State National Companies 10-Q 8 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 08, 2017
Document and Entity Information
Entity Registrant Name	State National Companies, Inc.
Entity Central Index Key	1,610,793
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		42,173,561
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q3

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Investments:
Fixed-maturity securities – available-for-sale, at fair value (amortized cost – $400,885, $329,994, respectively)	$ 406,677	$ 332,107
Equity securities – available-for-sale, at fair value (cost – $2,039, $3,271, respectively)	2,116	3,224
Total investments	408,793	335,331
Cash and cash equivalents	64,003	91,698
Restricted cash and investments	25,192	2,958
Accounts receivable from agents, net	145,867	35,964
Reinsurance recoverable on paid losses	1,740	1,430
Deferred acquisition costs	1,348	1,194
Reinsurance recoverables	2,871,500	2,342,864
Property and equipment, net (includes land held for sale – $1,034, $1,034, respectively)	16,999	16,163
Interest receivable	2,319	2,112
Income taxes receivable		329
Deferred income taxes, net	30,900	28,858
Goodwill and intangible assets, net	14,364	12,588
Other assets	7,680	5,248
Total assets	3,590,705	2,876,737
Liabilities
Unpaid losses and loss adjustment expenses	2,087,941	1,703,706
Unearned premiums	828,583	680,691
Allowance for policy cancellations	68,568	66,418
Deferred ceding fees	39,639	32,226
Accounts payable to agents	2,467	2,639
Accounts payable to insurance companies	118,791	14,871
Debt, net	43,815	43,783
Income taxes payable	3,649
Other liabilities	63,454	36,023
Total liabilities	3,256,907	2,580,357
Shareholders' equity
Common stock, $.001 par value (150,000,000 shares authorized; 42,173,561 and 41,924,440 shares issued at September 30, 2017 and December 31, 2016, respectively)	42	42
Preferred stock, $.001 par value (10,000,000 shares authorized; no shares issued and outstanding at September 30, 2017 and December 31, 2016)
Additional paid-in capital	232,710	229,297
Retained earnings	98,073	66,230
Accumulated other comprehensive income	2,973	811
Total shareholders' equity	333,798	296,380
Total liabilities and shareholders' equity	$ 3,590,705	$ 2,876,737

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Consolidated Balance Sheets
Fixed-maturity securities - available-for-sale, amortized cost	$ 400,885	$ 329,994
Equity securities - available-for-sale, cost	2,039	3,271
Property and equipment, net - land held for sale	$ 1,034	$ 1,034
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	42,173,561	41,924,440
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

Consolidated Statements of Inco

Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues:
Premiums earned	$ 35,499	$ 33,700	$ 105,941	$ 94,293
Commission income	328	389	926	1,015
Ceding fees	21,697	19,263	60,340	52,424
Net investment income	2,314	2,001	6,753	6,141
Realized net investment gains (losses)	1,010	2,063	3,409	1,707
Other income	597	501	1,658	1,416
Total revenues	61,445	57,917	179,027	156,996
Expenses:
Losses and loss adjustment expenses	15,883	13,755	50,849	42,587
Commissions	1,064	1,408	4,341	4,235
Taxes, licenses, and fees	1,096	960	2,962	2,466
General and administrative	19,666	17,235	57,412	51,377
Interest expense	631	565	1,831	1,655
Total expenses	38,340	33,923	117,395	102,320
Income (loss) before income taxes	23,105	23,994	61,632	54,676
Income taxes:
Current tax expense (benefit)	11,160	10,801	25,420	21,292
Deferred tax expense (benefit)	(2,749)	(2,130)	(3,207)	(1,597)
Total income tax expense (benefit)	8,411	8,671	22,213	19,695
Net income (loss)	$ 14,694	$ 15,323	$ 39,419	$ 34,981
Net income (loss) per share attributable to common shareholders:
Basic earnings per share (in dollars per share)	$ 0.35	$ 0.37	$ 0.95	$ 0.83
Diluted earnings per share (in dollars per share)	0.34	0.37	0.92	0.83
Dividends, per share	$ 0.06	$ 0.06	$ 0.18	$ 0.18

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Consolidated Statements of Comprehensive Income
Net income (loss)	$ 14,694	$ 15,323	$ 39,419	$ 34,981
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)	64	(1,771)	3,627	6,744
Tax effect on unrealized holding gains (losses)	(22)	620	(1,269)	(2,360)
Less: reclassification adjustments for realized gains included in net income	79	626	(301)	680
Tax effect on reclassification adjustments for realized gains included in net income	(28)	(219)	105	(238)
Other comprehensive income (loss)	93	(744)	2,162	4,826
Total comprehensive income (loss)	$ 14,787	$ 14,579	$ 41,581	$ 39,807

Consolidated Statements of Shar

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Common stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Balance at Dec. 31, 2015	$ 43	$ 224,719	$ 37,322	$ 1,373	$ 263,457
Increase (decrease) in shareholder's equity
Stock-based compensation expense		4,578			4,578
Dividends declared			(10,139)		(10,139)
Repurchase of common stock	(1)		(10,030)		(10,031)
Net income (loss)			49,077		49,077
Other comprehensive income (loss), net of tax				(562)	(562)
Balance at Dec. 31, 2016	42	229,297	66,230	811	296,380
Increase (decrease) in shareholder's equity
Stock-based compensation expense		3,413			3,413
Dividends declared			(7,576)		(7,576)
Net income (loss)			39,419		39,419
Other comprehensive income (loss), net of tax				2,162	2,162
Balance at Sep. 30, 2017	$ 42	$ 232,710	$ 98,073	$ 2,973	$ 333,798

Condensed Consolidated Statemen

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Operating activities
Net cash provided by (used in) operating activities	$ 52,690	$ 48,938
Investing activities
Purchase of investments	(114,829)	(60,754)
Proceeds from sale of investments	47,323	55,120
Proceeds from maturities and principal receipts	29,282	17,679
Proceeds from dispositions of property and equipment	97	78
Purchase of property and equipment	(2,093)	(724)
Acquisition of consolidated subsidiaries, net of cash obtained	(31,980)	(17,320)
Investment in cost-method investee	(650)
Net cash provided by (used in) investing activities	(72,850)	(5,921)
Financing activities
Dividends paid	(7,535)	(5,077)
Repurchase of common stock		(9,948)
Net cash provided by (used in) financing activities	(7,535)	(15,025)
Net change in cash and cash equivalents	(27,695)	27,992
Cash and cash equivalents at beginning of period	91,698	51,770
Cash and cash equivalents at end of period	$ 64,003	$ 79,762

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2017
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	1. Summary of Significant Accounting Policies Description of Business State National Companies, Inc. (the “Company”) refers to a group of companies that conducts insurance-related activities along two major segments. The Company’s Program Services segment generates fee income, in the form of ceding fees, by offering issuing carrier capacity to both specialty general agents and other producers (“GAs”), who sell, control, and administer books of insurance business that are supported by third parties that assume reinsurance risk. Substantially all of the underwriting risk associated with the Program Services segment is ceded to unaffiliated, highly rated reinsurance companies or other reinsurers that provide collateral. The Company’s Lender Services segment generates premiums primarily from the sale of collateral protection insurance (“CPI”), which insures automobiles or other vehicles held as collateral for loans made by credit unions, banks and specialty finance companies. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company includes the results of operations of an acquired business in its consolidated financial statements from the date of the acquisition. Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of the Company and all subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the years ended December 31, 2016 and 2015. The interim financial data as of September 30, 2017 and 2016 is unaudited. However, in the opinion of the Company’s management (“Management”), the interim data includes all adjustments, consisting of normal recurring adjustments, necessary to fairly state the results for the interim period. The results of operations for the period ended September 30, 2017 and 2016 are not necessarily indicative of the operating results to be expected for the full year. Refer to “Summary of Significant Accounting Policies” in the consolidated financial statements for the three years in the period ended December 31, 2016 for information on accounting policies that we consider critical in preparing consolidated financial statements. Estimates The preparation of financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from these estimates. Earnings Per Share The computation of earnings per share is based upon the weighted average number of common shares outstanding during the period plus the effect of common shares potentially issuable (in periods in which they have a dilutive effect). Income Taxes For any uncertain tax positions not meeting the “more likely than not” recognition threshold, accounting standards require recognition, measurement, and disclosure in the financial statements. There were no uncertain tax positions at September 30, 2017 and December 31, 2016. Stock-Based Compensation Compensation expense for stock-based payments is recognized based on the measurement-date fair value for awards that will settle in shares. Compensation expense for restricted stock grants and stock option awards that contain a service condition are recognized on a straight line pro rata basis over the vesting period. For restricted stock awards that contain a performance condition, the expense is recognized based on the awards expected to vest and the cumulative expense is adjusted whenever the estimate of the number of awards to vest changes. An estimation of future forfeitures of stock-based awards is incorporated into the determination of compensation expense. See Note 8 — “Stock-based Payments” for related disclosures. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” which replaces most existing GAAP revenue recognition guidance to a five-step revenue recognition model. The FASB has updated the guidance to include the following ASUs: · ASU 2015-14—“Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”; · ASU 2016-08—“Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”; · ASU 2016-10—“Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”; · ASU 2016-11—“Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at March 3, 2016 EITF Meeting (SEC Update)”; · ASU 2016-12—“Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”; and · ASU 2016-20—“Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” The new guidance excludes insurance contracts that are recognized under Topic 944 “Financial Services—Insurance”; however, income related to our agency operations will be recognized under the new guidance. The model provides for an analysis of transactions to determine when or how revenue is recognized and requires additional disclosures sufficient to describe the nature, amount, timing, and uncertainty of revenue and cash flows for these transactions. The Company has the option to choose to apply the guidance using either the full retrospective or a modified retrospective approach. The standards are effective for annual periods beginning after December 15, 2017, including interim reporting periods within that period. The Company has assessed its revenue streams to identify those contracts that are clearly excluded from the scope of the new standard and those that may be subject to the new standard. The Company does not anticipate the impact of these ASUs to be material to the Company’s financial position or cash flows. In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (Sub-Topic 825-10). The amendment in this update supersedes the guidance to classify equity securities with readily determinable fair value into different categories (either trading or available-for-sale) and requires equity securities to be measured at fair value and changes in the fair value to be recognized through net income instead of other comprehensive income. This ASU is effective for annual and interim reports beginning after December 15, 2017. Since the Company’s current position in equities is less than 1% of our current investment portfolio as of September 30, 2017, the Company does not anticipate that the guidance will have a material impact to the Company’s financial statements or cash flows. In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842) that requires lessees to recognize the assets and liabilities related to leases on the balance sheet. The FASB is issuing this update to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. The Company does not plan to early adopt and is currently evaluating what impact this ASU will have on financial results and disclosures. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost and require entities to record allowances for available-for-sale (AFS) debt securities rather than reduce the carrying amount, as they do today under the other-than-temporary impairment (OTTI) model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This ASU is effective for annual and interim periods beginning after December 15, 2019. The Company will be evaluating what impact this ASU will have on financial results and disclosures. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This ASU amends guidance related to debt prepayment or extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims and corporate-owned life insurance, distributions received from equity method investees and beneficial interests in securitization transactions. The guidance will generally be applied retrospectively and is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. The Company does not expect financial results and disclosures to be significantly impacted by this ASU. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” The amendments require entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. This ASU is effective for annual and interim periods beginning after December 15, 2017. The Company will be evaluating what impact this ASU will have on disclosures. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” Under the new guidance, if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the transferred assets and activities do not constitute a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606. The ASU is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. The ASU will be applied prospectively to any transactions occurring within the period of adoption. Early adoption is permitted, including for interim or annual periods in which the financial statements have not been issued or made available for issuance. The Company does not plan to early adopt and will be evaluating what impact this ASU will have on financial results and disclosures. In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The new guidance eliminates the requirement to calculate the implied fair value of goodwill under step two of the current goodwill impairment test, to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value based on step one of the current goodwill impairment test. The standard will be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019, for public business entities. The Company will be evaluating what impact this ASU will have on disclosures. In March 2017, the FASB issued ASU 2017-08, “Premium Amortization on Purchased Callable Debt Securities.” The amendments in this update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. This ASU is effective for annual and interim periods beginning after December 15, 2018. The Company will be evaluating what impact this ASU will have on disclosures. In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Modification accounting is not needed if the fair value, vesting conditions and classification of the modified award are the same as the original award immediately before the original award is modified. This ASU is effective for annual and interim periods beginning after December 15, 2017. The Company does not expect financial results and disclosures to be significantly impacted by this ASU.

Investments

Investments	9 Months Ended
	Sep. 30, 2017
Investments
Investments	2. Investments The following table summarizes information on the amortized cost, gross unrealized gains and losses, and the fair value of investment securities by class: As of September 30, 2017 Cost or Gross Gross Amortized Unrealized Unrealized Fair ($ in thousands) Cost Gains Losses Value Fixed-maturity securities Government $ 39,272 $ 108 $ (103) $ 39,277 Government agency 864 16 (2) 878 State and municipality 61,348 1,504 (31) 62,821 Industrial and miscellaneous 181,500 5,314 (1,846) 184,968 Residential mortgage-backed 60,514 605 (437) 60,682 Commercial mortgage-backed 54,793 444 (292) 54,945 Redeemable preferred stock 2,594 561 (49) 3,106 Total fixed-maturity securities 400,885 8,552 (2,760) 406,677 Equity securities Non-redeemable preferred stock 2,032 247 (175) 2,104 Common stock 7 5 — 12 Total equity securities 2,039 252 (175) 2,116 Total investments $ 402,924 $ 8,804 $ (2,935) $ 408,793 As of December 31, 2016 Cost or Gross Gross Amortized Unrealized Unrealized Fair ($ in thousands) Cost Gains Losses Value Fixed-maturity securities Government $ 28,020 $ 87 $ (102) $ 28,005 Government agency 1,522 18 (2) 1,538 State and municipality 57,885 508 (183) 58,210 Industrial and miscellaneous 147,761 3,765 (2,111) 149,415 Residential mortgage-backed 51,237 536 (697) 51,076 Commercial mortgage-backed 40,410 300 (327) 40,383 Redeemable preferred stock 3,159 503 (182) 3,480 Total fixed-maturity securities 329,994 5,717 (3,604) 332,107 Equity securities Non-redeemable preferred stock 3,267 304 (350) 3,221 Common stock 4 — (1) 3 Total equity securities 3,271 304 (351) 3,224 Total investments $ 333,265 $ 6,021 $ (3,955) $ 335,331 Investment securities are exposed to various risks such as interest rate, market, and credit risk. Fair values of securities fluctuate based on the magnitude of changing market conditions; significant changes in market conditions could materially affect the portfolio fair value in the near term. The following tables show the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position: As of September 30, 2017 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized ($ in thousands) Value Losses Value Losses Value Losses Fixed-maturity securities Government $ 20,927 $ (103) $ — $ — $ 20,927 $ (103) Government agency 522 (2) — — 522 (2) State and municipality 6,966 (31) — — 6,966 (31) Industrial and miscellaneous 52,845 (866) 4,409 (980) 57,254 (1,846) Residential mortgage-backed 27,994 (240) 7,400 (197) 35,394 (437) Commercial mortgage-backed 25,351 (226) 1,991 (66) 27,342 (292) Redeemable preferred stock 180 (22) 161 (27) 341 (49) Total fixed-maturity securities 134,785 (1,490) 13,961 (1,270) 148,746 (2,760) Equity securities Non-redeemable preferred stock 376 (26) 122 (149) 498 (175) Total equity securities 376 (26) 122 (149) 498 (175) $ 135,161 $ (1,516) $ 14,083 $ (1,419) $ 149,244 $ (2,935) As of December 31, 2016 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized ($ in thousands) Value Losses Value Losses Value Losses Fixed-maturity securities Government $ 19,371 $ (102) $ — $ — $ 19,371 $ (102) Government agency 538 (2) — — 538 (2) State and municipality 21,523 (183) — — 21,523 (183) Industrial and miscellaneous 52,995 (1,485) 2,784 (626) 55,779 (2,111) Residential mortgage-backed 29,776 (535) 3,338 (162) 33,114 (697) Commercial mortgage-backed 18,673 (293) 773 (34) 19,446 (327) Redeemable preferred stock 2,207 (171) (11) 2,342 (182) Total fixed-maturity securities 145,083 (2,771) 7,030 (833) 152,113 (3,604) Equity securities Non-redeemable preferred stock 570 (312) 42 (38) 612 (350) Common stock 3 (1) — — 3 (1) Total equity securities 573 (313) 42 (38) 615 (351) $ 145,656 $ (3,084) $ 7,072 $ (871) $ 152,728 $ (3,955) The determination that a security has incurred an other-than-temporary decline in fair value and the associated amount of any loss recognition requires the judgment of Management and a regular review of the Company’s investments. Management reviewed all securities with unrealized losses in accordance with the Company’s impairment policy described in Note 1 — “Summary of Significant Accounting Policies” in the consolidated financial statements for each of the three years in the period ended December 31, 2016. Management believes that the temporary impairments are primarily the result of a combination of widening credit spreads, and higher underlying Treasury rates, and that despite the wider credit spreads and higher rates, the securities are only temporarily impaired due to the strength of the issuing entities’ balance sheets, as well as their available liquidity options. For structured securities, future cash flow projections were used to determine potential impairment. For those securities where cash flow projections showed less than 100% principal recovery, a net present value test was done to determine any credit related losses. There were 242 securities in an unrealized loss position at September 30, 2017. Approximately 96% of these investments are investment-grade at September 30, 2017. We do not intend to sell or believe we will be required to sell any of our temporarily-impaired fixed maturities before recovery of their amortized cost basis. Management has the intent and ability to hold the equity securities in an unrealized loss position until the recovery of their fair value. Therefore, Management does not consider these investments to be other-than-temporarily impaired at September 30, 2017. Proceeds from sales of investments in fixed-maturity, equity and short-term securities for the nine months ended September 30, 2017 and 2016 were $47.3 million and $55.1 million, respectively. The Company holds convertible securities with embedded derivatives. The embedded derivative is bifurcated from the host contract if all of the following criteria are met: the combined instrument is not accounted for in its entirety at fair value with changes in fair value recorded in earnings; the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; and a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument. These embedded derivatives are presented together with the host contract and carried at estimated fair value. Changes in the estimated fair value of the embedded derivatives are reflected in “Realized net investment gains (losses)” in the condensed consolidated statements of income, while changes in the estimated fair value of the underlying fixed maturity securities are reflected in “Unrealized holding gains (losses)” in the condensed consolidated statements of comprehensive income. The following table presents the Company’s gross realized gains (losses) for the periods ended: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, ($ in thousands) 2017 2016 2017 2016 Realized gains: Fixed-maturity securities $ 969 $ 1,134 $ 3,522 $ 2,146 Equity securities — 497 5 573 Gross realized gains 969 1,631 3,527 2,719 Realized losses: Fixed-maturity securities (170) (205) (593) (615) Equity securities — (35) (2) (133) Other-than-temporary impairment losses on fixed-maturity securities — — — (90) Gross realized losses (170) (240) (595) (838) Change in fair value of embedded derivatives 211 672 477 (174) Net realized investment gains (losses) $ 1,010 $ 2,063 $ 3,409 $ 1,707 The Company had seven non-cash exchanges of investment securities for the nine months ended September 30, 2017 and two non-cash exchanges for the nine months ended September 30, 2016. Non-cash consideration received for these exchanges was $1.5 million and $533 thousand for the nine months ended September 30, 2017 and September 30, 2016. Gains of $150 thousand and $153 thousand were recognized on these exchanges and are reflected in “Realized net investment gains (losses)” on the condensed consolidated statements of income. The following schedule details the maturities of the Company’s available-for-sale fixed-maturity securities: As of September 30, 2017 ($ in thousands) Amortized Cost Fair Value Due in one year or less $ 16,126 $ 16,471 Due after one year through five years 136,335 138,915 Due after five years through ten years 115,806 117,204 Due after ten years 17,311 18,460 Residential mortgage-backed securities 60,514 60,682 Commercial mortgage-backed securities 54,793 54,945 $ 400,885 $ 406,677 Expected maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties. The Company’s investment portfolio includes approximately $0.7 million of mortgage-backed securities collateralized by subprime residential loans, which represent approximately 0.17% of the Company’s total investments as of September 30, 2017. The Company does not own mortgage derivatives. Net investment income for the periods ended, consists of the following: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, ($ in thousands) 2017 2016 2017 2016 Interest on investments $ 2,481 $ 2,074 $ 7,206 $ 6,409 Dividends 85 148 271 387 Gross investment income 2,566 2,222 7,477 6,796 Investment expenses (252) (221) (724) (655) Net investment income $ 2,314 $ 2,001 $ 6,753 $ 6,141 The Company’s insurance subsidiaries are required to maintain deposits in various states where they are licensed to operate. These deposits consist of fixed-maturity securities at fair values totaling $80.3 million and $77.0 million at September 30, 2017 and December 31, 2016, respectively.

Income Tax Provision

Income Tax Provision	9 Months Ended
	Sep. 30, 2017
Income Taxes
Income Tax Provision	3. Income Tax Provision The Company computes its provision for income taxes in interim periods by applying its estimated annual effective tax rate against income (loss) before income taxes for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur. The magnitude of the impact that discrete items have on the Company’s quarterly effective tax rate is dependent on the level of income in the period. A reconciliation of federal income tax expense computed by applying the federal statutory tax rate to income (loss) before income taxes for the periods ended is as follows: Nine Months Ended September 30, 2017 September 30, 2016 Effective Effective ($ in thousands) Amount Tax Rate Amount Tax Rate Expected tax expense (benefit) $ 21,571 35.0 % $ 19,137 35.0 % Tax-exempt income (266) (0.4) (332) (0.6) State income taxes 1,015 1.6 948 1.7 Other (107) (0.2) (58) (0.1) Total income tax expense (benefit) $ 22,213 36.0 % $ 19,695 36.0 %

Reinsurance

Reinsurance	9 Months Ended
	Sep. 30, 2017
Reinsurance
Reinsurance	4. Reinsurance Through unaffiliated general agents, the Company’s insurance subsidiaries write property and casualty lines of business in the Program Services segment. This business is written and reinsured pursuant to quota share and excess of loss reinsurance contracts and general agency agreements that are typically tripartite agreements executed by the Company’s insurance subsidiaries, the reinsurer, and the general agent. Substantially all of the underwriting risk associated with this business is borne by the reinsurer. As compensation for writing this business, the Company’s insurance subsidiaries receive ceding fees from the producers and, accordingly, the related ceding fees receivable are reflected as “Accounts receivable from agents, net”. Typically, if the GA defaults on its obligation to pay these fees (or any other amount due), the reinsurer is obligated to make the payment under the guarantee contained in the tripartite contracts. The Company recently entered into a limited number of large programs, in which certain qualifying criteria were met, where the Company retains the risk associated with such obligations. In these instances, the net premiums receivable are also reflected as “Accounts receivable from agents, net”, and the net premiums payable to the reinsurers are reflected as “Accounts payable to insurance companies”. Through our Lender Services segment, the Company is party to a reinsurance agreement in which it cedes 30% of certain CPI policies to CUMIS Insurance Society, Inc. (“CUNA Mutual”) and receives a ceding commission related to these policies. The Company’s insurance subsidiaries remain liable for unearned premiums and unpaid losses and loss adjustment expenses with respect to reinsurance ceded should the reinsurer be unable to meet its obligations. Management considers the possibility of a reinsurer becoming unable to meet its obligations as remote due to the reinsurers’ financial stability, A.M. Best Company rating, size, security funds available, and other factors as appropriate. Following is a summary of these balances: September 30, December 31, ($ in thousands) 2017 2016 Ceded unearned premiums $ 796,679 $ 651,938 Ceded loss and loss adjustment expense reserves 2,074,821 1,690,926 Total reinsurance recoverables 2,871,500 2,342,864 Secured reinsurance recoverables (1,826,824) (1,678,243) Unsecured reinsurance recoverables $ 1,044,676 $ 664,621 The fair value of all collateral held by the Company’s insurance subsidiaries for reinsurers for whom we require collateral is approximately 143% of the related reinsurance recoverables as of September 30, 2017, with the lowest ratio for any such reinsurer being 100%.

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Sep. 30, 2017
Fair Value Measurements
Fair Value Measurements	5. Fair Value Measurements Assets and liabilities reported in the condensed consolidated financial statements at fair value are required to be classified according to a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into three levels. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset’s or liability’s classification is based on the lowest level input that is significant to its measurement. For example, a Level 3 fair value measurement may include inputs that are both observable (Level 1 and 2) and unobservable (Level 3). The levels of the fair value hierarchy are as follows: · Level 1: Inputs are quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date. · Level 2: Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. These inputs include market interest rates and volatilities, spreads, and yield curves. · Level 3: Inputs are unobservable. Unobservable inputs reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. A description of the Company’s valuation techniques used to measure its assets at fair value is as follows: · Available-for-sale, fixed-maturity securities: All fixed-maturity investments are currently reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from either an independent pricing service using quoted prices or from its third-party investment managers. These Level 2 inputs are valued by either the pricing service or the investment managers utilizing observable data that may include dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus, prepayment speeds, credit information, and the security’s terms and conditions, among other things. Securities are recorded at estimated fair value with changes in estimated fair value reported in the consolidated statements of comprehensive income. · Available-for-sale equity securities: Equity securities are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service using quoted prices or from its third-party investment managers. These Level 2 inputs are valued by either the pricing service or the investment managers utilizing observable data that may include dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus, prepayment speeds, credit information, and the security’s terms and conditions, among other things. Securities are recorded at estimated fair value with changes in estimated fair value reported in the consolidated statements of comprehensive income. · Embedded derivatives: The Company invests in convertible securities that have embedded derivatives. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in the consolidated statements of net income. The estimated fair value of the embedded derivatives is calculated by the Company’s third-party investment managers using observable inputs. Management has reviewed the processes used by the pricing services and has determined that they result in fair values consistent with requirements for Level 1 and Level 2 investment securities. Based on an analysis of the inputs, the Company’s investments measured at fair value on a recurring basis have been categorized as follows: As of September 30, 2017 ($ in thousands) Level 1 Level 2 Level 3 Total Fixed-maturity securities Government $ — $ 39,277 $ — $ 39,277 Government agency — 878 — 878 State and municipality — 62,821 — 62,821 Industrial and miscellaneous — 184,968 — 184,968 Residential mortgage-backed — 60,682 — 60,682 Commercial mortgage-backed — 54,945 — 54,945 Redeemable preferred stock — 3,106 — 3,106 Total fixed-maturity securities — 406,677 — 406,677 Equity securities Non-redeemable preferred stock — 2,104 — 2,104 Common stock 6 6 — 12 Total equity securities 6 2,110 — 2,116 Total investments $ 6 $ 408,787 $ — $ 408,793 As of December 31, 2016 ($ in thousands) Level 1 Level 2 Level 3 Total Fixed-maturity securities Government $ — $ 28,005 $ — $ 28,005 Government agency — 1,538 — 1,538 State and municipality — 58,210 — 58,210 Industrial and miscellaneous — 149,415 — 149,415 Residential mortgage-backed — 51,076 — 51,076 Commercial mortgage-backed — 40,383 — 40,383 Redeemable preferred stock — 3,480 — 3,480 Total fixed-maturity securities — 332,107 — 332,107 Equity securities Non-redeemable preferred stock — 3,221 — 3,221 Common stock — 3 — 3 Total equity securities — 3,224 — 3,224 Total investments $ — $ 335,331 $ — $ 335,331 The fair value of embedded derivatives included in Level 2 securities was $10.5 million at September 30, 2017 and $9.5 million at December 31, 2016, respectively. There was no Level 3 activity including gains or losses recognized, purchases, or sales transaction during the periods ending September 30, 2017 and December 31, 2016. Transfers between levels are recognized at the end of the reporting period. There were no transfers between Level 1, Level 2, and Level 3 at September 30, 2017 and December 31, 2016.

Losses and Loss Adjustment Expe

Losses and Loss Adjustment Expenses	9 Months Ended
	Sep. 30, 2017
Investments
Losses and Loss Adjustment Expenses	6. Losses and Loss Adjustment Expenses The following table shows the activity in the liability for unpaid losses and loss adjustment expenses: Nine Months Ended September 30, ($ in thousands) 2017 2016 Balance at January 1, $ 1,703,706 $ 1,364,774 Reinsurance recoverables (1,690,926) (1,352,022) Net balance at January 1, 12,780 12,752 Incurred related to: Current year 49,415 41,692 Prior year 1,434 895 Total incurred 50,849 42,587 Paid related to: Current year 39,153 34,037 Prior year 11,356 9,848 Total paid 50,509 43,885 Net balance at September 30, 13,120 11,454 Reinsurance recoverables 2,074,821 1,643,451 Balance at September 30, $ 2,087,941 $ 1,654,905

401(k) Profit-Sharing Plan and

401(k) Profit-Sharing Plan and Trust	9 Months Ended
	Sep. 30, 2017
401(k) Profit-Sharing Plan and Trust
401(k) Profit-Sharing Plan and Trust	7. 401(k) Profit-Sharing Plan and Trust The Company has a 401(k) profit-sharing plan for employees that covers all officers and employees who are at least 18 years of age. The Company is required to make a matching contribution of 100% of the first 1% and 50% of the next 5% of employees’ contributions. Also, the Company may make additional matching and profit-sharing contributions that are discretionary and are determined at the end of each plan year. The employer contribution expense included in general and administrative expenses was $375 thousand for the three months ended September 30, 2017 and $347 thousand for the three months ended September 30, 2016. The employer contribution expense included in general and administrative expenses was $1.2 million for the nine months ended September 30, 2017 and $1.1 million for the nine months ended September 30, 2016.

Stock-based Payments

Stock-based Payments	9 Months Ended
	Sep. 30, 2017
Stock-based Payments
Stock-based Payments	8. Stock-based Payments On May 18, 2017, the Company’s shareholders approved the First Amended and Restated 2014 Long-Term Incentive Plan (“2014 Plan”), which provides for an aggregate of 6.4 million shares of our common stock that may be issued to employees and non-employee directors. Awards under the 2014 Plan may be in the form of stock options (including incentive stock options that meet the requirements of Section 422 of the Internal Revenue Code and non-statutory stock options), restricted stock, restricted stock units, stock appreciation rights and performance units. The fair value of the restricted shares granted is determined based on the most recent trading price of the stock as of the grant date. The fair value of each stock option grant is established on the grant date using the Black-Scholes option pricing model. A summary of the Company’s restricted shares and stock options activity is shown below: Weighted-Average Weighted-Average Restricted Grant Date Fair Value Stock Grant Date Fair Value September 30, 2017 Shares per Restricted Share Options per Stock Option Nonvested at January 1, 2017 278,050 $ 11.52 1,502,963 $ 2.73 Granted 249,121 14.36 — — Vested (37,305) 11.37 (1,119,629) 3.00 Nonvested at September 30, 2017 489,866 12.98 383,334 1.93 Weighted-Average Weighted-Average Restricted Grant Date Fair Value Stock Grant Date Fair Value September 30, 2016 Shares per Restricted Share Options per Stock Option Nonvested at January 1, 2016 144,362 $ 10.05 1,855,918 $ 3.22 Granted 211,383 12.00 575,000 1.93 Vested (11,028) 10.88 (927,955) 3.22 Nonvested at September 30, 2016 344,717 11.22 1,502,963 2.73 Compensation expense for all share-based compensation was $1.1 million for the three months ended September 30, 2017 and $1.2 million for the three months ended September 30, 2016. Compensation expense for all share-based compensation was $3.4 million for the nine months ended September 30, 2017 and $3.1 million for the nine months ended September 30, 2016.

Concentration of Risk

Concentration of Risk	9 Months Ended
	Sep. 30, 2017
Concentration of Risk
Concentration of Risk	9. Concentration of Risk The Company maintains cash and cash equivalents in accounts with financial institutions in excess of the amount insured by the Federal Deposit Insurance Corporation. The Company monitors the financial stability of these institutions regularly, and Management does not believe there is significant credit risk associated with deposits in excess of federally insured amounts. The Company’s writings in California, Texas, Florida and New York comprised 58% and 57% of gross premiums written for the periods ending September 30, 2017 and 2016, respectively. The top five general agents comprised 52% and 62% of gross premiums written in the Program Services segment for the periods ending ended September 30, 2017 and 2016, respectively. The four largest reinsurers with unsecured reinsurance recoverables, all of which are rated A or higher by A.M. Best, accounted for approximately 21%, 12%, 8%, and 7% of the Company’s unsecured reinsurance recoverables at September 30, 2017.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies
Commitments and Contingencies	10 . Commitments and Contingencies The Company is involved in various legal proceedings incidental to its normal business activities. Management of the Company does not anticipate that the outcome of such legal actions will have a material effect on the Company’s consolidated financial position or results of operations. The Company’s insurance subsidiaries are subject to assessments from various insurance regulatory agencies related to insurance company insolvencies. Management is not aware of any material assessments for which notice has not yet been received. However, to the extent that such assessments are made, the Company has the contractual right to recover these amounts from the underlying reinsurers. The Company has a Collateral Protection Alliance (the “Alliance”) with CUMIS Insurance Society, Inc., a subsidiary of CUNA Mutual, to administer and write CPI business for credit union customers. The Alliance includes an agency agreement and a reinsurance agreement whereby the Company cedes a portion of the business to CUNA Mutual. In connection with the Alliance, the Company has a purchase option and CUNA Mutual has a put option, whereby the Company is obligated to purchase CUNA Mutual’s right to participate in future program business at a specified price in the event of termination of the Alliance. The Alliance’s current term ends on July 31, 2018. The Company anticipates continued negotiations with CUNA Mutual to revise and extend the term of the contract. In the event the Alliance is not revised and extended, the Company expects to purchase CUNA Mutual’s remaining quota share participation. The Company estimates payments totaling approximately $27 million as of September 30, 2017 related to the termination of the agreement.

Earnings Per Share

Earnings Per Share	9 Months Ended
	Sep. 30, 2017
Earnings Per Share
Earnings Per Share	11. Earnings Per Share A reconciliation of the numerators and denominators of the basic and diluted per share calculations is presented below: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, ($ in thousands, except for per share amounts) 2017 2016 2017 2016 Numerator for both basic and diluted earnings per share: Net income (loss) $ 14,694 $ 15,323 $ 39,419 $ 34,981 Denominator for both basic and diluted earnings per share: Weighted-average common shares outstanding 41,683,695 41,937,467 41,655,636 42,196,075 Dilutive effect of outstanding securities (determined using the treasury stock method) 1,729,207 3,451 1,311,666 19,771 Weighted-average common shares outstanding and potential common shares outstanding 43,412,902 41,940,918 42,967,302 42,215,846

Segment Information

Segment Information	9 Months Ended
	Sep. 30, 2017
Segment Information
Segment Information	12. Segment Information The following is business segment information for the periods indicated: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, ($ in thousands) 2017 2016 2017 2016 Revenues: Program $ 21,697 $ 19,266 $ 60,340 $ 52,427 Lender 36,381 34,577 108,494 96,715 Corporate 3,367 4,074 10,193 7,854 Consolidated revenues $ 61,445 $ 57,917 $ 179,027 $ 156,996 Income (loss) before income taxes: Program $ 17,695 $ 15,485 $ 47,963 $ 40,608 Lender 7,668 8,292 16,852 17,049 Corporate (2,258) 217 (3,183) (2,981) Consolidated income (loss) before income taxes $ 23,105 $ 23,994 $ 61,632 $ 54,676 The following table summarizes the financial assets of the Company’s segments as of the periods indicated: September 30, December 31, ($ in thousands) 2017 2016 Assets: Program $ 3,042,300 $ 2,382,466 Lender 21,568 17,824 Corporate 526,837 476,447 $ 3,590,705 $ 2,876,737

Debt

Debt	9 Months Ended
	Sep. 30, 2017
Debt
Debt	13. Debt Between 2002 and 2004, the Company, through its subsidiary T.B.A. Insurance Group, Ltd. (“TBA”), formed three business trusts (the “Trusts”) for the sole purpose of issuing, in private placement transactions, $44.5 million of trust preferred securities (“TPS”). In turn, the Trusts used the proceeds thereof, together with the equity proceeds received from TBA upon their initial formation, to purchase variable-rate subordinated debentures (“TPS Debentures”) issued by TBA. All voting securities of the Trusts are owned by TBA, and the TPS debentures are the sole assets of the Trusts. The Trusts meet the obligations of the TPS with the interest and principal paid on the TPS debentures. The Company does not have a variable interest in the Trusts and therefore does not consolidate the Trusts. These debentures’ interest rates range from 3.80% to 4.10% plus the three-month LIBOR. All of the debentures mature between 2032 and 2034 and are reflected net of debt issuance costs in the condensed consolidated balance sheets. On March 31, 2016, TBA entered into a loan agreement (“credit agreement”), which provides for a secured revolving credit facility in an aggregate principal amount of $15 million. The credit agreement matures on April 30, 2018. Under the credit agreement, TBA may request advances up to the aggregate amount of the unused commitment under the credit facility, on a revolving basis, prior to the maturity of the credit agreement. Borrowings under the credit agreement will bear interest at a variable rate equal to LIBOR plus 1.85% per annum; provided, however, that LIBOR shall be subject to a floor of 0.15%. TBA shall also pay a commitment fee on the daily average unused commitment amount for the period running from the closing date to the maturity date at a rate of 0.125% per annum. The credit agreement contains customary representations, warranties, covenants, and events of default, as well as a financial covenant requiring TBA and the Company to maintain a consolidated tangible net worth of at least $150 million. TBA’s obligations under the credit agreement are guaranteed by the Company and are secured by a securities account in the name of TBA and maintained with the creditor, in which TBA must maintain assets with a market value of at least $25 million.

Business Combinations

Business Combinations	9 Months Ended
	Sep. 30, 2017
Business Combinations
Business Combinations	14. Business Combinations Effective January 1, 2017, (“the acquisition date”), the Company acquired 100% of the outstanding common shares of Fireman’s Fund Insurance Company of Ohio, which was subsequently renamed Independent Specialty Insurance Company (“ISIC”). ISIC is an excess and surplus lines, or non-admitted, shell company. The purpose of the acquisition is to provide a dedicated insurance carrier for one of our programs. The acquisition date fair value of the consideration transferred totaled $49.4 million in cash. The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the acquisition date. ($ in thousands) Cash and cash equivalents $ 17,400 Fixed-maturity securities 29,611 Reinsurance recoverables 45,127 Interest receivable 142 Goodwill and intangible assets, net 2,300 Other receivables 107 Total identifiable assets acquired $ 94,687 Unpaid losses and loss adjustment expenses $ 45,127 Other liabilities 180 Total liabilities assumed 45,307 Net assets acquired $ 49,380 ISIC was acquired as a shell company with a 100% quota share reinsurance agreement. There was no income statement impact resulting from the acquisition. There is no goodwill to assign to reporting segments. The indefinite lived intangible asset is assigned to the Program Services segment. The Company recognized $29 thousand of acquisition related costs that were expensed in the current period. These costs are included in the condensed consolidated statements of income as “General and administrative” expenses.

Merger

Merger	9 Months Ended
	Sep. 30, 2017
Merger
Merger	15. Merger On July 26, 2017, the Company entered into a definitive agreement with Markel Corporation (“Markel”) to acquire all of the outstanding shares of the Company’s common stock for $21.00 per share cash. Upon the completion of the transaction, the Company will be a direct, wholly-owned subsidiary of Markel. The transaction is subject to the approval of relevant state insurance regulators and other customary closing conditions. The transaction is expected to close in the fourth quarter of 2017.

Summary of Significant Accoun23

Summary of Significant Accounting Policies (Policy )	9 Months Ended
	Sep. 30, 2017
Summary of Significant Accounting Policies
Description of Business	Description of Business State National Companies, Inc. (the “Company”) refers to a group of companies that conducts insurance-related activities along two major segments. The Company’s Program Services segment generates fee income, in the form of ceding fees, by offering issuing carrier capacity to both specialty general agents and other producers (“GAs”), who sell, control, and administer books of insurance business that are supported by third parties that assume reinsurance risk. Substantially all of the underwriting risk associated with the Program Services segment is ceded to unaffiliated, highly rated reinsurance companies or other reinsurers that provide collateral. The Company’s Lender Services segment generates premiums primarily from the sale of collateral protection insurance (“CPI”), which insures automobiles or other vehicles held as collateral for loans made by credit unions, banks and specialty finance companies.
Principles of Consolidation	Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company includes the results of operations of an acquired business in its consolidated financial statements from the date of the acquisition.
Basis of Presentation	Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of the Company and all subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the years ended December 31, 2016 and 2015. The interim financial data as of September 30, 2017 and 2016 is unaudited. However, in the opinion of the Company’s management (“Management”), the interim data includes all adjustments, consisting of normal recurring adjustments, necessary to fairly state the results for the interim period. The results of operations for the period ended September 30, 2017 and 2016 are not necessarily indicative of the operating results to be expected for the full year. Refer to “Summary of Significant Accounting Policies” in the consolidated financial statements for the three years in the period ended December 31, 2016 for information on accounting policies that we consider critical in preparing consolidated financial statements.
Estimates	Estimates The preparation of financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from these estimates.
Earnings Per Share	Earnings Per Share The computation of earnings per share is based upon the weighted average number of common shares outstanding during the period plus the effect of common shares potentially issuable (in periods in which they have a dilutive effect).
Income Taxes	Income Taxes For any uncertain tax positions not meeting the “more likely than not” recognition threshold, accounting standards require recognition, measurement, and disclosure in the financial statements. There were no uncertain tax positions at September 30, 2017 and December 31, 2016.
Stock-based Compensation	Stock-Based Compensation Compensation expense for stock-based payments is recognized based on the measurement-date fair value for awards that will settle in shares. Compensation expense for restricted stock grants and stock option awards that contain a service condition are recognized on a straight line pro rata basis over the vesting period. For restricted stock awards that contain a performance condition, the expense is recognized based on the awards expected to vest and the cumulative expense is adjusted whenever the estimate of the number of awards to vest changes. An estimation of future forfeitures of stock-based awards is incorporated into the determination of compensation expense. See Note 8 — “Stock-based Payments” for related disclosures.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” which replaces most existing GAAP revenue recognition guidance to a five-step revenue recognition model. The FASB has updated the guidance to include the following ASUs: · ASU 2015-14—“Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”; · ASU 2016-08—“Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”; · ASU 2016-10—“Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”; · ASU 2016-11—“Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at March 3, 2016 EITF Meeting (SEC Update)”; · ASU 2016-12—“Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”; and · ASU 2016-20—“Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” The new guidance excludes insurance contracts that are recognized under Topic 944 “Financial Services—Insurance”; however, income related to our agency operations will be recognized under the new guidance. The model provides for an analysis of transactions to determine when or how revenue is recognized and requires additional disclosures sufficient to describe the nature, amount, timing, and uncertainty of revenue and cash flows for these transactions. The Company has the option to choose to apply the guidance using either the full retrospective or a modified retrospective approach. The standards are effective for annual periods beginning after December 15, 2017, including interim reporting periods within that period. The Company has assessed its revenue streams to identify those contracts that are clearly excluded from the scope of the new standard and those that may be subject to the new standard. The Company does not anticipate the impact of these ASUs to be material to the Company’s financial position or cash flows. In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (Sub-Topic 825-10). The amendment in this update supersedes the guidance to classify equity securities with readily determinable fair value into different categories (either trading or available-for-sale) and requires equity securities to be measured at fair value and changes in the fair value to be recognized through net income instead of other comprehensive income. This ASU is effective for annual and interim reports beginning after December 15, 2017. Since the Company’s current position in equities is less than 1% of our current investment portfolio as of September 30, 2017, the Company does not anticipate that the guidance will have a material impact to the Company’s financial statements or cash flows. In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842) that requires lessees to recognize the assets and liabilities related to leases on the balance sheet. The FASB is issuing this update to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. The Company does not plan to early adopt and is currently evaluating what impact this ASU will have on financial results and disclosures. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost and require entities to record allowances for available-for-sale (AFS) debt securities rather than reduce the carrying amount, as they do today under the other-than-temporary impairment (OTTI) model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This ASU is effective for annual and interim periods beginning after December 15, 2019. The Company will be evaluating what impact this ASU will have on financial results and disclosures. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This ASU amends guidance related to debt prepayment or extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims and corporate-owned life insurance, distributions received from equity method investees and beneficial interests in securitization transactions. The guidance will generally be applied retrospectively and is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. The Company does not expect financial results and disclosures to be significantly impacted by this ASU. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” The amendments require entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. This ASU is effective for annual and interim periods beginning after December 15, 2017. The Company will be evaluating what impact this ASU will have on disclosures. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” Under the new guidance, if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the transferred assets and activities do not constitute a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606. The ASU is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. The ASU will be applied prospectively to any transactions occurring within the period of adoption. Early adoption is permitted, including for interim or annual periods in which the financial statements have not been issued or made available for issuance. The Company does not plan to early adopt and will be evaluating what impact this ASU will have on financial results and disclosures. In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The new guidance eliminates the requirement to calculate the implied fair value of goodwill under step two of the current goodwill impairment test, to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value based on step one of the current goodwill impairment test. The standard will be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019, for public business entities. The Company will be evaluating what impact this ASU will have on disclosures. In March 2017, the FASB issued ASU 2017-08, “Premium Amortization on Purchased Callable Debt Securities.” The amendments in this update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. This ASU is effective for annual and interim periods beginning after December 15, 2018. The Company will be evaluating what impact this ASU will have on disclosures. In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Modification accounting is not needed if the fair value, vesting conditions and classification of the modified award are the same as the original award immediately before the original award is modified. This ASU is effective for annual and interim periods beginning after December 15, 2017. The Company does not expect financial results and disclosures to be significantly impacted by this ASU.

Investments (Tables)

Investments (Tables)	9 Months Ended
	Sep. 30, 2017
Investments
Summary of amortized cost, gross unrealized gains and losses, and the fair value of investment securities by class	As of September 30, 2017 Cost or Gross Gross Amortized Unrealized Unrealized Fair ($ in thousands) Cost Gains Losses Value Fixed-maturity securities Government $ 39,272 $ 108 $ (103) $ 39,277 Government agency 864 16 (2) 878 State and municipality 61,348 1,504 (31) 62,821 Industrial and miscellaneous 181,500 5,314 (1,846) 184,968 Residential mortgage-backed 60,514 605 (437) 60,682 Commercial mortgage-backed 54,793 444 (292) 54,945 Redeemable preferred stock 2,594 561 (49) 3,106 Total fixed-maturity securities 400,885 8,552 (2,760) 406,677 Equity securities Non-redeemable preferred stock 2,032 247 (175) 2,104 Common stock 7 5 — 12 Total equity securities 2,039 252 (175) 2,116 Total investments $ 402,924 $ 8,804 $ (2,935) $ 408,793 As of December 31, 2016 Cost or Gross Gross Amortized Unrealized Unrealized Fair ($ in thousands) Cost Gains Losses Value Fixed-maturity securities Government $ 28,020 $ 87 $ (102) $ 28,005 Government agency 1,522 18 (2) 1,538 State and municipality 57,885 508 (183) 58,210 Industrial and miscellaneous 147,761 3,765 (2,111) 149,415 Residential mortgage-backed 51,237 536 (697) 51,076 Commercial mortgage-backed 40,410 300 (327) 40,383 Redeemable preferred stock 3,159 503 (182) 3,480 Total fixed-maturity securities 329,994 5,717 (3,604) 332,107 Equity securities Non-redeemable preferred stock 3,267 304 (350) 3,221 Common stock 4 — (1) 3 Total equity securities 3,271 304 (351) 3,224 Total investments $ 333,265 $ 6,021 $ (3,955) $ 335,331
Schedule of gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position	As of September 30, 2017 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized ($ in thousands) Value Losses Value Losses Value Losses Fixed-maturity securities Government $ 20,927 $ (103) $ — $ — $ 20,927 $ (103) Government agency 522 (2) — — 522 (2) State and municipality 6,966 (31) — — 6,966 (31) Industrial and miscellaneous 52,845 (866) 4,409 (980) 57,254 (1,846) Residential mortgage-backed 27,994 (240) 7,400 (197) 35,394 (437) Commercial mortgage-backed 25,351 (226) 1,991 (66) 27,342 (292) Redeemable preferred stock 180 (22) 161 (27) 341 (49) Total fixed-maturity securities 134,785 (1,490) 13,961 (1,270) 148,746 (2,760) Equity securities Non-redeemable preferred stock 376 (26) 122 (149) 498 (175) Total equity securities 376 (26) 122 (149) 498 (175) $ 135,161 $ (1,516) $ 14,083 $ (1,419) $ 149,244 $ (2,935) As of December 31, 2016 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized ($ in thousands) Value Losses Value Losses Value Losses Fixed-maturity securities Government $ 19,371 $ (102) $ — $ — $ 19,371 $ (102) Government agency 538 (2) — — 538 (2) State and municipality 21,523 (183) — — 21,523 (183) Industrial and miscellaneous 52,995 (1,485) 2,784 (626) 55,779 (2,111) Residential mortgage-backed 29,776 (535) 3,338 (162) 33,114 (697) Commercial mortgage-backed 18,673 (293) 773 (34) 19,446 (327) Redeemable preferred stock 2,207 (171) (11) 2,342 (182) Total fixed-maturity securities 145,083 (2,771) 7,030 (833) 152,113 (3,604) Equity securities Non-redeemable preferred stock 570 (312) 42 (38) 612 (350) Common stock 3 (1) — — 3 (1) Total equity securities 573 (313) 42 (38) 615 (351) $ 145,656 $ (3,084) $ 7,072 $ (871) $ 152,728 $ (3,955)
Schedule of gross realized gains (losses)	Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, ($ in thousands) 2017 2016 2017 2016 Realized gains: Fixed-maturity securities $ 969 $ 1,134 $ 3,522 $ 2,146 Equity securities — 497 5 573 Gross realized gains 969 1,631 3,527 2,719 Realized losses: Fixed-maturity securities (170) (205) (593) (615) Equity securities — (35) (2) (133) Other-than-temporary impairment losses on fixed-maturity securities — — — (90) Gross realized losses (170) (240) (595) (838) Change in fair value of embedded derivatives 211 672 477 (174) Net realized investment gains (losses) $ 1,010 $ 2,063 $ 3,409 $ 1,707
Schedule detailing the maturities of the Company's fixed-maturity securities, available-for-sale	As of September 30, 2017 ($ in thousands) Amortized Cost Fair Value Due in one year or less $ 16,126 $ 16,471 Due after one year through five years 136,335 138,915 Due after five years through ten years 115,806 117,204 Due after ten years 17,311 18,460 Residential mortgage-backed securities 60,514 60,682 Commercial mortgage-backed securities 54,793 54,945 $ 400,885 $ 406,677
Schedule of net investment income	Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, ($ in thousands) 2017 2016 2017 2016 Interest on investments $ 2,481 $ 2,074 $ 7,206 $ 6,409 Dividends 85 148 271 387 Gross investment income 2,566 2,222 7,477 6,796 Investment expenses (252) (221) (724) (655) Net investment income $ 2,314 $ 2,001 $ 6,753 $ 6,141

Income Tax Provision (Tables)

Income Tax Provision (Tables)	9 Months Ended
	Sep. 30, 2017
Income Taxes
Schedule of reconciliation of federal income tax expense computed by applying the federal statutory tax rate to income (loss) before federal income tax	Nine Months Ended September 30, 2017 September 30, 2016 Effective Effective ($ in thousands) Amount Tax Rate Amount Tax Rate Expected tax expense (benefit) $ 21,571 35.0 % $ 19,137 35.0 % Tax-exempt income (266) (0.4) (332) (0.6) State income taxes 1,015 1.6 948 1.7 Other (107) (0.2) (58) (0.1) Total income tax expense (benefit) $ 22,213 36.0 % $ 19,695 36.0 %

Reinsurance (Tables)

Reinsurance (Tables)	9 Months Ended
	Sep. 30, 2017
Reinsurance
Summary of balances	September 30, December 31, ($ in thousands) 2017 2016 Ceded unearned premiums $ 796,679 $ 651,938 Ceded loss and loss adjustment expense reserves 2,074,821 1,690,926 Total reinsurance recoverables 2,871,500 2,342,864 Secured reinsurance recoverables (1,826,824) (1,678,243) Unsecured reinsurance recoverables $ 1,044,676 $ 664,621

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2017
Fair Value Measurements
Schedule of investments measured at fair value on recurring basis	As of September 30, 2017 ($ in thousands) Level 1 Level 2 Level 3 Total Fixed-maturity securities Government $ — $ 39,277 $ — $ 39,277 Government agency — 878 — 878 State and municipality — 62,821 — 62,821 Industrial and miscellaneous — 184,968 — 184,968 Residential mortgage-backed — 60,682 — 60,682 Commercial mortgage-backed — 54,945 — 54,945 Redeemable preferred stock — 3,106 — 3,106 Total fixed-maturity securities — 406,677 — 406,677 Equity securities Non-redeemable preferred stock — 2,104 — 2,104 Common stock 6 6 — 12 Total equity securities 6 2,110 — 2,116 Total investments $ 6 $ 408,787 $ — $ 408,793 As of December 31, 2016 ($ in thousands) Level 1 Level 2 Level 3 Total Fixed-maturity securities Government $ — $ 28,005 $ — $ 28,005 Government agency — 1,538 — 1,538 State and municipality — 58,210 — 58,210 Industrial and miscellaneous — 149,415 — 149,415 Residential mortgage-backed — 51,076 — 51,076 Commercial mortgage-backed — 40,383 — 40,383 Redeemable preferred stock — 3,480 — 3,480 Total fixed-maturity securities — 332,107 — 332,107 Equity securities Non-redeemable preferred stock — 3,221 — 3,221 Common stock — 3 — 3 Total equity securities — 3,224 — 3,224 Total investments $ — $ 335,331 $ — $ 335,331

Losses and Loss Adjustment Ex28

Losses and Loss Adjustment Expenses (Tables)	9 Months Ended
	Sep. 30, 2017
Income Taxes
Schedule in the liability for unpaid losses and loss adjustment expenses	Nine Months Ended September 30, ($ in thousands) 2017 2016 Balance at January 1, $ 1,703,706 $ 1,364,774 Reinsurance recoverables (1,690,926) (1,352,022) Net balance at January 1, 12,780 12,752 Incurred related to: Current year 49,415 41,692 Prior year 1,434 895 Total incurred 50,849 42,587 Paid related to: Current year 39,153 34,037 Prior year 11,356 9,848 Total paid 50,509 43,885 Net balance at September 30, 13,120 11,454 Reinsurance recoverables 2,074,821 1,643,451 Balance at September 30, $ 2,087,941 $ 1,654,905

Stock-based Payments (Tables)

Stock-based Payments (Tables)	9 Months Ended
	Sep. 30, 2017
Stock-based Payments
Schedule of nonvested stock activity	Weighted-Average Weighted-Average Restricted Grant Date Fair Value Stock Grant Date Fair Value September 30, 2017 Shares per Restricted Share Options per Stock Option Nonvested at January 1, 2017 278,050 $ 11.52 1,502,963 $ 2.73 Granted 249,121 14.36 — — Vested (37,305) 11.37 (1,119,629) 3.00 Nonvested at September 30, 2017 489,866 12.98 383,334 1.93 Weighted-Average Weighted-Average Restricted Grant Date Fair Value Stock Grant Date Fair Value September 30, 2016 Shares per Restricted Share Options per Stock Option Nonvested at January 1, 2016 144,362 $ 10.05 1,855,918 $ 3.22 Granted 211,383 12.00 575,000 1.93 Vested (11,028) 10.88 (927,955) 3.22 Nonvested at September 30, 2016 344,717 11.22 1,502,963 2.73

Earnings Per Share (Tables)

Earnings Per Share (Tables)	9 Months Ended
	Sep. 30, 2017
Earnings Per Share
Schedule of reconciliation of the numerators and denominators of the basic and diluted per share calculations	Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, ($ in thousands, except for per share amounts) 2017 2016 2017 2016 Numerator for both basic and diluted earnings per share: Net income (loss) $ 14,694 $ 15,323 $ 39,419 $ 34,981 Denominator for both basic and diluted earnings per share: Weighted-average common shares outstanding 41,683,695 41,937,467 41,655,636 42,196,075 Dilutive effect of outstanding securities (determined using the treasury stock method) 1,729,207 3,451 1,311,666 19,771 Weighted-average common shares outstanding and potential common shares outstanding 43,412,902 41,940,918 42,967,302 42,215,846

Segment Information (Tables)

Segment Information (Tables)	9 Months Ended
	Sep. 30, 2017
Segment Information
Schedule of business segment information	Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, ($ in thousands) 2017 2016 2017 2016 Revenues: Program $ 21,697 $ 19,266 $ 60,340 $ 52,427 Lender 36,381 34,577 108,494 96,715 Corporate 3,367 4,074 10,193 7,854 Consolidated revenues $ 61,445 $ 57,917 $ 179,027 $ 156,996 Income (loss) before income taxes: Program $ 17,695 $ 15,485 $ 47,963 $ 40,608 Lender 7,668 8,292 16,852 17,049 Corporate (2,258) 217 (3,183) (2,981) Consolidated income (loss) before income taxes $ 23,105 $ 23,994 $ 61,632 $ 54,676
Schedule of the financial assets of the Entity's segments	September 30, December 31, ($ in thousands) 2017 2016 Assets: Program $ 3,042,300 $ 2,382,466 Lender 21,568 17,824 Corporate 526,837 476,447 $ 3,590,705 $ 2,876,737

Business Combinations (Tables)

Business Combinations (Tables)	9 Months Ended
	Sep. 30, 2017
Business Combinations
Schedule summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date	($ in thousands) Cash and cash equivalents $ 17,400 Fixed-maturity securities 29,611 Reinsurance recoverables 45,127 Interest receivable 142 Goodwill and intangible assets, net 2,300 Other receivables 107 Total identifiable assets acquired $ 94,687 Unpaid losses and loss adjustment expenses $ 45,127 Other liabilities 180 Total liabilities assumed 45,307 Net assets acquired $ 49,380

Summary of Significant Accoun33

Summary of Significant Accounting Policies (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017USD ($)	Sep. 30, 2016USD ($)	Sep. 30, 2017USD ($)item	Sep. 30, 2016USD ($)	Dec. 31, 2016USD ($)
Income Taxes
Uncertain tax positions	$ 0		$ 0		$ 0
Income tax expense (benefit)	$ 8,411	$ 8,671	$ 22,213	$ 19,695
Number of major segments | item			2

Investments - Amortized Cost, G

Investments - Amortized Cost, Gross Unrealized Gains and Losses, and Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Investments
Cost or Amortized Cos	$ 402,924	$ 333,265
Gross Unrealized Gains	8,804	6,021
Gross Unrealized Losses	(2,935)	(3,955)
Total investments	408,793	335,331
Fixed-maturity securities
Investments
Cost or Amortized Cos	400,885	329,994
Gross Unrealized Gains	8,552	5,717
Gross Unrealized Losses	(2,760)	(3,604)
Total investments	406,677	332,107
Government
Investments
Cost or Amortized Cos	39,272	28,020
Gross Unrealized Gains	108	87
Gross Unrealized Losses	(103)	(102)
Total investments	39,277	28,005
Government agency
Investments
Cost or Amortized Cos	864	1,522
Gross Unrealized Gains	16	18
Gross Unrealized Losses	(2)	(2)
Total investments	878	1,538
State and municipality
Investments
Cost or Amortized Cos	61,348	57,885
Gross Unrealized Gains	1,504	508
Gross Unrealized Losses	(31)	(183)
Total investments	62,821	58,210
Industrial and miscellaneous
Investments
Cost or Amortized Cos	181,500	147,761
Gross Unrealized Gains	5,314	3,765
Gross Unrealized Losses	(1,846)	(2,111)
Total investments	184,968	149,415
Residential mortgage-backed
Investments
Cost or Amortized Cos	60,514	51,237
Gross Unrealized Gains	605	536
Gross Unrealized Losses	(437)	(697)
Total investments	60,682	51,076
Commercial mortgage-backed
Investments
Cost or Amortized Cos	54,793	40,410
Gross Unrealized Gains	444	300
Gross Unrealized Losses	(292)	(327)
Total investments	54,945	40,383
Redeemable preferred stock
Investments
Cost or Amortized Cos	2,594	3,159
Gross Unrealized Gains	561	503
Gross Unrealized Losses	(49)	(182)
Total investments	3,106	3,480
Equity securities
Investments
Cost or Amortized Cos	2,039	3,271
Gross Unrealized Gains	252	304
Gross Unrealized Losses	(175)	(351)
Total investments	2,116	3,224
Non-redeemable preferred stock
Investments
Cost or Amortized Cos	2,032	3,267
Gross Unrealized Gains	247	304
Gross Unrealized Losses	(175)	(350)
Total investments	2,104	3,221
Common stock
Investments
Cost or Amortized Cos	7	4
Gross Unrealized Gains	5
Gross Unrealized Losses		(1)
Total investments	$ 12	$ 3

Investments - Gross Unrealized

Investments - Gross Unrealized Losses, Fair Value and Length of Time Securities in Continuous Unrealized Loss Position (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2017USD ($)item	Sep. 30, 2016USD ($)	Dec. 31, 2016USD ($)
Fair Value
Less Than 12 Months	$ 135,161		$ 145,656
12 Months or More	14,083		7,072
Total	149,244		152,728
Unrealized Losses
Less Than 12 Months	(1,516)		(3,084)
12 Months or More	(1,419)		(871)
Total	$ (2,935)		(3,955)
Number of securities in unrealized loss position | item	242
Proceeds from sales of investments in fixed-maturity, equity and short-term securities	$ 47,300	$ 55,100
Fixed-maturity securities
Fair Value
Less Than 12 Months	134,785		145,083
12 Months or More	13,961		7,030
Total	148,746		152,113
Unrealized Losses
Less Than 12 Months	(1,490)		(2,771)
12 Months or More	(1,270)		(833)
Total	(2,760)		(3,604)
Government
Fair Value
Less Than 12 Months	20,927		19,371
Total	20,927		19,371
Unrealized Losses
Less Than 12 Months	(103)		(102)
Total	(103)		(102)
Government agency
Fair Value
Less Than 12 Months	522		538
Total	522		538
Unrealized Losses
Less Than 12 Months	(2)		(2)
Total	(2)		(2)
State and municipality
Fair Value
Less Than 12 Months	6,966		21,523
Total	6,966		21,523
Unrealized Losses
Less Than 12 Months	(31)		(183)
Total	(31)		(183)
Industrial and miscellaneous
Fair Value
Less Than 12 Months	52,845		52,995
12 Months or More	4,409		2,784
Total	57,254		55,779
Unrealized Losses
Less Than 12 Months	(866)		(1,485)
12 Months or More	(980)		(626)
Total	(1,846)		(2,111)
Residential mortgage-backed
Fair Value
Less Than 12 Months	27,994		29,776
12 Months or More	7,400		3,338
Total	35,394		33,114
Unrealized Losses
Less Than 12 Months	(240)		(535)
12 Months or More	(197)		(162)
Total	(437)		(697)
Commercial mortgage-backed
Fair Value
Less Than 12 Months	25,351		18,673
12 Months or More	1,991		773
Total	27,342		19,446
Unrealized Losses
Less Than 12 Months	(226)		(293)
12 Months or More	(66)		(34)
Total	(292)		(327)
Redeemable preferred stock
Fair Value
Less Than 12 Months	180		2,207
12 Months or More	161		135
Total	341		2,342
Unrealized Losses
Less Than 12 Months	(22)		(171)
12 Months or More	(27)		(11)
Total	(49)		(182)
Equity securities
Fair Value
Less Than 12 Months	376		573
12 Months or More	122		42
Total	498		615
Unrealized Losses
Less Than 12 Months	(26)		(313)
12 Months or More	(149)		(38)
Total	(175)		(351)
Non-redeemable preferred stock
Fair Value
Less Than 12 Months	376		570
12 Months or More	122		42
Total	498		612
Unrealized Losses
Less Than 12 Months	(26)		(312)
12 Months or More	(149)		(38)
Total	$ (175)		(350)
Common stock
Fair Value
Less Than 12 Months			3
Total			3
Unrealized Losses
Less Than 12 Months			(1)
Total			$ (1)
Investment-grade
Unrealized Losses
Percentage of investments in unrealized loss position	96.00%

Investments - Gross Realized Ga

Investments - Gross Realized Gains (Losses) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017USD ($)	Sep. 30, 2016USD ($)	Sep. 30, 2017USD ($)item	Sep. 30, 2016USD ($)item
Realized gains:
Fixed-maturity securities	$ 969	$ 1,134	$ 3,522	$ 2,146
Equity securities		497	5	573
Gross realized gains	969	1,631	3,527	2,719
Realized losses:
Fixed-maturity securities	(170)	(205)	(593)	(615)
Equity securities		(35)	(2)	(133)
Other-than-temporary impairment losses on fixed-maturity securities				(90)
Gross realized losses	(170)	(240)	(595)	(838)
Change in fair value of embedded derivatives	211	672	477	(174)
Net realized investment gains (losses)	$ 1,010	$ 2,063	$ 3,409	$ 1,707
Number of non-cash exchanges of an investment security | item			7	2
Non-cash consideration received for exchanges			$ 1,500	$ 533
Gains recognized on exchanges			$ 150	$ 153

Investments - Maturities of Fix

Investments - Maturities of Fixed-Maturity Securities (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Amortized Cost
Due in one year or less	$ 16,126
Due after one year through five years	136,335
Due after five years through ten years	115,806
Due after ten years	17,311
Total amortized cost for fixed maturity securities	400,885	$ 329,994
Fair value
Due in one year or less	16,471
Due after one year through five years	138,915
Due after five years through ten years	117,204
Due after ten years	18,460
Total fixed maturity securities	406,677	$ 332,107
Mortgage-backed securities
Fair value
Mortgage-backed securities collateralized by subprime residential loans	$ 700
Percentage of total investments which are collateralized by subprime residential loans	0.17%
Residential mortgage-backed
Amortized Cost
Residential mortgage-backed securities and Commercial mortgage-backed securities	$ 60,514
Fair value
Residential mortgage-backed securities and Commercial mortgage-backed securities	60,682
Commercial mortgage-backed
Amortized Cost
Residential mortgage-backed securities and Commercial mortgage-backed securities	54,793
Fair value
Residential mortgage-backed securities and Commercial mortgage-backed securities	$ 54,945

Investments - Net Investment In

Investments - Net Investment Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Net investment income
Interest on investments	$ 2,481	$ 2,074	$ 7,206	$ 6,409
Dividends	85	148	271	387
Gross investment income	2,566	2,222	7,477	6,796
Investment expenses	(252)	(221)	(724)	(655)
Net investment income	2,314	$ 2,001	6,753	$ 6,141
Fair value of fixed-maturity securities on deposit	$ 80,300		$ 80,300		$ 77,000

Income Tax Provision (Details)

Income Tax Provision (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Federal And State Income Tax Expense Benefit Abstract
Total income tax expense (benefit)	$ 8,411	$ 8,671	$ 22,213	$ 19,695
Federal graduated rates			35.00%	35.00%
Amount
Expected tax expense (benefit)			$ 21,571	$ 19,137
Tax-exempt income			(266)	(332)
State income taxes			1,015	948
Other			(107)	(58)
Total income tax expense (benefit)	$ 8,411	$ 8,671	$ 22,213	$ 19,695
Effective Tax Rate
Expected tax expense (benefit) (as a percent)			35.00%	35.00%
Tax-exempt income (as a percent)			(0.40%)	(0.60%)
State income taxes (as a percent)			1.60%	1.70%
Other (as a percent)			(0.20%)	(0.10%)
Total income tax expense (benefit) (as a percent)			36.00%	36.00%

Reinsurance (Details)

Reinsurance (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Ceded unearned premiums	$ 796,679	$ 651,938
Ceded loss and loss adjustment expense reserves	2,074,821	1,690,926
Total reinsurance recoverables	2,871,500	2,342,864
Secured reinsurance recoverables	(1,826,824)	(1,678,243)
Unsecured reinsurance recoverables	$ 1,044,676	$ 664,621
Fair value of the collateral held as a percentage of the secured reinsurance recoverables	143.00%
Minimum
Fair value of the collateral held as a percentage of the secured reinsurance recoverables	100.00%
CUMIS Insurance Society Inc Member
Percentage of certain CPI policies ceded	30.00%

Fair Value Measurements (Detail

Fair Value Measurements (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Fair Value Measurements
Fixed-maturity securities	$ 406,677	$ 332,107
Equity securities	2,116	3,224
Level 3 activity	0	0
Transfers between Level 1, Level 2, and Level 3	0	0
Level 1
Fair Value Measurements
Total	6
Level 1 | Equity securities
Fair Value Measurements
Equity securities	6
Level 1 | Common stock
Fair Value Measurements
Equity securities	6
Level 2
Fair Value Measurements
Fair value of embedded derivatives	10,500	9,500
Recurring basis
Fair Value Measurements
Total	408,793	335,331
Recurring basis | Fixed-maturity securities
Fair Value Measurements
Fixed-maturity securities	406,677	332,107
Recurring basis | Government
Fair Value Measurements
Fixed-maturity securities	39,277	28,005
Recurring basis | Government agency
Fair Value Measurements
Fixed-maturity securities	878	1,538
Recurring basis | State and municipality
Fair Value Measurements
Fixed-maturity securities	62,821	58,210
Recurring basis | Industrial and miscellaneous
Fair Value Measurements
Fixed-maturity securities	184,968	149,415
Recurring basis | Residential mortgage-backed
Fair Value Measurements
Fixed-maturity securities	60,682	51,076
Recurring basis | Commercial mortgage-backed
Fair Value Measurements
Fixed-maturity securities	54,945	40,383
Recurring basis | Redeemable preferred stock
Fair Value Measurements
Fixed-maturity securities	3,106	3,480
Recurring basis | Equity securities
Fair Value Measurements
Equity securities	2,116	3,224
Recurring basis | Non-redeemable preferred stock
Fair Value Measurements
Equity securities	2,104	3,221
Recurring basis | Common stock
Fair Value Measurements
Equity securities	12	3
Recurring basis | Level 2
Fair Value Measurements
Total	408,787	335,331
Recurring basis | Level 2 | Fixed-maturity securities
Fair Value Measurements
Fixed-maturity securities	406,677	332,107
Recurring basis | Level 2 | Government
Fair Value Measurements
Fixed-maturity securities	39,277	28,005
Recurring basis | Level 2 | Government agency
Fair Value Measurements
Fixed-maturity securities	878	1,538
Recurring basis | Level 2 | State and municipality
Fair Value Measurements
Fixed-maturity securities	62,821	58,210
Recurring basis | Level 2 | Industrial and miscellaneous
Fair Value Measurements
Fixed-maturity securities	184,968	149,415
Recurring basis | Level 2 | Residential mortgage-backed
Fair Value Measurements
Fixed-maturity securities	60,682	51,076
Recurring basis | Level 2 | Commercial mortgage-backed
Fair Value Measurements
Fixed-maturity securities	54,945	40,383
Recurring basis | Level 2 | Redeemable preferred stock
Fair Value Measurements
Fixed-maturity securities	3,106	3,480
Recurring basis | Level 2 | Equity securities
Fair Value Measurements
Equity securities	2,110	3,224
Recurring basis | Level 2 | Non-redeemable preferred stock
Fair Value Measurements
Equity securities	2,104	3,221
Recurring basis | Level 2 | Common stock
Fair Value Measurements
Equity securities	$ 6	$ 3

Losses and Loss Adjustment Ex42

Losses and Loss Adjustment Expenses (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Liability for Claims and Claims Adjustment Expenses
Balance at January 1	$ 1,703,706	$ 1,364,774
Reinsurance recoverables	(1,690,926)	(1,352,022)
Net balance at January 1	12,780	12,752
Incurred related to:
Current year	49,415	41,692
Prior year	1,434	895
Total incurred	50,849	42,587
Paid related to:
Current year	39,153	34,037
Prior year	11,356	9,848
Total paid	50,509	43,885
Net balance at September 30,	13,120	11,454
Reinsurance recoverable	2,074,821	1,643,451
Balance at September 30,	$ 2,087,941	$ 1,654,905

401(k) Profit-Sharing Plan an43

401(k) Profit-Sharing Plan and Trust (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Minimum age of officers and employees covered under plan			18 years
Employer contribution expense	$ 375	$ 347	$ 1,200	$ 1,100
First One Percent Member
Contribution required to made by employer which match with employees contribution (as a percent)			100.00%
Next Five Percent Member
Contribution required to made by employer which match with employees contribution (as a percent)			50.00%

Stock-based Payments - Assumpti

Stock-based Payments - Assumptions (Details) - $ / shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2017	May 18, 2017	Dec. 31, 2016	Dec. 31, 2015
Long-Term Incentive Plan 2014 | Employee and non-employee director
Stock-based Payments
Shares issued			6,400,000
Stock Options
Stock-based Payments
Granted (in shares)	575,000
Weighted average exercise price of non-vested options (in dollars per share)	$ 2.73	$ 1.93		$ 2.73	$ 3.22

Stock-based Payments - Restrict

Stock-based Payments - Restricted Shares and Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Weighted-Average Grant Date Fair Value per Stock Option
Compensation expense for all share-based compensation	$ 1.1	$ 1.2	$ 3.4	$ 3.1
Restricted Shares
Restricted Shares
Nonvested (in shares)			278,050	144,362
Granted (in shares)			249,121	211,383
Vested (in shares)			(37,305)	(11,028)
Nonvested (in shares)	489,866	344,717	489,866	344,717
Weighted-Average Grant Date Fair Value per Restricted Share
Nonvested (in dollars per share)			$ 11.52	$ 10.05
Granted (in dollars per share)			14.36	12
Vested (in dollars per share)			11.37	10.88
Nonvested (in dollars per share)	$ 12.98	$ 11.22	$ 12.98	$ 11.22
Stock Options
Stock Options
Nonvested (in shares)			1,502,963	1,855,918
Granted (in shares)				575,000
Vested (in shares)			(1,119,629)	(927,955)
Nonvested (in shares)	383,334	1,502,963	383,334	1,502,963
Weighted-Average Grant Date Fair Value per Stock Option
Nonvested (in dollars per share)			$ 2.73	$ 3.22
Granted (in dollars per share)				1.93
Vested (in dollars per share)			3	3.22
Nonvested (in dollars per share)	$ 1.93	$ 2.73	$ 1.93	$ 2.73

Concentration of Risk (Details)

Concentration of Risk (Details) - item	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Gross premiums written | California Texas New York and Florida
Concentration of Risk
Concentration of risk (as a percent)	58.00%	57.00%
Reinsurer | Unsecured reinsurance recoverables
Concentration of Risk
Number of reinsurers	4
Reinsurer | Unsecured reinsurance recoverables | One reinsurer
Concentration of Risk
Concentration of risk (as a percent)	21.00%
Reinsurer | Unsecured reinsurance recoverables | Two reinsurer
Concentration of Risk
Concentration of risk (as a percent)	12.00%
Reinsurer | Unsecured reinsurance recoverables | Three reinsurer
Concentration of Risk
Concentration of risk (as a percent)	8.00%
Reinsurer | Unsecured reinsurance recoverables | Four reinsurer
Concentration of Risk
Concentration of risk (as a percent)	7.00%
Program Services segment | Top Five General Agents Member | Gross premiums written
Concentration of Risk
Number of general agents	5
Concentration of risk (as a percent)	52.00%	62.00%

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Millions	9 Months Ended
	Sep. 30, 2017USD ($)
Alliance | CUNA
Commitments and Contingencies
Contract termination expense	$ 27

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Numerator for both basic and diluted earnings per share:
Net income (loss)	$ 14,694	$ 15,323	$ 39,419	$ 34,981	$ 49,077
Denominator for both basic and diluted earnings per share:
Weighted-average common shares outstanding (in shares)	41,683,695	41,937,467	41,655,636	42,196,075
Dilutive effect of outstanding securities (determined using the treasury stock method) (in shares)	1,729,207	3,451	1,311,666	19,771
Weighted-average common shares outstanding and potential common shares outstanding (in shares)	43,412,902	41,940,918	42,967,302	42,215,846

Segment Information - Revenues

Segment Information - Revenues and Income Loss Before Taxes (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017USD ($)	Sep. 30, 2016USD ($)	Sep. 30, 2017USD ($)item	Sep. 30, 2016USD ($)
Business segment information
Number of Operating Segments | item			2
Revenues [Abstract]
Revenues	$ 61,445	$ 57,917	$ 179,027	$ 156,996
Income (loss) before income taxes:
Income (loss) before income taxes	23,105	23,994	61,632	54,676
Corporate
Revenues [Abstract]
Revenues	3,367	4,074	10,193	7,854
Income (loss) before income taxes:
Income (loss) before income taxes	(2,258)	217	(3,183)	(2,981)
Operating segment | Program Services segment
Revenues [Abstract]
Revenues	21,697	19,266	60,340	52,427
Income (loss) before income taxes:
Income (loss) before income taxes	17,695	15,485	47,963	40,608
Operating segment | Lender Services segment
Revenues [Abstract]
Revenues	36,381	34,577	108,494	96,715
Income (loss) before income taxes:
Income (loss) before income taxes	$ 7,668	$ 8,292	$ 16,852	$ 17,049

Segment Information - Assets (D

Segment Information - Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Assets
Total assets	$ 3,590,705	$ 2,876,737
Program Services segment
Assets
Total assets	3,042,300	2,382,466
Lender Services segment
Assets
Total assets	21,568	17,824
Corporate
Assets
Total assets	$ 526,837	$ 476,447

Debt (Details)

Debt (Details) $ in Millions	Dec. 31, 2004USD ($)item	Sep. 30, 2017USD ($)
Credit Facility
Number of statutory business trusts | item	3
Trust Preferred Securities
Credit Facility
Proceeds from trust preferred securities	$ 44.5
Trust Preferred Securities | Subordinated debentures | London Interbank Offered Rate (LIBOR) [Member]
Credit Facility
Variable rate basis		three-month LIBOR
Trust Preferred Securities | Subordinated debentures | Minimum | London Interbank Offered Rate (LIBOR) [Member]
Credit Facility
Basis spread on variable rate (as a percent)		3.80%
Trust Preferred Securities | Subordinated debentures | Maximum | London Interbank Offered Rate (LIBOR) [Member]
Credit Facility
Basis spread on variable rate (as a percent)		4.10%
T.B.A. Insurance Group, Ltd Member | Revolving Credit Facility (“credit agreement”)
Credit Facility
Maximum borrowing capacity		$ 15
Unused capacity commitment fee percentage		0.125%
Minimum tangible net worth required by financial covenant		$ 150
Minimum asset market value required by financial covenant		$ 25
T.B.A. Insurance Group, Ltd Member | Revolving Credit Facility (“credit agreement”) | London Interbank Offered Rate (LIBOR) [Member]
Credit Facility
Variable rate basis		LIBOR
Variable rate basis floor		0.15%
Basis spread on variable rate (as a percent)		1.85%

Business Combinations (Details)

Business Combinations (Details) - Fireman’s Fund Insurance Company ("ISIC") - USD ($)	Jan. 01, 2017	Sep. 30, 2017
Business Acquisition [Line Items]
Percentage of common shares outstanding acquired	100.00%
Percentage of quota share reinsurance agreement	100.00%
Consideration transferred in cash	$ 49,400,000
Impact to income statement	0
Acquisition related costs		$ 29,000
Net assets acquired
Cash and cash equivalents	17,400,000
Fixed-maturity securities	29,611,000
Reinsurance recoverables	45,127,000
Interest receivable	142,000
Goodwill and intangible assets, net	2,300,000
Other receivables	107,000
Total identifiable assets acquired	94,687,000
Unpaid losses and loss adjustment expenses	45,127,000
Unearned premiums	180,000
Total liabilities assumed	45,307,000
Net assets acquired	$ 49,380,000
Goodwill		$ 0

Merger (Details)

Merger (Details)	Jul. 26, 2017$ / shares
State National Companies | Markel Corporation
Share price	$ 21