Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 09, 2023 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2023 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-36366 | |
Entity Registrant Name | FG Financial Group, Inc. | |
Entity Central Index Key | 0001591890 | |
Entity Tax Identification Number | 46-1119100 | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Address Line One | 104 S. Walnut Street | |
Entity Address, Address Line Two | Unit 1A | |
Entity Address, City or Town | Itasca | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60143 | |
City Area Code | (847) | |
Local Phone Number | 773-1665 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,558,930 | |
Common Stock, $0.001 par value per share | ||
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | FGF | |
Security Exchange Name | NASDAQ | |
8.00% Cumulative Preferred Stock, Series A, $25.00 par value per share | ||
Title of 12(b) Security | 8.00% Cumulative Preferred Stock, Series A, $25.00 par value per share | |
Trading Symbol | FGFPP | |
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Equity securities, at fair value (cost basis of $1,916 and $889, respectively) | $ 2,187 | $ 841 |
Other investments | 27,365 | 24,839 |
Cash and cash equivalents | 5,525 | 3,010 |
Deferred policy acquisition costs | 1,480 | 1,527 |
Reinsurance balances receivable (net of current expected losses allowance of $84 and zero, respectively) | 14,469 | 9,269 |
Funds deposited with reinsured companies | 7,075 | 9,277 |
Other assets | 727 | 712 |
Total assets | 58,828 | 49,475 |
LIABILITIES | ||
Loss and loss adjustment expense reserves | 5,912 | 4,409 |
Unearned premium reserves | 9,394 | 6,823 |
Accounts payable and accrued expenses | 720 | 723 |
Other liabilities | 135 | 225 |
Total liabilities | 16,161 | 12,180 |
Commitments and contingencies (Note 10) | ||
SHAREHOLDERS’ EQUITY | ||
Series A Preferred Shares, $25.00 par and liquidation value, 1,000,000 shares authorized; 894,580 shares issued and outstanding as of September 30, 2023 and December 31, 2022 | 22,365 | 22,365 |
Common stock, $0.001 par value; 100,000,000 shares authorized; 10,303,739 and 9,410,473 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | 10 | 9 |
Additional paid-in capital | 52,781 | 50,021 |
Accumulated deficit | (32,489) | (35,100) |
Total shareholders’ equity | 42,667 | 37,295 |
Total liabilities and shareholders’ equity | $ 58,828 | $ 49,475 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Equity securities, cost basis | $ 1,916 | $ 889 |
Reinsurance losses allowance | $ 84 | $ 0 |
Series A preferred stock, par value | $ 25 | $ 25 |
Series A preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Series A preferred stock, shares issued | 894,580 | 894,580 |
Series A preferred stock, shares outstanding | 894,580 | 894,580 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 10,303,739 | 9,410,473 |
Common stock, shares Outstanding | 10,303,739 | 9,410,473 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue: | ||||
Net premiums earned | $ 4,192 | $ 4,383 | $ 11,534 | $ 9,809 |
Net investment income | 6,961 | 11,174 | 8,272 | 5,114 |
Other income | 24 | 214 | 84 | 266 |
Total revenue | 11,177 | 15,771 | 19,890 | 15,189 |
Expenses: | ||||
Net losses and loss adjustment expenses | 2,205 | 2,406 | 6,081 | 5,798 |
Amortization of deferred policy acquisition costs | 1,003 | 1,109 | 2,533 | 2,427 |
General and administrative expenses | 2,341 | 2,001 | 7,221 | 6,009 |
Total expenses | 5,549 | 5,516 | 15,835 | 14,234 |
Net income | 5,628 | 10,255 | 4,055 | 955 |
Dividends declared on Series A Preferred Shares | 447 | 447 | 1,339 | 1,342 |
Income (loss) attributable to FG Financial Group, Inc. common shareholders | $ 5,181 | $ 9,808 | $ 2,716 | $ (387) |
Basic net income (loss) per common share | $ 0.50 | $ 1.05 | $ 0.28 | $ (0.05) |
Diluted net income (loss) per common share | $ 0.50 | $ 1.05 | $ 0.28 | $ (0.05) |
Weighted average common shares outstanding: | ||||
Basic | 10,303,739 | 9,333,709 | 9,813,438 | 7,564,017 |
Diluted | 10,303,739 | 9,333,709 | 9,813,438 | 7,564,017 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2021 | $ 22,365 | $ 6 | $ 46,037 | $ (34,399) | $ 34,009 |
Beginning balance, shares at Dec. 31, 2021 | 894,580 | 6,497,205 | |||
Stock based compensation | $ 1 | 62 | 63 | ||
Stock based compensation, shares | 30,796 | ||||
Dividends declared on Series A Preferred Shares ($0.50 per share) | (447) | (447) | |||
Net income (loss) | (3,823) | (3,823) | |||
Ending balance, value at Mar. 31, 2022 | $ 22,365 | $ 7 | 46,099 | (38,669) | 29,802 |
Ending balance, shares at Mar. 31, 2022 | 894,580 | 6,528,001 | |||
Beginning balance, value at Dec. 31, 2021 | $ 22,365 | $ 6 | 46,037 | (34,399) | 34,009 |
Beginning balance, shares at Dec. 31, 2021 | 894,580 | 6,497,205 | |||
Net income (loss) | 955 | ||||
Ending balance, value at Sep. 30, 2022 | $ 22,365 | $ 9 | 50,104 | (34,786) | 37,692 |
Ending balance, shares at Sep. 30, 2022 | 894,580 | 9,394,040 | |||
Beginning balance, value at Mar. 31, 2022 | $ 22,365 | $ 7 | 46,099 | (38,669) | 29,802 |
Beginning balance, shares at Mar. 31, 2022 | 894,580 | 6,528,001 | |||
Stock based compensation | 53 | 52 | |||
Dividends declared on Series A Preferred Shares ($0.50 per share) | (447) | (447) | |||
Net income (loss) | (5,478) | (5,478) | |||
Common stock issuance | $ 2 | 3,781 | 3,784 | ||
Common stock issuance, shares | 2,750,000 | ||||
Ending balance, value at Jun. 30, 2022 | $ 22,365 | $ 9 | 49,933 | (44,594) | 27,713 |
Ending balance, shares at Jun. 30, 2022 | 894,580 | 9,278,001 | |||
Stock based compensation | 65 | 65 | |||
Stock based compensation, shares | 44,269 | ||||
Dividends declared on Series A Preferred Shares ($0.50 per share) | (447) | (447) | |||
Net income (loss) | 10,255 | 10,255 | |||
Common stock issuance | 106 | 106 | |||
Common stock issuance, shares | 71,770 | ||||
Ending balance, value at Sep. 30, 2022 | $ 22,365 | $ 9 | 50,104 | (34,786) | 37,692 |
Ending balance, shares at Sep. 30, 2022 | 894,580 | 9,394,040 | |||
Beginning balance, value at Dec. 31, 2022 | $ 22,365 | $ 9 | 50,021 | (35,100) | 37,295 |
Beginning balance, shares at Dec. 31, 2022 | 894,580 | 9,410,473 | |||
Stock based compensation | 641 | 641 | |||
Stock based compensation, shares | 1,080 | ||||
Dividends declared on Series A Preferred Shares ($0.50 per share) | (447) | (447) | |||
Net income (loss) | 1,350 | 1,350 | |||
Common stock issuance | 74 | 74 | |||
Common stock issuance, shares | 27,186 | ||||
Cumulative effect of adoption of accounting guidance for expected credit losses at January 1, 2023 | (106) | (106) | |||
Ending balance, value at Mar. 31, 2023 | $ 22,365 | $ 9 | 50,736 | (34,303) | 38,807 |
Ending balance, shares at Mar. 31, 2023 | 894,580 | 9,438,739 | |||
Beginning balance, value at Dec. 31, 2022 | $ 22,365 | $ 9 | 50,021 | (35,100) | 37,295 |
Beginning balance, shares at Dec. 31, 2022 | 894,580 | 9,410,473 | |||
Net income (loss) | 4,055 | ||||
Ending balance, value at Sep. 30, 2023 | $ 22,365 | $ 10 | 52,781 | (32,489) | 42,667 |
Ending balance, shares at Sep. 30, 2023 | 894,580 | 10,303,739 | |||
Beginning balance, value at Mar. 31, 2023 | $ 22,365 | $ 9 | 50,736 | (34,303) | 38,807 |
Beginning balance, shares at Mar. 31, 2023 | 894,580 | 9,438,739 | |||
Stock based compensation | 361 | 361 | |||
Dividends declared on Series A Preferred Shares ($0.50 per share) | (444) | (444) | |||
Net income (loss) | (2,923) | (2,923) | |||
Common stock issuance | $ 1 | 1,205 | 1,206 | ||
Common stock issuance, shares | 865,000 | ||||
Ending balance, value at Jun. 30, 2023 | $ 22,365 | $ 10 | 52,302 | (37,670) | 37,007 |
Ending balance, shares at Jun. 30, 2023 | 894,580 | 10,303,739 | |||
Stock based compensation | 479 | 479 | |||
Dividends declared on Series A Preferred Shares ($0.50 per share) | (447) | (447) | |||
Net income (loss) | 5,628 | 5,628 | |||
Ending balance, value at Sep. 30, 2023 | $ 22,365 | $ 10 | $ 52,781 | $ (32,489) | $ 42,667 |
Ending balance, shares at Sep. 30, 2023 | 894,580 | 10,303,739 |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||||||
Preferred stock dividends per share cash paid | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 4,055 | $ 955 |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Net unrealized holding (gain) on equity investments | (319) | (10,521) |
(Income) from equity method investments, net of distributions received | (4,192) | (2,880) |
(Increase) in investment without a readily determinable fair value | (250) | |
(Increase) in fair value of convertible note | (125) | |
Net realized (gain) loss on sale of equity investments | (3,062) | 11,263 |
Stock compensation expense | 1,481 | 180 |
Changes in operating assets and liabilities: | ||
Reinsurance balances receivable | (5,307) | (3,857) |
Funds deposited with reinsured companies | 2,202 | (2,237) |
Deferred policy acquisition costs | 47 | (1,134) |
Other assets | (42) | (121) |
Loss and loss adjustment expense reserves | 1,503 | 2,000 |
Unearned premium reserves | 2,571 | 2,955 |
Accounts payable, accrued expenses and other liabilities | (92) | (544) |
Net cash used by operating activities | (1,530) | (3,941) |
Cash flows from investing activities: | ||
Purchases of furniture and equipment | (77) | |
Purchases of equity method investments | (495) | (6,795) |
Purchases of other investments | (950) | |
Distribution from equity method investments | 761 | 1,521 |
Proceeds from sales of equity securities | 4,604 | 664 |
Return of capital – other investments | 184 | 185 |
Net cash provided (used) by investing activities | 4,104 | (4,502) |
Cash flows from financing activities: | ||
Payment of dividends on preferred shares | (1,339) | (1,341) |
Proceeds from issuance of common stock, net | 1,280 | 3,889 |
Net cash (used) provided by financing activities | (59) | 2,548 |
Net increase (decrease) in cash and cash equivalents | 2,515 | (5,895) |
Cash and cash equivalents at beginning of period | 3,010 | 15,542 |
Cash and cash equivalents at end of period | 5,525 | 9,647 |
Non-Cash Investing Transactions: | ||
Equity securities in OppFi received in connection with FG Special Situations Fund unwind | $ 1,916 |
Nature of Business
Nature of Business | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Note 1. Nature of Business FG Financial Group, Inc. (“FGF”, the “Company”, “we”, or “us”) is a reinsurance, merchant banking and asset management holding company. We focus on opportunistic collateralized and loss-capped reinsurance, while allocating capital in partnership with Fundamental Global ® From our inception in October 2012 through December 2019, we operated as an insurance holding company, writing property and casualty insurance throughout the states of Louisiana, Florida, and Texas. On December 2, 2019, we sold our three former insurance subsidiaries to FedNat Holding Company (“FedNat”) for a combination of cash and FedNat common stock, and embarked upon our current strategy focused on reinsurance, merchant banking and asset management. As of September 30, 2023, FG Financial Holdings, LLC (“FG”), a private partnership focused on long-term strategic holdings, and its affiliated entity, collectively beneficially owned approximately 55 Reincorporation Effective at 5:01 p.m. ET on December 9, 2022, the Company completed its reincorporation from a Delaware corporation to a Nevada corporation (the “Reincorporation”). The Reincorporation was accomplished by means of a merger by and between the Company and its former wholly owned subsidiary FG Financial Group, Inc., a Nevada corporation. As of December 9, 2022, the rights of the Company’s stockholders began to be governed by the Nevada corporation laws, our Amended and Restated Nevada Articles of Incorporation and our Nevada Bylaws. The Reincorporation was approved by the Company’s stockholders at a special meeting held on December 6, 2022. Other than the change in the state of incorporation, the Reincorporation did not result in any change in the business, physical location, management, assets, liabilities or net worth of the Company, nor did it result in any change in location of the Company’s employees, including the Company’s management. The Reincorporation did not alter any stockholder’s percentage ownership interest or number of shares owned in the Company and the Company’s common stock continues to be quoted on the Nasdaq Global Market under the same symbol “FGF” and the 8.00% Cumulative Preferred Stock, Series A of the Company continues to be quoted on the Nasdaq Global Market under the same symbol, “FGFPP.” Current Business Our strategy has evolved to focus on opportunistic collateralized and loss capped reinsurance, with capital allocation to merchant banking activities with asymmetrical risk/reward opportunities. As part of our refined focus, we have adopted the following capital allocation philosophy: “ Grow intrinsic value long-term focus fundamental research asymmetric risk/reward Currently, the business operates as a diversified holding company of insurance, reinsurance, asset management, our Special Purpose Acquisition Corporation “SPAC” Platform businesses, and our merchant banking division. Insurance Sponsor Protection Coverage and Risk, Inc. has been formed as a special purpose captive in South Carolina to provide reinsurance coverage for Sides A, B, & C Directors and Officers Liability insurance coverage for related and unrelated entities of FG Reinsurance Ltd (“FGRe”). These will include SPAC entities engaged in the services or business of taking companies public, as well as small cap businesses performing an initial public offering. Sponsor Protection Coverage and Risk, Inc. has yet to write any business. Reinsurance The Company’s wholly owned reinsurance subsidiary, FGRe, a Cayman Islands limited liability company, provides specialty property and casualty reinsurance. FGRe has been granted a Class B (iii) insurer license in accordance with the terms of The Insurance Act (as revised) of the Cayman Islands and underlying regulations thereto and is subject to regulation by the Cayman Islands Monetary Authority (the “Authority”). The terms of the license require advance approval from the Authority should FGRe wish to enter into any reinsurance agreements which are not fully collateralized. As of September 30, 2023, the Company had seven Asset Management FG Strategic Consulting, LLC, (“FGSC”) a wholly owned subsidiary of the Company, looks to provide investment advisory services, including identifying, analyzing and recommending potential investments, advising as to existing investments and investment optimization, recommending investment dispositions, and providing advice regarding macro-economic conditions. SPAC Platform and Merchant Banking On December 21, 2020, we formed FG Management Solutions LLC (“FGMS”), formerly known as FG SPAC Solutions, LLC, a Delaware company, to facilitate the launch of our “SPAC Platform.” Under the SPAC Platform, we provide various strategic, administrative, and regulatory support services to newly formed SPACs for a monthly fee. Additionally, the Company co-founded a partnership, FG Merchant Partners, LP (“FGMP”), formerly known as FG SPAC Partners, LP, to participate as a co-sponsor for newly formed SPACs. In the third quarter of 2022, the Company announced the expansion of its growth strategy through the formation of a merchant banking division. In the fourth quarter of 2022, the Company invested $ 2.0 |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2. Significant Accounting Policies Basis of Presentation These statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Consolidation Policies The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation. The consolidated financial statements include the accounts of the Company and entities in which it is required to consolidate under either the Variable Interest Entity (“VIE”) or Voting Interest Entity (“VOE”) models. Both models require the reporting entity to identify whether it has a controlling financial interest in a legal entity and is therefore required to consolidate the legal entity. Under the VOE model, a reporting entity with ownership of a majority of the voting interest of a legal entity is generally considered to have a controlling financial interest. The VIE model was established for situations in which control may be demonstrated other than by the possession of voting rights in a legal entity and instead focuses on the power to direct the activities that most significantly impact the legal entity’s economic performance, as well as the rights to receive benefits and obligations to absorb losses that could potentially be significant to the legal entity. The determination of whether a legal entity is consolidated under either model is reassessed where there is a substantive change in the governing documents or contractual arrangements of the entity, to the capital structure of the entity or in the activities of the entity. The Company continuously reassesses whether it should consolidate under either model. In September 2020, the Company invested approximately $ 5.0 During the first quarter of 2023, it was determined that the Fund would begin the process of winding down, and all investment holdings held in the name of the Fund would be transferred and distributed to members within the Fund based on their ownership percentage of each respective holding. Prior to the unwinding, through the Fund, the Company held underlying investments in FGAC Investors LLC, FG Merger Investors LLC, Greenfirst Forest Products Holdings LLC, and OppFi. The Fund, an investment company, carried each of these investments at fair value. In June 2023, all transfers were completed, resulting in the Company being transferred direct limited partner interests in FGAC Investors LLC, with a carrying value of $ 8.9 3.4 1.4 29 19 16 1.9 As a result of the winddown, the Company now holds direct limited partner interests in FGAC Investors LLC, FG Merger Investors LLC, and Greenfirst Forest Products Holdings, LLC. The Company has determined that each of these entities meets the criteria of a VIE. For each new position, the Company analyzed ASC 810 – Consolidation and has determined it is not the primary beneficiary of FGAC Investors LLC, FG Merger Investors LLC or Greenfirst Forest Products Holdings LLC, but does have the ability to exercise significant influence over each of these. Therefore, the Company will apply the equity method of accounting for each of these investments. In October of 2022, the Company invested $ 2.0 The Company’s risk of loss associated with its non-consolidated VIEs is limited. As of September 30, 2023, and December 31, 2022, the carrying value and maximum loss exposure of the Company’s non-consolidated VIE’s was $ 16.5 18.8 See Note 4 for further information regarding the Company’s investments. The Use of Estimates in the Preparation of Consolidated Financial Statements The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from these estimates. Estimates and their underlying assumptions are reviewed on an ongoing basis. Changes in estimates are recorded in the accounting period in which they are determined. The critical accounting estimates and assumptions in the accompanying consolidated financial statements include the valuation of our equity method investments, current expected credit losses, the valuation of net deferred income taxes and deferred policy acquisition costs, premium revenue recognition, reserves for loss and loss adjustment expenses, and stock-based compensation expense. Investments in Equity Securities Investments in equity securities are carried at fair value with subsequent changes in fair value recorded to the Consolidated Statements of Operations as a component of net investment income. Other Investments Other investments consist, in part, of equity investments made in privately held companies accounted for under the equity method. We utilize the equity method to account for investments when we possess the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when the investor possesses more than 20 In applying the equity method, we record the investment at cost and subsequently increase or decrease the carrying amount of the investment by our proportionate share of the net earnings or losses and other comprehensive income of the investee. We record dividends or other equity distributions as reductions in the carrying value of the investment. Should net losses of the investee reduce the carrying amount of the investment to zero, additional net losses may be recorded if other investments in the investee are at-risk, even if we have not committed to provide financial support to the investee. Such additional equity method losses, if any, are based upon the change in our claim on the investee’s book value. When we receive distributions from our equity method investments, we utilize the cumulative earnings approach. When classifying the related cash flows under this approach, the Company compares the cumulative distributions received, less distributions received in prior periods, with the Company’s cumulative equity in earnings. Cumulative distributions that do not exceed cumulative equity in earnings represent returns on investment and are classified as cash inflows from operating activities. Cumulative distributions in excess of cumulative equity in earnings represent returns on investment and are classified as cash inflows from investing activities. In addition to investments accounted for under the equity method of accounting, other investments also consist of equity we have purchased in a limited partnership, a limited liability company, and a corporation for which there does not exist a readily determinable fair value. The Company accounts for these investments at their cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments by the same issuer. When the Company observes an orderly transaction of an investee’s identical or similar equity securities, the Company adjusts the carrying value based on the observable price as of the transaction date. Once the Company records such an adjustment, the investment is considered an asset measured at fair value on a nonrecurring basis. Any profit distributions the Company receives on these investments are included in net investment income. Other investments also include a convertible note and a senior unsecured promissory note. See Note 4 for additional information regarding the Company’s investments. Cash and Cash Equivalents Cash and cash equivalents include cash and highly liquid investments with original maturities of 90 days or less. Pursuant to the Company’s insurance license, the Authority has required that FGRe hold a minimum capital requirement of $ 200,000 Income Taxes The Company follows the asset and liability method of accounting for income taxes, whereby deferred income tax assets and liabilities are recognized for (i) the differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and (ii) loss and tax credit carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not and a valuation allowance is established for any portion of a deferred tax asset that management believes will not be realized. Current federal income taxes are charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense (benefit). Concentration of Credit Risk Financial instruments which potentially expose the Company to concentrations of credit risk include investments, cash, and deposits with reinsured companies. The Company maintains its cash with a major U.S. domestic banking institution which is insured by the Federal Deposit Insurance Corporation (“FDIC”) for up to $ 250,000 Premium Revenue Recognition The Company participates in quota-share contracts and estimates the ultimate premiums for the contract period. These estimates are based on information received from the ceding companies, whereby premiums are recorded as written in the same periods in which the underlying insurance contracts are written and are based on cession statements from cedents. These statements are received quarterly and in arrears, and thus, for any reporting lag, premiums written are estimated based on the portion of the ultimate estimated premiums relating to the risks underwritten during the lag period. Premium estimates are reviewed by management periodically. Such review includes a comparison of actual reported premiums to expected premiums. Based on management’s review, the appropriateness of the premium estimates is evaluated, and any adjustments to these estimates are recorded in the period in which they are determined. Changes in premium estimates, including premiums receivable, are not unusual and may result in significant adjustments in any period. A significant portion of amounts included in the caption “Reinsurance balances receivable” in the Company’s consolidated balance sheets represents estimated premiums written, net of commissions, brokerage, and loss and loss adjustment expense, and are not currently due based on the terms of the underlying contracts. Additional premiums due on a contract that has no remaining coverage period are earned in full when written. Premiums written are generally recognized as earned over the contract period in proportion to the risk covered. Unearned premiums represent the unexpired portion of reinsurance provided. Current Expected Credit Loss In the first quarter of 2023, the Company adopted ASU 2016-13, as amended, Financial Instruments – Credit Losses (“ASU 2016-13”), which requires an entity to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The financial assets included in the caption “Reinsurance balances recoverable” in the Company’s consolidated balance sheets are carried at amortized cost and therefore affected by ASU 2016-13. The amendments in this update were effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted, however smaller reporting companies, like the Company, could delay adoption until January 2023. Upon adoption of ASU 2016-13, the Company calculated an allowance for expected credit losses for its reinsurance balances receivable by applying a Probability of Default / Loss Given Default model. The model considers both the external collectability history as well as external loss history. The external loss history that the Company used included a long-term probability of liquidation study specific to insurance companies. Additionally, the life of each of the Company’s reinsurance treaties was also considered as the probability of default was calculated over the contractual length of the reinsurance contracts. The credit worthiness of a counterparty is evaluated by considering the credit ratings assigned by independent agencies and individually evaluating all the counterparties. The adoption resulted in a cumulative-effect adjustment to increase accumulated deficit by $ 0.1 In the first quarter of 2023, the Company allocated $ 200,000 Deferred Policy Acquisition Costs Policy acquisition costs are costs that vary with, and are directly related to, the successful production of new and renewal business, and consist principally of commissions, taxes and brokerage expenses. If the sum of a contract’s expected losses and loss expenses and deferred acquisition costs exceeds associated unearned premiums and expected investment income, a premium deficiency is determined to exist. In this event, deferred acquisition costs are written off to the extent necessary to eliminate the premium deficiency. If the premium deficiency exceeds deferred acquisition costs then a liability is accrued for the excess deficiency. There were no premium deficiency adjustments recognized during the periods presented herein. Funds Deposited for Benefit of Reinsured Companies “Funds Deposited with Reinsured Companies” on the Company’s consolidated balance sheets includes amounts held to support our reinsurance contracts. As of September 30, 2023 and December 31, 2022, the total cash collateral posted to support all of our reinsurance treaties was approximately $ 7.1 9.3 Loss and Loss Adjustment Expense Reserves The Company maintains reserves equal to our estimated ultimate liability for losses and loss adjustment expense for reported and unreported claims from our reinsurance business. Loss and loss adjustment reserve estimates are based primarily on estimates derived from reports the Company has received from ceding companies. The Company then uses a variety of statistical and actuarial techniques to monitor reserve adequacy. When setting reserves, the Company considers many factors including: (1) the types of exposures and projected ultimate premium to be written by our cedants; (2) expected loss ratios by type of business; (3) actuarial methodologies which analyze loss reporting and payment experience, reports from ceding companies and historical trends; and (4) general economic conditions. The Company also engages independent actuarial specialists, at least annually, to assist management in establishing appropriate reserves. Since reserves are estimates, the final settlement of losses may vary from the reserves established, and any adjustments to the estimates, which may be material, are recorded in the period they are determined. The final settlement of losses may vary, perhaps materially, from the reserves recorded. U.S. GAAP does not permit establishing loss reserves, which include case reserves and IBNR loss reserves, until the occurrence of an event which may give rise to a claim. As a result, only loss reserves applicable to losses incurred up to the reporting date are established, with no allowance for the establishment of loss reserves to account for expected future loss events. Generally, the Company obtains regular updates of premium and loss related information for the current and historical periods, which are utilized to update the initial expected loss ratio. We also experience a lag between (i) claims being reported by the underlying insured to the Company’s cedent and (ii) claims being reported by the Company’s cedent to the Company. This lag may impact the Company’s loss reserve estimates. Client reports have pre-determined due dates (for example, thirty days after each month end). As a result, the lag depends in part upon the terms of the specific contract. The timing of the reporting requirements is designed so that the Company receives premium and loss information as soon as practicable once the client has closed its books. Accordingly, there should be a short lag in such reporting. Additionally, most of the contracts that have the potential for large single event losses have provisions that such loss notifications are provided to the Company immediately upon the occurrence of an event. Stock-Based Compensation The Company has accounted for stock-based compensation under the provisions of ASC Topic 718 – Stock Compensation, The Company has also issued restricted stock units (“RSUs”) to certain of its employees and directors which have been accounted for as equity-based awards since, upon vesting, they are required to be settled in the Company’s common shares. We have used the fair value of the Company’s common stock on the date the RSUs were issued to estimate the grant date fair value of those RSUs which vest solely based upon the passage of time. The fair value of each RSU is recorded as compensation expense over the requisite service period, which is generally the expected period over which the awards will vest. Based upon the Company’s historical forfeiture rates relating to stock options and RSUs, the Company has not made any adjustment to stock compensation expense for expected forfeitures as of September 30, 2023. Fair Value of Financial Instruments The carrying values of certain financial instruments, including cash, short-term investments, deposits held, accounts payable, and other accrued expenses, approximate fair value due to their short-term nature. The Company measures the fair value of financial instruments in accordance with GAAP which defines fair value as the exchange price that would be received for an asset (or paid to transfer a liability) in the principal or most advantageous market for the asset (or liability) in an orderly transaction between market participants on the measurement date. GAAP also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. See Note 4 for further information on the fair value of the Company’s financial instruments. Earnings (Loss) Per Common Share Basic earnings (loss) per common share is computed using the weighted average number of shares outstanding during the respective period. Diluted earnings (loss) per common share assumes conversion of all potentially dilutive outstanding stock options, restricted stock units, warrants or other convertible financial instruments. Potential common shares outstanding are excluded from the calculation of diluted earnings (loss) per share if their effect is anti-dilutive. |
Recently Adopted and Issued Acc
Recently Adopted and Issued Accounting Standards | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Adopted and Issued Accounting Standards | Note 3. Recently Adopted and Issued Accounting Standards Accounting Standards Adopted As discussed, the Company adopted ASU 2016-13 during the first quarter of 2023 using a modified retrospective transition method. The adoption resulted in a cumulative-effect adjustment to increase accumulated deficit by $ 0.1 |
Investments and Fair Value Disc
Investments and Fair Value Disclosures | 9 Months Ended |
Sep. 30, 2023 | |
Investments And Fair Value Disclosures | |
Investments and Fair Value Disclosures | Note 4. Investments and Fair Value Disclosures The following table summarizes the Company’s equity securities held at fair value as of September 30, 2023 and December 31, 2022: Schedule of Equity Securities (in thousands) As of September 30, 2023 Cost Basis Gross Unrealized Gains Gross Unrealized Losses Carrying Amount OppFi common stock and warrants $ 1,916 $ 271 $ - $ 2,187 Total investments $ 1,916 $ 271 $ - $ 2,187 As of December 31, 2022 Cost Basis Gross Unrealized Gains Gross Unrealized Losses Carrying Amount Hagerty common stock $ 889 $ – $ 48 $ 841 Total investments $ 889 $ – $ 48 $ 841 OppFi Common Stock As a result of the Fund unwinding, the Company received approximately 860,000 1.9 Hagerty Common Stock On December 15, 2022, FGMP distributed 99,999 889,000 16,000 Equity Method Investments Other investments on the Company’s consolidated balance sheets include our equity method investments in FGMP, FGAC Investors LLC, FG Merger Investors LLC, and Greenfirst Forest Products Holdings LLC. On January 4, 2021, FGMP was formed as a Delaware limited partnership to co-sponsor newly formed SPACs with their founders or partners, as well as other merchant banking interests. The Company is the sole managing member of the general partner of FGMP and holds a limited partner interest of approximately 46 For the three months ended September 30, 2023, the Company recorded equity method gains from FGMP of approximately $ 1.2 0.1 4.1 9.9 5.7 9.9 0.4 Equity method investments previously included our investment in the Fund. However, during the first quarter of 2023, it was determined that the Fund would begin the process of winding down, and all investment holdings held in the name of the Fund would be transferred and distributed to members within the Fund based on their ownership percentage of each respective holding. Prior to the unwinding, through the Fund, the Company held underlying investments in FGAC Investors LLC, FG Merger Investors LLC, and Greenfirst Forest Products Holdings LLC. The Fund, an investment company, carried each of these investments at fair value. In June 2023, all transfers were completed, resulting in the Company being transferred direct limited partner interests in FGAC Investors LLC, with a carrying value of $ 8.9 3.4 1.4 the combined carrying value of these investments at June 30, 2023 was approximately $ 11.9 0.5 2.4 0.1 0.1 14.7 Financial information for our investments accounted for under the equity method, in the aggregate, is as follows: Schedule of Investments Under Equity Method As of 2023 As of (in thousands) Other investments $ 72,585 $ 35,366 Cash 275 113 Other assets 177 165 Total assets 73,037 35,644 Total liabilities 439 65 Nine months ended September 30, 2023 Nine months ended September 30, 2022 (in thousands) Net investment income $ 17,417 $ 8,170 Other income 129 - General and administrative expenses (1,149 ) (95 ) Net income 16,397 8,075 Certain investments held by our equity method investees are valued using Monte-Carlo simulation and option pricing models. Inherent in Monte-Carlo simulation and option pricing models are assumptions related to expected volatility and discount for lack of marketability of the underlying investment. Our investees estimate the volatility of these investments based on the historical performance of various broad market indices blended with various peer companies which they consider as having similar characteristics to the underlying investment, as well as consideration of price and volatility of relevant publicly traded securities such as SPAC warrants. Our investees also consider the probability of a successful merger when valuing equity for SPACs that have not yet closed. Investments without Readily Determinable Fair Value In addition to our equity method investments, other investments, as listed on our consolidated balance sheets, consist of equity we have purchased in companies for which there does not exist a readily determinable fair value. The Company accounts for these investments at their cost, subject to any adjustment from time to time due to impairment or observable price changes in orderly transactions. When the Company observes an orderly transaction of an investee’s identical or similar equity securities, the Company adjusts the carrying value based on the observable price as of the transaction date. Any profit distributions the Company receives on these investments are included in net investment income. The carrying value of investments without readily determinable fair value were increased by $ 0.3 zero 2.3 2.3 Other Other investments, in addition to equity method investments and investments without readily determinable fair value, include a convertible promissory note and a senior unsecured promissory note. On September 29, 2023, the Company invested $ 250,000 15 August 1, 2025 5.00 250,000 On March 16, 2023, the Company invested $ 200,000 13 March 15, 2024 200,000 200,000 15,000 On March 15, 2023, the Company invested $ 500,000 219,000 3.7 3.1 Impairment For equity securities without readily determinable fair values, impairment is determined via a qualitative assessment which considers indicators to evaluate whether the investment is impaired. Some of these indicators include a significant deterioration in the earnings performance or asset quality of the investee, a significant adverse change in regulatory, economic or general market conditions in which the investee operates, or doubt over an investee’s ability to continue as a going concern. If the investment is deemed to be impaired after conducting this analysis, the Company would estimate the fair value of the investment to determine the amount of impairment loss. For equity method investments, evidence of a loss in value might include a series of operating losses of an investee, the absence of an ability to recover the carrying amount of the investment, or a deterioration in the value of the investee’s underlying assets. If these, or other indicators lead to the conclusion that there is a decrease in the value of the investment that is other than temporary, the Company would recognize that decrease in value even though the decrease may be in excess of what would otherwise be recognized under the equity method of accounting. The risks and uncertainties inherent in the assessment methodology used to determine impairment include, but may not be limited to, the following: ● the opinions of professional investment managers and appraisers could be incorrect; ● the past operating performance and cash flows generated from the investee’s operations may not reflect their future performance; and ● the estimated fair values for investment for which observable market prices are not available are inherently imprecise. We have not recorded an impairment on our investments for either of the nine months ended September 30, 2023 and 2022. Net investment income for the three and nine months ended September 30, 2023 and 2022 is as follows: Schedule of Net Investment Income (Loss) 2023 2022 2023 2022 ($ in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Investment income: Realized gain (loss) on common stock $ 3,078 $ (2,472 ) $ 3,062 $ (11,441 ) Change in unrealized holding on common stock 404 2,448 319 10,521 Equity method earnings 3,460 11,226 4,192 6,080 Increase in investments without readily determinable fair value - - 250 - (Decrease) increase in fair value of convertible note (52 ) - 125 - Other 71 (28 ) 324 (46 ) Net investment income $ 6,961 $ 11,174 $ 8,272 $ 5,114 Fair Value Measurements The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. The FASB has issued guidance that defines fair value as the exchange price that would be received for an asset (or paid to transfer a liability) in the principal, or most advantageous market in an orderly transaction between market participants. This guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance categorizes assets and liabilities at fair value into one of three different levels depending on the observation of the inputs employed in the measurements, as follows: ● Level 1 – inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets providing the most reliable measurement of fair value since it is directly observable. ● Level 2 – inputs to the valuation methodology which include quoted prices for similar assets or liabilities in active markets. These inputs are observable, either directly or indirectly, for substantially the full-term of the financial instrument. ● Level 3 – inputs to the valuation methodology which are unobservable and significant to the measurement of fair value. The availability of valuation techniques and observable inputs can vary from investment to investment and are affected by a variety of factors, including the type of investment, whether the investment is new and not yet established in the marketplace, the liquidity of markets and other characteristics specific to the individual investment. In some cases, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the hierarchy based on the lowest level input that is significant to the fair value measurement. When determining fair value, the Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Financial instruments measured, on a recurring basis, at fair value as of September 30, 2023 and December 31, 2022 in accordance with the guidance promulgated by the FASB are as follows. Schedule of Financial Instruments Measured at Fair Value (in thousands) As of September 30, 2023 Level 1 Level 2 Level 3 Total Oppfi common stock and warrants $ 2,187 $ – $ – $ 2,187 ThinkMarkets convertible note $ – – 250 250 $ 2,187 $ – $ 250 $ 2,437 As of December 31, 2022 Hagerty common stock $ 841 $ – $ – $ 841 $ 841 $ – $ – $ 841 On September 29, 2023, the Company invested $ 250,000 250,000 The following tables provide a reconciliation of the fair value of recurring Level 3 fair value measurements for the three- and nine-months ended September 30, 2023 and September 30, 2022: Schedule of Fair Value of Recurring Level 3 Fair Value Measurements 2023 2022 (in thousands) Nine months ended September 30, 2023 2022 Assets: Convertible note Beginning balance - - Consideration paid 750 - Increase in fair value of convertible note 125 - Transfer out (625 ) Balance, September 30 $ 250 $ - 2023 2022 (in thousands) Three months ended September 30, 2023 2022 Assets: Convertible note Beginning balance 677 - Consideration paid 250 - Decrease in fair value of convertible note (52 ) - Transfer out (625 ) Balance, September 30 $ 250 $ - |
Loss and Loss Adjustment Expens
Loss and Loss Adjustment Expense Reserves | 9 Months Ended |
Sep. 30, 2023 | |
Loss And Loss Adjustment Expense Reserves | |
Loss and Loss Adjustment Expense Reserves | Note 5. Loss and Loss Adjustment Expense Reserves A significant degree of judgment is required to determine amounts recorded in the consolidated financial statements for the provision for loss and loss adjustment expense (“LAE”) reserves. The process for establishing this provision reflects the uncertainties and significant judgmental factors inherent in predicting future results of both known and unknown loss events. The process of establishing the provision for loss and LAE reserves relies on the judgment and opinions of many individuals, including the opinions of the Company’s management, as well as the management of ceding companies and their actuaries. In estimating losses, the Company may assess any of the following: ● a review of in-force treaties that may provide coverage and incur losses; ● general forecasts, catastrophe and scenario modelling analyses and results shared by cedents; ● reviews of industry insured loss estimates and market share analyses; ● management’s judgment; and ● loss development factor selections, initial expected loss ratio selections, and weighting of methods used Under the terms of certain of our quota-share agreements, and due to the nature of claims and premium reporting, a lag exists between (i) claims being reported by the underlying insured to the Company’s cedent and (ii) claims being reported by the Company’s cedent to the Company. This lag may impact the Company’s loss reserve estimates. The reports we receive from our cedents have pre-determined due dates. In the case of the Company’s FAL contracts, third quarter 2023 premium and loss information will not be made available to the Company until subsequent to the filing of this quarterly report. Thus, our third quarter results, including the loss and loss adjustment expense reserves presented herein, have been based upon a combination of actual results from the 2023 calendar year as well as forecasts for 2023 reported to us by the ceding companies. We have approximated third quarter 2023 results under our FAL contracts based upon this historical and forecasted information. While the Company believes its estimate of loss and loss adjustment expense reserves are adequate as of September 30, 2023, based on available information, actual losses may ultimately differ materially from the Company’s current estimates. The Company will continue to monitor the appropriateness of its assumptions as new information is provided. A summary of changes in outstanding loss and loss adjustment expense reserves for the nine months ended September 30, 2023 and 2022, is as follows: Schedule of Changes in Outstanding Loss and Loss Adjustment Expense Reserves 2023 2022 (in thousands) Nine months ended September 30, 2023 2022 Balance, beginning of period, net of reinsurance $ 4,409 $ 2,133 Incurred related to: Current year 5,420 4,984 Prior year 661 814 Paid related to: Current year (3,675 ) (2,568 ) Prior years (903 ) (1,230 ) Balance, September 30, net of reinsurance $ 5,912 $ 4,133 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 6. Income Taxes Actual income tax expense (benefit) differs from the income tax expense computed by applying the applicable effective federal and state tax rates to income before income tax expense as follows: Schedule of Reconciliation Effective Tax Rates ($ in thousands) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Provision for taxes at U.S., statutory marginal income tax rate of 21 $ 1,182 $ 2,154 $ 852 $ 201 Valuation allowance for deferred tax assets deemed unrealizable (1,200 ) (2,168 ) (871 ) (219 ) Non-deductible expenses associated with the Share Repurchase Transaction – 2 1 2 Share-based compensation 18 12 18 16 Income tax expense (benefit) $ – $ – $ – $ - Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes as compared to the amounts used for income tax purposes. The Company’s gross deferred tax assets and liabilities are $ 8.0 3.4 4.6 Schedule of Deferred Income Taxes (in thousands) As of As of Deferred income tax assets: Net operating loss carryforward $ 4,670 $ 4,171 Loss and loss adjustment expense reserves 52 39 Unearned premium reserves 395 287 Capital loss carryforward 2,491 4,313 Share-based compensation 424 242 Investments 10 5 Other 8 9 Deferred income tax assets $ 8,050 $ 9,066 Less: Valuation allowance (4,615 ) (5,463 ) Deferred income tax assets net of valuation allowance $ 3,435 $ 3,603 Deferred income tax liabilities: Investments $ 3,125 $ 3,282 Deferred policy acquisition costs 310 321 Deferred income tax liabilities $ 3,435 $ 3,603 Net deferred income tax asset (liability) $ – $ – As of September 30, 2023, the Company had net operating loss carryforwards (“NOLs”) for federal income tax purposes of approximately $ 22.2 million, which will be available to offset future taxable income. Approximately $ 0.5 million expire on December 31, 2039, $ 0.1 million expire on December 31, 2040, and $ 1.6 million of the Company’s NOLs will expire on December 31, 2041. The remaining $ 20.0 million of the Company’s NOLs do not expire under current tax law. Additionally, the Company has approximately $ 11.9 million of capital loss carryforward that can only be used to offset capital gains and which will expire in December 2026 if not used prior. As of September 30, 2023, the Company had no unrecognized tax benefits. The Company analyzed its tax positions in accordance with the provisions of Accounting Standards Codification Topic 740, Income Taxes |
Equity Incentive Plan Grants
Equity Incentive Plan Grants | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity Incentive Plan Grants | Note 7. Equity Incentive Plan Grants On December 15, 2021, our shareholders approved the FG Financial Group, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The purpose of the 2021 Plan is to attract and retain directors, consultants, officers and other key employees of the Company and its subsidiaries and to provide to such persons incentives and rewards for superior performance. The 2021 Plan is administered by the Compensation and Management Resources Committee of the Board and has a term of ten years. The 2021 Plan awards may be in the form of stock options (which may be incentive stock options or nonqualified stock options), stock appreciation rights (or “SARs”), restricted shares, restricted share units, and other share-based awards, and provides for a maximum of 1,500,000 On March 24, 2023, the Company’s board of directors approved an amendment to the 2021 Plan to increase the number of shares available for issuance from 1,500,000 2,000,000 In addition, on March 24, 2023, the board of directors approved an employee purchase plan (“ESPP Plan”) whereby qualifying employees can choose each year to have up to 5% of their annual base earnings withheld to purchase the Company’s common shares in the open market. The Company matches 100% of the employee’s contribution amount after thirty days of employment. RSUs Outstanding The following table summarizes RSU activity for the nine months ended September 30, 2023 and 2022: Schedule of Restricted Stock Units Activity Restricted Stock Units Number of Units Weighted Average Grant Date Fair Value Non-vested units, January 1, 2023 256,382 $ 2.57 Granted 821,974 2.76 Vested (227,301 ) 2.71 Forfeited — — Non-vested units, September 30, 2023 851,055 $ 1.40 Non-vested units, January 1, 2022 164,655 $ 4.35 Granted 158,225 1.58 Vested (50,065 ) 4.81 Forfeited — — Non-vested units, September 30, 2022 272,815 $ 2.66 On August 19, 2022, we issued a total of 158,225 On February 17, 2023, we granted a total of 415,000 In the third quarter of 2023, we granted a total of 36,974 On January 18, 2021, the Company entered into an Equity Award Letter Agreement (the “Letter Agreement”) with Mr. Swets, pursuant to which the Company clarified its intention to grant an additional 370,000 370,000 Restricted Shares On July 31, 2022, the Company issued 25,000 Stock Options Outstanding On January 12, 2021, in connection with Larry G. Swets, Jr.’s appointment as Chief Executive Officer, the Company entered into a Stock Option Agreement (the “Stock Option”) with Mr. Swets. The Stock Option entitles Mr. Swets to purchase up to 130,000 3.38 The Stock Option becomes vested and fully exercisable in 20% increments on each anniversary of the grant date, provided that Mr. Swets remains in the continuous service of the Company through each applicable vesting date and that the Company’s book value per share has increased by 15% or more as compared to the Company’s book value per share as of the fiscal year end prior. The Stock Option expires on January 11, 2031. The Stock Option contains performance and service conditions that affect vesting. Pursuant to ASC Topic 718- Stock Compensation, 3.3 In estimating the fair value of the Stock Option, the Company estimated volatility based on the historical volatility of our stock. The risk-free interest rate is based on the U.S. Treasury Constant Maturity similar to the expected remaining life of the Stock Option. The expected life of the Stock Option is assumed to be equivalent to its contractual term. The dividend rate is based on our historical rate, which the Company anticipates will remain at zero. The following assumptions were used to determine the estimated fair value of the Stock Option: Schedule of Fair Value of Stock Options Expected volatility 45.60 % Expected life (years) 10.00 Risk-free interest rate 5.15 % Dividend yield 0.00 % The following table summarizes activity for stock options issued for the nine months ended September 30, 2023 and 2022. Schedule of Stock Option Activity Common Stock Options Shares Weighted Ave Weighted Ave Weighted Ave Aggregate Intrinsic Value Outstanding, January 1, 2023 130,000 $ 3.38 8.04 $ 1.88 $ - Exercisable, January 1, 2023 – $ – – $ – $ – Granted - - – – Exercised – – – – – Cancelled – – – – – Outstanding, September 30, 2023 130,000 $ 3.38 7.29 $ 1.88 $ – Exercisable, September 30, 2023 – $ – – $ – $ – Outstanding, January 1, 2022 130,000 $ 3.38 9.04 $ 1.88 $ 49,400 Exercisable, January 1, 2022 – $ – – $ – $ – Granted – – – – – Exercised – – – – – Cancelled – – – – – Outstanding, September 30, 2022 130,000 $ 3.38 8.29 $ 1.88 $ – Exercisable, September 30, 2022 – $ – – $ – $ – Total stock-based compensation expense for the nine months ended September 30, 2023 and 2022 was approximately $ 1.5 180,000 1.8 Warrants No warrants were granted or exercised during the nine months ended September 30, 2023 and 2022. On February 24, 2022, 1,500,000 15.00 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 8. Related Party Transactions Related party transactions are carried out in the normal course of operations and are measured in part by the amount of consideration paid or received, as established and agreed by the parties. Management believes that consideration paid for such services in each case approximates fair value. Except where disclosed elsewhere in these consolidated financial statements, the following is a summary of related party transactions. Joint Venture Agreement On March 31, 2020, the Company entered into the Limited Liability Company Agreement of Fundamental Global Asset Management, LLC (“FGAM”), a joint venture owned 50 FGAM is governed by a Board of Managers consisting of four managers, two of which have been appointed by each Member. The Company has appointed two of its independent directors to the Board of Managers of FGAM. Certain major actions, including any decision to sponsor a new investment manager, require the prior consent of both Members. FG Special Situations Fund The Company participated as a limited partner in the Fund. The general partner of the Fund, and the investment advisor of the Fund, was ultimately controlled by Mr. Cerminara, the Chairman of the Company’s Board of Directors. Portions of the Company’s investment into the Fund were used to sponsor the launch of SPACs affiliated with certain of our officers and directors. The Fund began the process of winding down in the first quarter of 2023 and completed the process in the second quarter of 2023. As a result of the winddown, the Company now holds direct limited partner interests in FGAC Investors LLC, FG Merger Investors LLC, and Greenfirst Forest Products Holdings, LLC. Mr. Cerminara, Mr. Swets and Mr. Baqar, our Executive Vice President and Chief Financial Officer, serve as managers of FGAC Investors LLC and FG Merger Investors LLC, while Mr. Cerminara ultimately controls Greenfirst Forest Products Holdings, LLC. FG Merchant Partners FGMP was formed to co-sponsor newly formed SPACs with their founders or partners. Certain of our directors and officers also hold limited partner interests in FGMP. Mr. Swets holds a limited partner interest through Itasca Financial LLC, an advisory and investment firm for which Mr. Swets is managing member. Mr. Baqar also holds a limited partner interest through Sequoia Financial LLC, an advisory firm for which Mr. Baqar is managing member. Mr. Cerminara also holds a limited partner interest through Fundamental Global, LLC, a holding company for which Mr. Cerminara is the manager and one of the members. FGMP has invested in the founder shares and warrants of Aldel, FG Merger Corp, FG Acquisition Corp, FGC and Craveworthy. Certain of our directors and officers are affiliated with these entities. FG Communities In October of 2022, the Company directly invested $ 2.0 Craveworthy On March 16, 2023, the Company invested $ 200,000 Think Markets On September 29, 2023, the Company invested $ 250,000 Shared Services Agreement On March 31, 2020, the Company entered into a Shared Services Agreement (the “Shared Services Agreement”) with Fundamental Global Management, LLC (“FGM”), an affiliate of FG, pursuant to which FGM provides the Company with certain services related to the day-to-day management of the Company, including assisting with regulatory compliance, evaluating the Company’s financial and operational performance, providing a management team to supplement the executive officers of the Company, and such other services consistent with those customarily performed by executive officers and employees of a public company. In exchange for these services, the Company pays FGM a fee of $ 456,000 The Shared Services Agreement has an initial term of three years, and thereafter renews automatically for successive one-year terms unless terminated in accordance with its terms. The Shared Services Agreement may be terminated by FGM or by the Company, by a vote of the Company’s independent directors, at the end of the initial or automatic renewal term upon 120 days’ notice, subject to payment by the Company of certain costs incurred by FGM to wind down the provision of services and, in the case of a termination by the Company without cause, payment of a termination fee equal to the Shared Services Fee paid for the two quarters preceding termination. The Company paid $ 1,368,000 1,368,000 |
Net Earnings Per Share
Net Earnings Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Net Earnings Per Share | Note 9. Net Earnings Per Share Net earnings per share is computed by dividing net income by the weighted average number of common shares and common share equivalents outstanding during the periods presented. In calculating diluted earnings per share, those potential common shares that are found to be anti-dilutive are excluded from the calculation. The table below provides a summary of the numerators and denominators used in determining basic and diluted earnings per share for the three and nine months ended September 30, 2023 and 2022. Schedule of Numerators and Denominators Used in Calculation of Basic and Diluted Earnings Per Share 2023 2022 2023 2022 ($ in thousands) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Basic and diluted: Net income from continuing operations $ 5,628 $ 10,255 $ 4,055 $ 955 Dividends declared on Series A Preferred Shares (447 ) (447 ) (1,339 ) (1,342 ) Income (loss) attributable to FG Financial Group, Inc. common shareholders from continuing operations 5,181 9,808 2,716 (387 ) Weighted average common shares 10,303,739 9,333,709 9,813,438 7,564,017 Income (loss) per common share from continuing operations $ 0.50 $ 1.05 $ 0.28 $ (0.05 ) Weighted average common shares outstanding 10,303,739 9,333,709 9,813,438 7,564,017 The following potentially dilutive securities outstanding as of September 30, 2023 and 2022 have been excluded from the computation of diluted weighted-average shares outstanding as their effect would be anti-dilutive. Schedule of Potentially Dilutive Securities Excluded from Calculation As of September 30, 2023 2022 Options to purchase common stock 130,000 130,000 Restricted stock units 851,055 297,815 981,055 427,815 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10. Commitments and Contingencies Legal Proceedings: As of September 30, 2023, the Company was not aware of any material claims or actions pending or threatened against us Operating Lease Commitments: In July 2021, the Company entered into a lease agreement for office space in St. Petersburg, FL. The lease had a term of 12 months and was not renewed upon expiration. Total minimum rent over the 12 17,000 zero 10,000 In April 2022, the Company entered into a lease agreement for office space in Itasca, IL. The lease has a term of 44 77,000 8 44,000 16,000 8,800 |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 11. Segment Reporting The Company has two The following table presents the financial information for each segment that is specifically identifiable or based on allocations using internal methodology as of and for the three and nine months ended September 30, 2023 and 2022. The ‘other’ category in the table below consists largely of corporate general and administrative expenses which have not been allocated to a specific segment. Segment assets for the “other” category primarily consist of unrestricted cash in the amounts of $ 3.8 8.7 Summary of Segment Reporting (in thousands) For the three months ended September 30, 2023 Insurance Asset Management Other Total Net premiums earned $ 4,192 $ – $ – $ 4,192 Net investment income 5,032 1,922 7 6,961 Other income - 24 - 24 Total revenue 9,224 1,946 7 11,177 Income (loss) before income tax 5,465 1,946 (1,783 ) 5,628 For the nine months ended September 30, 2023 Net premiums earned $ 11,534 $ – $ – $ 11,534 Net investment income 8,108 150 14 8,272 Other income – 84 – 84 Total revenue 19,642 234 14 19,890 Income (loss) before income tax 9,366 234 (5,545 ) 4,055 As of September 30, 2023 Segment assets $ 35,776 $ 18,436 $ 4,616 $ 58,828 For the three months ended September 30, 2022 Net premiums earned $ 4,383 $ – $ – $ 4,383 Net investment income 2,468 8,706 – 11,174 Other income – 89 125 214 Total revenue 6,851 8,795 125 15,771 Income (loss) before income tax 3,274 8,798 (1,817 ) 10,255 For the nine months ended September 30, 2022 Net premiums earned $ 9,809 $ – $ – $ 9,809 Net investment income 1,562 3,552 – 5,114 Other income – 141 125 266 Total revenue 11,371 3,693 125 15,189 Income (loss) before income tax 2,728 3,680 (5,453 ) 955 As of September 30, 2022 Segment assets $ 21,662 $ 17,777 $ 9,484 $ 48,923 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12. Subsequent Events The Corporation has evaluated subsequent events through the filing date of the financial statements and determined that there have been no events that have occurred that would require additional disclosures. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). |
Consolidation Policies | Consolidation Policies The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation. The consolidated financial statements include the accounts of the Company and entities in which it is required to consolidate under either the Variable Interest Entity (“VIE”) or Voting Interest Entity (“VOE”) models. Both models require the reporting entity to identify whether it has a controlling financial interest in a legal entity and is therefore required to consolidate the legal entity. Under the VOE model, a reporting entity with ownership of a majority of the voting interest of a legal entity is generally considered to have a controlling financial interest. The VIE model was established for situations in which control may be demonstrated other than by the possession of voting rights in a legal entity and instead focuses on the power to direct the activities that most significantly impact the legal entity’s economic performance, as well as the rights to receive benefits and obligations to absorb losses that could potentially be significant to the legal entity. The determination of whether a legal entity is consolidated under either model is reassessed where there is a substantive change in the governing documents or contractual arrangements of the entity, to the capital structure of the entity or in the activities of the entity. The Company continuously reassesses whether it should consolidate under either model. In September 2020, the Company invested approximately $ 5.0 During the first quarter of 2023, it was determined that the Fund would begin the process of winding down, and all investment holdings held in the name of the Fund would be transferred and distributed to members within the Fund based on their ownership percentage of each respective holding. Prior to the unwinding, through the Fund, the Company held underlying investments in FGAC Investors LLC, FG Merger Investors LLC, Greenfirst Forest Products Holdings LLC, and OppFi. The Fund, an investment company, carried each of these investments at fair value. In June 2023, all transfers were completed, resulting in the Company being transferred direct limited partner interests in FGAC Investors LLC, with a carrying value of $ 8.9 3.4 1.4 29 19 16 1.9 As a result of the winddown, the Company now holds direct limited partner interests in FGAC Investors LLC, FG Merger Investors LLC, and Greenfirst Forest Products Holdings, LLC. The Company has determined that each of these entities meets the criteria of a VIE. For each new position, the Company analyzed ASC 810 – Consolidation and has determined it is not the primary beneficiary of FGAC Investors LLC, FG Merger Investors LLC or Greenfirst Forest Products Holdings LLC, but does have the ability to exercise significant influence over each of these. Therefore, the Company will apply the equity method of accounting for each of these investments. In October of 2022, the Company invested $ 2.0 The Company’s risk of loss associated with its non-consolidated VIEs is limited. As of September 30, 2023, and December 31, 2022, the carrying value and maximum loss exposure of the Company’s non-consolidated VIE’s was $ 16.5 18.8 See Note 4 for further information regarding the Company’s investments. |
The Use of Estimates in the Preparation of Consolidated Financial Statements | The Use of Estimates in the Preparation of Consolidated Financial Statements The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from these estimates. Estimates and their underlying assumptions are reviewed on an ongoing basis. Changes in estimates are recorded in the accounting period in which they are determined. The critical accounting estimates and assumptions in the accompanying consolidated financial statements include the valuation of our equity method investments, current expected credit losses, the valuation of net deferred income taxes and deferred policy acquisition costs, premium revenue recognition, reserves for loss and loss adjustment expenses, and stock-based compensation expense. |
Investments in Equity Securities | Investments in Equity Securities Investments in equity securities are carried at fair value with subsequent changes in fair value recorded to the Consolidated Statements of Operations as a component of net investment income. |
Other Investments | Other Investments Other investments consist, in part, of equity investments made in privately held companies accounted for under the equity method. We utilize the equity method to account for investments when we possess the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when the investor possesses more than 20 In applying the equity method, we record the investment at cost and subsequently increase or decrease the carrying amount of the investment by our proportionate share of the net earnings or losses and other comprehensive income of the investee. We record dividends or other equity distributions as reductions in the carrying value of the investment. Should net losses of the investee reduce the carrying amount of the investment to zero, additional net losses may be recorded if other investments in the investee are at-risk, even if we have not committed to provide financial support to the investee. Such additional equity method losses, if any, are based upon the change in our claim on the investee’s book value. When we receive distributions from our equity method investments, we utilize the cumulative earnings approach. When classifying the related cash flows under this approach, the Company compares the cumulative distributions received, less distributions received in prior periods, with the Company’s cumulative equity in earnings. Cumulative distributions that do not exceed cumulative equity in earnings represent returns on investment and are classified as cash inflows from operating activities. Cumulative distributions in excess of cumulative equity in earnings represent returns on investment and are classified as cash inflows from investing activities. In addition to investments accounted for under the equity method of accounting, other investments also consist of equity we have purchased in a limited partnership, a limited liability company, and a corporation for which there does not exist a readily determinable fair value. The Company accounts for these investments at their cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments by the same issuer. When the Company observes an orderly transaction of an investee’s identical or similar equity securities, the Company adjusts the carrying value based on the observable price as of the transaction date. Once the Company records such an adjustment, the investment is considered an asset measured at fair value on a nonrecurring basis. Any profit distributions the Company receives on these investments are included in net investment income. Other investments also include a convertible note and a senior unsecured promissory note. See Note 4 for additional information regarding the Company’s investments. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash and highly liquid investments with original maturities of 90 days or less. Pursuant to the Company’s insurance license, the Authority has required that FGRe hold a minimum capital requirement of $ 200,000 |
Income Taxes | Income Taxes The Company follows the asset and liability method of accounting for income taxes, whereby deferred income tax assets and liabilities are recognized for (i) the differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and (ii) loss and tax credit carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not and a valuation allowance is established for any portion of a deferred tax asset that management believes will not be realized. Current federal income taxes are charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense (benefit). |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments which potentially expose the Company to concentrations of credit risk include investments, cash, and deposits with reinsured companies. The Company maintains its cash with a major U.S. domestic banking institution which is insured by the Federal Deposit Insurance Corporation (“FDIC”) for up to $ 250,000 |
Premium Revenue Recognition | Premium Revenue Recognition The Company participates in quota-share contracts and estimates the ultimate premiums for the contract period. These estimates are based on information received from the ceding companies, whereby premiums are recorded as written in the same periods in which the underlying insurance contracts are written and are based on cession statements from cedents. These statements are received quarterly and in arrears, and thus, for any reporting lag, premiums written are estimated based on the portion of the ultimate estimated premiums relating to the risks underwritten during the lag period. Premium estimates are reviewed by management periodically. Such review includes a comparison of actual reported premiums to expected premiums. Based on management’s review, the appropriateness of the premium estimates is evaluated, and any adjustments to these estimates are recorded in the period in which they are determined. Changes in premium estimates, including premiums receivable, are not unusual and may result in significant adjustments in any period. A significant portion of amounts included in the caption “Reinsurance balances receivable” in the Company’s consolidated balance sheets represents estimated premiums written, net of commissions, brokerage, and loss and loss adjustment expense, and are not currently due based on the terms of the underlying contracts. Additional premiums due on a contract that has no remaining coverage period are earned in full when written. Premiums written are generally recognized as earned over the contract period in proportion to the risk covered. Unearned premiums represent the unexpired portion of reinsurance provided. |
Current Expected Credit Loss | Current Expected Credit Loss In the first quarter of 2023, the Company adopted ASU 2016-13, as amended, Financial Instruments – Credit Losses (“ASU 2016-13”), which requires an entity to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The financial assets included in the caption “Reinsurance balances recoverable” in the Company’s consolidated balance sheets are carried at amortized cost and therefore affected by ASU 2016-13. The amendments in this update were effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted, however smaller reporting companies, like the Company, could delay adoption until January 2023. Upon adoption of ASU 2016-13, the Company calculated an allowance for expected credit losses for its reinsurance balances receivable by applying a Probability of Default / Loss Given Default model. The model considers both the external collectability history as well as external loss history. The external loss history that the Company used included a long-term probability of liquidation study specific to insurance companies. Additionally, the life of each of the Company’s reinsurance treaties was also considered as the probability of default was calculated over the contractual length of the reinsurance contracts. The credit worthiness of a counterparty is evaluated by considering the credit ratings assigned by independent agencies and individually evaluating all the counterparties. The adoption resulted in a cumulative-effect adjustment to increase accumulated deficit by $ 0.1 In the first quarter of 2023, the Company allocated $ 200,000 |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs Policy acquisition costs are costs that vary with, and are directly related to, the successful production of new and renewal business, and consist principally of commissions, taxes and brokerage expenses. If the sum of a contract’s expected losses and loss expenses and deferred acquisition costs exceeds associated unearned premiums and expected investment income, a premium deficiency is determined to exist. In this event, deferred acquisition costs are written off to the extent necessary to eliminate the premium deficiency. If the premium deficiency exceeds deferred acquisition costs then a liability is accrued for the excess deficiency. There were no premium deficiency adjustments recognized during the periods presented herein. |
Funds Deposited for Benefit of Reinsured Companies | Funds Deposited for Benefit of Reinsured Companies “Funds Deposited with Reinsured Companies” on the Company’s consolidated balance sheets includes amounts held to support our reinsurance contracts. As of September 30, 2023 and December 31, 2022, the total cash collateral posted to support all of our reinsurance treaties was approximately $ 7.1 9.3 |
Loss and Loss Adjustment Expense Reserves | Loss and Loss Adjustment Expense Reserves The Company maintains reserves equal to our estimated ultimate liability for losses and loss adjustment expense for reported and unreported claims from our reinsurance business. Loss and loss adjustment reserve estimates are based primarily on estimates derived from reports the Company has received from ceding companies. The Company then uses a variety of statistical and actuarial techniques to monitor reserve adequacy. When setting reserves, the Company considers many factors including: (1) the types of exposures and projected ultimate premium to be written by our cedants; (2) expected loss ratios by type of business; (3) actuarial methodologies which analyze loss reporting and payment experience, reports from ceding companies and historical trends; and (4) general economic conditions. The Company also engages independent actuarial specialists, at least annually, to assist management in establishing appropriate reserves. Since reserves are estimates, the final settlement of losses may vary from the reserves established, and any adjustments to the estimates, which may be material, are recorded in the period they are determined. The final settlement of losses may vary, perhaps materially, from the reserves recorded. U.S. GAAP does not permit establishing loss reserves, which include case reserves and IBNR loss reserves, until the occurrence of an event which may give rise to a claim. As a result, only loss reserves applicable to losses incurred up to the reporting date are established, with no allowance for the establishment of loss reserves to account for expected future loss events. Generally, the Company obtains regular updates of premium and loss related information for the current and historical periods, which are utilized to update the initial expected loss ratio. We also experience a lag between (i) claims being reported by the underlying insured to the Company’s cedent and (ii) claims being reported by the Company’s cedent to the Company. This lag may impact the Company’s loss reserve estimates. Client reports have pre-determined due dates (for example, thirty days after each month end). As a result, the lag depends in part upon the terms of the specific contract. The timing of the reporting requirements is designed so that the Company receives premium and loss information as soon as practicable once the client has closed its books. Accordingly, there should be a short lag in such reporting. Additionally, most of the contracts that have the potential for large single event losses have provisions that such loss notifications are provided to the Company immediately upon the occurrence of an event. |
Stock-Based Compensation | Stock-Based Compensation The Company has accounted for stock-based compensation under the provisions of ASC Topic 718 – Stock Compensation, The Company has also issued restricted stock units (“RSUs”) to certain of its employees and directors which have been accounted for as equity-based awards since, upon vesting, they are required to be settled in the Company’s common shares. We have used the fair value of the Company’s common stock on the date the RSUs were issued to estimate the grant date fair value of those RSUs which vest solely based upon the passage of time. The fair value of each RSU is recorded as compensation expense over the requisite service period, which is generally the expected period over which the awards will vest. Based upon the Company’s historical forfeiture rates relating to stock options and RSUs, the Company has not made any adjustment to stock compensation expense for expected forfeitures as of September 30, 2023. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying values of certain financial instruments, including cash, short-term investments, deposits held, accounts payable, and other accrued expenses, approximate fair value due to their short-term nature. The Company measures the fair value of financial instruments in accordance with GAAP which defines fair value as the exchange price that would be received for an asset (or paid to transfer a liability) in the principal or most advantageous market for the asset (or liability) in an orderly transaction between market participants on the measurement date. GAAP also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. See Note 4 for further information on the fair value of the Company’s financial instruments. |
Earnings (Loss) Per Common Share | Earnings (Loss) Per Common Share Basic earnings (loss) per common share is computed using the weighted average number of shares outstanding during the respective period. Diluted earnings (loss) per common share assumes conversion of all potentially dilutive outstanding stock options, restricted stock units, warrants or other convertible financial instruments. Potential common shares outstanding are excluded from the calculation of diluted earnings (loss) per share if their effect is anti-dilutive. |
Investments and Fair Value Di_2
Investments and Fair Value Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Platform Operator, Crypto-Asset [Line Items] | |
Schedule of Equity Securities | The following table summarizes the Company’s equity securities held at fair value as of September 30, 2023 and December 31, 2022: Schedule of Equity Securities (in thousands) As of September 30, 2023 Cost Basis Gross Unrealized Gains Gross Unrealized Losses Carrying Amount OppFi common stock and warrants $ 1,916 $ 271 $ - $ 2,187 Total investments $ 1,916 $ 271 $ - $ 2,187 As of December 31, 2022 Cost Basis Gross Unrealized Gains Gross Unrealized Losses Carrying Amount Hagerty common stock $ 889 $ – $ 48 $ 841 Total investments $ 889 $ – $ 48 $ 841 |
Schedule of Investments Under Equity Method | Financial information for our investments accounted for under the equity method, in the aggregate, is as follows: Schedule of Investments Under Equity Method As of 2023 As of (in thousands) Other investments $ 72,585 $ 35,366 Cash 275 113 Other assets 177 165 Total assets 73,037 35,644 Total liabilities 439 65 Nine months ended September 30, 2023 Nine months ended September 30, 2022 (in thousands) Net investment income $ 17,417 $ 8,170 Other income 129 - General and administrative expenses (1,149 ) (95 ) Net income 16,397 8,075 |
Schedule of Net Investment Income (Loss) | Net investment income for the three and nine months ended September 30, 2023 and 2022 is as follows: Schedule of Net Investment Income (Loss) 2023 2022 2023 2022 ($ in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Investment income: Realized gain (loss) on common stock $ 3,078 $ (2,472 ) $ 3,062 $ (11,441 ) Change in unrealized holding on common stock 404 2,448 319 10,521 Equity method earnings 3,460 11,226 4,192 6,080 Increase in investments without readily determinable fair value - - 250 - (Decrease) increase in fair value of convertible note (52 ) - 125 - Other 71 (28 ) 324 (46 ) Net investment income $ 6,961 $ 11,174 $ 8,272 $ 5,114 |
Schedule of Financial Instruments Measured at Fair Value | Financial instruments measured, on a recurring basis, at fair value as of September 30, 2023 and December 31, 2022 in accordance with the guidance promulgated by the FASB are as follows. Schedule of Financial Instruments Measured at Fair Value (in thousands) As of September 30, 2023 Level 1 Level 2 Level 3 Total Oppfi common stock and warrants $ 2,187 $ – $ – $ 2,187 ThinkMarkets convertible note $ – – 250 250 $ 2,187 $ – $ 250 $ 2,437 As of December 31, 2022 Hagerty common stock $ 841 $ – $ – $ 841 $ 841 $ – $ – $ 841 |
Fair Value, Inputs, Level 3 [Member] | |
Platform Operator, Crypto-Asset [Line Items] | |
Schedule of Fair Value of Recurring Level 3 Fair Value Measurements | The following tables provide a reconciliation of the fair value of recurring Level 3 fair value measurements for the three- and nine-months ended September 30, 2023 and September 30, 2022: Schedule of Fair Value of Recurring Level 3 Fair Value Measurements 2023 2022 (in thousands) Nine months ended September 30, 2023 2022 Assets: Convertible note Beginning balance - - Consideration paid 750 - Increase in fair value of convertible note 125 - Transfer out (625 ) Balance, September 30 $ 250 $ - 2023 2022 (in thousands) Three months ended September 30, 2023 2022 Assets: Convertible note Beginning balance 677 - Consideration paid 250 - Decrease in fair value of convertible note (52 ) - Transfer out (625 ) Balance, September 30 $ 250 $ - |
Loss and Loss Adjustment Expe_2
Loss and Loss Adjustment Expense Reserves (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Loss And Loss Adjustment Expense Reserves | |
Schedule of Changes in Outstanding Loss and Loss Adjustment Expense Reserves | A summary of changes in outstanding loss and loss adjustment expense reserves for the nine months ended September 30, 2023 and 2022, is as follows: Schedule of Changes in Outstanding Loss and Loss Adjustment Expense Reserves 2023 2022 (in thousands) Nine months ended September 30, 2023 2022 Balance, beginning of period, net of reinsurance $ 4,409 $ 2,133 Incurred related to: Current year 5,420 4,984 Prior year 661 814 Paid related to: Current year (3,675 ) (2,568 ) Prior years (903 ) (1,230 ) Balance, September 30, net of reinsurance $ 5,912 $ 4,133 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Reconciliation Effective Tax Rates | Actual income tax expense (benefit) differs from the income tax expense computed by applying the applicable effective federal and state tax rates to income before income tax expense as follows: Schedule of Reconciliation Effective Tax Rates ($ in thousands) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Provision for taxes at U.S., statutory marginal income tax rate of 21 $ 1,182 $ 2,154 $ 852 $ 201 Valuation allowance for deferred tax assets deemed unrealizable (1,200 ) (2,168 ) (871 ) (219 ) Non-deductible expenses associated with the Share Repurchase Transaction – 2 1 2 Share-based compensation 18 12 18 16 Income tax expense (benefit) $ – $ – $ – $ - |
Schedule of Deferred Income Taxes | Schedule of Deferred Income Taxes (in thousands) As of As of Deferred income tax assets: Net operating loss carryforward $ 4,670 $ 4,171 Loss and loss adjustment expense reserves 52 39 Unearned premium reserves 395 287 Capital loss carryforward 2,491 4,313 Share-based compensation 424 242 Investments 10 5 Other 8 9 Deferred income tax assets $ 8,050 $ 9,066 Less: Valuation allowance (4,615 ) (5,463 ) Deferred income tax assets net of valuation allowance $ 3,435 $ 3,603 Deferred income tax liabilities: Investments $ 3,125 $ 3,282 Deferred policy acquisition costs 310 321 Deferred income tax liabilities $ 3,435 $ 3,603 Net deferred income tax asset (liability) $ – $ – |
Equity Incentive Plan Grants (T
Equity Incentive Plan Grants (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Restricted Stock Units Activity | The following table summarizes RSU activity for the nine months ended September 30, 2023 and 2022: Schedule of Restricted Stock Units Activity Restricted Stock Units Number of Units Weighted Average Grant Date Fair Value Non-vested units, January 1, 2023 256,382 $ 2.57 Granted 821,974 2.76 Vested (227,301 ) 2.71 Forfeited — — Non-vested units, September 30, 2023 851,055 $ 1.40 Non-vested units, January 1, 2022 164,655 $ 4.35 Granted 158,225 1.58 Vested (50,065 ) 4.81 Forfeited — — Non-vested units, September 30, 2022 272,815 $ 2.66 |
Schedule of Fair Value of Stock Options | Schedule of Fair Value of Stock Options Expected volatility 45.60 % Expected life (years) 10.00 Risk-free interest rate 5.15 % Dividend yield 0.00 % |
Schedule of Stock Option Activity | The following table summarizes activity for stock options issued for the nine months ended September 30, 2023 and 2022. Schedule of Stock Option Activity Common Stock Options Shares Weighted Ave Weighted Ave Weighted Ave Aggregate Intrinsic Value Outstanding, January 1, 2023 130,000 $ 3.38 8.04 $ 1.88 $ - Exercisable, January 1, 2023 – $ – – $ – $ – Granted - - – – Exercised – – – – – Cancelled – – – – – Outstanding, September 30, 2023 130,000 $ 3.38 7.29 $ 1.88 $ – Exercisable, September 30, 2023 – $ – – $ – $ – Outstanding, January 1, 2022 130,000 $ 3.38 9.04 $ 1.88 $ 49,400 Exercisable, January 1, 2022 – $ – – $ – $ – Granted – – – – – Exercised – – – – – Cancelled – – – – – Outstanding, September 30, 2022 130,000 $ 3.38 8.29 $ 1.88 $ – Exercisable, September 30, 2022 – $ – – $ – $ – |
Net Earnings Per Share (Tables)
Net Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Numerators and Denominators Used in Calculation of Basic and Diluted Earnings Per Share | Schedule of Numerators and Denominators Used in Calculation of Basic and Diluted Earnings Per Share 2023 2022 2023 2022 ($ in thousands) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Basic and diluted: Net income from continuing operations $ 5,628 $ 10,255 $ 4,055 $ 955 Dividends declared on Series A Preferred Shares (447 ) (447 ) (1,339 ) (1,342 ) Income (loss) attributable to FG Financial Group, Inc. common shareholders from continuing operations 5,181 9,808 2,716 (387 ) Weighted average common shares 10,303,739 9,333,709 9,813,438 7,564,017 Income (loss) per common share from continuing operations $ 0.50 $ 1.05 $ 0.28 $ (0.05 ) Weighted average common shares outstanding 10,303,739 9,333,709 9,813,438 7,564,017 |
Schedule of Potentially Dilutive Securities Excluded from Calculation | The following potentially dilutive securities outstanding as of September 30, 2023 and 2022 have been excluded from the computation of diluted weighted-average shares outstanding as their effect would be anti-dilutive. Schedule of Potentially Dilutive Securities Excluded from Calculation As of September 30, 2023 2022 Options to purchase common stock 130,000 130,000 Restricted stock units 851,055 297,815 981,055 427,815 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Summary of Segment Reporting | Summary of Segment Reporting (in thousands) For the three months ended September 30, 2023 Insurance Asset Management Other Total Net premiums earned $ 4,192 $ – $ – $ 4,192 Net investment income 5,032 1,922 7 6,961 Other income - 24 - 24 Total revenue 9,224 1,946 7 11,177 Income (loss) before income tax 5,465 1,946 (1,783 ) 5,628 For the nine months ended September 30, 2023 Net premiums earned $ 11,534 $ – $ – $ 11,534 Net investment income 8,108 150 14 8,272 Other income – 84 – 84 Total revenue 19,642 234 14 19,890 Income (loss) before income tax 9,366 234 (5,545 ) 4,055 As of September 30, 2023 Segment assets $ 35,776 $ 18,436 $ 4,616 $ 58,828 For the three months ended September 30, 2022 Net premiums earned $ 4,383 $ – $ – $ 4,383 Net investment income 2,468 8,706 – 11,174 Other income – 89 125 214 Total revenue 6,851 8,795 125 15,771 Income (loss) before income tax 3,274 8,798 (1,817 ) 10,255 For the nine months ended September 30, 2022 Net premiums earned $ 9,809 $ – $ – $ 9,809 Net investment income 1,562 3,552 – 5,114 Other income – 141 125 266 Total revenue 11,371 3,693 125 15,189 Income (loss) before income tax 2,728 3,680 (5,453 ) 955 As of September 30, 2022 Segment assets $ 21,662 $ 17,777 $ 9,484 $ 48,923 |
Nature of Business (Details Nar
Nature of Business (Details Narrative) | Sep. 30, 2023 Integer | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Oct. 31, 2022 USD ($) |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||
Number of active reinsurance contracts | Integer | 7 | |||
FG Communities Inc [Member] | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||
Investments | $ | $ 200,000 | $ 2,000,000 | $ 2,000,000 | |
Fundamental Global GP, LLC [Member] | Common Stock [Member] | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||
Ownership percentage | 55% |
Significant Accounting Polici_3
Significant Accounting Policies (Details Narrative) - USD ($) | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Jan. 01, 2023 | Dec. 31, 2022 | Oct. 31, 2022 | Sep. 30, 2020 |
Investment interest rate | 20% | ||||||
Cash in bank | $ 200,000 | ||||||
Cash deposit per institution insured by FDIC | 250,000 | ||||||
Accumulated deficit | $ 100,000 | ||||||
Cash collateral total | 7,100,000 | $ 9,300,000 | |||||
FGAC Investors LLC [Member] | |||||||
Equity method investment, ownership percentage | 29% | ||||||
FG MergerInvestors LLC [Member] | |||||||
Equity method investment, ownership percentage | 19% | ||||||
Greenfirst Forest Products Holdings LLC [Member] | |||||||
Equity method investment, ownership percentage | 16% | ||||||
Variable Interest Entity [Member] | |||||||
Equity method investments | 16,500,000 | 18,800,000 | |||||
FGAC Investors LLC [Member] | |||||||
Debt carry value | 8,900,000 | $ 8,900,000 | |||||
FG MergerInvestors LLC [Member] | |||||||
Debt carry value | 3,400,000 | 3,400,000 | |||||
Green first Forest Products LLC [Member] | |||||||
Debt carry value | $ 1,400,000 | 1,400,000 | |||||
Opp Fi [Member] | |||||||
Debt carry value | $ 1,900,000 | ||||||
FG Communities Inc [Member] | |||||||
Investments | $ 200,000 | $ 2,000,000 | $ 2,000,000 | ||||
Variable Interest Entity, Primary Beneficiary [Member] | Fundamental Global Asset Management, LLC [Member] | |||||||
Real estate investment | $ 5,000,000 |
Recently Adopted and Issued A_2
Recently Adopted and Issued Accounting Standards (Details Narrative) $ in Millions | Jan. 01, 2023 USD ($) |
Accounting Changes and Error Corrections [Abstract] | |
Cumulative earnings deficit | $ 0.1 |
Schedule of Equity Securities (
Schedule of Equity Securities (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Investments, Cost basis | $ 1,916 | $ 889 |
Investments, Gross Unrealized Gains | 271 | |
Investments, Gross Unrealized Losses | 48 | |
Investments, Carrying Amount | 2,187 | 841 |
Opp Fi Common Stock And Warrants [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Investments, Cost basis | 1,916 | |
Investments, Gross Unrealized Gains | 271 | |
Investments, Gross Unrealized Losses | ||
Investments, Carrying Amount | $ 2,187 | |
Hagerty Common Stock [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Investments, Cost basis | 889 | |
Investments, Gross Unrealized Gains | ||
Investments, Gross Unrealized Losses | 48 | |
Investments, Carrying Amount | $ 841 |
Schedule of Investments Under E
Schedule of Investments Under Equity Method (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Schedule of Equity Method Investments [Line Items] | |||||
Cash | $ 200,000 | $ 200,000 | |||
Other assets | 727,000 | 727,000 | $ 712,000 | ||
Total assets | 58,828,000 | $ 48,923,000 | 58,828,000 | $ 48,923,000 | 49,475,000 |
Total liabilities | 16,161,000 | 16,161,000 | 12,180,000 | ||
Other income | 24,000 | 214,000 | 84,000 | 266,000 | |
General and administrative expenses | (2,341,000) | $ (2,001,000) | (7,221,000) | (6,009,000) | |
Equity Method Investment [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Other investments | 72,585,000 | 72,585,000 | 35,366,000 | ||
Cash | 275,000 | 275,000 | 113,000 | ||
Other assets | 177,000 | 177,000 | 165,000 | ||
Total assets | 73,037,000 | 73,037,000 | 35,644,000 | ||
Total liabilities | $ 439,000 | 439,000 | $ 65,000 | ||
Net investment income | 17,417,000 | 8,170,000 | |||
Other income | 129,000 | ||||
General and administrative expenses | (1,149,000) | (95,000) | |||
Net income | $ 16,397,000 | $ 8,075,000 |
Schedule of Net Investment Inco
Schedule of Net Investment Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule of Investments [Line Items] | ||||
Net investment income | $ 6,961 | $ 11,174 | $ 8,272 | $ 5,114 |
Realized Gain (Loss) on Common Stock [Member] | ||||
Schedule of Investments [Line Items] | ||||
Net investment income | 3,078 | (2,472) | 3,062 | (11,441) |
Change in Unrealized Holding on Common Stock [Member] | ||||
Schedule of Investments [Line Items] | ||||
Net investment income | 404 | 2,448 | 319 | 10,521 |
Equity Method Earnings [Member] | ||||
Schedule of Investments [Line Items] | ||||
Net investment income | 3,460 | 11,226 | 4,192 | 6,080 |
Increase in Investments Without Readily Determinable Fair Value [Member] | ||||
Schedule of Investments [Line Items] | ||||
Net investment income | 250 | |||
Decrease (Increase) in Fair Value of Convertible Note [Member] | ||||
Schedule of Investments [Line Items] | ||||
Net investment income | (52) | 125 | ||
Other [Member] | ||||
Schedule of Investments [Line Items] | ||||
Net investment income | $ 71 | $ (28) | $ 324 | $ (46) |
Schedule of Financial Instrumen
Schedule of Financial Instruments Measured at Fair Value (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | $ 2,437 | $ 841 |
Opfi Common Stock And Warrants [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | 2,187 | |
ThinkMarkets Convertible Note [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | 250 | |
Hagerty Common Stock [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | 841 | |
Fair Value, Inputs, Level 1 [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | 2,187 | 841 |
Fair Value, Inputs, Level 1 [Member] | Opfi Common Stock And Warrants [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | 2,187 | |
Fair Value, Inputs, Level 1 [Member] | ThinkMarkets Convertible Note [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | ||
Fair Value, Inputs, Level 1 [Member] | Hagerty Common Stock [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | 841 | |
Fair Value, Inputs, Level 2 [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | ||
Fair Value, Inputs, Level 2 [Member] | Opfi Common Stock And Warrants [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | ||
Fair Value, Inputs, Level 2 [Member] | ThinkMarkets Convertible Note [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | ||
Fair Value, Inputs, Level 2 [Member] | Hagerty Common Stock [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | ||
Fair Value, Inputs, Level 3 [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | 250 | |
Fair Value, Inputs, Level 3 [Member] | Opfi Common Stock And Warrants [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | ||
Fair Value, Inputs, Level 3 [Member] | ThinkMarkets Convertible Note [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock | $ 250 | |
Fair Value, Inputs, Level 3 [Member] | Hagerty Common Stock [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Equity securities, common stock |
Schedule of Fair Value of Recur
Schedule of Fair Value of Recurring Level 3 Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Platform Operator, Crypto-Asset [Line Items] | ||||
Increase in fair value of convertible note | $ 125 | |||
Fair Value, Inputs, Level 3 [Member] | ||||
Platform Operator, Crypto-Asset [Line Items] | ||||
Beginning balance | $ 677 | |||
Consideration paid | 250 | 750 | ||
Increase in fair value of convertible note | 125 | |||
Transfer out | (625) | (625) | ||
Balance, September 30 | 250 | $ 250 | ||
Decrease in fair value of convertible note | $ (52) |
Investments and Fair Value Di_3
Investments and Fair Value Disclosures (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 29, 2023 | Mar. 16, 2023 | Dec. 15, 2022 | Sep. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Jun. 30, 2023 | Mar. 15, 2023 | Jan. 04, 2021 | |
Sale of stock number of shares sold | 16,000 | ||||||||||
Increase carrying value of investments | $ 300,000 | $ 0 | |||||||||
Proceeds from issuance of common stock | 1,280,000 | $ 3,889,000 | |||||||||
Convertible Promissory Note [Member] | |||||||||||
Fair value of note | $ 250,000 | ||||||||||
Fair Value, Nonrecurring [Member] | |||||||||||
Investments | $ 2,300,000 | 2,300,000 | $ 2,300,000 | ||||||||
FGMP [Member] | |||||||||||
Equity method investment realized gain (loss) | 1,200,000 | 4,100,000 | |||||||||
Gain loss on investments | 100,000 | ||||||||||
Undistributed earnings | 9,900,000 | $ 5,700,000 | |||||||||
Investments | 9,900,000 | 9,900,000 | |||||||||
FGMP [Member] | Maximum [Member] | |||||||||||
Investments | 400,000 | 400,000 | |||||||||
FGAC Investors LLC [Member] | |||||||||||
Debt carry value | 8,900,000 | 8,900,000 | $ 8,900,000 | ||||||||
FG MergerInvestors LLC [Member] | |||||||||||
Debt carry value | 3,400,000 | 3,400,000 | 3,400,000 | ||||||||
Contributed | 500,000 | ||||||||||
Green first Forest Products LLC [Member] | |||||||||||
Debt carry value | 1,400,000 | 1,400,000 | 1,400,000 | ||||||||
ThinkMarkets [Member] | |||||||||||
Investments | $ 250,000 | ||||||||||
Debt instrument interest rate | 15% | ||||||||||
Debt instrument maturity date | Aug. 01, 2025 | ||||||||||
Shares issued price per share | $ 5 | ||||||||||
Other investments | 250,000 | 250,000 | |||||||||
Craveworthy [Member] | |||||||||||
Debt instrument interest rate | 13% | ||||||||||
Debt instrument maturity date | Mar. 15, 2024 | ||||||||||
Senior unsecured promissory note | $ 200,000 | ||||||||||
Debt instrument principal amount | $ 200,000 | 200,000 | 200,000 | ||||||||
Accrued interest | 15,000 | 15,000 | |||||||||
I Core Connect Inc [Member] | |||||||||||
Investments | $ 500,000 | ||||||||||
FG SPAC Partners LP [Member] | |||||||||||
Equity method investments | 46% | ||||||||||
Investment Fund [Member] | |||||||||||
Investment fund | 14,700,000 | $ 14,700,000 | $ 11,900,000 | ||||||||
FGAC Investors LLC [Member] | |||||||||||
Equity method investments | 29% | ||||||||||
Equity method investment realized gain (loss) | 2,400,000 | ||||||||||
FG Merger Investors [Member] | |||||||||||
Equity method investment realized gain (loss) | 100,000 | ||||||||||
Greenfirst Forest Products Holdings LLC [Member] | |||||||||||
Equity method investments | 16% | ||||||||||
Equity method investment realized gain (loss) | $ 100,000 | ||||||||||
OppFi Common Stock [Member] | |||||||||||
Number of shares issued | 860,000 | ||||||||||
Number of shares issued, value | $ 1,900,000 | ||||||||||
Hagerty Common Stock [Member] | |||||||||||
Number of shares issued | 99,999 | ||||||||||
Number of shares issued, value | $ 889,000 | ||||||||||
I Core Connect Inc [Member] | |||||||||||
Number of shares issued | 219,000 | ||||||||||
Equity method investment realized gain (loss) | $ 3,100,000 | ||||||||||
Proceeds from issuance of common stock | $ 3,700,000 |
Schedule of Changes in Outstand
Schedule of Changes in Outstanding Loss and Loss Adjustment Expense Reserves (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Loss And Loss Adjustment Expense Reserves | ||
Balance, beginning of period, net of reinsurance | $ 4,409 | $ 2,133 |
Incurred related to: | ||
Current year | 5,420 | 4,984 |
Prior year | 661 | 814 |
Paid related to: | ||
Current year | (3,675) | (2,568) |
Prior years | (903) | (1,230) |
Balance, September 30, net of reinsurance | $ 5,912 | $ 4,133 |
Schedule of Reconciliation Effe
Schedule of Reconciliation Effective Tax Rates (Details) (Parenthetical) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax rate | 21% | 21% | 21% | 21% |
Schedule of Reconciliation Ef_2
Schedule of Reconciliation Effective Tax Rates (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Provision for taxes at U.S. statutory marginal income tax rate of 21% | $ 1,182 | $ 2,154 | $ 852 | $ 201 |
Valuation allowance for deferred tax assets deemed unrealizable | (1,200) | (2,168) | (871) | (219) |
Non-deductible expenses associated with the Share Repurchase Transaction | 2 | 1 | 2 | |
Share-based compensation | 18 | 12 | 18 | 16 |
Income tax benefit |
Schedule of Deferred Income Tax
Schedule of Deferred Income Taxes (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Deferred income tax assets: | ||
Net operating loss carryforward | $ 4,670 | $ 4,171 |
Loss and loss adjustment expense reserves | 52 | 39 |
Unearned premium reserves | 395 | 287 |
Capital loss carryforward | 2,491 | 4,313 |
Share-based compensation | 424 | 242 |
Investments | 10 | 5 |
Other | 8 | 9 |
Deferred income tax assets | 8,050 | 9,066 |
Less: Valuation allowance | (4,615) | (5,463) |
Deferred income tax assets net of valuation allowance | 3,435 | 3,603 |
Deferred income tax liabilities: | ||
Investments | 3,125 | 3,282 |
Deferred policy acquisition costs | 310 | 321 |
Deferred income tax liabilities | 3,435 | 3,603 |
Net deferred income tax asset (liability) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Deferred tax assets, gross | $ 8,050 | $ 9,066 |
Deferred tax liabilities | 3,400 | |
Deferred tax valuation allowances | 4,600 | |
Operating Loss Carryforwards | 22,200 | |
Expire on December 31, 2039 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Operating Loss Carryforwards | 500 | |
Expire on December 31, 2040 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Operating Loss Carryforwards | 100 | |
Expire on December 31, 2041 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Operating Loss Carryforwards | 1,600 | |
Not Expire Under Current Tax Law [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Operating Loss Carryforwards | 20,000 | |
Expire on December 2026 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Operating Loss Carryforwards | $ 11,900 |
Schedule of Restricted Stock Un
Schedule of Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Number of Non-vested Units, Beginning balance | 256,382 | 164,655 |
Weighted Average Grant Date Fair Value, Beginning balance | $ 2.57 | $ 4.35 |
Number of Non-vested Units, Granted | 821,974 | 158,225 |
Weighted Average Grant Date Fair Value, Granted | $ 2.76 | $ 1.58 |
Number of Non-vested Units, Vested | (227,301) | (50,065) |
Weighted Average Grant Date Fair Value, Vested | $ 2.71 | $ 4.81 |
Number of Non-vested Units, Forfeited | ||
Weighted Average Grant Date Fair Value, Forfeited | ||
Number of Non-vested Units, Ending balance | 851,055 | 272,815 |
Weighted Average Grant Date Fair Value, Ending balance | $ 1.40 | $ 2.66 |
Schedule of Fair Value of Stock
Schedule of Fair Value of Stock Options (Details) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Expected volatility | 45.60% |
Expected life (years) | 10 years |
Risk-free interest rate | 5.15% |
Dividend yield | 0% |
Schedule of Stock Option Activi
Schedule of Stock Option Activity (Details) - 2014 Equity Incentive Plan [Member] - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares, Outstanding, Beginning balance | 130,000 | 130,000 |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ 3.38 | $ 3.38 |
Weighted Ave Remaining Contractual Term (Years), Outstanding, Beginning balance | 8 years 14 days | 9 years 14 days |
Weighted Ave Grant Date Fair Value, Outstanding, Beginning balance | $ 1.88 | $ 1.88 |
Aggregate Intrinsic Value, Outstanding, Beginning balance | $ 49,400 | |
Shares, Exercisable, Beginning balance | ||
Weighted Average Exercise Price, Exercisable, Beginning balance | ||
Weighted Ave Grant Date Fair Value, Exercisable, Beginning balance | ||
Aggregate Intrinsic Value, Exercisable, Beginning balance | ||
Shares, Granted | ||
Weighted Average Exercise Price, Granted | ||
Weighted Average Grant date Fair Value, Granted | ||
Aggregate Intrinsic Value, Granted | ||
Shares, Exercised | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Grant date Fair Value, Exercised | ||
Aggregate Intrinsic Value, Exercised | ||
Shares, Cancelled | ||
Weighted Average Exercise Price, Cancelled | ||
Weighted Average Grant date Fair Value, Cancelled | ||
Aggregate Intrinsic Value, Cancelled | ||
Shares, Outstanding, Ending balance | 130,000 | 130,000 |
Weighted Average Exercise Price, Outstanding, Ending balance | $ 3.38 | $ 3.38 |
Weighted Ave Remaining Contractual Term (Years), Outstanding, Ending balance | 7 years 3 months 14 days | 8 years 3 months 14 days |
Weighted Ave Grant Date Fair Value, Outstanding, Ending balance | $ 1.88 | $ 1.88 |
Aggregate Intrinsic Value, Outstanding, Ending balance | ||
Shares, Exercisable, Ending balance | ||
Weighted Average Exercise Price, Exercisable, Ending balance | ||
Weighted Ave Grant Date Fair Value, Exercisable, Ending balance | ||
Aggregate Intrinsic Value, Exercisable, Ending balance |
Equity Incentive Plan Grants (D
Equity Incentive Plan Grants (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||||
Feb. 17, 2023 | Aug. 19, 2022 | Jul. 31, 2022 | Jan. 18, 2021 | Jan. 12, 2021 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Mar. 24, 2023 | Feb. 24, 2022 | Dec. 15, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
ESPP Plan, description | the board of directors approved an employee purchase plan (“ESPP Plan”) whereby qualifying employees can choose each year to have up to 5% of their annual base earnings withheld to purchase the Company’s common shares in the open market. The Company matches 100% of the employee’s contribution amount after thirty days of employment. | ||||||||||
Share-based payment arrangement, expense | $ 1,500,000 | $ 180,000 | |||||||||
Unrecognized stock based compensation expense | $ 1,800,000 | $ 1,800,000 | |||||||||
Warrant [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Warrants outstanding | 1,500,000 | ||||||||||
Exercise price of warrants | $ 15 | ||||||||||
Restricted Stock Units (RSUs) [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Number of restricted units granted | 821,974 | 158,225 | |||||||||
Non Employee Director [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Number of restricted stock issued | 158,225 | ||||||||||
Management [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Number of restricted units granted | 415,000 | ||||||||||
NonExecutive Members [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Number of restricted units granted | 36,974 | ||||||||||
Larry G. Swets Jr [Member] | Equity Award Letter Agreement [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Grant an additional stock options | 370,000 | ||||||||||
Larry G. Swets Jr [Member] | Stock Option Agreement [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Grant an additional stock options | 130,000 | ||||||||||
Exercise price of shares | $ 3.38 | ||||||||||
Stock option,description | The Stock Option becomes vested and fully exercisable in 20% increments on each anniversary of the grant date, provided that Mr. Swets remains in the continuous service of the Company through each applicable vesting date and that the Company’s book value per share has increased by 15% or more as compared to the Company’s book value per share as of the fiscal year end prior. The Stock Option expires on January 11, 2031. | ||||||||||
Stock option service period | 3 years 3 months 18 days | ||||||||||
Mr. Swets [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Number of restricted units granted | 370,000 | ||||||||||
2021 Incentive Plan [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Number of share available for issuance | 1,500,000 | ||||||||||
2021 Incentive Plan [Member] | Maximum [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Number of share available for issuance | 1,500,000 | ||||||||||
Amendment 2021 Incentive Plan [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Number of share available for issuance | 2,000,000 | ||||||||||
2021 Equity Incentive Plan [Member] | Employee Director [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Number of shares issued | 25,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 9 Months Ended | |||||||
Mar. 31, 2020 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 29, 2023 | Mar. 31, 2023 | Mar. 16, 2023 | Dec. 31, 2022 | Oct. 31, 2022 | |
FG Communities Inc [Member] | ||||||||
Investments | $ 200,000 | $ 2,000,000 | $ 2,000,000 | |||||
Craveworthy [Member] | ||||||||
Senior unsecured promissory note | $ 200,000 | |||||||
Think Makets [Member] | ||||||||
Investments | $ 250,000 | |||||||
Joint Venture Agreement [Member] | Fundamental Global Asset Management [Member] | ||||||||
Investment ownership percentage | 50% | |||||||
Shared Services Agreement [Member] | Fundamental Global Management, LLC [Member] | ||||||||
Shared services fee | $ 456,000 | $ 1,368,000 | $ 1,368,000 |
Schedule of Numerators and Deno
Schedule of Numerators and Denominators Used in Calculation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Net income from continuing operations | $ 5,628 | $ 10,255 | $ 4,055 | $ 955 |
Dividends declared on Series A Preferred Shares | (447) | (447) | (1,339) | (1,342) |
Income (loss) attributable to FG Financial Group, Inc. common shareholders from continuing operations | $ 5,181 | $ 9,808 | $ 2,716 | $ (387) |
Weighted average common shares | 10,303,739 | 9,333,709 | 9,813,438 | 7,564,017 |
Income (loss) per common share from continuing operations | $ 0.50 | $ 1.05 | $ 0.28 | $ (0.05) |
Weighted average common shares outstanding | 10,303,739 | 9,333,709 | 9,813,438 | 7,564,017 |
Schedule of Potentially Dilutiv
Schedule of Potentially Dilutive Securities Excluded from Calculation (Details) - shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities outstanding | 981,055 | 427,815 |
Equity Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities outstanding | 130,000 | 130,000 |
Restricted Stock Units (RSUs) [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities outstanding | 851,055 | 297,815 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Apr. 30, 2022 | Jul. 31, 2021 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Rent expense | $ 16,000 | $ 8,800 | ||
Lessee discount rate | 8% | |||
Operating asset and lease liability | $ 44,000 | |||
Lease Agreement [Member] | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Lease term | 44 months | 12 months | ||
Payments for rent | $ 77,000 | $ 17,000 | ||
Rent expense | $ 0 | $ 10,000 |
Summary of Segment Reporting (D
Summary of Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Segment Reporting Information [Line Items] | |||||
Net premiums earned | $ 4,192 | $ 4,383 | $ 11,534 | $ 9,809 | |
Net investment income (loss) | 6,961 | 11,174 | 8,272 | 5,114 | |
Other income | 24 | 214 | 84 | 266 | |
Total revenue | 11,177 | 15,771 | 19,890 | 15,189 | |
Income (loss) before income tax | 5,628 | 10,255 | 4,055 | 955 | |
Segment assets | 58,828 | 48,923 | 58,828 | 48,923 | $ 49,475 |
Insurance [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net premiums earned | 4,192 | 4,383 | 11,534 | 9,809 | |
Net investment income (loss) | 5,032 | 2,468 | 8,108 | 1,562 | |
Other income | |||||
Total revenue | 9,224 | 6,851 | 19,642 | 11,371 | |
Income (loss) before income tax | 5,465 | 3,274 | 9,366 | 2,728 | |
Segment assets | 35,776 | 21,662 | 35,776 | 21,662 | |
Asset Management [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net premiums earned | |||||
Net investment income (loss) | 1,922 | 8,706 | 150 | 3,552 | |
Other income | 24 | 89 | 84 | 141 | |
Total revenue | 1,946 | 8,795 | 234 | 3,693 | |
Income (loss) before income tax | 1,946 | 8,798 | 234 | 3,680 | |
Segment assets | 18,436 | 17,777 | 18,436 | 17,777 | |
Other Segments [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net premiums earned | |||||
Net investment income (loss) | 7 | 14 | |||
Other income | 125 | 125 | |||
Total revenue | 7 | 125 | 14 | 125 | |
Income (loss) before income tax | (1,783) | (1,817) | (5,545) | (5,453) | |
Segment assets | $ 4,616 | $ 9,484 | $ 4,616 | $ 9,484 |
Segment Reporting (Details Narr
Segment Reporting (Details Narrative) | 9 Months Ended | |
Sep. 30, 2023 USD ($) Segment | Sep. 30, 2022 USD ($) | |
Cash and Cash Equivalents [Line Items] | ||
Number of operating segments | Segment | 2 | |
Unrestricted cash | $ 200,000 | |
Unrestricted Cash [Member] | ||
Cash and Cash Equivalents [Line Items] | ||
Unrestricted cash | $ 3,800,000 | $ 8,700,000 |