||
Issuance of common stock private placement (in shares) | 2,500,000 | |||
Stock-based compensation expense | 58 | $ 58 | ||
Other comprehensive income (loss) | (4,347) | (4,347) | ||
Balance at end of period at Sep. 30, 2022 | $ 16,165 | $ 97,857 | $ (62,871) | $ (18,821) |
Balance at ending of period (in shares) at Sep. 30, 2022 | 12,215,324 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash Flows From Operating Activities | ||
Net income (loss) | $ (12,792) | $ (293) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Gain on sale of agency business | 0 | (8,910) |
Depreciation and amortization | 306 | 320 |
Amortization of bond premium and discount, net | 292 | 388 |
Net realized investment (gains) losses | 1,505 | (3,917) |
Change in fair value of equity securities | (446) | 3,234 |
Stock-based compensation expenses | 154 | 184 |
Equity earnings in Affiliate, net of tax | (368) | (612) |
Other gains/losses | 93 | (2,728) |
(Increase) decrease in: | ||
Premiums and agents' balances and other receivables | (737) | (2,022) |
Reinsurance recoverables | (2,547) | (1,040) |
Prepaid reinsurance premiums | (7,032) | (2,909) |
Deferred policy acquisition costs | 1,784 | (1,368) |
Other assets | (469) | 408 |
Increase (decrease) in: | ||
Unpaid losses and loss adjustment expenses | 5,472 | 8,584 |
Unearned premiums | 2,523 | 8,812 |
Reinsurance premiums payable | (1,966) | 750 |
Accounts payable and other liabilities | 137 | (869) |
Net cash provided by (used in) operating activities | (14,091) | (1,988) |
Cash Flows From Investing Activities | ||
Purchase of investments | (234,620) | (149,486) |
Proceeds from maturities and redemptions of investments | 17,638 | 17,859 |
Proceeds from sales of investments | 237,062 | 135,591 |
Proceeds from sale of agency business | 0 | 1,000 |
Dividends from Affiliate | 0 | 900 |
Other purchases | 0 | (531) |
Purchases of property and equipment | 0 | (20) |
Net cash provided by (used in) investing activities | 20,080 | 5,313 |
Cash Flows From Financing Activities | ||
Proceeds from issuance of common stock | 5,000 | 0 |
Repurchase of common stock | 11 | (11) |
Borrowings under line of credit | 5,000 | 3,000 |
Borrowings under Federal Home Loan Bank of Indianapolis | 14,500 | 0 |
Repayment of borrowings under debt arrangements | (5,000) | (7,000) |
Net cash provided by (used in) financing activities | 19,511 | (4,011) |
Net increase (decrease) in cash | 25,500 | (686) |
Cash at beginning of period | 9,913 | 8,193 |
Cash at end of period | 35,413 | 7,507 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 2,196 | 2,183 |
Income taxes paid (refunded), net | (12) | 140 |
Note receivable from sale of agency business | 0 | 9,000 |
Payable from purchase of agency | $ 0 | $ 520 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Recent Developments COVID-19 (the “Pandemic”) caused significant disruption to public health, the global economy, financial markets, and commercial, social and community activity in general. As there has been a significant reduction in reported cases and correspondingly a reduction in government restrictions, we see reduced risk to our business. We continue to monitor potential risks the Pandemic may present including a potential resurgence. Our exposure to the Pandemic is manifold. The majority of our employees continue to work remotely however strict “shelter-in-place” or “stay-at-home” orders have been lifted. A significant portion of our revenues are generated from the hospitality sector within the U.S. which remains under stress due to the threats of resurgence and resource shortages that resulted from the Pandemic. We have continued to provide customer service, process new and renewal business, handle claims and otherwise manage all operations even though the vast majority of the staff is working remotely. To date, we have not seen a major disruption in our business as a result of the Pandemic and currently do not expect to see a material negative impact to our financial position or results of operations as a result of the Pandemic. Basis of Presentation and Management Representation 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. ("Sycamore"). 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." Sycamore owns a 50% non-controlling interest in Venture Agency Holdings, Inc. (“Venture” or “Affiliate”). The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which differ from statutory accounting practices prescribed or permitted for insurance companies by regulatory authorities. 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. 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, 2021, as filed with the SEC. The results of operations for the nine months ended September 30, 2022, are not necessarily indicative of the results expected for the year ended December 31, 2022. Business The Company is engaged in the sale of property and casualty insurance products and has organized its principal operations into three types of insurance businesses: commercial lines, personal lines, and agency business. The Company underwrites a variety of specialty insurance products, including property, general liability, liquor liability, automobile, and homeowners and dwelling policies. The Company markets and sells its insurance products through a network of independent agents, including managing general agents, whereby policies are written in all 50 states in the United States of America (“U.S.”). The Company’s corporate headquarters are located in Troy, Michigan with additional office facilities in Florida and Michigan. 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. Recently Issued Accounting Guidance In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) |
Investments
Investments | 9 Months Ended |
Sep. 30, 2022 | |
Investments Debt And Equity Securities [Abstract] | |
Investments | 2. The cost or amortized cost, gross unrealized gains or losses, and estimated fair value of the investments in securities classified as available for sale at September 30, 2022 and December 31, 2021, were as follows (dollars in thousands): September 30, 2022 Cost or Gross Unrealized Estimated Amortized Cost Gains Losses Fair Value Debt Securities: U.S. Government $ 7,830 $ — $ (367 ) $ 7,463 State and local government 25,661 — (4,516 ) 21,145 Corporate debt 35,544 — (5,398 ) 30,146 Asset-backed securities 22,896 — (1,173 ) 21,723 Mortgage-backed securities 29,772 — (5,442 ) 24,330 Commercial mortgage-backed securities 3,418 — (181 ) 3,237 Collateralized mortgage obligations 4,251 — (448 ) 3,803 Total debt securities available for sale $ 129,372 $ — $ (17,525 ) $ 111,847 December 31, 2021 Cost or Gross Unrealized Estimated Amortized Cost Gains Losses Fair Value Debt Securities: U.S. Government $ 20,723 $ 74 $ (77 ) $ 20,720 State and local government 30,063 555 (189 ) 30,429 Corporate debt 30,808 88 (550 ) 30,346 Asset-backed securities 28,652 10 (224 ) 28,438 Mortgage-backed securities 33,178 105 (762 ) 32,521 Commercial mortgage-backed securities 1,659 31 0 1,690 Collateralized mortgage obligations 5,649 35 (45 ) 5,639 Total debt securities available for sale $ 150,732 $ 898 $ (1,847 ) $ 149,783 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 (dollars in thousands): September 30, 2022 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 9 $ 3,746 $ (161 ) 4 $ 3,717 $ (206 ) 13 $ 7,463 $ (367 ) State and local government 93 16,323 (3,165 ) 32 4,518 (1,351 ) 125 20,841 (4,516 ) Corporate debt 42 16,035 (2,568 ) 28 14,111 (2,830 ) 70 30,146 (5,398 ) Asset-backed securities 16 8,267 (162 ) 12 13,456 (1,011 ) 28 21,723 (1,173 ) Mortgage-backed securities 60 4,947 (780 ) 9 19,347 (4,662 ) 69 24,294 (5,442 ) Commercial mortgage-backed securities 4 3,212 (181 ) — — — 4 3,212 (181 ) Collateralized mortgage obligations 26 2,397 (239 ) 7 1,370 (209 ) 33 3,767 (448 ) Total debt securities available for sale 250 $ 54,927 $ (7,256 ) 92 $ 56,519 $ (10,269 ) 342 $ 111,446 $ (17,525 ) December 31, 2021 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 6 $ 10,323 $ (47 ) 1 $ 4,728 $ (30 ) 7 $ 15,051 $ (77 ) State and local government 41 8,875 (172 ) 4 446 (17 ) 45 9,321 (189 ) Corporate debt 41 22,748 (505 ) 1 705 (45 ) 42 23,453 (550 ) Asset-backed securities 24 24,305 (219 ) 2 1,893 (5 ) 26 26,198 (224 ) Mortgage-backed securities 12 27,034 (762 ) — — — 12 27,034 (762 ) Commercial mortgage-backed securities — — — — — — — — — Collateralized mortgage obligations 10 2,638 (45 ) 2 29 — 12 2,667 (45 ) Total debt securities available for sale 134 $ 95,923 $ (1,750 ) 10 $ 7,801 $ (97 ) 144 $ 103,724 $ (1,847 ) The Company analyzed its investment portfolio in accordance with its other-than-temporary impairment ("OTTI") review procedures and determined the Company did not need to record a credit-related OTTI loss in net income, nor recognize a non-credit related OTTI loss in other comprehensive income for the nine months ended September 30, 2022 and 2021. The Company’s sources of net investment income and losses are as follows (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Debt securities $ 636 $ 562 $ 1,814 $ 1,716 Equity securities 3 63 41 166 Cash, cash equivalents and short-term investments 279 1 316 2 Total investment income 918 626 2,171 1,884 Investment expenses (58 ) (112 ) (240 ) (335 ) Net investment income $ 860 $ 514 $ 1,931 $ 1,549 The following table summarizes the gross realized gains and losses from sales, calls and maturities of available-for-sale debt and equity securities (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Debt securities: Gross realized gains $ — $ 2 $ 6 $ 29 Gross realized losses — — (155 ) (6 ) Total debt securities — 2 (149 ) 23 Equity securities: Gross realized gains $ — 55 375 4,063 Gross realized losses — (158 ) (1,731 ) (203 ) Total equity securities — (103 ) (1,356 ) 3,860 Total net realized investment gains (losses) $ — $ (101 ) $ (1,505 ) $ 3,883 Proceeds from available-for-sale debt securities were $29.3 million and $25.6 million for the nine months ended September 30, 2022 and 2021, respectively. There were no gross realized gains or losses from the sale of available-for-sale debt securities for the three months ended September 30, 2022. The gross realized gains and losses from the sale of available-for-sale debt securities for the nine months ended September 30, 2022, were $5,000 and $155,000, respectively. There were no gross realized gains or losses from the sales of available-for-sale securities for the three months ended September 30, 2021. The gross realized gains and losses from the sales of available-for-sale debt securities for the nine months ended September 30, 2021, were $27,000 and $6,000, respectively. As of September 30, 2022 and 2021, there were $0 and $43,000 of payables from securities purchased, respectively. There were $0 and $3,000 of receivables from securities sold as of September 30, 2022, and 2021, respectively. The Company’s gross unrealized losses related to its equity investments were $595,000 and $1.0 million as of September 30, 2022 and December 31, 2021, respectively. The Company also 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 were no impairments or observable changes in price recorded during 2022 related to the Company's equity securities without readily determinable fair value. These investments are included in Other Assets in the Consolidated Balance Sheets and amounted to $1.7 million as of September 30, 2022 and $1.2 million as of December 31, 2021. The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at September 30, 2022. 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 $ 3,955 $ 3,886 Due after one year through five years 28,544 25,944 Due after five years through ten years 23,584 19,261 Due after ten years 12,952 9,663 Securities with contractual maturities 69,035 58,754 Asset-backed securities 22,896 21,723 Mortgage-backed securities 29,772 24,330 Commercial mortgage-backed securities 3,418 3,237 Collateralized mortgage obligations 4,251 3,803 Total debt securities $ 129,372 $ 111,847 At September 30, 2022 and December 31, 2021, the Insurance Company Subsidiaries had $7.9 million and $8.5 million, respectively, on deposit in trust accounts to meet the deposit requirements of various state insurance departments. At September 30, 2022 and December 31, 2021, the Company had $99.9 million and $76.1 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. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 3. 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. The Level 2 financial instruments also include our line of credit. 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 September 30, 2022 and December 31, 2021 (dollars in thousands): September 30, 2022 Fair Value Measurements Total Level 1 Level 2 Level 3 Assets: Debt Securities: U.S. Government $ 7,463 $ — $ 7,463 $ — State and local government 21,145 — 21,145 — Corporate debt 30,146 — 30,146 — Asset-backed securities 21,723 — 21,723 — Mortgage-backed securities 24,330 — 24,330 — Commercial mortgage-backed securities 3,237 — 3,237 — Collateralized mortgage obligations 3,803 — 3,803 — Total debt securities 111,847 — 111,847 — Equity Securities 947 190 757 — Short-term investments 30,562 30,562 — — Total marketable investments measured at fair value $ 143,356 $ 30,752 $ 112,604 $ — Investments measured at NAV: Investment in limited partnership 365 Total assets measured at fair value $ 143,721 Liabilities: Senior Unsecured Notes * $ 23,113 $ — $ 23,113 $ — Subordinated Notes * 11,186 — — 11,186 FHLB of Indianapolis 14,500 — 14,500 — Total Liabilities measured at fair value $ 48,799 $ — $ 37,613 $ 11,186 * Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheets December 31, 2021 Fair Value Measurements Total Level 1 Level 2 Level 3 Assets: Debt Securities: U.S. Government $ 20,720 $ — $ 20,720 $ — State and local government 30,429 — 30,429 — Corporate debt 30,346 — 30,346 — Asset-backed securities 28,438 — 28,438 — Mortgage-backed securities 32,521 — 32,521 — Commercial mortgage-backed securities 1,690 — 1,690 — Collateralized mortgage obligations 5,639 — 5,639 — Total debt securities 149,783 — 149,783 — Equity securities 9,437 9,154 283 — Short-term investments 23,013 23,013 — — Total marketable investments measured at fair value $ 182,233 $ 32,167 $ 150,066 $ — Investments measured at NAV: Investment in limited partnership 494 Total assets measured at fair value $ 182,727 Liabilities: Senior Unsecured Notes * $ 24,118 $ — $ 24,118 $ — Subordinated Notes * 11,704 — — 11,704 Total Liabilities measured at fair value $ 35,822 $ — $ 24,118 $ 11,704 * Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheets 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 21.4% and 17.6% of the fair value of the total investment portfolio as of September 30, 2022 and December 31, 2021, respectively. 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 78.4% and 82.1% of the fair value of the total investment portfolio as of September 30, 2022 and December 31, 2021, respectively. 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. The Level 2 financial instruments also include the Company's senior debt and its loan with the FHLB of Indianapolis. The fair value of the borrowings under the senior revolving credit facility, and the FHLB of Indianapolis loan, approximates its carrying amount because interest is based on a short-term, variable, market-based rate. As of September 30, 2022 and December 31, 2021, Level 3 is entirely comprised of the Company's subordinated debt. In determining the fair value of the subordinated debt outstanding at September 30, 2022 and December 31, 2021, the security attributes (issue date, maturity, coupon, calls, etc.) and market rates on September 24, 2018 (the date of the restated and amended agreement which was repriced at that time) were entered 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 used in the model along with the September 30, 2022 and December 31, 2021 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 did not have any assets or liabilities that were measured at fair value on a nonrecurring basis at September 30, 2022 or December 31, 2021. |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs | 9 Months Ended |
Sep. 30, 2022 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | |
Deferred Policy Acquisition Costs | 4. Deferred Policy Acquisition Costs The Company defers costs incurred which are incremental and directly related to the successful acquisition of new or renewal insurance business, net of corresponding amounts of ceded reinsurance commissions. Net deferred policy acquisition costs are amortized and charged to expense in proportion to premium earned over the estimated policy term. The Company anticipates that its deferred policy acquisition costs will be fully recoverable and there were no premium deficiencies for the nine months ended September 30, 2022 and 2021. The activity in deferred policy acquisition costs, net of reinsurance transactions, is as follows (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Balance at beginning of period $ 10,747 $ 13,121 $ 12,267 $ 12,243 Deferred policy acquisition costs 5,966 7,663 15,635 22,187 Amortization of policy acquisition costs (6,230 ) (7,173 ) (17,419 ) (20,819 ) Net change (264 ) 490 (1,784 ) 1,368 Balance at end of period $ 10,483 $ 13,611 $ 10,483 $ 13,611 |
Unpaid Losses and Loss Adjustme
Unpaid Losses and Loss Adjustment Expenses | 9 Months Ended |
Sep. 30, 2022 | |
Insurance Loss Reserves [Abstract] | |
Unpaid Losses and Loss Adjustment Expenses | 5. 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 September 30, Nine months ended September 30, 2022 2021 2022 2021 Gross reserves - beginning of period $ 140,996 $ 117,852 $ 139,085 $ 111,270 Less: reinsurance recoverables on unpaid losses (37,769 ) (22,824 ) (40,344 ) (24,218 ) Net reserves - beginning of period 103,227 95,028 98,741 87,052 Add: incurred losses and LAE, net of reinsurance: Current period 13,541 12,513 38,765 37,813 Prior period 3,130 3,646 18,175 15,634 Total net incurred losses and LAE 16,671 16,159 56,940 53,447 Deduct: loss and LAE payments, net of reinsurance: Current period 5,634 5,802 13,313 14,102 Prior period 11,456 8,587 39,560 29,599 Total net loss and LAE payments 17,090 14,389 52,873 43,701 Net reserves - end of period 102,808 96,798 102,808 96,798 Plus: reinsurance recoverables on unpaid losses 41,749 23,056 41,749 23,056 Gross reserves - end of period $ 144,557 $ 119,854 $ 144,557 $ 119,854 Net losses and LAE were $16.7 million during the third quarter of 2022. Adverse development contributed $3.1 million to the total incurred losses in the third quarter of 2022. Of the $3.1 million of adverse development, $2.3 million was related to 2019 and prior accident years and $1.8 million was related to the 2021 accident year. This was offset by $958,000 of favorable development experienced in the 2020 accident year. Of the $3.1 million of adverse development, $2.7 million was related to the commercial lines of business, while $381,000 was related to the personal lines of business. Net losses and LAE were $56.9 million for the nine months ended September 30, 2022. Adverse development contributed $18.2 million to the total incurred losses during the nine months ended September 30, 2022. Of the $18.2 million of adverse development, $14.3 million was related to 2019 and prior accident years, $2.2 million was related to the 2020 accident year, and $1.7 million was related to the 2021 accident year. Of the $18.2 million of adverse development, $17.7 million was related to the commercial lines of business, while $430,000 came from the personal lines of business. Net losses and LAE were $16.2 million during the third quarter of 2021. Adverse development contributed $3.6 million to the total incurred losses in the third quarter of 2021, of which $1.1 million was related to 2017 and prior accident years, $1.4 million was related to the 2018 accident year, and $1.0 million was related to the 2019. In the third quarter, $3.4 million of the adverse development came from the commercial lines of business, mostly from liability lines, while $290,000 was related to the personal lines of business. Net losses and LAE were $53.4 million for the nine months ended September 30, 2021. The Company experienced $2.0 million of catastrophe losses, net of reinsurance recoverables, during the first quarter of 2021 from Winter Storm Uri. The Company also experienced $15.6 million of adverse development for the nine months ended September 30, 2021. Of the $15.6 million in adverse development, $5.0 million was related to 2017 and prior accident years, $4.8 million was related to the 2018 accident year, $3.4 million was related to the 2019 accident year, and $2.4 million was related to the 2020 accident year. Of the $15.6 million in adverse development, $14.7 million was related to commercial lines, mostly from liability lines, while $926,000 was related to personal lines. |
Reinsurance
Reinsurance | 9 Months Ended |
Sep. 30, 2022 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | 6. In the normal course of business, the Company participates in reinsurance agreements in order to limit losses that may arise from catastrophes or other individually severe events. The Company ceded primarily all specific commercial liability risks in excess of $340,000 in 2022, and $400,000 in 2021. The Company ceded specific commercial property risks in excess of $300,000 in 2022 and ceded specific commercial property risks in excess of $200,000 in 2021. The Company ceded homeowners specific risks in excess of $300,000 in both 2022 and 2021. A "treaty" is a reinsurance agreement in which coverage is provided for a class of risks and does not require policy by policy underwriting of the reinsurer. "Facultative" reinsurance is where a reinsurer negotiates an individual reinsurance agreement for every policy it will reinsure on a policy by policy basis. A loss is covered under a reinsurance contract if the loss occurs within the effective dates of the agreement notwithstanding when the loss is reported. 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. 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 following table presents the effects of reinsurance and assumption transactions on written premiums, earned premiums and losses and LAE (dollars in thousands): Three Months Ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Written premiums: Direct $ 22,682 $ 24,239 $ 73,789 $ 73,825 Assumed 10,406 9,465 29,681 25,233 Ceded (9,395 ) (7,635 ) (34,490 ) (19,974 ) Net written premiums $ 23,693 $ 26,069 $ 68,980 $ 79,084 Earned premiums: Direct $ 24,679 $ 23,858 $ 73,667 $ 67,455 Assumed 9,722 7,912 27,280 22,790 Ceded (9,443 ) (6,829 ) (27,458 ) (17,631 ) Net earned premiums $ 24,958 $ 24,941 $ 73,489 $ 72,614 Losses and LAE: Direct $ 15,837 $ 14,511 $ 46,375 $ 50,628 Assumed 7,225 4,422 26,136 11,251 Ceded (6,391 ) (2,774 ) (15,571 ) (8,432 ) Net Losses and LAE $ 16,671 $ 16,159 $ 56,940 $ 53,447 Some of the excess of loss treaties that renewed on December 31, 2021 and January 1, 2022, included ceding commissions equal to 40% of the ceded premiums. The ceding commission is reflected as a reduction in acquisition costs and amounted to $2.1 million and $6.4 million for the three and nine months ended September 30, 2022. There were no ceding commissions reflected in the Consolidated Statements of Operations in 2021, relating to the excess of loss reinsurance treaties during 2021. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt | 7. As of September 30, 2022, the Company's debt is comprised of four instruments: $24.4 million of publicly traded senior unsecured notes which were issued in 2018, a $10.0 million line of credit which commenced in June 2018, $10.5 million of privately placed subordinated notes, and a loan of $14.5 million from the Federal Home Loan Bank (“FHLB”) of Indianapolis, which commenced in July 2022. A summary of the Company's outstanding debt is as follows (dollars in thousands): September 30, 2022 December 31, 2021 Senior unsecured notes * $ 24,121 $ 23,926 Subordinated notes * 9,677 9,638 FHLB of Indianapolis 14,500 — Total $ 48,298 $ 33,564 *Net of unamortized debt issuance costs Senior unsecured notes The Company issued $25.3 million of public senior unsecured notes (the "Notes") in 2018. The Notes bear an interest rate of 6.75% per annum, payable quarterly at the end of March, June, September and December and mature on September 30, 2023. The Company may redeem the Notes, in whole or in part, at face value at any time after September 30, 2021. The Company did not repurchase any of the Notes for the three and nine months ended September 30, 2022 and 2021. Management plans to issue new public debt that will provide sufficient cash flow to pay off the senior unsecured notes that are coming due within the next twelve months. Management believes it is probable that it will be able to issue new public debt and repay the senior unsecured notes by September 30, 2023. Subordinated notes The Company also has outstanding $10.5 million of Subordinated Notes maturing on September 30, 2038. The Subordinated Notes bear an interest 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. As of September 30, 2022, the carrying value of the Notes and Subordinated Notes are offset by $260,000 and $823,000 of debt issuance costs, respectively. The debt issuance costs will be amortized through interest expense over the life of the loans. The Subordinated Notes contain restrictive financial debt covenants that relate to the Company’s minimum tangible net worth, minimum fixed-charge coverage ratios, dividend paying capacity, reinsurance retentions, risk-based capital ratios, and debt-to-total capital. As of March 31, 2022, the Company was not in compliance with the tangible net worth and the debt-to-total capital financial covenants, principally due to changes in unrealized fair values of the bond portfolio resulting from the significant increase in the interest rate environment. On May 9, 2022, the holders of the Subordinated Notes waived the March 31, 2022 tangible net worth and debt-to-total capital requirements and the agreement was amended to exclude changes in unrealized gains or losses in the debt securities investment portfolio of the Company subsequent to December 31, 2021, when calculating the debt covenant ratios. As of June 30, 2022, the Company was not in compliance on the tangible net worth covenant of the Subordinated Notes. On August 8, 2022, the holders of the Subordinated Notes waived the June 30, 2022 tangible net worth requirement. The $5.0 million contribution to the Company on August 10, 2022 (see Note 8 ~ Shareholder’s Equity Line of credit The Company maintains a $10.0 million line of credit with a national bank (the “Lender”). The line of credit bears interest at the London Interbank rate ("LIBOR") plus 2.75% per annum, payable monthly. On June 18, 2021, the line of credit was renewed with a maturity of December 1, 2022. The line of credit contains restrictive financial debt covenants that relate to the Company’s minimum tangible net worth, minimum fixed-charge coverage ratios, dividend paying capacity, reinsurance retentions, risk-based capital ratios, and debt-to-total capital. On August 8, 2022, the Company entered into an amendment with the Lender which eliminated the financial debt covenant requirements if there is no outstanding balance going forward, and requires prior bank approval for any future draws on the line of credit. As of September 30, 2022, the Company had no balance outstanding on the line of credit. FHLB of Indianapolis loan On July 7, 2022, the Company borrowed $14.5 million from the FHLB of Indianapolis. The loan is fully collateralized with high-quality federally guaranteed debt securities and cash. The loan was drawn for short-term cash needs to avoid realizing losses on a statutory accounting basis due to temporary market-timing issues caused by the recent fluctuations in the interest rate markets. The loan has a daily floating interest rate that was 3.45% per annum as of September 30, 2022. The loan matures on January 9, 2023. Paycheck Protection Program loan On April 24, 2020, the Company received a $2.7 million loan from the line of credit Lender pursuant to the Paycheck Protection Program of the CARES Act administered by the U.S. Small Business Administration (“SBA”). The Company received notice from the SBA that the loan was 100% forgiven, including accrued interest, on July 8, 2021. This resulted in a $2.8 million gain that was included in Other Gains on the Consolidated Statement of Operations in the third quarter of 2021. |
Shareholder's Equity
Shareholder's Equity | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders Equity Note [Abstract] | |
Shareholder's Equity | 8. Shareholder’s Equity On August 10, 2022, the Company issued $5.0 million of equity through a private placement for 2,500,000 shares priced at $2.00 per share. The participants in the private placement consisted of members of the Company's Board of Directors. The Company used the proceeds for growth capital in the Company's specialty core business segments. For the three months ended September 30, 2022, the Company had no restricted stock units vest, and made no repurchases of stock. For the three months ended September 30, 2021, the Company repurchase 1,240 shares of stock valued at approximately $4,000, related to the vesting of the Company’s restricted stock units. For the nine months ended September 30, 2022 and 2021, the Company repurchased 1,493 and 3,547 shares of stock valued at approximately $3,000 and $11,000, respectively. Upon the repurchase of the Company’s shares, the shares remain authorized, but not issued or outstanding. As of September 30, 2022 and December 31, 2021, the Company had 12,215,324 and 9,707,817 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) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | 9. 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 September 30, Nine months ended September 30, 2022 2021 2022 2021 Balance at beginning of period $ (14,474 ) $ (659 ) $ (2,110 ) $ 912 Other comprehensive income (loss) before reclassifications, net of tax (4,347 ) (570 ) (16,641 ) (2,100 ) Less: amounts reclassified from accumulated other comprehensive income (loss), net of tax — 44 70 85 Net other comprehensive income (loss) (4,347 ) (614 ) (16,711 ) (2,185 ) Balance at end of period $ (18,821 ) $ (1,273 ) $ (18,821 ) $ (1,273 ) |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 10. Earnings 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 and share amounts): Three Months Ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Net income (loss) $ (1,523 ) $ (1,209 ) $ (12,792 ) $ (293 ) Weighted average common shares, basic and diluted * 11,101,194 9,692,150 10,178,975 9,686,874 Earnings (loss) per common share, basic and diluted $ (0.14 ) $ (0.12 ) $ (1.26 ) $ (0.03 ) * The non-vested shares of the restricted stock units and stock options were anti-dilutive as of September 30, 2022 and 2021. Therefore, the basic and diluted weighted average common shares are equal for the three months and nine months ended September 30, 2022 and 2021. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-based Compensation | 11. Stock-based Compensation On March 8, 2022, the Company issued options to purchase 630,000 shares of the Company’s common stock to two named executive officers. The right to exercise the options will vest over a five-year On June 30, 2020, the Company issued options to purchase shares of the Company’s common stock, to certain executive officers and other employees. The right to exercise the options will vest over a five-year period on a straight-line basis. The options have a strike price of $ 3.81 per share and expire on June 30, 2030 . The estimated value of these options is $ , which is being expensed ratably over the vesting period. In 2016 and 2018, the Company issued 111,281 and 70,000, respectively, of restricted stock units (“RSUs”) to various employees to be settled in shares of common stock, which were valued at $909,000 and $404,000, respectively, on the dates of grant. The Company recorded $43,000 and $145,000 of compensation expense related to the RSUs for the nine months ended September 30, 2022 and 2021, respectively. There were 10,000 unvested RSUs as of September 30, 2022, which will generate an estimated future expense of $30,000. The Company recorded $111,000 and $39,000 of compensation expense related to the stock options for the nine months ended September 30, 2022 and 2021, respectively. There were 783,000 unvested options as of September 30, 2022, which will generate an estimated future expense of $685,000. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. 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 covered by the insurance policy at issue. We account for such activity through the establishment of unpaid losses and LAE reserves. In accordance with accounting guidance, if it is probable that a liability has been incurred as of the date of the financial statements and the amount of loss is reasonably estimable; then an accrual for the costs to resolve these claims is recorded by the Company in the accompanying consolidated financial statements. Periodic expenses related to the defense of such claims are included in the accompanying consolidated statements of operations. 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 to, either individually or in the aggregate. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | 13. 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 increases the product options to the Company’s independent retail agents by offering both insurance products from the Insurance Company Subsidiaries as well as products offered by other insurers. The Company defines its operating segments as components of the business where separate financial information is available and used by the co-chief operating decision makers in deciding how to allocate resources to its segments and in assessing its performance. In assessing performance of its operating segments, the Company’s co-chief operating decision makers, the Co-Chief Executive Officers, review 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 Michigan, Florida, Texas and California. For the nine months ended September 30, 2022 and 2021, gross written premiums attributable to these four states were 56.2% and 51.4%, respectively, of the Company’s total gross written premiums. The Wholesale 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 Wholesale 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 September 30, 2022 Commercial Lines Personal Lines Total Underwriting Wholesale Agency Corporate Eliminations Total Gross written premiums $ 27,635 $ 5,453 $ 33,088 $ — $ — $ — $ 33,088 Net written premiums $ 18,730 $ 4,963 $ 23,693 $ — $ — $ — $ 23,693 Net earned premiums $ 20,789 $ 4,169 $ 24,958 $ — $ — $ — $ 24,958 Other income 57 26 83 793 113 (386 ) 603 Segment revenue 20,846 4,195 25,041 793 113 (386 ) 25,561 Losses and LAE, net 13,348 3,323 16,671 — — — 16,671 Policy acquisition costs 4,950 1,214 6,164 498 — (432 ) 6,230 Operating expenses 3,297 519 3,816 245 319 — 4,380 Segment expenses 21,595 5,056 26,651 743 319 (432 ) 27,281 Segment gain (loss) $ (749 ) $ (861 ) $ (1,610 ) $ 50 $ (206 ) $ 46 $ (1,720 ) Investment income 860 860 Net realized investment gains (losses) — — Change in fair value of equity securities (151 ) (151 ) Other gains (losses) 66 66 Interest expense (778 ) (778 ) Income (loss) before equity earnings in Affiliate and income taxes $ (749 ) $ (861 ) $ (1,610 ) $ 50 $ (209 ) $ 46 $ (1,723 ) Three months ended September 30, 2021 Commercial Lines Personal Lines Total Underwriting Wholesale Agency Corporate Eliminations Total Gross written premiums $ 29,849 $ 3,855 $ 33,704 $ — $ — $ — $ 33,704 Net written premiums $ 22,456 $ 3,613 $ 26,069 $ — $ — $ — $ 26,069 Net earned premiums $ 21,975 $ 2,966 $ 24,941 $ — $ — $ — $ 24,941 Other income 50 29 79 1,235 148 (710 ) 752 Segment revenue 22,025 2,995 25,020 1,235 148 (710 ) 25,693 Losses and LAE, net 14,697 1,462 16,159 — — — 16,159 Policy acquisition costs 6,458 838 7,296 778 — (901 ) 7,173 Operating expenses 2,954 336 3,290 500 287 — 4,077 Segment expenses 24,109 2,636 26,745 1,278 287 (901 ) 27,409 Segment gain (loss) $ (2,084 ) $ 359 $ (1,725 ) $ (43 ) $ (139 ) $ 191 $ (1,716 ) Investment income 514 514 Net realized investment gains (losses) (101 ) (101 ) Change in fair value of equity securities (2,169 ) (2,169 ) Other gains 2,778 2,778 Interest expense (701 ) (701 ) Income (loss) before equity earnings in Affiliate and income taxes $ (2,084 ) $ 359 $ (1,725 ) $ (43 ) $ 182 $ 191 $ (1,395 ) Nine months ended September 30, 2022 Commercial Lines Personal Lines Total Underwriting Wholesale Agency Corporate Eliminations Total Gross written premiums $ 88,297 $ 15,173 $ 103,470 $ — $ — $ — $ 103,470 Net written premiums $ 55,456 $ 13,524 $ 68,980 $ — $ — $ — $ 68,980 Net earned premiums $ 62,097 $ 11,392 $ 73,489 $ — $ — $ — $ 73,489 Other income 195 58 253 2,969 407 (1,665 ) 1,964 Segment revenue 62,292 11,450 73,742 2,969 407 (1,665 ) 75,453 Losses and LAE, net 49,864 7,076 56,940 — — — 56,940 Policy acquisition costs 13,717 3,530 17,247 2,026 — (1,854 ) 17,419 Operating expenses 9,966 1,405 11,371 811 828 — 13,010 Segment expenses 73,547 12,011 85,558 2,837 828 (1,854 ) 87,369 Segment gain (loss) $ (11,255 ) $ (561 ) $ (11,816 ) $ 132 $ (421 ) $ 189 $ (11,916 ) Investment income 1,931 1,931 Net realized investment gains (losses) (1,505 ) (1,505 ) Change in fair value of equity securities 446 446 Other gains 60 60 Interest expense (2,216 ) (2,216 ) Income (loss) before equity earnings in Affiliate and income taxes $ (11,255 ) $ (561 ) $ (11,816 ) $ 132 $ (1,705 ) $ 189 $ (13,200 ) Nine months ended September 30, 2021 Commercial Lines Personal Lines Total Underwriting Wholesale Agency Corporate Eliminations Total Gross written premiums $ 88,017 $ 11,041 $ 99,058 $ — $ — $ — $ 99,058 Net written premiums $ 68,685 $ 10,399 $ 79,084 $ — $ — $ — $ 79,084 Net earned premiums $ 64,869 $ 7,745 $ 72,614 $ — $ — $ — $ 72,614 Other income 158 113 271 4,932 219 (3,448 ) 1,974 Segment revenue 65,027 7,858 72,885 4,932 219 (3,448 ) 74,588 Losses and LAE, net 48,592 4,855 53,447 — — — 53,447 Policy acquisition costs 19,102 2,178 21,280 3,147 — (3,608 ) 20,819 Operating expenses 8,761 1,076 9,837 2,060 871 — 12,768 Segment expenses 76,455 8,109 84,564 5,207 871 (3,608 ) 87,034 Segment gain (loss) $ (11,428 ) $ (251 ) $ (11,679 ) $ (275 ) $ (652 ) $ 160 $ (12,446 ) Investment income 1,549 1,549 Net realized investment gains (losses) 3,883 3,883 Change in fair value of equity securities (3,234 ) (3,234 ) Other gains 11,688 11,688 Interest expense (2,154 ) (2,154 ) Income (loss) before equity earnings in Affiliate and income taxes $ (11,428 ) $ (251 ) $ (11,679 ) $ (275 ) $ 11,080 $ 160 $ (714 ) |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events On October 13, 2022, the Company purchased the 50% ownership interest in Venture that was owned by a third party for $9.7 million, resulting in Venture being owned 100% by the Company. On October 14, 2022, Venture completed the sale of certain producer business assets with Whitetail Insurance Services, LLC (the “Buyer”), a wholly-owned subsidiary of Acrisure, LLC (“Acrisure”), for a purchase price of $38.2 million. The effective date of the asset purchase agreement is October 1, 2022. There is no material relationship between the Company or any director or officer of the Company, or any associate of any director or officer of the Company, and the Buyer, other than with respect to the Company's disposition of assets to the Buyer. The assets involved in this transaction relate to Venture Agency Holdings, Inc. insurance brokerage and associated services provided largely to the security sector. This sale, along with related transactions including the cost of the Company purchasing the other 50% of Venture, is expected to generate approximately $8.0 million of non-operating gains for the Company, net of taxes, in the fourth quarter of 2022. This sale is not expected to result in discontinued operations related to agency business. On November 1, 2022, Conifer Holdings, Inc. (the “Company”), entered into a loss portfolio transfer (“LPT”) reinsurance agreement with Fleming Reinsurance Ltd (“Fleming Re”). Under the agreement, Fleming Re will cover an aggregate limit of $66.3 million of paid losses on $40.8 million of stated net reserves as of June 30, 2022, relating to accident years 2019 and prior. Within the aggregate limit, there is a $5.5 million loss corridor in which the Company and WPIC retains losses in excess of $40.8 million. Fleming Re is then responsible to cover paid losses in excess of $46.3 million up to $66.3 million. Accordingly, there is $20.0 million of adverse development cover for accident years 2019 and prior. Under the agreement, Fleming Re retains $40.8 million for stated net reserves as of June 30, 2022, plus a one-time risk fee of $5.4 million. Recoverables due to the Company under this agreement will be recorded as reinsurance recoverables. The agreement is between CIC and WPIC and Fleming Re. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Management Representation | Recent Developments COVID-19 (the “Pandemic”) caused significant disruption to public health, the global economy, financial markets, and commercial, social and community activity in general. As there has been a significant reduction in reported cases and correspondingly a reduction in government restrictions, we see reduced risk to our business. We continue to monitor potential risks the Pandemic may present including a potential resurgence. Our exposure to the Pandemic is manifold. The majority of our employees continue to work remotely however strict “shelter-in-place” or “stay-at-home” orders have been lifted. A significant portion of our revenues are generated from the hospitality sector within the U.S. which remains under stress due to the threats of resurgence and resource shortages that resulted from the Pandemic. We have continued to provide customer service, process new and renewal business, handle claims and otherwise manage all operations even though the vast majority of the staff is working remotely. To date, we have not seen a major disruption in our business as a result of the Pandemic and currently do not expect to see a material negative impact to our financial position or results of operations as a result of the Pandemic. Basis of Presentation and Management Representation 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. ("Sycamore"). 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." Sycamore owns a 50% non-controlling interest in Venture Agency Holdings, Inc. (“Venture” or “Affiliate”). The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which differ from statutory accounting practices prescribed or permitted for insurance companies by regulatory authorities. 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. 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, 2021, as filed with the SEC. The results of operations for the nine months ended September 30, 2022, are not necessarily indicative of the results expected for the year ended December 31, 2022. |
Business | Business The Company is engaged in the sale of property and casualty insurance products and has organized its principal operations into three types of insurance businesses: commercial lines, personal lines, and agency business. The Company underwrites a variety of specialty insurance products, including property, general liability, liquor liability, automobile, and homeowners and dwelling policies. The Company markets and sells its insurance products through a network of independent agents, including managing general agents, whereby policies are written in all 50 states in the United States of America (“U.S.”). The Company’s corporate headquarters are located in Troy, Michigan with additional office facilities in Florida and Michigan. |
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. |
Recently Issued Accounting Guidance | Recently Issued Accounting Guidance In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Investments Debt And Equity Securities [Abstract] | |
Schedule of Available-for-sale Securities | The cost or amortized cost, gross unrealized gains or losses, and estimated fair value of the investments in securities classified as available for sale at September 30, 2022 and December 31, 2021, were as follows (dollars in thousands): September 30, 2022 Cost or Gross Unrealized Estimated Amortized Cost Gains Losses Fair Value Debt Securities: U.S. Government $ 7,830 $ — $ (367 ) $ 7,463 State and local government 25,661 — (4,516 ) 21,145 Corporate debt 35,544 — (5,398 ) 30,146 Asset-backed securities 22,896 — (1,173 ) 21,723 Mortgage-backed securities 29,772 — (5,442 ) 24,330 Commercial mortgage-backed securities 3,418 — (181 ) 3,237 Collateralized mortgage obligations 4,251 — (448 ) 3,803 Total debt securities available for sale $ 129,372 $ — $ (17,525 ) $ 111,847 December 31, 2021 Cost or Gross Unrealized Estimated Amortized Cost Gains Losses Fair Value Debt Securities: U.S. Government $ 20,723 $ 74 $ (77 ) $ 20,720 State and local government 30,063 555 (189 ) 30,429 Corporate debt 30,808 88 (550 ) 30,346 Asset-backed securities 28,652 10 (224 ) 28,438 Mortgage-backed securities 33,178 105 (762 ) 32,521 Commercial mortgage-backed securities 1,659 31 0 1,690 Collateralized mortgage obligations 5,649 35 (45 ) 5,639 Total debt securities available for sale $ 150,732 $ 898 $ (1,847 ) $ 149,783 |
Schedule Of Unrealized Loss On Investments | 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 (dollars in thousands): September 30, 2022 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 9 $ 3,746 $ (161 ) 4 $ 3,717 $ (206 ) 13 $ 7,463 $ (367 ) State and local government 93 16,323 (3,165 ) 32 4,518 (1,351 ) 125 20,841 (4,516 ) Corporate debt 42 16,035 (2,568 ) 28 14,111 (2,830 ) 70 30,146 (5,398 ) Asset-backed securities 16 8,267 (162 ) 12 13,456 (1,011 ) 28 21,723 (1,173 ) Mortgage-backed securities 60 4,947 (780 ) 9 19,347 (4,662 ) 69 24,294 (5,442 ) Commercial mortgage-backed securities 4 3,212 (181 ) — — — 4 3,212 (181 ) Collateralized mortgage obligations 26 2,397 (239 ) 7 1,370 (209 ) 33 3,767 (448 ) Total debt securities available for sale 250 $ 54,927 $ (7,256 ) 92 $ 56,519 $ (10,269 ) 342 $ 111,446 $ (17,525 ) December 31, 2021 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 6 $ 10,323 $ (47 ) 1 $ 4,728 $ (30 ) 7 $ 15,051 $ (77 ) State and local government 41 8,875 (172 ) 4 446 (17 ) 45 9,321 (189 ) Corporate debt 41 22,748 (505 ) 1 705 (45 ) 42 23,453 (550 ) Asset-backed securities 24 24,305 (219 ) 2 1,893 (5 ) 26 26,198 (224 ) Mortgage-backed securities 12 27,034 (762 ) — — — 12 27,034 (762 ) Commercial mortgage-backed securities — — — — — — — — — Collateralized mortgage obligations 10 2,638 (45 ) 2 29 — 12 2,667 (45 ) Total debt securities available for sale 134 $ 95,923 $ (1,750 ) 10 $ 7,801 $ (97 ) 144 $ 103,724 $ (1,847 ) |
Schedule of Investment Income and Losses | The Company’s sources of net investment income and losses are as follows (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Debt securities $ 636 $ 562 $ 1,814 $ 1,716 Equity securities 3 63 41 166 Cash, cash equivalents and short-term investments 279 1 316 2 Total investment income 918 626 2,171 1,884 Investment expenses (58 ) (112 ) (240 ) (335 ) Net investment income $ 860 $ 514 $ 1,931 $ 1,549 |
Schedule of Gross Realized Gains and Losses on Securities | The following table summarizes the gross realized gains and losses from sales, calls and maturities of available-for-sale debt and equity securities (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Debt securities: Gross realized gains $ — $ 2 $ 6 $ 29 Gross realized losses — — (155 ) (6 ) Total debt securities — 2 (149 ) 23 Equity securities: Gross realized gains $ — 55 375 4,063 Gross realized losses — (158 ) (1,731 ) (203 ) Total equity securities — (103 ) (1,356 ) 3,860 Total net realized investment gains (losses) $ — $ (101 ) $ (1,505 ) $ 3,883 |
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 September 30, 2022. 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 $ 3,955 $ 3,886 Due after one year through five years 28,544 25,944 Due after five years through ten years 23,584 19,261 Due after ten years 12,952 9,663 Securities with contractual maturities 69,035 58,754 Asset-backed securities 22,896 21,723 Mortgage-backed securities 29,772 24,330 Commercial mortgage-backed securities 3,418 3,237 Collateralized mortgage obligations 4,251 3,803 Total debt securities $ 129,372 $ 111,847 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets and Liabilities Measured at Fair Value | The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis, classified by the valuation hierarchy as of September 30, 2022 and December 31, 2021 (dollars in thousands): September 30, 2022 Fair Value Measurements Total Level 1 Level 2 Level 3 Assets: Debt Securities: U.S. Government $ 7,463 $ — $ 7,463 $ — State and local government 21,145 — 21,145 — Corporate debt 30,146 — 30,146 — Asset-backed securities 21,723 — 21,723 — Mortgage-backed securities 24,330 — 24,330 — Commercial mortgage-backed securities 3,237 — 3,237 — Collateralized mortgage obligations 3,803 — 3,803 — Total debt securities 111,847 — 111,847 — Equity Securities 947 190 757 — Short-term investments 30,562 30,562 — — Total marketable investments measured at fair value $ 143,356 $ 30,752 $ 112,604 $ — Investments measured at NAV: Investment in limited partnership 365 Total assets measured at fair value $ 143,721 Liabilities: Senior Unsecured Notes * $ 23,113 $ — $ 23,113 $ — Subordinated Notes * 11,186 — — 11,186 FHLB of Indianapolis 14,500 — 14,500 — Total Liabilities measured at fair value $ 48,799 $ — $ 37,613 $ 11,186 * Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheets December 31, 2021 Fair Value Measurements Total Level 1 Level 2 Level 3 Assets: Debt Securities: U.S. Government $ 20,720 $ — $ 20,720 $ — State and local government 30,429 — 30,429 — Corporate debt 30,346 — 30,346 — Asset-backed securities 28,438 — 28,438 — Mortgage-backed securities 32,521 — 32,521 — Commercial mortgage-backed securities 1,690 — 1,690 — Collateralized mortgage obligations 5,639 — 5,639 — Total debt securities 149,783 — 149,783 — Equity securities 9,437 9,154 283 — Short-term investments 23,013 23,013 — — Total marketable investments measured at fair value $ 182,233 $ 32,167 $ 150,066 $ — Investments measured at NAV: Investment in limited partnership 494 Total assets measured at fair value $ 182,727 Liabilities: Senior Unsecured Notes * $ 24,118 $ — $ 24,118 $ — Subordinated Notes * 11,704 — — 11,704 Total Liabilities measured at fair value $ 35,822 $ — $ 24,118 $ 11,704 * Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheets |
Deferred Policy Acquisition C_2
Deferred Policy Acquisition Costs (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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 September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Balance at beginning of period $ 10,747 $ 13,121 $ 12,267 $ 12,243 Deferred policy acquisition costs 5,966 7,663 15,635 22,187 Amortization of policy acquisition costs (6,230 ) (7,173 ) (17,419 ) (20,819 ) Net change (264 ) 490 (1,784 ) 1,368 Balance at end of period $ 10,483 $ 13,611 $ 10,483 $ 13,611 |
Unpaid Losses and Loss Adjust_2
Unpaid Losses and Loss Adjustment Expenses (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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 September 30, Nine months ended September 30, 2022 2021 2022 2021 Gross reserves - beginning of period $ 140,996 $ 117,852 $ 139,085 $ 111,270 Less: reinsurance recoverables on unpaid losses (37,769 ) (22,824 ) (40,344 ) (24,218 ) Net reserves - beginning of period 103,227 95,028 98,741 87,052 Add: incurred losses and LAE, net of reinsurance: Current period 13,541 12,513 38,765 37,813 Prior period 3,130 3,646 18,175 15,634 Total net incurred losses and LAE 16,671 16,159 56,940 53,447 Deduct: loss and LAE payments, net of reinsurance: Current period 5,634 5,802 13,313 14,102 Prior period 11,456 8,587 39,560 29,599 Total net loss and LAE payments 17,090 14,389 52,873 43,701 Net reserves - end of period 102,808 96,798 102,808 96,798 Plus: reinsurance recoverables on unpaid losses 41,749 23,056 41,749 23,056 Gross reserves - end of period $ 144,557 $ 119,854 $ 144,557 $ 119,854 |
Reinsurance (Tables)
Reinsurance (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Reinsurance Disclosures [Abstract] | |
Summary of the Effects of Reinsurance | The following table presents the effects of reinsurance and assumption transactions on written premiums, earned premiums and losses and LAE (dollars in thousands): Three Months Ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Written premiums: Direct $ 22,682 $ 24,239 $ 73,789 $ 73,825 Assumed 10,406 9,465 29,681 25,233 Ceded (9,395 ) (7,635 ) (34,490 ) (19,974 ) Net written premiums $ 23,693 $ 26,069 $ 68,980 $ 79,084 Earned premiums: Direct $ 24,679 $ 23,858 $ 73,667 $ 67,455 Assumed 9,722 7,912 27,280 22,790 Ceded (9,443 ) (6,829 ) (27,458 ) (17,631 ) Net earned premiums $ 24,958 $ 24,941 $ 73,489 $ 72,614 Losses and LAE: Direct $ 15,837 $ 14,511 $ 46,375 $ 50,628 Assumed 7,225 4,422 26,136 11,251 Ceded (6,391 ) (2,774 ) (15,571 ) (8,432 ) Net Losses and LAE $ 16,671 $ 16,159 $ 56,940 $ 53,447 Some of the excess of loss treaties that renewed on December 31, 2021 and January 1, 2022, included ceding commissions equal to 40% of the ceded premiums. The ceding commission is reflected as a reduction in acquisition costs and amounted to $2.1 million and $6.4 million for the three and nine months ended September 30, 2022. There were no ceding commissions reflected in the Consolidated Statements of Operations in 2021, relating to the excess of loss reinsurance treaties during 2021. |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Senior Debt | A summary of the Company's outstanding debt is as follows (dollars in thousands): September 30, 2022 December 31, 2021 Senior unsecured notes * $ 24,121 $ 23,926 Subordinated notes * 9,677 9,638 FHLB of Indianapolis 14,500 — Total $ 48,298 $ 33,564 *Net of unamortized debt issuance costs |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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 September 30, Nine months ended September 30, 2022 2021 2022 2021 Balance at beginning of period $ (14,474 ) $ (659 ) $ (2,110 ) $ 912 Other comprehensive income (loss) before reclassifications, net of tax (4,347 ) (570 ) (16,641 ) (2,100 ) Less: amounts reclassified from accumulated other comprehensive income (loss), net of tax — 44 70 85 Net other comprehensive income (loss) (4,347 ) (614 ) (16,711 ) (2,185 ) Balance at end of period $ (18,821 ) $ (1,273 ) $ (18,821 ) $ (1,273 ) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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 and share amounts): Three Months Ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Net income (loss) $ (1,523 ) $ (1,209 ) $ (12,792 ) $ (293 ) Weighted average common shares, basic and diluted * 11,101,194 9,692,150 10,178,975 9,686,874 Earnings (loss) per common share, basic and diluted $ (0.14 ) $ (0.12 ) $ (1.26 ) $ (0.03 ) * The non-vested shares of the restricted stock units and stock options were anti-dilutive as of September 30, 2022 and 2021. Therefore, the basic and diluted weighted average common shares are equal for the three months and nine months ended September 30, 2022 and 2021. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Information by Reportable Segment | The following tables present information by reportable operating segment (dollars in thousands): Three months ended September 30, 2022 Commercial Lines Personal Lines Total Underwriting Wholesale Agency Corporate Eliminations Total Gross written premiums $ 27,635 $ 5,453 $ 33,088 $ — $ — $ — $ 33,088 Net written premiums $ 18,730 $ 4,963 $ 23,693 $ — $ — $ — $ 23,693 Net earned premiums $ 20,789 $ 4,169 $ 24,958 $ — $ — $ — $ 24,958 Other income 57 26 83 793 113 (386 ) 603 Segment revenue 20,846 4,195 25,041 793 113 (386 ) 25,561 Losses and LAE, net 13,348 3,323 16,671 — — — 16,671 Policy acquisition costs 4,950 1,214 6,164 498 — (432 ) 6,230 Operating expenses 3,297 519 3,816 245 319 — 4,380 Segment expenses 21,595 5,056 26,651 743 319 (432 ) 27,281 Segment gain (loss) $ (749 ) $ (861 ) $ (1,610 ) $ 50 $ (206 ) $ 46 $ (1,720 ) Investment income 860 860 Net realized investment gains (losses) — — Change in fair value of equity securities (151 ) (151 ) Other gains (losses) 66 66 Interest expense (778 ) (778 ) Income (loss) before equity earnings in Affiliate and income taxes $ (749 ) $ (861 ) $ (1,610 ) $ 50 $ (209 ) $ 46 $ (1,723 ) Three months ended September 30, 2021 Commercial Lines Personal Lines Total Underwriting Wholesale Agency Corporate Eliminations Total Gross written premiums $ 29,849 $ 3,855 $ 33,704 $ — $ — $ — $ 33,704 Net written premiums $ 22,456 $ 3,613 $ 26,069 $ — $ — $ — $ 26,069 Net earned premiums $ 21,975 $ 2,966 $ 24,941 $ — $ — $ — $ 24,941 Other income 50 29 79 1,235 148 (710 ) 752 Segment revenue 22,025 2,995 25,020 1,235 148 (710 ) 25,693 Losses and LAE, net 14,697 1,462 16,159 — — — 16,159 Policy acquisition costs 6,458 838 7,296 778 — (901 ) 7,173 Operating expenses 2,954 336 3,290 500 287 — 4,077 Segment expenses 24,109 2,636 26,745 1,278 287 (901 ) 27,409 Segment gain (loss) $ (2,084 ) $ 359 $ (1,725 ) $ (43 ) $ (139 ) $ 191 $ (1,716 ) Investment income 514 514 Net realized investment gains (losses) (101 ) (101 ) Change in fair value of equity securities (2,169 ) (2,169 ) Other gains 2,778 2,778 Interest expense (701 ) (701 ) Income (loss) before equity earnings in Affiliate and income taxes $ (2,084 ) $ 359 $ (1,725 ) $ (43 ) $ 182 $ 191 $ (1,395 ) Nine months ended September 30, 2022 Commercial Lines Personal Lines Total Underwriting Wholesale Agency Corporate Eliminations Total Gross written premiums $ 88,297 $ 15,173 $ 103,470 $ — $ — $ — $ 103,470 Net written premiums $ 55,456 $ 13,524 $ 68,980 $ — $ — $ — $ 68,980 Net earned premiums $ 62,097 $ 11,392 $ 73,489 $ — $ — $ — $ 73,489 Other income 195 58 253 2,969 407 (1,665 ) 1,964 Segment revenue 62,292 11,450 73,742 2,969 407 (1,665 ) 75,453 Losses and LAE, net 49,864 7,076 56,940 — — — 56,940 Policy acquisition costs 13,717 3,530 17,247 2,026 — (1,854 ) 17,419 Operating expenses 9,966 1,405 11,371 811 828 — 13,010 Segment expenses 73,547 12,011 85,558 2,837 828 (1,854 ) 87,369 Segment gain (loss) $ (11,255 ) $ (561 ) $ (11,816 ) $ 132 $ (421 ) $ 189 $ (11,916 ) Investment income 1,931 1,931 Net realized investment gains (losses) (1,505 ) (1,505 ) Change in fair value of equity securities 446 446 Other gains 60 60 Interest expense (2,216 ) (2,216 ) Income (loss) before equity earnings in Affiliate and income taxes $ (11,255 ) $ (561 ) $ (11,816 ) $ 132 $ (1,705 ) $ 189 $ (13,200 ) Nine months ended September 30, 2021 Commercial Lines Personal Lines Total Underwriting Wholesale Agency Corporate Eliminations Total Gross written premiums $ 88,017 $ 11,041 $ 99,058 $ — $ — $ — $ 99,058 Net written premiums $ 68,685 $ 10,399 $ 79,084 $ — $ — $ — $ 79,084 Net earned premiums $ 64,869 $ 7,745 $ 72,614 $ — $ — $ — $ 72,614 Other income 158 113 271 4,932 219 (3,448 ) 1,974 Segment revenue 65,027 7,858 72,885 4,932 219 (3,448 ) 74,588 Losses and LAE, net 48,592 4,855 53,447 — — — 53,447 Policy acquisition costs 19,102 2,178 21,280 3,147 — (3,608 ) 20,819 Operating expenses 8,761 1,076 9,837 2,060 871 — 12,768 Segment expenses 76,455 8,109 84,564 5,207 871 (3,608 ) 87,034 Segment gain (loss) $ (11,428 ) $ (251 ) $ (11,679 ) $ (275 ) $ (652 ) $ 160 $ (12,446 ) Investment income 1,549 1,549 Net realized investment gains (losses) 3,883 3,883 Change in fair value of equity securities (3,234 ) (3,234 ) Other gains 11,688 11,688 Interest expense (2,154 ) (2,154 ) Income (loss) before equity earnings in Affiliate and income taxes $ (11,428 ) $ (251 ) $ (11,679 ) $ (275 ) $ 11,080 $ 160 $ (714 ) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 class_business state | |
Accounting Policies [Abstract] | |
Non Controlling Interest | 50% |
Number of types of business | class_business | 3 |
Number of states in which entity operates | state | 50 |
Investments - Available-for-sal
Investments - Available-for-sale Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, Cost or Amortized Cost | $ 129,372 | $ 150,732 |
Debt securities, Gross Unrealized Gain | 0 | 898 |
Debt securities, Gross Unrealized Losses | (17,525) | (1,847) |
Debt securities, Estimated Fair Value | 111,847 | 149,783 |
U.S. Government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, Cost or Amortized Cost | 7,830 | 20,723 |
Debt securities, Gross Unrealized Gain | 0 | 74 |
Debt securities, Gross Unrealized Losses | (367) | (77) |
Debt securities, Estimated Fair Value | 7,463 | 20,720 |
State and local government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, Cost or Amortized Cost | 25,661 | 30,063 |
Debt securities, Gross Unrealized Gain | 0 | 555 |
Debt securities, Gross Unrealized Losses | (4,516) | (189) |
Debt securities, Estimated Fair Value | 21,145 | 30,429 |
Corporate debt | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, Cost or Amortized Cost | 35,544 | 30,808 |
Debt securities, Gross Unrealized Gain | 0 | 88 |
Debt securities, Gross Unrealized Losses | (5,398) | (550) |
Debt securities, Estimated Fair Value | 30,146 | 30,346 |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, Cost or Amortized Cost | 22,896 | 28,652 |
Debt securities, Gross Unrealized Gain | 0 | 10 |
Debt securities, Gross Unrealized Losses | (1,173) | (224) |
Debt securities, Estimated Fair Value | 21,723 | 28,438 |
Mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, Cost or Amortized Cost | 29,772 | 33,178 |
Debt securities, Gross Unrealized Gain | 0 | 105 |
Debt securities, Gross Unrealized Losses | (5,442) | (762) |
Debt securities, Estimated Fair Value | 24,330 | 32,521 |
Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, Cost or Amortized Cost | 3,418 | 1,659 |
Debt securities, Gross Unrealized Gain | 0 | 31 |
Debt securities, Gross Unrealized Losses | (181) | 0 |
Debt securities, Estimated Fair Value | 3,237 | 1,690 |
Collateralized mortgage obligations | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, Cost or Amortized Cost | 4,251 | 5,649 |
Debt securities, Gross Unrealized Gain | 0 | 35 |
Debt securities, Gross Unrealized Losses | (448) | (45) |
Debt securities, Estimated Fair Value | $ 3,803 | $ 5,639 |
Investments - Available-for-s_2
Investments - Available-for-sale Securities in Unrealized Loss Positions (Details) $ in Thousands | Sep. 30, 2022 USD ($) security | Dec. 31, 2021 USD ($) security |
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract] | ||
Debt securities, less than 12 months, number of issues | security | 250 | 134 |
Debt securities, greater than 12 months, number of issues | security | 92 | 10 |
Debt securities, number of issues | security | 342 | 144 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 54,927 | $ 95,923 |
Debt securities, greater than 12 months, fair value | 56,519 | 7,801 |
Debt securities, fair value | 111,446 | 103,724 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (7,256) | (1,750) |
Debt securities, greater than 12 months, unrealized losses | (10,269) | (97) |
Debt securities, total unrealized losses | $ (17,525) | $ (1,847) |
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 | 9 | 6 |
Debt securities, greater than 12 months, number of issues | security | 4 | 1 |
Debt securities, number of issues | security | 13 | 7 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 3,746 | $ 10,323 |
Debt securities, greater than 12 months, fair value | 3,717 | 4,728 |
Debt securities, fair value | 7,463 | 15,051 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (161) | (47) |
Debt securities, greater than 12 months, unrealized losses | (206) | (30) |
Debt securities, total unrealized losses | $ (367) | $ (77) |
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 | 93 | 41 |
Debt securities, greater than 12 months, number of issues | security | 32 | 4 |
Debt securities, number of issues | security | 125 | 45 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 16,323 | $ 8,875 |
Debt securities, greater than 12 months, fair value | 4,518 | 446 |
Debt securities, fair value | 20,841 | 9,321 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (3,165) | (172) |
Debt securities, greater than 12 months, unrealized losses | (1,351) | (17) |
Debt securities, total unrealized losses | $ (4,516) | $ (189) |
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 | 42 | 41 |
Debt securities, greater than 12 months, number of issues | security | 28 | 1 |
Debt securities, number of issues | security | 70 | 42 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 16,035 | $ 22,748 |
Debt securities, greater than 12 months, fair value | 14,111 | 705 |
Debt securities, fair value | 30,146 | 23,453 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (2,568) | (505) |
Debt securities, greater than 12 months, unrealized losses | (2,830) | (45) |
Debt securities, total unrealized losses | $ (5,398) | $ (550) |
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 | 16 | 24 |
Debt securities, greater than 12 months, number of issues | security | 12 | 2 |
Debt securities, number of issues | security | 28 | 26 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 8,267 | $ 24,305 |
Debt securities, greater than 12 months, fair value | 13,456 | 1,893 |
Debt securities, fair value | 21,723 | 26,198 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (162) | (219) |
Debt securities, greater than 12 months, unrealized losses | (1,011) | (5) |
Debt securities, total unrealized losses | $ (1,173) | $ (224) |
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 | 60 | 12 |
Debt securities, greater than 12 months, number of issues | security | 9 | 0 |
Debt securities, number of issues | security | 69 | 12 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 4,947 | $ 27,034 |
Debt securities, greater than 12 months, fair value | 19,347 | 0 |
Debt securities, fair value | 24,294 | 27,034 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (780) | (762) |
Debt securities, greater than 12 months, unrealized losses | (4,662) | 0 |
Debt securities, total unrealized losses | $ (5,442) | $ (762) |
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 | 4 | 0 |
Debt securities, greater than 12 months, number of issues | security | 0 | 0 |
Debt securities, number of issues | security | 4 | 0 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 3,212 | $ 0 |
Debt securities, greater than 12 months, fair value | 0 | 0 |
Debt securities, fair value | 3,212 | 0 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (181) | 0 |
Debt securities, greater than 12 months, unrealized losses | 0 | 0 |
Debt securities, total unrealized losses | $ (181) | $ 0 |
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 | 26 | 10 |
Debt securities, greater than 12 months, number of issues | security | 7 | 2 |
Debt securities, number of issues | security | 33 | 12 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract] | ||
Debt securities, less than 12 months, fair value | $ 2,397 | $ 2,638 |
Debt securities, greater than 12 months, fair value | 1,370 | 29 |
Debt securities, fair value | 3,767 | 2,667 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Debt securities, less than 12 months, unrealized losses | (239) | (45) |
Debt securities, greater than 12 months, unrealized losses | (209) | 0 |
Debt securities, total unrealized losses | $ (448) | $ (45) |
Investments - Net Investment In
Investments - Net Investment Income and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net Investment Income [Line Items] | ||||
Investment income | $ 918 | $ 626 | $ 2,171 | $ 1,884 |
Investment expenses | (58) | (112) | (240) | (335) |
Net investment income | 860 | 514 | 1,931 | 1,549 |
Debt securities | ||||
Net Investment Income [Line Items] | ||||
Investment income | 636 | 562 | 1,814 | 1,716 |
Equity securities | ||||
Net Investment Income [Line Items] | ||||
Investment income | 3 | 63 | 41 | 166 |
Cash, cash equivalents and short-term investments | ||||
Net Investment Income [Line Items] | ||||
Investment income | $ 279 | $ 1 | $ 316 | $ 2 |
Investments - Gross Realized Ga
Investments - Gross Realized Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Debt securities: | |||
Gross realized gains | $ 2 | $ 6 | $ 29 |
Gross realized losses | (155) | (6) | |
Total debt securities | 2 | (149) | 23 |
Equity securities: | |||
Gross realized gains | 55 | 375 | 4,063 |
Gross realized losses | (158) | (1,731) | (203) |
Total equity securities | (103) | (1,356) | 3,860 |
Total net realized investment gains (losses) | $ (101) | $ (1,505) | $ 3,883 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Investments Debt And Equity Securities [Abstract] | |||||
Proceeds from available-for-sale debt securities | $ 29,300,000 | $ 25,600,000 | |||
Gross realized gains from sales of available-for-sale debt securities | $ 0 | $ 0 | 5,000 | 27,000 | |
Gross realized losses from sales of available-for-sale debt securities | 0 | 0 | 155,000 | 6,000 | |
Amount payable for securities purchased | 0 | 43,000 | 0 | 43,000 | |
Amount receivable for securities sold | 0 | $ 3,000 | 0 | $ 3,000 | |
Gross unrealized losses to equity investments | 595,000 | $ 1,000,000 | |||
Other than temporary impairments losses, investments | 0 | ||||
Investments | 1,700,000 | 1,700,000 | 1,200,000 | ||
Deposits held in trust accounts | 7,900,000 | 7,900,000 | 8,500,000 | ||
Deposits, held in trust for collateral requirements | $ 99,900,000 | $ 99,900,000 | $ 76,100,000 |
Investments - Available-for-s_3
Investments - Available-for-sale Fixed Maturity Securities by Contractual Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Amortized Cost | ||
Due in one year or less | $ 3,955 | |
Due after one year through five years | 28,544 | |
Due after five years through ten years | 23,584 | |
Due after ten years | 12,952 | |
Securities with contractual maturities | 69,035 | |
Total debt securities | 129,372 | $ 150,732 |
Estimated Fair Value | ||
Due in one year or less | 3,886 | |
Due after one year through five years | 25,944 | |
Due after five years through ten years | 19,261 | |
Due after ten years | 9,663 | |
Securities with contractual maturities | 58,754 | |
Total debt securities | 111,847 | 149,783 |
Asset-backed securities | ||
Amortized Cost | ||
Total debt securities | 22,896 | 28,652 |
Estimated Fair Value | ||
Total debt securities | 21,723 | 28,438 |
Mortgage-backed securities | ||
Amortized Cost | ||
Total debt securities | 29,772 | 33,178 |
Estimated Fair Value | ||
Total debt securities | 24,330 | 32,521 |
Commercial mortgage-backed securities | ||
Amortized Cost | ||
Total debt securities | 3,418 | 1,659 |
Estimated Fair Value | ||
Total debt securities | 3,237 | 1,690 |
Collateralized mortgage obligations | ||
Amortized Cost | ||
Total debt securities | 4,251 | 5,649 |
Estimated Fair Value | ||
Total debt securities | $ 3,803 | $ 5,639 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Assets: | ||
Total debt securities | $ 111,847 | $ 149,783 |
Equity Securities | 947 | 9,437 |
Short-term investments | 30,562 | 23,013 |
Total marketable investments measured at fair value | 143,356 | 182,233 |
Total assets measured at fair value | 143,721 | 182,727 |
Liabilities: | ||
Total Liabilities measured at fair value | 48,799 | 35,822 |
U.S. Government | ||
Assets: | ||
Total debt securities | 7,463 | 20,720 |
State and local government | ||
Assets: | ||
Total debt securities | 21,145 | 30,429 |
Corporate debt | ||
Assets: | ||
Total debt securities | 30,146 | 30,346 |
Asset-backed securities | ||
Assets: | ||
Total debt securities | 21,723 | 28,438 |
Mortgage-backed securities | ||
Assets: | ||
Total debt securities | 24,330 | 32,521 |
Commercial mortgage-backed securities | ||
Assets: | ||
Total debt securities | 3,237 | 1,690 |
Collateralized mortgage obligations | ||
Assets: | ||
Total debt securities | 3,803 | 5,639 |
Senior Unsecured Notes | ||
Liabilities: | ||
Debt | 23,113 | 24,118 |
Subordinated notes | ||
Liabilities: | ||
Debt | 11,186 | 11,704 |
Partnership interest | ||
Assets: | ||
Investments measured at NAV | 365 | 494 |
FHLB of Indianapolis | ||
Liabilities: | ||
Debt | 14,500 | |
Level 1 | ||
Assets: | ||
Total debt securities | 0 | 0 |
Equity Securities | 190 | 9,154 |
Short-term investments | 30,562 | 23,013 |
Total marketable investments measured at fair value | 30,752 | 32,167 |
Liabilities: | ||
Total Liabilities measured at fair value | 0 | 0 |
Level 1 | U.S. Government | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 1 | State and local government | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 1 | Corporate debt | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 1 | Asset-backed securities | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 1 | Mortgage-backed securities | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 1 | Commercial mortgage-backed securities | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 1 | Collateralized mortgage obligations | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 1 | Senior Unsecured Notes | ||
Liabilities: | ||
Debt | 0 | 0 |
Level 1 | Subordinated notes | ||
Liabilities: | ||
Debt | 0 | 0 |
Level 1 | FHLB of Indianapolis | ||
Liabilities: | ||
Debt | 0 | |
Level 2 | ||
Assets: | ||
Total debt securities | 111,847 | 149,783 |
Equity Securities | 757 | 283 |
Short-term investments | 0 | 0 |
Total marketable investments measured at fair value | 112,604 | 150,066 |
Liabilities: | ||
Total Liabilities measured at fair value | 37,613 | 24,118 |
Level 2 | U.S. Government | ||
Assets: | ||
Total debt securities | 7,463 | 20,720 |
Level 2 | State and local government | ||
Assets: | ||
Total debt securities | 21,145 | 30,429 |
Level 2 | Corporate debt | ||
Assets: | ||
Total debt securities | 30,146 | 30,346 |
Level 2 | Asset-backed securities | ||
Assets: | ||
Total debt securities | 21,723 | 28,438 |
Level 2 | Mortgage-backed securities | ||
Assets: | ||
Total debt securities | 24,330 | 32,521 |
Level 2 | Commercial mortgage-backed securities | ||
Assets: | ||
Total debt securities | 3,237 | 1,690 |
Level 2 | Collateralized mortgage obligations | ||
Assets: | ||
Total debt securities | 3,803 | 5,639 |
Level 2 | Senior Unsecured Notes | ||
Liabilities: | ||
Debt | 23,113 | 24,118 |
Level 2 | Subordinated notes | ||
Liabilities: | ||
Debt | 0 | 0 |
Level 2 | FHLB of Indianapolis | ||
Liabilities: | ||
Debt | 14,500 | |
Level 3 | ||
Assets: | ||
Total debt securities | 0 | 0 |
Equity Securities | 0 | 0 |
Short-term investments | 0 | 0 |
Total marketable investments measured at fair value | 0 | 0 |
Liabilities: | ||
Total Liabilities measured at fair value | 11,186 | 11,704 |
Level 3 | U.S. Government | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 3 | State and local government | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 3 | Corporate debt | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 3 | Asset-backed securities | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 3 | Mortgage-backed securities | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 3 | Commercial mortgage-backed securities | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 3 | Collateralized mortgage obligations | ||
Assets: | ||
Total debt securities | 0 | 0 |
Level 3 | Senior Unsecured Notes | ||
Liabilities: | ||
Debt | 0 | 0 |
Level 3 | Subordinated notes | ||
Liabilities: | ||
Debt | 11,186 | $ 11,704 |
Level 3 | FHLB of Indianapolis | ||
Liabilities: | ||
Debt | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Assets measured at fair value | $ 143,721,000 | $ 182,727,000 |
Liabilities measured at fair value | 48,799,000 | 35,822,000 |
Fair Value, Nonrecurring | ||
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Assets measured at fair value | 0 | 0 |
Liabilities measured at fair value | $ 0 | $ 0 |
Level 1 | ||
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Investment portfolio percentage | 21.40% | 17.60% |
Liabilities measured at fair value | $ 0 | $ 0 |
Level 2 | ||
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Investment portfolio percentage | 78.40% | 82.10% |
Liabilities measured at fair value | $ 37,613,000 | $ 24,118,000 |
Deferred Policy Acquisition C_3
Deferred Policy Acquisition Costs - Activity in Deferred Policy Acquisition Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | ||||
Balance at beginning of period | $ 10,747 | $ 13,121 | $ 12,267 | $ 12,243 |
Deferred policy acquisition costs | 5,966 | 7,663 | 15,635 | 22,187 |
Amortization of policy acquisition costs | (6,230) | (7,173) | (17,419) | (20,819) |
Net change | (264) | 490 | (1,784) | 1,368 |
Balance at end of period | $ 10,483 | $ 13,611 | $ 10,483 | $ 13,611 |
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 | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Gross reserves - beginning of period | $ 140,996 | $ 117,852 | $ 139,085 | $ 111,270 |
Less: reinsurance recoverables on unpaid losses | (37,769) | (22,824) | (40,344) | (24,218) |
Net reserves - beginning of period | 103,227 | 95,028 | 98,741 | 87,052 |
Add: incurred losses and LAE, net of reinsurance: | ||||
Current period | 13,541 | 12,513 | 38,765 | 37,813 |
Prior period | 3,130 | 3,646 | 18,175 | 15,634 |
Total net incurred losses and LAE | 16,671 | 16,159 | 56,940 | 53,447 |
Deduct: loss and LAE payments, net of reinsurance: | ||||
Current period | 5,634 | 5,802 | 13,313 | 14,102 |
Prior period | 11,456 | 8,587 | 39,560 | 29,599 |
Total net loss and LAE payments | 17,090 | 14,389 | 52,873 | 43,701 |
Net reserves - end of period | 102,808 | 96,798 | 102,808 | 96,798 |
Plus: reinsurance recoverables on unpaid losses | 41,749 | 23,056 | 41,749 | 23,056 |
Gross reserves - end of period | $ 144,557 | $ 119,854 | $ 144,557 | $ 119,854 |
Unpaid Losses and Loss Adjust_4
Unpaid Losses and Loss Adjustment Expenses - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Liability For Claims And Claims Adjustment Expense [Line Items] | ||||
Losses and loss adjustment expenses, net | $ 16,671,000 | $ 16,159,000 | $ 56,940,000 | $ 53,447,000 |
Prior year adjustments | 3,130,000 | 3,646,000 | 18,175,000 | 15,634,000 |
Winter Storm Uri | ||||
Liability For Claims And Claims Adjustment Expense [Line Items] | ||||
Losses and loss adjustment expenses, net | 2,000,000 | |||
Commercial Lines1 | ||||
Liability For Claims And Claims Adjustment Expense [Line Items] | ||||
Prior year adjustments | 2,700,000 | 3,400,000 | 17,700,000 | 14,700,000 |
Personal Lines | ||||
Liability For Claims And Claims Adjustment Expense [Line Items] | ||||
Prior year adjustments | 381,000 | 290,000 | 430,000 | 926,000 |
2019 Accident Year | ||||
Liability For Claims And Claims Adjustment Expense [Line Items] | ||||
Prior year adjustments | 2,300,000 | 1,000,000 | 14,300,000 | 3,400,000 |
2021 Accident Year | ||||
Liability For Claims And Claims Adjustment Expense [Line Items] | ||||
Prior year adjustments | 1,800,000 | 1,700,000 | ||
2020 Accident Year | ||||
Liability For Claims And Claims Adjustment Expense [Line Items] | ||||
Losses and loss adjustment expenses, net | $ 958,000 | |||
Prior year adjustments | $ 2,200,000 | 2,400,000 | ||
2017 Accident Year | ||||
Liability For Claims And Claims Adjustment Expense [Line Items] | ||||
Prior year adjustments | 1,100,000 | 5,000,000 | ||
2018 Accident Year | ||||
Liability For Claims And Claims Adjustment Expense [Line Items] | ||||
Prior year adjustments | $ 1,400,000 | $ 4,800,000 |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Effects Of Reinsurance [Line Items] | ||||||
Ceded premium written | $ 9,395,000 | $ 7,635,000 | $ 34,490,000 | $ 19,974,000 | ||
Ceded premiums earned | 9,443,000 | $ 6,829,000 | 27,458,000 | $ 17,631,000 | ||
100% Cede of Commercial Liability Risks In Excess of $400,000 | ||||||
Effects Of Reinsurance [Line Items] | ||||||
Amount retained (excess of) | 340,000 | $ 400,000 | ||||
Ceded Commercial Property Risks In Excess of $300,000 | ||||||
Effects Of Reinsurance [Line Items] | ||||||
Amount retained (excess of) | 300,000 | |||||
Ceded Commercial Property Risks In Excess of $200,000 | ||||||
Effects Of Reinsurance [Line Items] | ||||||
Amount retained (excess of) | 200,000 | |||||
Ceded Homeowners Specific Risks In Excess of $300,000 | ||||||
Effects Of Reinsurance [Line Items] | ||||||
Amount retained (excess of) | 300,000 | $ 300,000 | ||||
Ceding Commission | ||||||
Effects Of Reinsurance [Line Items] | ||||||
Reinsurance retention policy, reinsured percentage | 40% | |||||
Ceding Commission | Acquisition-related Costs | ||||||
Effects Of Reinsurance [Line Items] | ||||||
Ceded premium written | $ 0 | $ 2,100,000 | $ 6,400,000 |
Reinsurance - Effects of Reinsu
Reinsurance - Effects of Reinsurance and Assumption Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Written premiums: | ||||
Direct | $ 22,682 | $ 24,239 | $ 73,789 | $ 73,825 |
Assumed | 10,406 | 9,465 | 29,681 | 25,233 |
Ceded | (9,395) | (7,635) | (34,490) | (19,974) |
Net written premiums | 23,693 | 26,069 | 68,980 | 79,084 |
Earned premiums: | ||||
Direct | 24,679 | 23,858 | 73,667 | 67,455 |
Assumed | 9,722 | 7,912 | 27,280 | 22,790 |
Ceded | (9,443) | (6,829) | (27,458) | (17,631) |
Net earned premiums | 24,958 | 24,941 | 73,489 | 72,614 |
Losses and LAE: | ||||
Direct | 15,837 | 14,511 | 46,375 | 50,628 |
Assumed | 7,225 | 4,422 | 26,136 | 11,251 |
Ceded | (6,391) | (2,774) | (15,571) | (8,432) |
Total net incurred losses and LAE | $ 16,671 | $ 16,159 | $ 56,940 | $ 53,447 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||||||||
Dec. 01, 2022 USD ($) | Aug. 10, 2022 USD ($) | Jul. 07, 2022 USD ($) | Apr. 24, 2020 USD ($) | Sep. 24, 2018 USD ($) | Sep. 30, 2022 USD ($) debt_instrument shares | Sep. 30, 2021 USD ($) shares | Sep. 30, 2022 USD ($) debt_instrument shares | Sep. 30, 2021 shares | Oct. 31, 2018 USD ($) | |
Debt Instrument [Line Items] | ||||||||||
Number of debt instruments | debt_instrument | 4 | 4 | ||||||||
FHLB of Indianapolis | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Federal home loan bank borrowings | $ 14,500,000 | |||||||||
Federal home loan bank borrowings floating interest rate | 3.45% | |||||||||
Federal Home Loan Bank, Borrowings maturity date | Jan. 09, 2023 | |||||||||
Debt | $ 14,500,000 | $ 14,500,000 | ||||||||
Common stocks | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Equity contribution received | $ 5,000,000 | |||||||||
Federal Home Loan Bank Debt | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | 14,500,000 | 14,500,000 | ||||||||
Paycheck Protection Program | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt | $ 2,700,000 | |||||||||
Debt instrument, description | The Company received notice from the SBA that the loan was 100% forgiven, including accrued interest, on July 8, 2021. This resulted in a $2.8 million gain that was included in Other Gains on the Consolidated Statement of Operations in the third quarter of 2021. | |||||||||
Loan forgiven date | Jul. 08, 2021 | |||||||||
Paycheck Protection Program | Other Gains | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Gain on forgiven loan | $ 2,800,000 | |||||||||
Senior Unsecured Notes | Senior Unsecured Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 24,400,000 | $ 24,400,000 | $ 25,300,000 | |||||||
Maturity date | Sep. 30, 2023 | |||||||||
Interest rate | 6.75% | |||||||||
Number of units repurchased | shares | 0 | 0 | 0 | 0 | ||||||
Debt issuance costs | $ 260,000 | $ 260,000 | ||||||||
Subordinated notes | Subordinated notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 10,500,000 | 10,500,000 | $ 10,500,000 | |||||||
Maturity date | Sep. 30, 2038 | |||||||||
Interest rate, payment terms | Interest is payable quarterly at the end of March, June, September and December. | |||||||||
Call premium percentage | 12.50% | |||||||||
Debt issuance costs | 823,000 | $ 823,000 | ||||||||
Subordinated notes | Subordinated notes | Debt Instrument, Redemption, Period One | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 7.50% | |||||||||
Call premium | $ 1,100,000 | |||||||||
Subordinated notes | Subordinated notes | Debt Instrument, Redemption, Period Two | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 12.50% | |||||||||
Call premium | $ 1,750,000 | |||||||||
Subordinated notes | Subordinated notes | Debt Instrument, Redemption, Period Three | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Call premium | $ 3,050,000 | |||||||||
Line of credit | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Borrowing capacity | $ 10,000,000 | 10,000,000 | 10,000,000 | |||||||
Debt | $ 0 | $ 0 | ||||||||
Line of credit | LIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Variable interest rate | 2.75% |
Debt - Outstanding Senior Debt
Debt - Outstanding Senior Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Debt | $ 48,298 | $ 33,564 |
Senior Unsecured Notes | ||
Debt Instrument [Line Items] | ||
Debt | 24,121 | 23,926 |
Subordinated notes | ||
Debt Instrument [Line Items] | ||
Debt | 9,677 | $ 9,638 |
FHLB of Indianapolis | ||
Debt Instrument [Line Items] | ||
Debt | $ 14,500 |
Shareholder's Equity - Narrativ
Shareholder's Equity - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||||
Aug. 10, 2022 USD ($) $ / shares shares | Sep. 30, 2022 shares | Sep. 30, 2021 USD ($) shares | Sep. 30, 2022 USD ($) vote shares | Sep. 30, 2021 USD ($) shares | Dec. 31, 2021 shares | |
Equity Class Of Treasury Stock [Line Items] | ||||||
Common stock, shares issued (in shares) | 12,215,324 | 12,215,324 | 9,707,817 | |||
Common stock, shares outstanding (in shares) | 12,215,324 | 12,215,324 | 9,707,817 | |||
Common stock voting rights, number of votes per share | vote | 1 | |||||
Restricted Stock Units (RSUs) | ||||||
Equity Class Of Treasury Stock [Line Items] | ||||||
Shares repurchased (in shares) | 0 | 1,240 | 1,493 | 3,547 | ||
Shares repurchased | $ | $ 4,000 | $ 3,000 | $ 11,000 | |||
Restricted stock units vested | 0 | |||||
Common stocks | ||||||
Equity Class Of Treasury Stock [Line Items] | ||||||
Common equity issued | $ | $ 5,000,000 | |||||
Common stock, shares issued (in shares) | 12,215,324 | 12,215,324 | 9,707,817 | |||
Common stock, shares outstanding (in shares) | 12,215,324 | 12,215,324 | 9,707,817 | |||
Private placement | Common stocks | ||||||
Equity Class Of Treasury Stock [Line Items] | ||||||
Common equity issued | $ | $ 5,000,000 | |||||
Common equity issued (in shares) | 2,500,000 | |||||
Offering price per share (in dollars per share) | $ / shares | $ 2 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at beginning of period | $ 16,977 | $ 43,884 | $ 40,503 | $ 44,413 |
Other comprehensive income (loss) | (4,347) | (614) | (16,711) | (2,185) |
Balance at end of period | 16,165 | 42,108 | 16,165 | 42,108 |
Accumulated Other Comprehensive Income (Loss) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at beginning of period | (14,474) | (659) | (2,110) | 912 |
Other comprehensive income (loss) before reclassifications, net of tax | (4,347) | (570) | (16,641) | (2,100) |
Less: amounts reclassified from accumulated other comprehensive income (loss), net of tax | 44 | 70 | 85 | |
Other comprehensive income (loss) | (4,347) | (614) | (16,711) | (2,185) |
Balance at end of period | $ (18,821) | $ (1,273) | $ (18,821) | $ (1,273) |
Earnings Per Share - Basic and
Earnings Per Share - Basic and Diluted Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Earnings Per Share [Abstract] | |||||
Net income (loss) | $ (1,523) | $ (1,209) | $ (12,792) | $ (293) | |
Weighted average common shares outstanding, basic | [1] | 11,101,194 | 9,692,150 | 10,178,975 | 9,686,874 |
Weighted average common shares outstanding, diluted | [1] | 11,101,194 | 9,692,150 | 10,178,975 | 9,686,874 |
Earnings (loss) per common share, basic | $ (0.14) | $ (0.12) | $ (1.26) | $ (0.03) | |
Earnings (loss) per common share, diluted | $ (0.14) | $ (0.12) | $ (1.26) | $ (0.03) | |
[1]The non-vested shares of the restricted stock units and stock options were anti-dilutive as of September 30, 2022 and 2021. Therefore, the basic and diluted weighted average common shares are equal for the three months and nine months ended September 30, 2022 and 2021 |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) - USD ($) | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 08, 2022 | Jun. 30, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2018 | Dec. 31, 2016 | |
Stock Option | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options issued to purchase shares of common stock | 630,000 | 280,000 | ||||
Vesting period | 5 years | 5 years | ||||
Strike price | $ 4.53 | $ 3.81 | ||||
Expiration date | Mar. 08, 2032 | Jun. 30, 2030 | ||||
Estimated value of options issued to purchase shares of common stock | $ 612,000 | $ 290,000 | ||||
Share-based compensation expense | $ 111,000 | $ 39,000 | ||||
Share-based compensation expense not yet recognized | $ 685,000 | |||||
Share-based compensation nonvested shares | 783,000 | |||||
2015 Omnibus Incentive Plan | Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares granted in period (in shares) | 70,000 | 111,281 | ||||
Shares granted in period | $ 404,000 | $ 909,000 | ||||
Share-based compensation expense | $ 43,000 | $ 145,000 | ||||
Share-based compensation expense not yet recognized | $ 30,000 | |||||
Share-based compensation nonvested shares | 10,000 |
Segment Information - Narrative
Segment Information - Narrative (Details) - business | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information [Line Items] | ||
Number of businesses | 3 | |
Gross Written Premiums | Geographic Concentration Risk | Michigan, Florida, Texas and Pennsylvania | ||
Segment Reporting Information [Line Items] | ||
Concentration risk | 56.20% | 51.40% |
Segment Information - Informati
Segment Information - Information by Reportable Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Gross written premiums | $ 33,088 | $ 33,704 | $ 103,470 | $ 99,058 |
Net written premiums | 23,693 | 26,069 | 68,980 | 79,084 |
Net earned premiums | 24,958 | 24,941 | 73,489 | 72,614 |
Other income | 603 | 752 | 1,964 | 1,974 |
Segment revenue | 25,561 | 25,693 | 75,453 | 74,588 |
Losses and loss adjustment expenses, net | 16,671 | 16,159 | 56,940 | 53,447 |
Policy acquisition costs | 6,230 | 7,173 | 17,419 | 20,819 |
Operating expenses | 4,380 | 4,077 | 13,010 | 12,768 |
Segment expenses | 27,281 | 27,409 | 87,369 | 87,034 |
Segment gain (loss) | (1,720) | (1,716) | (11,916) | (12,446) |
Net investment income | 860 | 514 | 1,931 | 1,549 |
Net realized investment gains (losses) | (101) | (1,505) | 3,883 | |
Change in fair value of equity securities | (151) | (2,169) | 446 | (3,234) |
Other gains (losses) | 66 | 2,778 | 60 | 11,688 |
Interest expense | (778) | (701) | (2,216) | (2,154) |
Income (loss) before equity earnings in Affiliate and income taxes | (1,723) | (1,395) | (13,200) | (714) |
Operating Segments | Commercial Lines1 | ||||
Segment Reporting Information [Line Items] | ||||
Gross written premiums | 27,635 | 29,849 | 88,297 | 88,017 |
Net written premiums | 18,730 | 22,456 | 55,456 | 68,685 |
Net earned premiums | 20,789 | 21,975 | 62,097 | 64,869 |
Other income | 57 | 50 | 195 | 158 |
Segment revenue | 20,846 | 22,025 | 62,292 | 65,027 |
Losses and loss adjustment expenses, net | 13,348 | 14,697 | 49,864 | 48,592 |
Policy acquisition costs | 4,950 | 6,458 | 13,717 | 19,102 |
Operating expenses | 3,297 | 2,954 | 9,966 | 8,761 |
Segment expenses | 21,595 | 24,109 | 73,547 | 76,455 |
Segment gain (loss) | (749) | (2,084) | (11,255) | (11,428) |
Income (loss) before equity earnings in Affiliate and income taxes | (749) | (2,084) | (11,255) | (11,428) |
Operating Segments | Personal Lines | ||||
Segment Reporting Information [Line Items] | ||||
Gross written premiums | 5,453 | 3,855 | 15,173 | 11,041 |
Net written premiums | 4,963 | 3,613 | 13,524 | 10,399 |
Net earned premiums | 4,169 | 2,966 | 11,392 | 7,745 |
Other income | 26 | 29 | 58 | 113 |
Segment revenue | 4,195 | 2,995 | 11,450 | 7,858 |
Losses and loss adjustment expenses, net | 3,323 | 1,462 | 7,076 | 4,855 |
Policy acquisition costs | 1,214 | 838 | 3,530 | 2,178 |
Operating expenses | 519 | 336 | 1,405 | 1,076 |
Segment expenses | 5,056 | 2,636 | 12,011 | 8,109 |
Segment gain (loss) | (861) | 359 | (561) | (251) |
Income (loss) before equity earnings in Affiliate and income taxes | (861) | 359 | (561) | (251) |
Operating Segments | Total Underwriting | ||||
Segment Reporting Information [Line Items] | ||||
Gross written premiums | 33,088 | 33,704 | 103,470 | 99,058 |
Net written premiums | 23,693 | 26,069 | 68,980 | 79,084 |
Net earned premiums | 24,958 | 24,941 | 73,489 | 72,614 |
Other income | 83 | 79 | 253 | 271 |
Segment revenue | 25,041 | 25,020 | 73,742 | 72,885 |
Losses and loss adjustment expenses, net | 16,671 | 16,159 | 56,940 | 53,447 |
Policy acquisition costs | 6,164 | 7,296 | 17,247 | 21,280 |
Operating expenses | 3,816 | 3,290 | 11,371 | 9,837 |
Segment expenses | 26,651 | 26,745 | 85,558 | 84,564 |
Segment gain (loss) | (1,610) | (1,725) | (11,816) | (11,679) |
Income (loss) before equity earnings in Affiliate and income taxes | (1,610) | (1,725) | (11,816) | (11,679) |
Operating Segments | Wholesale Agency | ||||
Segment Reporting Information [Line Items] | ||||
Other income | 793 | 1,235 | 2,969 | 4,932 |
Segment revenue | 793 | 1,235 | 2,969 | 4,932 |
Policy acquisition costs | 498 | 778 | 2,026 | 3,147 |
Operating expenses | 245 | 500 | 811 | 2,060 |
Segment expenses | 743 | 1,278 | 2,837 | 5,207 |
Segment gain (loss) | 50 | (43) | 132 | (275) |
Income (loss) before equity earnings in Affiliate and income taxes | 50 | (43) | 132 | (275) |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Other income | 113 | 148 | 407 | 219 |
Segment revenue | 113 | 148 | 407 | 219 |
Operating expenses | 319 | 287 | 828 | 871 |
Segment expenses | 319 | 287 | 828 | 871 |
Segment gain (loss) | (206) | (139) | (421) | (652) |
Net investment income | 860 | 514 | 1,931 | 1,549 |
Net realized investment gains (losses) | (101) | (1,505) | 3,883 | |
Change in fair value of equity securities | (151) | (2,169) | 446 | (3,234) |
Other gains (losses) | 66 | 2,778 | 60 | 11,688 |
Interest expense | (778) | (701) | (2,216) | (2,154) |
Income (loss) before equity earnings in Affiliate and income taxes | (209) | 182 | (1,705) | 11,080 |
Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Other income | (386) | (710) | (1,665) | (3,448) |
Segment revenue | (386) | (710) | (1,665) | (3,448) |
Policy acquisition costs | (432) | (901) | (1,854) | (3,608) |
Segment expenses | (432) | (901) | (1,854) | (3,608) |
Segment gain (loss) | 46 | 191 | 189 | 160 |
Income (loss) before equity earnings in Affiliate and income taxes | $ 46 | $ 191 | $ 189 | $ 160 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||||||
Nov. 01, 2022 | Oct. 14, 2022 | Oct. 13, 2022 | Dec. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
Subsequent Event [Line Items] | ||||||||||||
Aggregate limit of paid losses | $ 2,489 | $ 2,489 | $ 1,347 | |||||||||
Stated net reserves | 102,808 | $ 96,798 | 102,808 | $ 96,798 | $ 103,227 | 98,741 | $ 95,028 | $ 87,052 | ||||
Loss corridor | 16,671 | 16,159 | 56,940 | 53,447 | ||||||||
Reinsurance recoverables on paid losses | 2,489 | 2,489 | 1,347 | |||||||||
Prior period | 3,130 | 3,646 | 18,175 | 15,634 | ||||||||
Stated net reserves retained | 102,808 | 96,798 | 102,808 | 96,798 | 103,227 | $ 98,741 | $ 95,028 | $ 87,052 | ||||
2019 Accident Year | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Prior period | $ 2,300 | $ 1,000 | $ 14,300 | $ 3,400 | ||||||||
Subsequent Event | Venture | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Percentage of ownership interest purchased | 50% | |||||||||||
Payments to acquire interest in venture | $ 9,700 | |||||||||||
Ownership percentage | 100% | |||||||||||
Asset Purchase Agreement | Forecast | Whitetail Insurance Services L L C | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Non-operating gains, net of taxes generated | $ 8,000 | |||||||||||
Asset Purchase Agreement | Subsequent Event | Whitetail Insurance Services L L C | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Asset purchase agreement purchase price | $ 38,200 | |||||||||||
Effective date of acquisition | Oct. 01, 2022 | |||||||||||
Loss Portfolio Transfer (“LPT”) Reinsurance Agreement | Fleming Reinsurance Ltd | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Stated net reserves | 40,800 | |||||||||||
Stated net reserves retained | 40,800 | |||||||||||
One-time risk fee retained | 5,400 | |||||||||||
Loss Portfolio Transfer (“LPT”) Reinsurance Agreement | Fleming Reinsurance Ltd | 2019 Accident Year | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Aggregate limit of paid losses | 66,300 | |||||||||||
Stated net reserves | 40,800 | |||||||||||
Reinsurance recoverables on paid losses | 66,300 | |||||||||||
Stated net reserves retained | $ 40,800 | |||||||||||
Loss Portfolio Transfer (“LPT”) Reinsurance Agreement | Subsequent Event | Fleming Reinsurance Ltd | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Loss corridor | $ 5,500 | |||||||||||
Reinsurance losses in excess retained | 40,800 | |||||||||||
Loss Portfolio Transfer (“LPT”) Reinsurance Agreement | Subsequent Event | Fleming Reinsurance Ltd | 2019 Accident Year | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Prior period | 20,000 | |||||||||||
Loss Portfolio Transfer (“LPT”) Reinsurance Agreement | Subsequent Event | Fleming Reinsurance Ltd | Minimum | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Aggregate limit of paid losses | 46,300 | |||||||||||
Reinsurance recoverables on paid losses | 46,300 | |||||||||||
Loss Portfolio Transfer (“LPT”) Reinsurance Agreement | Subsequent Event | Fleming Reinsurance Ltd | Maximum | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Aggregate limit of paid losses | 66,300 | |||||||||||
Reinsurance recoverables on paid losses | $ 66,300 |