Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 03, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-38996 | |
Entity Registrant Name | ProSight Global, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 35-2405664 | |
Entity Address, Address Line One | 412 Mt. Kemble Avenue | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | Morristown | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 07960 | |
City Area Code | 973 | |
Local Phone Number | 532-1900 | |
Title of 12(b) Security | Common Stock, Par Value $0.01 per share | |
Trading Symbol | PROS | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 43,788,499 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001634038 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Assets | ||
Fixed maturity securities, available-for-sale at fair value (amortized cost $1,651,797 in 2021 and $2,159,743 in 2020, allowance for credit losses $(1,011) in 2021 and $(1,457) in 2020) | $ 1,686,570 | $ 2,266,057 |
Commercial levered loans at amortized cost (fair value $5,269 in 2021 and $12,180 in 2020) | 5,299 | 12,308 |
Non-redeemable preferred stock securities at fair value (cost $1,400 in 2021 and $6,541 in 2020) | 1,400 | 7,049 |
Bond exchange-traded funds at fair value (cost $0 in 2021 and $44,679 in 2020) | 44,882 | |
Limited partnerships and limited liability companies at fair value (cost $72,814 in 2021 and $74,268 in 2020) | 97,150 | 90,468 |
Short-term investments | 18,833 | 154 |
Total investments | 1,809,252 | 2,420,918 |
Cash and cash equivalents | 652,374 | 12,078 |
Restricted cash | 24,502 | 7,525 |
Accrued investment income | 9,659 | 13,693 |
Premiums and other receivables, net | 131,145 | 146,243 |
Receivable from reinsurers on paid losses, net | 11,167 | 10,481 |
Reinsurance receivables on unpaid losses, net | 152,075 | 170,522 |
Deferred policy acquisition costs | 98,424 | 94,437 |
Prepaid reinsurance premiums | 46,624 | 56,787 |
Goodwill and net intangible assets | 17,233 | 17,248 |
Fixed assets and capitalized software, net | 31,798 | 33,896 |
Funds withheld related to sale of affiliate | 19,532 | 19,534 |
Other assets | 16,008 | 25,996 |
Assets of discontinued operations | 22,709 | 21,354 |
Total assets | 3,042,502 | 3,050,712 |
Liabilities | ||
Reserve for unpaid losses and loss adjustment expenses | 1,598,934 | 1,602,902 |
Reserve for unearned premiums | 450,278 | 448,676 |
Ceded reinsurance payable | 23,429 | 38,152 |
Notes payable, net of debt issuance costs | 204,029 | 203,267 |
Secured notes payable, net of issuance costs | 20,773 | 22,668 |
Funds held under reinsurance agreements | 19,099 | 23,179 |
Net deferred income taxes | 1,669 | 10,137 |
Other liabilities | 59,191 | 40,034 |
Liabilities of discontinued operations | 44,115 | 37,729 |
Total liabilities | 2,421,517 | 2,426,744 |
Stockholders' equity | ||
Preferred stock, $0.01 par value; 50,000,000 shares authorized; no shares issued or outstanding | ||
Common stock, $0.01 par value; 200,000,000 shares authorized; 43,632,764 and 43,449,087 shares issued, 43,619,844 and 43,436,167 shares outstanding in 2021 and 2020, respectively | 436 | 434 |
Paid-in capital | 672,105 | 668,798 |
Accumulated other comprehensive income | 31,103 | 89,122 |
Retained deficit | (82,459) | (134,186) |
Treasury shares - at cost (12,920 shares) | (200) | (200) |
Total stockholders' equity | 620,985 | 623,968 |
Total liabilities and stockholders' equity | $ 3,042,502 | $ 3,050,712 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Consolidated Balance Sheets | ||
Fixed maturity securities, available-for-sale, amortized cost | $ 1,651,797 | $ 2,159,743 |
Fixed maturity securities, available-for-sale, allowance for credit losses | (1,011) | (1,457) |
Commercial levered loans, fair value | 5,269 | 12,180 |
Non-redeemable preferred stock securities, cost | 1,400 | 6,541 |
Bond exchange-traded funds, cost | 0 | 44,679 |
Limited partnerships and limited liability companies, cost | $ 72,814 | $ 74,268 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 43,632,764 | 43,449,087 |
Common stock, shares outstanding | 43,619,844 | 43,436,167 |
Treasury shares, shares | 12,920 | 12,920 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Consolidated Statements of Operations | ||||
Gross written premiums | $ 238,522 | $ 186,394 | $ 407,913 | $ 400,178 |
Net earned premiums | 178,897 | 181,629 | 351,868 | 387,291 |
Net investment income | 14,581 | 23,791 | 31,260 | 32,606 |
Realized investment gains, net | 15,784 | 1,891 | 48,892 | 2,123 |
Other income | 45 | 101 | 117 | 213 |
Total revenues | 209,307 | 207,412 | 432,137 | 422,233 |
Expenses: | ||||
Net losses and loss adjustment expenses incurred | 114,400 | 112,473 | 219,923 | 240,030 |
Policy acquisition expenses | 43,696 | 42,033 | 86,055 | 89,019 |
General and administrative expenses | 24,457 | 26,415 | 47,456 | 53,052 |
Interest Expense | 2,666 | 3,067 | 5,324 | 6,172 |
Other expense | 1,339 | 1,390 | 2,656 | 3,127 |
Total expenses | 186,558 | 185,378 | 361,414 | 391,400 |
Net income from continuing operations before income taxes | 22,749 | 22,034 | 70,723 | 30,833 |
Income tax provision: | ||||
Current | 2,619 | 4,116 | 8,465 | 5,747 |
Deferred | 2,068 | 635 | 6,649 | 992 |
Total income tax expense | 4,687 | 4,751 | 15,114 | 6,739 |
Net income from continuing operations | 18,062 | 17,283 | 55,609 | 24,094 |
Discontinued operations: | ||||
Net income (loss) from discontinued operations | (1,544) | 279 | (3,882) | 536 |
Net income | $ 16,518 | $ 17,562 | $ 51,727 | $ 24,630 |
Earnings per share - basic: | ||||
Net income from continuing operations | $ 0.41 | $ 0.39 | $ 1.27 | $ 0.55 |
Net income | 0.38 | 0.40 | 1.18 | 0.56 |
Earnings per share - diluted: | ||||
Net income from continuing operations | 0.40 | 0.39 | 1.24 | 0.55 |
Net income | $ 0.37 | $ 0.40 | $ 1.16 | $ 0.56 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Consolidated Statements of Comprehensive (Loss) Income | ||||
Net income | $ 16,518 | $ 17,562 | $ 51,727 | $ 24,630 |
Other comprehensive income (loss), net of taxes: | ||||
Change in unrealized holding gains (losses) on available-for-sale debt securities, net of deferred tax expense (benefit) of $3,206 and $(4,849) in 2021 and $20,851 and $4,749 in 2020 | 12,069 | 78,456 | (18,199) | 17,492 |
Less: reclassification adjustment for gains included in net income, net of tax expense of $3,310 and $10,174 in 2021 and $726 and $862 in 2020 | 13,232 | 2,952 | 39,468 | 3,758 |
Less: reclassification adjustment for credit losses included in net income, net of tax expense (benefit) of $5 and $94 in 2021 and $(330) and $(417) in 2020 | 18 | (1,240) | 352 | (1,569) |
Other comprehensive income (loss) | (1,181) | 76,744 | (58,019) | 15,303 |
Comprehensive income | $ 15,337 | $ 94,306 | $ (6,292) | $ 39,933 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive (Loss) Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Consolidated Statements of Comprehensive (Loss) Income | ||||
Change in unrealized holding gains (losses) on securities, deferred tax (benefit) expense | $ 3,206 | $ 20,851 | $ (4,849) | $ 4,749 |
Reclassification adjustment for gains (losses) included in net income, tax expense (benefit) | 3,310 | 726 | 10,174 | 862 |
Reclassification adjustment for credit losses included in net income, tax expense (benefit) | $ 5 | $ (330) | $ 94 | $ (417) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders Equity - USD ($) $ in Thousands | Common stock | Paid-in capital | Accumulated other comprehensive (loss) income | Retained deficit | Treasury shares | Total |
Balance at the beginning of the period at Dec. 31, 2019 | $ 431 | $ 661,761 | $ 37,453 | $ (156,414) | $ (200) | $ 543,031 |
Increase (decrease) in Stockholders' Equity | ||||||
Stock based employee compensation plan | 2 | 1,754 | 1,756 | |||
Net unrealized gain (loss) on available-for-sale debt securities, net of deferred tax expense | (61,441) | (61,441) | ||||
Retirement of common stock (tax payments on equity compensation) | (2,263) | (2,263) | ||||
Payments related to offering costs | (49) | (49) | ||||
Net income | 7,068 | 7,068 | ||||
Balance at the end of the period at Mar. 31, 2020 | 433 | 661,203 | (23,988) | (149,346) | (200) | 488,102 |
Balance at the beginning of the period at Dec. 31, 2019 | 431 | 661,761 | 37,453 | (156,414) | (200) | 543,031 |
Increase (decrease) in Stockholders' Equity | ||||||
Net income | 24,630 | |||||
Balance at the end of the period at Jun. 30, 2020 | 433 | 664,895 | 52,756 | (131,784) | (200) | 586,100 |
Balance at the beginning of the period at Mar. 31, 2020 | 433 | 661,203 | (23,988) | (149,346) | (200) | 488,102 |
Increase (decrease) in Stockholders' Equity | ||||||
Stock based employee compensation plan | 3,057 | 3,057 | ||||
Net unrealized gain (loss) on available-for-sale debt securities, net of deferred tax expense | 76,744 | 76,744 | ||||
Tax benefit on payments related to offering costs | 635 | 635 | ||||
Net income | 17,562 | 17,562 | ||||
Balance at the end of the period at Jun. 30, 2020 | 433 | 664,895 | 52,756 | (131,784) | (200) | 586,100 |
Balance at the beginning of the period at Dec. 31, 2020 | 434 | 668,798 | 89,122 | (134,186) | (200) | 623,968 |
Increase (decrease) in Stockholders' Equity | ||||||
Stock based employee compensation plan | 2 | 1,918 | 1,920 | |||
Share purchase plan | 60 | 60 | ||||
Net unrealized gain (loss) on available-for-sale debt securities, net of deferred tax expense | (56,838) | (56,838) | ||||
Retirement of common stock (tax payments on equity compensation) | (655) | (655) | ||||
Net income | 35,209 | 35,209 | ||||
Balance at the end of the period at Mar. 31, 2021 | 436 | 670,121 | 32,284 | (98,977) | (200) | 603,664 |
Balance at the beginning of the period at Dec. 31, 2020 | 434 | 668,798 | 89,122 | (134,186) | (200) | 623,968 |
Increase (decrease) in Stockholders' Equity | ||||||
Net income | 51,727 | |||||
Balance at the end of the period at Jun. 30, 2021 | 436 | 672,105 | 31,103 | (82,459) | (200) | 620,985 |
Balance at the beginning of the period at Mar. 31, 2021 | 436 | 670,121 | 32,284 | (98,977) | (200) | 603,664 |
Increase (decrease) in Stockholders' Equity | ||||||
Stock based employee compensation plan | 1,984 | 1,984 | ||||
Net unrealized gain (loss) on available-for-sale debt securities, net of deferred tax expense | (1,181) | (1,181) | ||||
Net income | 16,518 | 16,518 | ||||
Balance at the end of the period at Jun. 30, 2021 | $ 436 | $ 672,105 | $ 31,103 | $ (82,459) | $ (200) | $ 620,985 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders Equity (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | |
Consolidated Statements of Changes in Stockholders' Equity | ||||
Net unrealized (loss) gain on available-for-sale securities, deferred tax (benefit) | $ (109) | $ (15,008) | $ 20,455 | $ (16,151) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Operating activities | ||
Net income from continuing operations | $ 55,609 | $ 24,094 |
Net income (loss) from discontinued operations | (3,882) | 536 |
Net income | 51,727 | 24,630 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for deferred taxes | 6,649 | 992 |
Realized investment gains, net | (48,892) | (2,123) |
Net limited partnerships and limited liability companies (gains) losses | (8,100) | (1,254) |
Net amortization from bonds and commercial loans | 1,157 | 1,808 |
Net change in fair value of non-redeemable preferred stock securities | 22 | (115) |
Net change in fair value of bond exchange-traded funds | 1,511 | |
Depreciation and amortization | 4,487 | 4,186 |
Amortization of debt issuance costs | 858 | 169 |
Stock based compensation | 3,904 | 4,813 |
Changes in: | ||
Premiums and other receivables, net | 15,098 | 46,485 |
Receivable from reinsurers on paid losses and reinsurance receivable on unpaid losses | 17,761 | 53,509 |
Ceded reinsurance payable | (14,723) | 2,556 |
Accrued investment income | 4,034 | (509) |
Deferred policy acquisition costs | (3,987) | 4,225 |
Prepaid reinsurance premiums | 10,163 | (4,976) |
Reserve for unpaid losses and loss adjustment expenses | (3,968) | 22,475 |
Reserve for unearned premiums | 1,602 | (32,289) |
Funds withheld related to sale of affiliate | 2 | (76) |
Funds held under reinsurance agreements | (4,080) | (35,997) |
Other assets | 9,901 | (4,465) |
Other liabilities | 19,157 | 10,324 |
Total adjustments | 12,556 | 69,738 |
Net cash provided by operating activities - continuing operations | 68,165 | 93,832 |
Net cash provided by (used in) operating activities - discontinued operations | 68 | 115 |
Net cash provided by operating activities | 68,233 | 93,947 |
Investing activities | ||
Purchases of available-for-sale fixed maturity securities | (652,395) | (408,224) |
Sales of available-for-sale fixed maturity securities | 1,025,174 | 194,904 |
Redemptions of available-for-sale fixed maturity securities | 182,428 | 111,877 |
Purchases of non-redeemable preferred stock securities | (11,669) | |
Redemptions of commercial levered loans | 7,026 | 608 |
Sales of bond exchange-traded funds | 43,371 | |
Purchases of limited partnerships | (2,035) | (13,651) |
Distributions and redemptions from limited partnerships | 3,453 | 1,847 |
Sales of non-redeemable preferred stock securities | 5,627 | |
Purchases of short-term investments | (161,382) | (34,955) |
Sales of short-term investments | 142,714 | 78,485 |
Acquisition of fixed assets and capitalized software | (2,373) | (2,634) |
Net cash used in investing activities - continuing operations | 591,608 | (83,412) |
Net cash provided by (used in) investing activities - discontinued operations | 1,599 | 634 |
Net cash used in investing activities | 593,207 | (82,778) |
Financing activities | ||
Payments related to offering costs | (49) | |
Tax withholding on stock compensation awards | (655) | (2,263) |
Proceeds from stock purchase plan | 60 | |
Proceeds from secured loan payable | 24,997 | |
Repayment of secured loan payable | (1,905) | |
Net cash provided by financing activities | (2,500) | 22,685 |
Net change in cash and cash equivalents | 658,940 | 33,854 |
Cash, cash equivalents and restricted cash at beginning of year - continuing operations | 19,603 | 27,497 |
Cash, cash equivalents and restricted cash at beginning of year- discontinued operations | 1,779 | 255 |
Less: cash, cash equivalents and restricted cash at end of period - discontinued operations | (3,446) | (1,003) |
Cash, cash equivalents and restricted cash at end of period - continuing operations | $ 676,876 | $ 60,603 |
Basis of Reporting
Basis of Reporting | 6 Months Ended |
Jun. 30, 2021 | |
Basis of Reporting | |
Basis of Reporting | 1. Basis of Reporting The accompanying unaudited interim consolidated financial statements of ProSight Global, Inc. and its subsidiaries (the “Company”) have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and do not contain all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s 2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 23, 2021. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial statements have been included. Such adjustments consist only of normal recurring items. All significant intercompany balances and transactions have been eliminated in consolidation. Interim results are not necessarily indicative of results of operations for the full year. Effective August 4, 2021, the Company completed its previously announced merger with Pedal Merger Sub, Inc. (“Merger Sub”), pursuant to the agreement and plan of merger (the “Merger Agreement”) by and among Pedal Parent Inc. (“Parent”), owned by affiliates of TowerBrook Capital Partners L.P. and Further Global Capital Management, and Merger Sub. Pursuant to the Merger Agreement, Merger Sub merged with and into the Company (the “merger”), with the Company surviving as a wholly owned subsidiary of Parent. Pursuant to the Merger Agreement, each ProSight common share held by our stockholders converted into the right to receive $12.85 in cash, without interest. In connection with the merger, the Company executed an adverse development cover and loss portfolio transfer transaction with Cavello Bay Reinsurance Limited. In connection with the merger, all outstanding obligations in respect of principal, interest and fees under the Credit Agreement, dated as of June 12, 2020, (the “Credit Agreement”) were repaid and all commitments under the Credit Agreement were terminated. Simultaneously with the consummation of the merger and the termination of the Credit Agreement, the Company entered into a credit agreement with third-party lenders and an administrative agent dated August 4, 2021, with terms that were materially similar to the Credit Agreement. Use of Estimates The preparation of the unaudited interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statement balances, as well as disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Management periodically reviews its estimates and assumptions. |
Recently Adopted Accounting Sta
Recently Adopted Accounting Standards | 6 Months Ended |
Jun. 30, 2021 | |
Recently Adopted Accounting Standards | |
Recently Adopted Accounting Standards | 2 . Recently Adopted Accounting Standards Accounting Guidance Adopted In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract Accounting Guidance Not Yet Adopted In December 2019, the FASB issued ASU 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
Supplemental Cash Flow
Supplemental Cash Flow | 6 Months Ended |
Jun. 30, 2021 | |
Supplemental Cash Flow | |
Supplemental Cash Flow | 3. Supplemental Cash Flow The following table represents the supplemental cash flow information for the six months ended June 30, 2021 and 2020: Six Months Ended June 30 ($ in thousands) 2021 2020 Cash paid during the period for: Interest $ 4,385 $ 6,187 Federal income tax $ 5,850 $ — Non-cash activity: Operating lease right-of-use assets due to the adoption of ASU 2016-02 - continuing operations $ 1,461 $ 4,117 Operating lease right-of-use assets due to the adoption of ASU 2016-02 - discontinued operations $ 1,987 $ 2,174 Operating lease liabilities due to the adoption of ASU 2016-02 - continuing operations $ 1,665 $ 4,624 Operating lease liabilities due to the adoption of ASU 2016-02 - discontinued operations $ 2,274 $ 2,526 Tax benefit on payments related to offering costs $ — $ 635 For the six months ended June 30, 2021, the Company withheld 50,926 shares of common stock from employees related to tax liabilities incurred upon the settlement of vested restricted stock units (“RSUs”). The number of shares of common stock issued, upon the settlement of vested RSUs net of tax withholding, was 183,677. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2021 | |
Discontinued Operations | |
Discontinued Operations | 4. Discontinued Operations In March 2017, the Company announced its exit from the United Kingdom (“U.K.”) insurance market. The financial results and subsequent expenses directly attributable to U.K. operations are included in the Company’s financial statements and classified within discontinued operations for all periods presented. Net loss from discontinued operations was $1.5 million and $3.9 million for the three and six months ended June 30, 2021. Net income from discontinued operations was $0.3 million and $0.5 million for the three and six months ended June 30, 2020. The following table represents the carrying amounts of assets and liabilities associated with the exit from the insurance market in the U.K. reported as discontinued operations in its consolidated balance sheets: June 30, December 31, ($ in thousands) 2021 2020 Assets Cash and investments $ 11,032 $ 10,939 Other assets 11,677 10,415 Total assets $ 22,709 $ 21,354 Liabilities Reserve for unpaid losses and loss adjustment expenses $ 38,668 $ 32,414 Other liabilities 5,447 5,315 Total liabilities $ 44,115 $ 37,729 |
Investments
Investments | 6 Months Ended |
Jun. 30, 2021 | |
Investments | |
Investments | 5. Investments The Company’s investment portfolio consists of fixed maturity securities, commercial levered loans, limited partnerships and limited liability companies, non-redeemable preferred stock securities, bond exchange-traded funds, and short-term investments. Fixed maturity securities may include U.S. Treasury securities, government agency securities, municipal debt obligations, residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”), collateralized loan obligations (“CLO”), asset-backed securities (“ABS”) and corporate debt securities. Corporate debt securities may include investment grade and below investment grade bonds, bank loan investments and redeemable preferred stock securities. The Company has designated its investments in fixed maturity securities as available-for-sale (“AFS”) securities. (a) The gross unrealized gains and losses on fixed maturity securities included in assets from continuing operations at June 30, 2021, are as follows: Cost/ Gross Gross Amortized Credit Loss Unrealized Unrealized Fair ($ in thousands) Cost Allowance Gains Losses Value Fixed maturity securities: U.S. Treasury securities $ 45,555 $ — $ 1,269 $ (28) $ 46,796 Government agency securities 19,935 — 148 (171) 19,912 Corporate debt securities 1,026,771 (508) 38,803 (12,676) 1,052,390 Municipal debt obligations 144,356 — 3,100 (435) 147,021 ABS 64,590 — 505 (200) 64,895 CLO 90,942 — 60 (427) 90,575 CMBS 53,219 — 1,570 (217) 54,572 RMBS - non-agency 89,432 (503) 5,262 (474) 93,717 RMBS - agency 116,997 — 808 (1,113) 116,692 Total fixed maturity securities $ 1,651,797 $ (1,011) $ 51,525 $ (15,741) $ 1,686,570 The gross unrealized gains and losses on fixed maturity securities included in assets from continuing operations at December 31, 2020, are as follows: Cost/ Gross Gross Amortized Credit Loss Unrealized Unrealized Fair ($ in thousands) Cost Allowance Gains Losses Value Fixed maturity securities: U.S. Treasury securities $ 50,248 $ — $ 1,909 $ — $ 52,157 Government agency securities 30,446 — 561 — 31,007 Corporate debt securities 1,317,667 (598) 86,447 (6,485) 1,397,031 Municipal debt obligations 198,773 — 8,437 (116) 207,094 ABS 54,989 — 696 (427) 55,258 CLO 140,615 — 154 (1,643) 139,126 CMBS 111,313 — 7,008 (361) 117,960 RMBS - non-agency 109,110 (859) 8,619 (734) 116,136 RMBS - agency 146,582 — 3,721 (15) 150,288 Total fixed maturity securities $ 2,159,743 $ (1,457) $ 117,552 $ (9,781) $ 2,266,057 (b) The following table summarizes the fair values and gross unrealized losses for fixed maturity securities in an unrealized loss position at June 30, 2021, grouped by asset class and by duration of time in a continuous unrealized loss position: Less Than 12 Months Greater Than 12 Months Total Total Fair Unrealized Fair Unrealized Total Unrealized ($ in thousands) Value Losses Value Losses Fair Value Losses U.S. Treasury securities $ 23,079 $ (28) $ — — $ 23,079 $ (28) Government agency securities 11,949 (171) — — 11,949 (171) Corporate debt securities 193,335 (3,096) 88,194 (9,580) 281,529 (12,676) Municipal debt obligations 48,243 (431) 2,162 (4) 50,405 (435) ABS 25,627 (136) 6,421 (64) 32,048 (200) CLO 7,596 (17) 41,476 (410) 49,072 (427) CMBS 12,138 (202) 4,695 (15) 16,833 (217) RMBS - non-agency 15,300 (210) 5,821 (264) 21,121 (474) RMBS - agency 82,760 (1,113) — — 82,760 (1,113) Total fixed maturity securities $ 420,027 $ (5,404) $ 148,769 $ (10,337) $ 568,796 $ (15,741) The following table summarizes the fair values and gross unrealized losses for fixed maturity securities in an unrealized loss position at December 31, 2020, grouped by asset class and by duration of time in a continuous unrealized loss position: Less Than 12 Months Greater Than 12 Months Total Total Fair Unrealized Fair Unrealized Total Unrealized ($ in thousands) Value Losses Value Losses Fair Value Losses Corporate debt securities $ 36,450 $ (740) $ 101,628 $ (5,745) $ 138,078 $ (6,485) Municipal debt obligations 12,211 (73) 3,344 (43) 15,555 (116) ABS 9,121 (364) 9,461 (63) 18,582 (427) CLO 29,909 (215) 82,758 (1,428) 112,667 (1,643) CMBS 17,559 (348) 800 (13) 18,359 (361) RMBS - non-agency 11,759 (249) 6,723 (485) 18,482 (734) RMBS - agency 2,467 (15) — — 2,467 (15) Total fixed maturity securities $ 119,476 $ (2,004) $ 204,714 $ (7,777) $ 324,190 $ (9,781) (c) The Company was holding 360 and 212 fixed maturity securities that were in an unrealized loss position as of June 30, 2021 and December 31, 2020, respectively. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity. The Company analyzes fixed maturity securities in an unrealized loss position for credit losses if they meet the following criteria: (i) they are trading in a significant loss position, (ii) failure of the issuer of the security to make scheduled interest or principal payments, (iii) there have been negative credit events with respect to the issuer, or (iv) there have been negative current events surrounding an issuer or the environment in which an issuer operates. For fixed maturity securities in an unrealized loss position that require a credit loss analysis, the Company estimates a present value of expected cash flows. If the results of the cash flow analysis indicate that the Company will not recover the full amount of its amortized cost basis, the Company records a credit loss for the excess of amortized cost over the present value of expected cash flows, not to exceed the unrealized loss. Changes in the credit loss allowance are recognized through realized investment gains, net on the consolidated statements of operations. The credit loss allowance benefit for fixed maturity securities was $0.0 million and $0.4 million for the three and six months ended June 30, 2021, respectively. The credit loss allowance expense for fixed maturity securities was $1.6 million and $2.0 million for the three and six months ended June 30, 2020, respectively. The following table is a rollforward of the credit loss allowance for fixed maturity securities: December 31, Additions Reduction Reduction Change in Securities June 30, ($ in thousands) 2020 New Securities Sales Intent to Sell with Previous Allowance 2021 Fixed maturity securities: Corporate debt securities $ 598 $ — $ (111) $ — $ 21 $ 508 RMBS - non-agency 859 — (59) — (297) 503 Total fixed maturity securities allowance $ 1,457 $ — $ (170) $ — $ (276) $ 1,011 December 31, Additions Reduction Reduction Change in Securities June 30, ($ in thousands) 2019 New Securities Sales Intent to Sell with Previous Allowance 2020 Fixed maturity securities: Corporate debt securities $ — $ 615 $ — $ — $ — $ 615 ABS — 275 — — — 275 CLO — 6 — — — 6 RMBS - non-agency — 1,090 (1) — — 1,089 Total fixed maturity securities allowance $ — $ 1,986 $ (1) $ — $ — $ 1,985 (d) The amortized cost and fair value of fixed maturity securities, excluding the Company’s structured securities portfolio, at June 30, 2021, by contractual maturity are shown below. Expected maturities will differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. June 30, 2021 Amortized Fair ($ in thousands) Cost Value Due in one year or less $ 112,908 $ 114,423 Due after one through five years 506,126 517,934 Due after five through ten years 389,723 400,097 Due after ten years 207,925 213,753 1,216,682 1,246,207 Structured securities: Government agency securities 19,935 19,912 ABS 64,590 64,895 CLO 90,942 90,575 CMBS 53,219 54,572 RMBS - non-agency 89,432 93,717 RMBS - agency 116,997 116,692 Total fixed maturity securities $ 1,651,797 $ 1,686,570 The Company did not have any non-income producing fixed maturity investments as of June 30, 2021 and December 31, 2020, respectively. (e) The Company records its limited partnership and limited liability companies using net asset value, which the Company has determined to be the best indicator of fair value for these investments. At June 30, 2021 and December 31, 2020, the fair value of limited partnerships and limited liability companies were $97.1 million and $90.5 million, respectively. Changes in fair value of such investments are recorded in the consolidated statements of operations within net investment income. The largest investment within the portfolio is the Pacific Investment Management Company LLC Tactical Opportunities fund, which is carried at $49.2 million at June 30, 2021. The carrying values used for investments in limited partnerships and limited liability companies generally are established on the basis of the current valuations provided by the managers of such investments. These valuations are determined based upon the valuation criteria established by the governing documents of such investments or utilized in the normal course of such manager’s business, which are reflective of fair value. Such valuations may differ significantly from the values that would have been used had available markets for these investments existed and the differences could be material. The Company’s strategies for its investments in limited partnerships and limited liability companies include investment funds that employ diverse and fundamentally driven approaches to investing which include effective risk management, hedging strategies and leverage. The portfolio of investments in limited partnerships and limited liability companies consists of common stocks, real estate assets, options, swaps, derivative instruments and other structured products. The limited partnerships and limited liability companies in which the Company invests sometimes impose limitations on the timing of withdrawals from the funds. The Company’s inability to withdraw its investment quickly from a particular limited partnership or a limited liability company that is performing poorly could result in losses and may affect liquidity. All of the Company’s limited partnerships and limited liability companies have timing limitations. Most limited partnerships and limited liability companies require a 90 day notice period in order to withdraw funds. Some limited partnerships and limited liability companies may require a withdrawal only at the end of their fiscal year. The Company may also be subject to withdrawal fees in the event the limited partnerships and limited liability companies are sold within a minimum holding period, which may be up to one year. Many limited partnerships and limited liability companies have invoked gated provisions that allow the fund to disperse redemption proceeds to investors over an extended period. The Company is subject to such restrictions, which may delay the receipt of proceeds from limited partnerships and limited liability companies. (f) The Company invests in commercial loans, which are private placements. Loans are reported at the principal amount outstanding, reduced by unearned discounts, net deferred loan fees, and an allowance for credit losses on loans. Interest on loans is calculated using the simple interest method on the daily principal amount outstanding. There was no allowance for credit losses on loans at June 30, 2021 and December 31, 2020, respectively. (g) Proceeds from sales and redemptions in AFS securities totaled $726.2 million and $154.0 million for the three months ended June 30, 2021 and 2020, respectively. Proceeds from sales and redemptions in AFS securities totaled $1,207.6 million and $306.8 million for the six months ended June 30, 2021 and 2020, respectively. Gross realized gains from sales and redemptions in AFS securities totaled $17.1 million and $3.7 million for the three months ended June 30, 2021 and 2020, respectively. Gross realized gains from sales and redemptions in AFS securities totaled $49.9 million and $4.7 million for the six months ended June 30, 2021 and 2020, respectively. Gross realized losses from sales and redemptions of AFS investments totaled $1.4 million and $0.2 million for the three months ended June 30, 2021 and 2020, respectively. Gross realized losses from sales and redemptions of AFS investments totaled $1.5 million and $0.6 million for the six months ended June 30, 2021 and 2020, respectively. (h) Net investment income included in net income from continuing operations in the consolidated statements of operations from each major category of investments for the three and six months ended June 30, 2021 and 2020, is as follows: Three Months Ended June 30 Six Months Ended June 30 ($ in thousands) 2021 2020 2021 2020 Fixed maturity securities $ 11,826 $ 15,849 $ 25,585 $ 32,131 Net limited partnerships and limited liability companies gains 2,917 8,131 8,100 1,254 Other 1,084 461 (414) 546 Gross investment income 15,827 24,441 33,271 33,931 Less: investment income attributable to funds withheld liabilities 98 118 202 254 Less: expenses 1,148 532 1,809 1,071 Net investment income $ 14,581 $ 23,791 $ 31,260 $ 32,606 (i) Included in investments at June 30, 2021 and December 31, 2020, are securities required to be held by the Company (or those that are on deposit) with various regulatory authorities as required by law with a fair value of $230.5 million and $233.4 million, respectively. Fair value and carrying value of assets in the amount of $254.5 million and $243.5 million, respectively, were on deposit in collateral agreements at June 30, 2021. Fair value and carrying value of assets in the amount of $256.4 million and $241.0 million, respectively, were on deposit in collateral agreements at December 31, 2020. (j) The investment portfolio has exposure to market risks, which include the effect of adverse changes in interest rates, credit quality, limited partnership value and illiquid securities, including commercial loan values, on the portfolio. Interest rate risk includes the changes in the fair value of fixed maturities based upon changes in interest rates. Credit quality risk includes the risk of default by issuers of debt securities. Risks from investments in limited partnerships and limited liability companies and illiquid securities risks include the potential loss from the diminution in the value of the underlying investment of the limited partnerships and limited liability companies and the potential loss from changes in the fair value of commercial loans. (k) Non-redeemable preferred stock securities with readily determinable fair values are recorded at fair value. The change in fair value recognized in income on non-redeemable preferred stock securities for the three and six months ended June 30, 2021 was a gain of $0.1 million and $0.5 million, respectively. The gain consisted of a gain recognized on the sale of non-redeemable preferred stock securities of $0.5 million and an unrealized loss of $0.4 million for the three months ended June 30 2021. The gain consisted of a gain recognized on the sale of non-redeemable preferred stock securities $0.5 million for the six months ended June 30 2021. The change in fair value recognized in income on non-redeemable preferred stock securities for the three and six months ended June 30, 2020 was a gain of $0.4 million and $0.1 million, respectively. The gain consisted of an unrealized gain of $0.4 million and $0.1 million for the three and six months ended June 30 2020, respectively. (l) Bond exchange-traded funds with readily determinable fair values are recorded at fair value. The change in fair value recognized in income on bond exchange-traded funds for the three and six months ended June 30, 2021 was a gain of $0.2 million and a loss of $1.3 million, respectively. The gain consisted of a realized gain on the sale of bond exchange-traded funds of $0.2 million for the three months ended June 30, 2021. The loss consisted of a realized loss on the sale of bond exchange-traded funds of $1.3 million for the six months ended June 30, 2021, respectively. (m) The Company began participating in a securities lending program in March 2021. The Company loans certain of its securities to third parties, for short periods through a lending agent. The Company maintains legal control over the securities it lends, retains the earnings and cash flows associated with the loaned securities and receives a fee from the borrower for the temporary use of the securities and cash collateral received earns income which are both recorded within net investment income on the consolidated statement of operations. Collateral recorded within restricted cash on the consolidated balance sheet is received in an amount that is in excess of fair value at the time of borrowing (102% for domestic loaned securities and 105% for foreign loaned securities), including accrued investment income and is monitored and maintained by the lending agent. A securities lending payable is recorded within other liabilities on the consolidated balance sheet, which represents the Company’s obligation to return collateral upon receiving borrowed securities. An indemnification agreement with the lending agent protects the Company on the event a borrower becomes insolvent or fails to return any securities on loan to the Company. As of June 30, 2021, the fair value of the cash collateral received by the Company was $11.4 million. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | 6. Fair Value Measurements The Company has established a framework for valuing financial assets and financial liabilities. The framework is based on a hierarchy of inputs used in valuation and gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. The standard describes three levels of inputs that may be used to measure fair value and categorize the assets and liabilities within the hierarchy: Level 1 The Company’s Level 1 assets include bond exchange-traded funds. Level 2 The Company’s Level 2 assets include U.S. Treasury securities, government agency securities, municipal debt obligations, RMBS, CMBS, CLO, ABS, corporate debt securities, and non-redeemable preferred stock securities. The Company generally obtains valuations from third-party pricing services and/or security dealers for identical or comparable assets or liabilities by obtaining nonbinding broker quotes (when pricing service information is not available) in order to determine an estimate of fair value. The Company bases all of its estimates of fair value for assets on the bid price as it represents what a third-party market participant would be willing to pay in an arm’s-length transaction. Level 3 The Company’s Level 3 assets include its investments in certain corporate debt securities, certain non-redeemable preferred stock securities and commercial levered loans as they are illiquid and trade in inactive markets. These markets are considered inactive as a result of the low level of trades of such investments. Commercial levered loans are also not considered within the Level 3 tabular disclosure, because they are in the “held for investment” category and are also not measured at fair value on a recurring basis. The corporate debt securities and non-redeemable preferred stock securities classified under Level 3 in the fair value hierarchy are either provided to the Company by an independent valuation service provider or calculated by the Company. For certain securities, the Company uses observable inputs such as readily available indices as well as change in estimated fund returns provided by third party investment managers. Unobservable inputs, significant to the measurement and valuation of the corporate debt securities are assumptions about prepayment speed, default rates and recovery rates. Significant changes to any of these inputs, or combination of inputs, could significantly change the fair value measurement for these securities when using the income approach. The primary pricing sources for the Company’s investments in commercial levered loans are reviewed for reasonableness, based on the Company’s understanding of the respective market. Prices may then be determined using valuation methodologies such as discounted cash flow models, as well as matrix pricing analyses performed on nonbinding quotes from brokers or other market makers. The following are the major categories of assets measured at fair value on a recurring basis at June 30, 2021 and December 31, 2020, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3): June 30, 2021 ($ in thousands) Level 1 Level 2 Level 3 Total Fixed maturity securities: U.S. Treasury securities $ — $ 46,796 $ — $ 46,796 Government agency securities — 19,912 — 19,912 Corporate debt securities — 741,341 311,049 1,052,390 Municipal debt obligations — 147,021 — 147,021 ABS — 64,895 — 64,895 CLO — 90,575 — 90,575 CMBS — 54,572 — 54,572 RMBS - non agency — 93,717 — 93,717 RMBS - agency — 116,692 — 116,692 Total fixed maturity securities — 1,375,521 311,049 1,686,570 Non-redeemable preferred stock securities — — 1,400 1,400 Total categorized $ — $ 1,375,521 $ 312,449 $ 1,687,970 Investments measured at net asset value: Limited partnerships and limited liability companies 97,150 Total of invested assets carried at fair value $ 1,785,120 December 31, 2020 ($ in thousands) Level 1 Level 2 Level 3 Total Fixed maturity securities: U.S. Treasury securities $ — $ 52,157 $ — $ 52,157 Government agency securities — 31,007 — 31,007 Corporate debt securities — 1,139,066 257,965 1,397,031 Municipal debt obligations — 207,094 — 207,094 ABS — 55,258 — 55,258 CLO — 139,126 — 139,126 CMBS — 117,960 — 117,960 RMBS - non agency — 116,136 — 116,136 RMBS - agency — 150,288 — 150,288 Total fixed maturity securities — 2,008,092 257,965 2,266,057 Non-redeemable preferred stock securities — 5,649 1,400 7,049 Bond exchange-traded funds 44,882 — — 44,882 Total categorized $ 44,882 $ 2,013,741 $ 259,365 2,317,988 Investments measured at net asset value: Limited partnerships and limited liability companies 90,468 Total of invested assets carried at fair value $ 2,408,456 The following tables disclose the carrying value and fair value of financial instruments that are not recognized or are not carried at fair value in the consolidated balance sheets as of June 30, 2021 and December 31, 2020: June 30, 2021 Carrying Fair Value ($ in thousands) Value Total Level 1 Level 2 Level 3 Assets Commercial levered loans $ 5,299 $ 5,269 $ — $ — $ 5,269 Liabilities Notes payable $ 207,000 $ 207,661 $ — $ 207,661 $ — Unamortized debt issuance costs (2,971) Notes payable, net of debt issuance costs $ 204,029 Secured loan payable $ 20,845 $ 21,039 $ — $ 21,039 $ — Unamortized debt issuance costs (72) Secured loan payable, net of issuance costs $ 20,773 December 31, 2020 Carrying Fair Value ($ in thousands) Value Total Level 1 Level 2 Level 3 Assets Commercial levered loans $ 12,308 $ 12,180 $ — $ — $ 12,180 Liabilities Notes payable $ 207,000 $ 207,537 $ — $ 207,537 $ — Unamortized debt issuance costs (3,733) Notes payable, net of debt issuance costs $ 203,267 Secured loan payable $ 22,750 $ 23,265 $ — $ 23,265 $ — Unamortized debt issuance costs (82) Secured loan payable, net of issuance costs $ 22,668 The fair value of the notes payable at June 30, 2021, approximated a price equal to $207.7 million or 100.3% of the par value. The fair value of the secured loan payable at June 30, 2021, approximated a price equal to $21.0 million or 101.3% of the par value. The fair value of the notes payable at December 31, 2020, approximated a price equal to $207.5 million or 100.3% of the par value. The fair value of the secured loan payable at December 31, 2020, approximated a price equal to $23.3 million or 102.3% of the par value. The following tables provides a summary of the changes in the fair value of securities measured using Level 3 inputs during the six months ended June 30, 2021 and 2020: Non-Redeemable Corporate Debt Preferred Stock Level 3 ($ in thousands) Securities Securities Total Fair value, December 31, 2020 $ 257,965 $ 1,400 $ 259,365 Total net losses for the period included in: Other comprehensive loss (2,922) — (2,922) Net realized loss (165) — (165) Purchases 70,894 — 70,894 Sales — — — Issuances — — — Settlements (14,723) — (14,723) Transfers into Level 3 — — — Transfers out of Level 3 — — — Fair value, June 30, 2021 $ 311,049 $ 1,400 $ 312,449 Level 3 Corporate Debt ($ in thousands) Securities Fair value, December 31, 2019 $ 149,631 Total net losses for the period included in: Other comprehensive loss (8,563) Net realized loss (2) Purchases 22,634 Sales — Issuances — Settlements (1,623) Transfers into Level 3 — Transfers out of Level 3 — Fair value, June 30, 2020 $ 162,077 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2021 | |
Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Income (Loss) | 7. Accumulated Other Comprehensive Income The following table summarizes the components of accumulated other comprehensive income (“AOCI”) for the three and six months ended June 30, 2021 and 2020: ($ in thousands) Gross Tax Net March 31, 2021 $ 39,909 $ 7,625 $ 32,284 Unrealized holding gains on fixed maturity securities 15,275 3,206 12,069 Amounts reclassified into net income 16,542 3,310 13,232 Amounts reclassified as credit losses 23 5 18 Other comprehensive loss (1,290) (109) (1,181) June 30, 2021 $ 38,619 $ 7,516 $ 31,103 ($ in thousands) Gross Tax Net March 31, 2020 $ (31,469) $ (7,481) $ (23,988) Unrealized holding gains on fixed maturity securities 99,307 20,851 78,456 Amounts reclassified into net income 3,678 726 2,952 Amounts reclassified as credit losses (1,570) (330) (1,240) Other comprehensive income 97,199 20,455 76,744 June 30, 2020 $ 65,730 $ 12,974 $ 52,756 ($ in thousands) Gross Tax Net December 31, 2020 $ 111,755 $ 22,633 $ 89,122 Unrealized holding losses on fixed maturity securities (23,048) (4,849) (18,199) Amounts reclassified into net income 49,642 10,174 39,468 Amounts reclassified as credit losses 446 94 352 Other comprehensive loss (73,136) (15,117) (58,019) June 30, 2021 $ 38,619 $ 7,516 $ 31,103 ($ in thousands) Gross Tax Net December 31, 2019 $ 46,123 $ 8,670 $ 37,453 Unrealized holding gains on fixed maturity securities 22,241 4,749 17,492 Amounts reclassified into net income 4,620 862 3,758 Amounts reclassified as credit losses (1,986) (417) (1,569) Other comprehensive income 19,607 4,304 15,303 June 30, 2020 $ 65,730 $ 12,974 $ 52,756 The following table presents reclassifications out of AOCI attributable to the Company during the three and six months ended June 30, 2021 and 2020: Line in Consolidated Three Months Ended June 30 Six Months Ended June 30 ($ in thousands) Statements of Operations 2021 2020 2021 2020 AOCI Unrealized gains on securities Realized investment gains, net $ 16,542 $ 3,678 $ 49,642 $ 4,620 Income tax expense 3,310 726 10,174 862 Reclassification adjustment for credit losses included in net income Realized investment gains, net 23 (1,570) 446 (1,986) Income tax expense 5 (330) 94 (417) Total reclassifications $ 13,250 $ 1,712 $ 39,820 $ 2,189 |
Related-Party Information
Related-Party Information | 6 Months Ended |
Jun. 30, 2021 | |
Related-Party Information | |
Related-Party Information | 8. Related-Party Information Transition and Separation Agreement On May 3, 2019, the Company entered into a Transition and Separation Agreement (the “Separation Agreement”) with its former Chief Executive Officer (the “former CEO”). Under the Separation Agreement, the former CEO and the Company agreed to a general release of claims and his compliance with the restrictive covenants. On January 23, 2020, the Company and the former CEO entered into an amendment to the Separation Agreement, which, among other things, provides that effective as of February 1, 2020, the former CEO resigned from his position as Executive Chairman of the Company. The Company recorded no expense for the three months ended June 30, 2021 and 2020, respectively, within other expense in the consolidated statements of operations relating to the severance payments and benefits payable to the former CEO. The Company recorded no expense and $0.3 million for the six months ended June 30, 2021 and 2020, respectively, within other expense in the consolidated statements of operations relating to the severance payments and benefits payable to the former CEO. Additionally, the Company entered into a niche management agreement with an independent agency founded by the former CEO. |
Insurance Operations
Insurance Operations | 6 Months Ended |
Jun. 30, 2021 | |
Insurance Operations | |
Insurance Operations | 9. Insurance Operations Total reinsurance ceded and assumed relating to written premiums, earned premiums and losses and loss adjustment expenses incurred, are as follows: Three Months Ended June 30 Six Months Ended June 30 ($ in thousands) 2021 2020 2021 2020 Written premiums Direct written premiums $ 239,587 $ 185,722 $ 408,359 $ 398,673 Assumed from other companies (1,065) 672 (446) 1,505 Ceded to other companies 26,811 29,771 44,281 53,372 Net written premiums $ 211,711 $ 156,623 $ 363,632 $ 346,806 Earned premiums Direct earned premiums $ 206,280 $ 206,028 $ 406,212 $ 434,608 Assumed from other companies (590) 697 100 1,439 Ceded to other companies 26,793 25,096 54,444 48,756 Net earned premiums $ 178,897 $ 181,629 $ 351,868 $ 387,291 Percent of amount assumed to net (0.3)% 0.4% 0.0% 0.4% Losses and loss adjustment expenses incurred Direct net losses and loss adjustment expenses incurred $ 136,827 $ 120,680 $ 244,284 $ 265,057 Assumed from other companies 3,434 1,984 3,087 627 Ceded to other companies 25,861 10,191 27,448 25,654 Net losses and loss adjustment expenses incurred $ 114,400 $ 112,473 $ 219,923 $ 240,030 Allowances for Credit Losses The allowance for credit loss for premium receivable is an assessment of ultimate non-collectability based on historical experience applicable to the respective current collection action status, age of the amount outstanding and expected collection costs. The credit loss allowance for premium receivables as of June 30, 2021 and December 31, 2020 were $5.3 million and $6.9 million, respectively. The majority of the allowance relates to audit premium on workers’ compensation coverages assessed during or after the period of coverage whereby there is limited ability to cancel or limit coverage. In the final collection action at the insured level, collection agencies are typically engaged. The amount with collection agencies as of June 30, 2021 was $5.5 million. The reinsurance receivable allowance for credit loss is based on sources of credit ratings of reinsurers and applies probabilities of default and loss given default to the total uncollateralized exposure including incurred but not reported (“IBNR”) by rating class. The credit loss allowance for reinsurance receivables on paid and unpaid losses as of June 30, 2021 and December 31, 2020 were $0.7 million and $0.7 million, respectively. Distribution Partners The three distribution partners contributing the largest amounts of direct written premium totaled $96.7 million and $80.8 million for the three months ended June 30, 2021 and 2020, respectively. The three distribution partners contributing the largest amounts of direct written premium totaled $153.5 million and $146.9 million for the six months ended June 30, 2021 and 2020, respectively. Unpaid Losses Unpaid losses are based on individual case estimates for losses reported and include a provision for IBNR losses and loss adjustment expenses. The following table provides a roll forward of the Company’s reserve for unpaid losses and loss adjustment expenses: June 30 ($ in thousands) 2021 2020 Gross reserve for unpaid losses and loss expenses, at beginning of year $ 1,602,902 $ 1,521,648 Ceded reserve for unpaid losses and loss expenses, at beginning of year 170,522 193,952 Net reserve for unpaid losses and loss expenses, at beginning of year 1,432,380 1,327,696 Add: Incurred losses and loss expenses occurring in the: Current year 210,287 227,842 Prior years 5,690 508 Prior years attributable to adjusted premium 3,946 11,680 Total net losses and loss adjustment expenses incurred 219,923 240,030 Less: Paid losses and loss expenses for claims occurring in the: Current year 24,087 12,168 Prior years 181,357 152,862 Total paid losses and loss expenses for claims 205,444 165,030 Net reserve for unpaid losses and loss expenses, at end of period 1,446,859 1,402,696 Ceded reserve for unpaid losses and loss expenses, at end of period 152,075 141,427 Gross reserve for unpaid losses and loss expenses, at end of period $ 1,598,934 $ 1,544,123 During the six months ended June 30, 2021, the Company’s reserve for unpaid losses and loss adjustment expenses for accident years 2020 and prior developed unfavorably by $5.7 million driven by $7.5 million unfavorable development in All Other lines, $4.7 million unfavorable development in Commercial Multiple Peril and $2.9 million unfavorable development in Commercial Auto offset by $6.2 million favorable development in Workers’ Compensation, $3.2 million favorable development in General Liability. In addition, the Company incurred $3.9 million of losses and loss adjustment expenses related to premium adjustments earned during the six months ended June 30, 2021 attributable to accident years 2020 and 2019. The unfavorable development in All Other lines was due mainly to adverse development in accident years 2016 and 2018 from ocean marine liability exposures. The unfavorable development in Commercial Multiple Peril related primarily to accident year 2017 due largely to increased severities. The favorable development in Workers’ Compensation derived from lower than expected claims severity across all customer segments primarily in accident years 2017 and 2020. During the six months ended June 30, 2020, the Company’s reserve for unpaid losses and loss adjustment expenses for accident years 2019 and prior developed unfavorably by $0.5 million driven by $12.1 million unfavorable development in General Liability and $4.3 million unfavorable development in Commercial Multiple Peril offset by $8.3 million favorable development in Workers’ Compensation, $5.2 million favorable development in Commercial Auto and $2.4 million favorable development in All Other lines. In addition, the Company incurred $11.7 million of losses and loss adjustment expenses related to premium adjustments earned during the six months ended June 30, 2020 attributable to accident years 2019 and 2018. The unfavorable development in General Liability and Commercial Multiple Peril related to 2013 through 2017 accident years due largely to increased severities in the runoff components within the Other customer segment. The favorable development in Workers’ Compensation derived from lower than expected claims severity across all customer segments primarily in accident years 2013 and 2015 through 2017. The favorable development in Commercial Auto was derived by physical damage and liability property damage in accident year 2019. The favorable development in All Other lines was in Ocean Marine, Inland Marine, Fire and Surety lines of business. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2021 | |
Income Taxes | |
Income Taxes | 10. Income Taxes The Company is subject to the tax laws and regulations of the United States and various state jurisdictions. The Company files a consolidated federal tax return. The Company has one non-U.S. subsidiary, ProSight Specialty Bermuda Limited (“PSBL”), which has received an undertaking from the Minister of Finance in Bermuda that would exempt such company from Bermudian taxation until March 2035. In 2019, PSBL became a direct subsidiary of the Company and is subject to U.S. tax on its income. The Company uses the estimated annual effective tax rate method for calculating its tax provision in interim periods, which represents the Company’s best estimate of the effective tax rate expected for the full year. The estimated annual effective tax rate typically differs from the U.S. statutory tax rate primarily as a result of non-deductible expenses and discrete items recognized during the period. The Company’s effective tax rates were 20.6% and 21.6% for the three months ended June 30, 2021 and 2020, respectively. The decrease in the effective tax rate for the three months ended June 30, 2021 compared to the same period in 2020 was primarily due to the tax effect of share-based compensation. The Company’s effective tax rates were 21.4% and 21.9% for the six months ended June 30, 2021 and 2020, respectively. The decrease in the effective tax rate for the six months ended June 30, 2021 compared to the same period in 2020 was primarily due to the tax effect of share-based compensation. On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act, among other things, includes certain income tax provisions for individuals and corporations; however, these benefits do not impact the Company’s current tax provision. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2021 | |
Segment Information | |
Segment Information | 11. Segment Information The Company has one reportable segment, Specialty Insurance, which primarily offers property and casualty insurance products through its customers segments that include Construction, Consumer Services, Marine and Energy, Media and Entertainment, Professional Services, Real Estate, Sports, and Transportation. The primary criteria to determine the Company’s reportable segment is based on the fact that the Company’s senior management reviews, assesses and allocates resources both on a financial and personnel basis on an entity-wide level. The following table provides a summary of the Company’s gross written premiums by customer segments within our Specialty Insurance segment. “Other” includes gross written premiums from; (i) primary and excess workers’ compensation coverage for exited Self-Insured Groups, (ii) niches exited prior to 2018, many with a concentration in commercial auto, (iii) participation in industry pools, and (iv) emerging new business. Three Months Ended June 30 Six Months Ended June 30 ($ in thousands) 2021 2020 2021 2020 Customer Segment Construction $ 38,968 16.3 % $ 27,704 14.9 % $ 65,463 16.0 % $ 52,218 13.0 % Consumer Services 41,784 17.5 40,730 21.8 64,408 15.8 71,298 17.8 Marine and Energy 33,013 13.8 26,821 14.4 57,224 14.0 59,611 14.9 Media and Entertainment 23,013 9.7 17,454 9.4 43,861 10.8 47,921 12.0 Professional Services 33,896 14.2 31,891 17.1 68,337 16.8 61,589 15.4 Real Estate 40,765 17.1 47,273 25.3 60,677 14.9 80,488 20.1 Sports 5,026 2.1 4,688 2.5 10,683 2.6 14,253 3.6 Transportation 20,888 8.8 (12,340) (6.6) 34,678 8.5 9,127 2.3 Customer segment subtotal 237,353 99.5 184,221 98.8 405,331 99.4 396,505 99.1 Other 1,169 0.5 2,173 1.2 2,582 0.6 3,673 0.9 Specialty Insurance total $ 238,522 100.0 % $ 186,394 100.0 % $ 407,913 100.0 % $ 400,178 100.0 % The following table provides a summary of the Company’s gross written premiums by line of business within our Specialty Insurance segment: Three Months Ended June 30 Six Months Ended June 30 ($ in thousands) 2021 2020 2021 2020 Line of Business Commercial Auto $ 58,271 24.4 % $ 20,649 11.1 % $ 94,391 23.1 % $ 60,980 15.2 % General Liability 107,612 45.1 81,876 43.9 178,505 43.8 160,409 40.1 Workers’ Compensation 12,007 5.0 20,420 10.9 23,852 5.9 49,241 12.3 Commercial Multiple Peril 13,915 5.9 10,928 5.9 28,167 6.9 27,293 6.8 All Other Lines 46,717 19.6 52,521 28.2 82,998 20.3 102,255 25.6 Specialty Insurance total $ 238,522 100.0 % $ 186,394 100.0 % $ 407,913 100.0 % $ 400,178 100.0 % |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share | |
Earnings Per Share | 12. Earnings per Share The following table provides a reconciliation of the numerators and denominators of basic and diluted earnings per share (“EPS”): Continuing Operations Discontinued Operations (in thousands, except per share amounts) Income Shares Per Share Loss Shares Per Share Three Months Ended June 30, 2021 (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS: Net income (loss) available to common stockholders $ 18,062 43,955 $ 0.41 $ (1,544) 43,955 $ (0.03) Effect of dilutive securities: Stock compensation plans 868 868 Diluted EPS $ 18,062 44,823 $ 0.40 $ (1,544) 44,823 $ (0.03) Continuing Operations Discontinued Operations (in thousands, except per share amounts) Income Shares Per Share Income Shares Per Share Three Months Ended June 30, 2020 (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS: Net income available to common stockholders $ 17,283 43,810 $ 0.39 $ 279 43,810 $ 0.01 Effect of dilutive securities: Stock compensation plans 17 17 Diluted EPS $ 17,283 43,827 $ 0.39 $ 279 43,827 $ 0.01 Continuing Operations Discontinued Operations (in thousands, except per share amounts) Income Shares Per Share Loss Shares Per Share Six Months Ended June 30, 2021 (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS: Net income (loss) available to common stockholders $ 55,609 43,946 $ 1.27 $ (3,882) 43,946 $ (0.09) Effect of dilutive securities: Stock compensation plans 807 807 Diluted EPS $ 55,609 44,753 $ 1.24 $ (3,882) 44,753 $ (0.08) Continuing Operations Discontinued Operations (in thousands, except per share amounts) Income Shares Per Share Income Shares Per Share Six Months Ended June 30, 2020 (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS: Net income available to common stockholders $ 24,094 43,866 $ 0.55 $ 536 43,866 $ 0.01 Effect of dilutive securities: Stock compensation plans 190 190 Diluted EPS $ 24,094 44,056 $ 0.55 $ 536 44,056 $ 0.01 |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2021 | |
Share-Based Compensation | |
Share-Based Compensation | 13. Share-Based Compensation On July 24, 2019, the Company’s 2019 Equity Incentive Plan (the “2019 Plan”) became effective immediately prior to the effectiveness of the registration statement filed in connection with the initial public offering. The 2019 Plan provides for the grant of stock options, stock appreciation rights, restricted shares, RSUs, dividend equivalent rights, performance-based shares or other equity-based or equity-related awards. A total of 4,500,000 shares of common stock are initially authorized and reserved The following table summarizes the stock-based compensation transactions for the 2019 Plan for the six months ended June 30, 2021: Number of Weighted Average Grant Date Shares Fair Value Per Share Unvested at December 31, 2020 1,705,441 $ 13.46 Granted 15,634 $ 12.55 Vested (76,213) $ 12.97 Forfeited (31,488) $ 12.60 Unvested at June 30, 2021 1,613,374 $ 13.49 As of June 30, 2021, The Company had approximately $7.8 million of total unrecognized stock-based compensation expense expected to be recognized over a weighted-average period of 1.2 years. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2021 | |
Debt | |
Debt | 14. Debt Recent Financing Transactions Termination of the Prior Credit Agreement The Company, as borrower, was a party to a revolving loan agreement (the “Prior Credit Agreement”) dated January 29, 2018 and amended on March 15, 2019, for $50.0 million which was scheduled to mature on the earlier of (i) March 15, 2022, or (ii) 91 days before maturity of the Company’s 7.5% Senior Unsecured Notes due November 2020 and the Company’s 6.5% Senior Unsecured Notes due November 2020 (collectively, the “Notes”) or, if the Notes are amended or replaced, 91 days before the maturity of such amendment or replacement. The Company exercised its termination rights under the Prior Credit Agreement on June 12, 2020. There were no borrowings under the Prior Credit Agreement on the date of termination. Credit Agreement On June 12, 2020 (the “Effective Date”), the Company entered into the Credit Agreement with third-party lenders and an administrative agent. The Credit Agreement, which matures on June 11, 2023 (the “Maturity Date”), provides for (i) a delayed draw term loan facility in the aggregate principal amount of up to $165.0 million (the “Term Loan Facility”), and (ii) an uncommitted revolving credit facility of up to $35.0 million (the “Revolving Credit Facility”), for which commitments had not been obtained as of the closing date. Interest on borrowings under the Term Loan Facility and the Revolving Credit Facility are calculated at each drawdown date based on variable rates described in the Credit Agreement. Debt issuance costs of $4.6 million related to the Credit Agreement were incurred and are amortized over the life of the loan. There were no borrowings under the Credit Agreement as of June 30, 2020. There were borrowings of $165.0 million under the Credit Agreement as of June 30, 2021. Incremental Facility Agreement On June 30, 2020, the Company entered into an Incremental Facility Agreement and Amendment (the “Agreement”), in the aggregate amount of $65.0 million, subject to the terms of the Credit Agreement. The Agreement had lenders commit to the previously uncommitted Revolving Credit Facility, and increased the available amount from the $35.0 million noted above to an aggregate of $65.0 million. Debt issuance costs of $0.5 million related to the Agreement were incurred and are being amortized over the life of the agreement. There were no borrowings under the Agreement as of June 30, 2020. There were borrowings of $42.0 million under the Agreement as of June 30, 2021. Secured Loan Payable In June 2020, the Company entered into a $24.9 million lease transaction that for accounting purposes is treated as a loan secured by a portion of the Company’s fixed assets and capitalized software, payable at 4.83% interest with a maturity date of July 1, 2025 and providing for monthly interest and principal payments. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 15. Commitments and Contingencies Leases The Company leases certain facilities and equipment under non-cancelable lease agreements that expire at various dates through 2025, which are generally renewed or replaced by similar leases. The lease agreements do not contain any material restrictive covenants, do not contain any conditions of residual value guarantees and are substantially all considered to be operating leases. The Company’s leases relate to office facilities in New Jersey, California, Florida and the U.K. The weighted average lease term was 2.3 years and the weighted average discount rate was 2.1%. The Company recorded rent expense $0.7 million and $0.8 million for the three months ended June 30, 2021 and 2020, respectively. The Company recorded rent expense $1.4 million and $1.6 million for the six months ended June 30, 2021 and 2020, respectively. The following table presents the Company’s lease liabilities and right-of-use assets related to operating leases as of June 30, 2021: ($ in thousands) June 30, 2021 One year or less $ 1,678 More than one year to two years — More than two years to three years — More than three years to four years — More than four years to five years — More than five years — Total undiscounted future minimum lease payments 1,678 Less: difference between lease payments and discounted lease liabilities 13 Lease liabilities $ 1,665 Right-of-use assets $ 1,461 Prepaid lease assets, net of lease allowances and incentives 204 Total $ 1,665 The right-of-use assets liabilities |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Jun. 30, 2021 | |
Legal Proceedings | |
Legal Proceedings | 16. Legal Proceedings In the normal course of business, the Company’s insurance subsidiaries are subject to disputes, including litigation and arbitration, arising out of the ordinary course of business. The Company’s estimates of the costs of settling such matters are reflected in its reserves for losses and loss expenses, and the Company does not believe that the ultimate outcome of such matters will have a material adverse effect on its financial condition or results of operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Summary Of Significant Accounting Policies | |
Use of Estimates | Use of Estimates The preparation of the unaudited interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statement balances, as well as disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Management periodically reviews its estimates and assumptions. |
Supplemental Cash Flow (Tables)
Supplemental Cash Flow (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Supplemental Cash Flow | |
Summary of supplemental cash flow information | Six Months Ended June 30 ($ in thousands) 2021 2020 Cash paid during the period for: Interest $ 4,385 $ 6,187 Federal income tax $ 5,850 $ — Non-cash activity: Operating lease right-of-use assets due to the adoption of ASU 2016-02 - continuing operations $ 1,461 $ 4,117 Operating lease right-of-use assets due to the adoption of ASU 2016-02 - discontinued operations $ 1,987 $ 2,174 Operating lease liabilities due to the adoption of ASU 2016-02 - continuing operations $ 1,665 $ 4,624 Operating lease liabilities due to the adoption of ASU 2016-02 - discontinued operations $ 2,274 $ 2,526 Tax benefit on payments related to offering costs $ — $ 635 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Discontinued Operations | |
Summary of results of operations and carrying amounts of assets and liabilities for discontinued operations | June 30, December 31, ($ in thousands) 2021 2020 Assets Cash and investments $ 11,032 $ 10,939 Other assets 11,677 10,415 Total assets $ 22,709 $ 21,354 Liabilities Reserve for unpaid losses and loss adjustment expenses $ 38,668 $ 32,414 Other liabilities 5,447 5,315 Total liabilities $ 44,115 $ 37,729 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Investments | |
Summary of gross unrealized gains and losses on fixed maturity securities included in assets | (a) The gross unrealized gains and losses on fixed maturity securities included in assets from continuing operations at June 30, 2021, are as follows: Cost/ Gross Gross Amortized Credit Loss Unrealized Unrealized Fair ($ in thousands) Cost Allowance Gains Losses Value Fixed maturity securities: U.S. Treasury securities $ 45,555 $ — $ 1,269 $ (28) $ 46,796 Government agency securities 19,935 — 148 (171) 19,912 Corporate debt securities 1,026,771 (508) 38,803 (12,676) 1,052,390 Municipal debt obligations 144,356 — 3,100 (435) 147,021 ABS 64,590 — 505 (200) 64,895 CLO 90,942 — 60 (427) 90,575 CMBS 53,219 — 1,570 (217) 54,572 RMBS - non-agency 89,432 (503) 5,262 (474) 93,717 RMBS - agency 116,997 — 808 (1,113) 116,692 Total fixed maturity securities $ 1,651,797 $ (1,011) $ 51,525 $ (15,741) $ 1,686,570 The gross unrealized gains and losses on fixed maturity securities included in assets from continuing operations at December 31, 2020, are as follows: Cost/ Gross Gross Amortized Credit Loss Unrealized Unrealized Fair ($ in thousands) Cost Allowance Gains Losses Value Fixed maturity securities: U.S. Treasury securities $ 50,248 $ — $ 1,909 $ — $ 52,157 Government agency securities 30,446 — 561 — 31,007 Corporate debt securities 1,317,667 (598) 86,447 (6,485) 1,397,031 Municipal debt obligations 198,773 — 8,437 (116) 207,094 ABS 54,989 — 696 (427) 55,258 CLO 140,615 — 154 (1,643) 139,126 CMBS 111,313 — 7,008 (361) 117,960 RMBS - non-agency 109,110 (859) 8,619 (734) 116,136 RMBS - agency 146,582 — 3,721 (15) 150,288 Total fixed maturity securities $ 2,159,743 $ (1,457) $ 117,552 $ (9,781) $ 2,266,057 |
Summary of all securities in an unrealized loss position, the fair value and gross unrealized loss by asset class and by length of time those securities have been in a loss position | (b) The following table summarizes the fair values and gross unrealized losses for fixed maturity securities in an unrealized loss position at June 30, 2021, grouped by asset class and by duration of time in a continuous unrealized loss position: Less Than 12 Months Greater Than 12 Months Total Total Fair Unrealized Fair Unrealized Total Unrealized ($ in thousands) Value Losses Value Losses Fair Value Losses U.S. Treasury securities $ 23,079 $ (28) $ — — $ 23,079 $ (28) Government agency securities 11,949 (171) — — 11,949 (171) Corporate debt securities 193,335 (3,096) 88,194 (9,580) 281,529 (12,676) Municipal debt obligations 48,243 (431) 2,162 (4) 50,405 (435) ABS 25,627 (136) 6,421 (64) 32,048 (200) CLO 7,596 (17) 41,476 (410) 49,072 (427) CMBS 12,138 (202) 4,695 (15) 16,833 (217) RMBS - non-agency 15,300 (210) 5,821 (264) 21,121 (474) RMBS - agency 82,760 (1,113) — — 82,760 (1,113) Total fixed maturity securities $ 420,027 $ (5,404) $ 148,769 $ (10,337) $ 568,796 $ (15,741) The following table summarizes the fair values and gross unrealized losses for fixed maturity securities in an unrealized loss position at December 31, 2020, grouped by asset class and by duration of time in a continuous unrealized loss position: Less Than 12 Months Greater Than 12 Months Total Total Fair Unrealized Fair Unrealized Total Unrealized ($ in thousands) Value Losses Value Losses Fair Value Losses Corporate debt securities $ 36,450 $ (740) $ 101,628 $ (5,745) $ 138,078 $ (6,485) Municipal debt obligations 12,211 (73) 3,344 (43) 15,555 (116) ABS 9,121 (364) 9,461 (63) 18,582 (427) CLO 29,909 (215) 82,758 (1,428) 112,667 (1,643) CMBS 17,559 (348) 800 (13) 18,359 (361) RMBS - non-agency 11,759 (249) 6,723 (485) 18,482 (734) RMBS - agency 2,467 (15) — — 2,467 (15) Total fixed maturity securities $ 119,476 $ (2,004) $ 204,714 $ (7,777) $ 324,190 $ (9,781) |
Rollforward of the credit losses allowance for fixed maturity securities | December 31, Additions Reduction Reduction Change in Securities June 30, ($ in thousands) 2020 New Securities Sales Intent to Sell with Previous Allowance 2021 Fixed maturity securities: Corporate debt securities $ 598 $ — $ (111) $ — $ 21 $ 508 RMBS - non-agency 859 — (59) — (297) 503 Total fixed maturity securities allowance $ 1,457 $ — $ (170) $ — $ (276) $ 1,011 December 31, Additions Reduction Reduction Change in Securities June 30, ($ in thousands) 2019 New Securities Sales Intent to Sell with Previous Allowance 2020 Fixed maturity securities: Corporate debt securities $ — $ 615 $ — $ — $ — $ 615 ABS — 275 — — — 275 CLO — 6 — — — 6 RMBS - non-agency — 1,090 (1) — — 1,089 Total fixed maturity securities allowance $ — $ 1,986 $ (1) $ — $ — $ 1,985 |
Summary of amortized cost and fair value of fixed maturity securities | June 30, 2021 Amortized Fair ($ in thousands) Cost Value Due in one year or less $ 112,908 $ 114,423 Due after one through five years 506,126 517,934 Due after five through ten years 389,723 400,097 Due after ten years 207,925 213,753 1,216,682 1,246,207 Structured securities: Government agency securities 19,935 19,912 ABS 64,590 64,895 CLO 90,942 90,575 CMBS 53,219 54,572 RMBS - non-agency 89,432 93,717 RMBS - agency 116,997 116,692 Total fixed maturity securities $ 1,651,797 $ 1,686,570 |
Summary of net investment income included in net income from continuing operations | Three Months Ended June 30 Six Months Ended June 30 ($ in thousands) 2021 2020 2021 2020 Fixed maturity securities $ 11,826 $ 15,849 $ 25,585 $ 32,131 Net limited partnerships and limited liability companies gains 2,917 8,131 8,100 1,254 Other 1,084 461 (414) 546 Gross investment income 15,827 24,441 33,271 33,931 Less: investment income attributable to funds withheld liabilities 98 118 202 254 Less: expenses 1,148 532 1,809 1,071 Net investment income $ 14,581 $ 23,791 $ 31,260 $ 32,606 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Measurements | |
Summary of major categories of assets measured at fair value on a recurring basis | June 30, 2021 ($ in thousands) Level 1 Level 2 Level 3 Total Fixed maturity securities: U.S. Treasury securities $ — $ 46,796 $ — $ 46,796 Government agency securities — 19,912 — 19,912 Corporate debt securities — 741,341 311,049 1,052,390 Municipal debt obligations — 147,021 — 147,021 ABS — 64,895 — 64,895 CLO — 90,575 — 90,575 CMBS — 54,572 — 54,572 RMBS - non agency — 93,717 — 93,717 RMBS - agency — 116,692 — 116,692 Total fixed maturity securities — 1,375,521 311,049 1,686,570 Non-redeemable preferred stock securities — — 1,400 1,400 Total categorized $ — $ 1,375,521 $ 312,449 $ 1,687,970 Investments measured at net asset value: Limited partnerships and limited liability companies 97,150 Total of invested assets carried at fair value $ 1,785,120 December 31, 2020 ($ in thousands) Level 1 Level 2 Level 3 Total Fixed maturity securities: U.S. Treasury securities $ — $ 52,157 $ — $ 52,157 Government agency securities — 31,007 — 31,007 Corporate debt securities — 1,139,066 257,965 1,397,031 Municipal debt obligations — 207,094 — 207,094 ABS — 55,258 — 55,258 CLO — 139,126 — 139,126 CMBS — 117,960 — 117,960 RMBS - non agency — 116,136 — 116,136 RMBS - agency — 150,288 — 150,288 Total fixed maturity securities — 2,008,092 257,965 2,266,057 Non-redeemable preferred stock securities — 5,649 1,400 7,049 Bond exchange-traded funds 44,882 — — 44,882 Total categorized $ 44,882 $ 2,013,741 $ 259,365 2,317,988 Investments measured at net asset value: Limited partnerships and limited liability companies 90,468 Total of invested assets carried at fair value $ 2,408,456 |
Summary of carrying value and fair value of financial instruments that are not recognized or are not carried at fair value | June 30, 2021 Carrying Fair Value ($ in thousands) Value Total Level 1 Level 2 Level 3 Assets Commercial levered loans $ 5,299 $ 5,269 $ — $ — $ 5,269 Liabilities Notes payable $ 207,000 $ 207,661 $ — $ 207,661 $ — Unamortized debt issuance costs (2,971) Notes payable, net of debt issuance costs $ 204,029 Secured loan payable $ 20,845 $ 21,039 $ — $ 21,039 $ — Unamortized debt issuance costs (72) Secured loan payable, net of issuance costs $ 20,773 December 31, 2020 Carrying Fair Value ($ in thousands) Value Total Level 1 Level 2 Level 3 Assets Commercial levered loans $ 12,308 $ 12,180 $ — $ — $ 12,180 Liabilities Notes payable $ 207,000 $ 207,537 $ — $ 207,537 $ — Unamortized debt issuance costs (3,733) Notes payable, net of debt issuance costs $ 203,267 Secured loan payable $ 22,750 $ 23,265 $ — $ 23,265 $ — Unamortized debt issuance costs (82) Secured loan payable, net of issuance costs $ 22,668 |
Summary of the changes in the fair value of securities measured using Level 3 inputs | Non-Redeemable Corporate Debt Preferred Stock Level 3 ($ in thousands) Securities Securities Total Fair value, December 31, 2020 $ 257,965 $ 1,400 $ 259,365 Total net losses for the period included in: Other comprehensive loss (2,922) — (2,922) Net realized loss (165) — (165) Purchases 70,894 — 70,894 Sales — — — Issuances — — — Settlements (14,723) — (14,723) Transfers into Level 3 — — — Transfers out of Level 3 — — — Fair value, June 30, 2021 $ 311,049 $ 1,400 $ 312,449 Level 3 Corporate Debt ($ in thousands) Securities Fair value, December 31, 2019 $ 149,631 Total net losses for the period included in: Other comprehensive loss (8,563) Net realized loss (2) Purchases 22,634 Sales — Issuances — Settlements (1,623) Transfers into Level 3 — Transfers out of Level 3 — Fair value, June 30, 2020 $ 162,077 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accumulated Other Comprehensive Income (Loss) | |
Summary of the components of accumulated other comprehensive (loss) income | ($ in thousands) Gross Tax Net March 31, 2021 $ 39,909 $ 7,625 $ 32,284 Unrealized holding gains on fixed maturity securities 15,275 3,206 12,069 Amounts reclassified into net income 16,542 3,310 13,232 Amounts reclassified as credit losses 23 5 18 Other comprehensive loss (1,290) (109) (1,181) June 30, 2021 $ 38,619 $ 7,516 $ 31,103 ($ in thousands) Gross Tax Net March 31, 2020 $ (31,469) $ (7,481) $ (23,988) Unrealized holding gains on fixed maturity securities 99,307 20,851 78,456 Amounts reclassified into net income 3,678 726 2,952 Amounts reclassified as credit losses (1,570) (330) (1,240) Other comprehensive income 97,199 20,455 76,744 June 30, 2020 $ 65,730 $ 12,974 $ 52,756 ($ in thousands) Gross Tax Net December 31, 2020 $ 111,755 $ 22,633 $ 89,122 Unrealized holding losses on fixed maturity securities (23,048) (4,849) (18,199) Amounts reclassified into net income 49,642 10,174 39,468 Amounts reclassified as credit losses 446 94 352 Other comprehensive loss (73,136) (15,117) (58,019) June 30, 2021 $ 38,619 $ 7,516 $ 31,103 ($ in thousands) Gross Tax Net December 31, 2019 $ 46,123 $ 8,670 $ 37,453 Unrealized holding gains on fixed maturity securities 22,241 4,749 17,492 Amounts reclassified into net income 4,620 862 3,758 Amounts reclassified as credit losses (1,986) (417) (1,569) Other comprehensive income 19,607 4,304 15,303 June 30, 2020 $ 65,730 $ 12,974 $ 52,756 |
Summary of reclassifications out of accumulated other comprehensive (loss) income | Line in Consolidated Three Months Ended June 30 Six Months Ended June 30 ($ in thousands) Statements of Operations 2021 2020 2021 2020 AOCI Unrealized gains on securities Realized investment gains, net $ 16,542 $ 3,678 $ 49,642 $ 4,620 Income tax expense 3,310 726 10,174 862 Reclassification adjustment for credit losses included in net income Realized investment gains, net 23 (1,570) 446 (1,986) Income tax expense 5 (330) 94 (417) Total reclassifications $ 13,250 $ 1,712 $ 39,820 $ 2,189 |
Insurance Operations (Tables)
Insurance Operations (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Insurance Operations | |
Summary of reinsurance ceded and assumed relating to premiums written, earned premiums and losses and loss adjustment expenses | Three Months Ended June 30 Six Months Ended June 30 ($ in thousands) 2021 2020 2021 2020 Written premiums Direct written premiums $ 239,587 $ 185,722 $ 408,359 $ 398,673 Assumed from other companies (1,065) 672 (446) 1,505 Ceded to other companies 26,811 29,771 44,281 53,372 Net written premiums $ 211,711 $ 156,623 $ 363,632 $ 346,806 Earned premiums Direct earned premiums $ 206,280 $ 206,028 $ 406,212 $ 434,608 Assumed from other companies (590) 697 100 1,439 Ceded to other companies 26,793 25,096 54,444 48,756 Net earned premiums $ 178,897 $ 181,629 $ 351,868 $ 387,291 Percent of amount assumed to net (0.3)% 0.4% 0.0% 0.4% Losses and loss adjustment expenses incurred Direct net losses and loss adjustment expenses incurred $ 136,827 $ 120,680 $ 244,284 $ 265,057 Assumed from other companies 3,434 1,984 3,087 627 Ceded to other companies 25,861 10,191 27,448 25,654 Net losses and loss adjustment expenses incurred $ 114,400 $ 112,473 $ 219,923 $ 240,030 |
Summary of unpaid losses | June 30 ($ in thousands) 2021 2020 Gross reserve for unpaid losses and loss expenses, at beginning of year $ 1,602,902 $ 1,521,648 Ceded reserve for unpaid losses and loss expenses, at beginning of year 170,522 193,952 Net reserve for unpaid losses and loss expenses, at beginning of year 1,432,380 1,327,696 Add: Incurred losses and loss expenses occurring in the: Current year 210,287 227,842 Prior years 5,690 508 Prior years attributable to adjusted premium 3,946 11,680 Total net losses and loss adjustment expenses incurred 219,923 240,030 Less: Paid losses and loss expenses for claims occurring in the: Current year 24,087 12,168 Prior years 181,357 152,862 Total paid losses and loss expenses for claims 205,444 165,030 Net reserve for unpaid losses and loss expenses, at end of period 1,446,859 1,402,696 Ceded reserve for unpaid losses and loss expenses, at end of period 152,075 141,427 Gross reserve for unpaid losses and loss expenses, at end of period $ 1,598,934 $ 1,544,123 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Segment Information | |
Summary of gross written premiums by customer segments | Three Months Ended June 30 Six Months Ended June 30 ($ in thousands) 2021 2020 2021 2020 Customer Segment Construction $ 38,968 16.3 % $ 27,704 14.9 % $ 65,463 16.0 % $ 52,218 13.0 % Consumer Services 41,784 17.5 40,730 21.8 64,408 15.8 71,298 17.8 Marine and Energy 33,013 13.8 26,821 14.4 57,224 14.0 59,611 14.9 Media and Entertainment 23,013 9.7 17,454 9.4 43,861 10.8 47,921 12.0 Professional Services 33,896 14.2 31,891 17.1 68,337 16.8 61,589 15.4 Real Estate 40,765 17.1 47,273 25.3 60,677 14.9 80,488 20.1 Sports 5,026 2.1 4,688 2.5 10,683 2.6 14,253 3.6 Transportation 20,888 8.8 (12,340) (6.6) 34,678 8.5 9,127 2.3 Customer segment subtotal 237,353 99.5 184,221 98.8 405,331 99.4 396,505 99.1 Other 1,169 0.5 2,173 1.2 2,582 0.6 3,673 0.9 Specialty Insurance total $ 238,522 100.0 % $ 186,394 100.0 % $ 407,913 100.0 % $ 400,178 100.0 % |
Summary of gross written premiums by line of business across customer segments | Three Months Ended June 30 Six Months Ended June 30 ($ in thousands) 2021 2020 2021 2020 Line of Business Commercial Auto $ 58,271 24.4 % $ 20,649 11.1 % $ 94,391 23.1 % $ 60,980 15.2 % General Liability 107,612 45.1 81,876 43.9 178,505 43.8 160,409 40.1 Workers’ Compensation 12,007 5.0 20,420 10.9 23,852 5.9 49,241 12.3 Commercial Multiple Peril 13,915 5.9 10,928 5.9 28,167 6.9 27,293 6.8 All Other Lines 46,717 19.6 52,521 28.2 82,998 20.3 102,255 25.6 Specialty Insurance total $ 238,522 100.0 % $ 186,394 100.0 % $ 407,913 100.0 % $ 400,178 100.0 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share | |
Summary of reconciliation of the numerators and denominators of basic and diluted EPS | Continuing Operations Discontinued Operations (in thousands, except per share amounts) Income Shares Per Share Loss Shares Per Share Three Months Ended June 30, 2021 (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS: Net income (loss) available to common stockholders $ 18,062 43,955 $ 0.41 $ (1,544) 43,955 $ (0.03) Effect of dilutive securities: Stock compensation plans 868 868 Diluted EPS $ 18,062 44,823 $ 0.40 $ (1,544) 44,823 $ (0.03) Continuing Operations Discontinued Operations (in thousands, except per share amounts) Income Shares Per Share Income Shares Per Share Three Months Ended June 30, 2020 (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS: Net income available to common stockholders $ 17,283 43,810 $ 0.39 $ 279 43,810 $ 0.01 Effect of dilutive securities: Stock compensation plans 17 17 Diluted EPS $ 17,283 43,827 $ 0.39 $ 279 43,827 $ 0.01 Continuing Operations Discontinued Operations (in thousands, except per share amounts) Income Shares Per Share Loss Shares Per Share Six Months Ended June 30, 2021 (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS: Net income (loss) available to common stockholders $ 55,609 43,946 $ 1.27 $ (3,882) 43,946 $ (0.09) Effect of dilutive securities: Stock compensation plans 807 807 Diluted EPS $ 55,609 44,753 $ 1.24 $ (3,882) 44,753 $ (0.08) Continuing Operations Discontinued Operations (in thousands, except per share amounts) Income Shares Per Share Income Shares Per Share Six Months Ended June 30, 2020 (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS: Net income available to common stockholders $ 24,094 43,866 $ 0.55 $ 536 43,866 $ 0.01 Effect of dilutive securities: Stock compensation plans 190 190 Diluted EPS $ 24,094 44,056 $ 0.55 $ 536 44,056 $ 0.01 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Share-Based Compensation | |
Schedule of stock-based compensation transactions | Number of Weighted Average Grant Date Shares Fair Value Per Share Unvested at December 31, 2020 1,705,441 $ 13.46 Granted 15,634 $ 12.55 Vested (76,213) $ 12.97 Forfeited (31,488) $ 12.60 Unvested at June 30, 2021 1,613,374 $ 13.49 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies | |
Schedule of lease liabilities and right-of-use lease assets | ($ in thousands) June 30, 2021 One year or less $ 1,678 More than one year to two years — More than two years to three years — More than three years to four years — More than four years to five years — More than five years — Total undiscounted future minimum lease payments 1,678 Less: difference between lease payments and discounted lease liabilities 13 Lease liabilities $ 1,665 Right-of-use assets $ 1,461 Prepaid lease assets, net of lease allowances and incentives 204 Total $ 1,665 |
Basis of Reporting (Details)
Basis of Reporting (Details) | Jan. 14, 2021$ / shares |
Pedal Parent, Inc. | Prosight Global, Inc. | |
Business Acquisition [Line Items] | |
Cash amount to be received for each common share held by the stockholders | $ 12.85 |
Supplemental Cash Flow - Summar
Supplemental Cash Flow - Summary of supplemental cash flow information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Supplemental Cash Flow | ||
Interest | $ 4,385 | $ 6,187 |
Federal income tax | 5,850 | |
Operating lease right-of-use assets due to adoption of ASU 2016-02 - continuing operations | 1,461 | 4,117 |
Operating lease right-of-use assets due to adoption of ASU 2016-02 - discontinued operations | 1,987 | 2,174 |
Operating lease liabilities due to adoption of ASU 2016-02 - continuing operations | 1,665 | 4,624 |
Operating lease liabilities due to adoption of ASU 2016-02 - discontinued operations | $ 2,274 | 2,526 |
Tax benefit on payments related to offering costs | $ 635 |
Supplemental Cash Flow (Details
Supplemental Cash Flow (Details) | 6 Months Ended |
Jun. 30, 2021shares | |
Supplemental cash flow information | |
Shares withheld to settle tax withholding on vested RSUs | 50,926 |
Net shares issued upon settlement of vested RSUs | 183,677 |
Discontinued Operations - Conso
Discontinued Operations - Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Net income (loss) | |||||
Net income (loss) from discontinued operations | $ (1,544) | $ 279 | $ (3,882) | $ 536 | |
Assets | |||||
Total assets | 22,709 | 22,709 | $ 21,354 | ||
Liabilities | |||||
Total liabilities | 44,115 | 44,115 | 37,729 | ||
Insurance Operations, U.K. | Discontinued operation | |||||
Net income (loss) | |||||
Net income (loss) from discontinued operations | (1,500) | $ 300 | (3,900) | $ 500 | |
Assets | |||||
Cash and investments | 11,032 | 11,032 | 10,939 | ||
Other assets | 11,677 | 11,677 | 10,415 | ||
Total assets | 22,709 | 22,709 | 21,354 | ||
Liabilities | |||||
Reserve for unpaid losses and loss adjustment expenses | 38,668 | 38,668 | 32,414 | ||
Other liabilities | 5,447 | 5,447 | 5,315 | ||
Total liabilities | $ 44,115 | $ 44,115 | $ 37,729 |
Investments - Gross Unrealized
Investments - Gross Unrealized Gains and Losses on AFS Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 |
Gross unrealized gains and losses on fixed maturity securities included in assets | |||
Fixed maturity securities, available-for-sale, amortized cost | $ 1,651,797 | $ 2,159,743 | |
Credit Loss Allowance | (1,011) | (1,457) | |
Gross Unrealized Losses | (9,781) | ||
Fair Value | 1,686,570 | 2,266,057 | |
Short-term investments | 18,833 | 154 | |
Commercial levered loans (amortized cost) | 5,299 | 12,308 | |
Non-redeemable preferred stock securities | 1,400 | 7,049 | |
Bond exchange-traded funds | 44,882 | ||
Limited partnerships and limited liability companies (fair value) | 97,150 | 90,468 | |
Total investments | 1,809,252 | 2,420,918 | |
Fixed maturity securities | |||
Gross unrealized gains and losses on fixed maturity securities included in assets | |||
Fixed maturity securities, available-for-sale, amortized cost | 1,651,797 | 2,159,743 | |
Credit Loss Allowance | (1,011) | (1,457) | $ (1,985) |
Gross Unrealized Gains | 51,525 | 117,552 | |
Gross Unrealized Losses | (15,741) | ||
Fair Value | 1,686,570 | 2,266,057 | |
Fixed maturity securities | U.S. Treasury securities | |||
Gross unrealized gains and losses on fixed maturity securities included in assets | |||
Fixed maturity securities, available-for-sale, amortized cost | 45,555 | 50,248 | |
Gross Unrealized Gains | 1,269 | 1,909 | |
Gross Unrealized Losses | (28) | ||
Fair Value | 46,796 | 52,157 | |
Fixed maturity securities | Government agency securities | |||
Gross unrealized gains and losses on fixed maturity securities included in assets | |||
Fixed maturity securities, available-for-sale, amortized cost | 19,935 | 30,446 | |
Gross Unrealized Gains | 148 | 561 | |
Gross Unrealized Losses | (171) | ||
Fair Value | 19,912 | 31,007 | |
Fixed maturity securities | Corporate debt securities | |||
Gross unrealized gains and losses on fixed maturity securities included in assets | |||
Fixed maturity securities, available-for-sale, amortized cost | 1,026,771 | 1,317,667 | |
Credit Loss Allowance | (508) | (598) | (615) |
Gross Unrealized Gains | 38,803 | 86,447 | |
Gross Unrealized Losses | (12,676) | (6,485) | |
Fair Value | 1,052,390 | 1,397,031 | |
Fixed maturity securities | Municipal debt obligations | |||
Gross unrealized gains and losses on fixed maturity securities included in assets | |||
Fixed maturity securities, available-for-sale, amortized cost | 144,356 | 198,773 | |
Gross Unrealized Gains | 3,100 | 8,437 | |
Gross Unrealized Losses | (435) | (116) | |
Fair Value | 147,021 | 207,094 | |
Fixed maturity securities | ABS | |||
Gross unrealized gains and losses on fixed maturity securities included in assets | |||
Fixed maturity securities, available-for-sale, amortized cost | 64,590 | 54,989 | |
Credit Loss Allowance | (275) | ||
Gross Unrealized Gains | 505 | 696 | |
Gross Unrealized Losses | (200) | (427) | |
Fair Value | 64,895 | 55,258 | |
Fixed maturity securities | CLO | |||
Gross unrealized gains and losses on fixed maturity securities included in assets | |||
Fixed maturity securities, available-for-sale, amortized cost | 90,942 | 140,615 | |
Credit Loss Allowance | (6) | ||
Gross Unrealized Gains | 60 | 154 | |
Gross Unrealized Losses | (427) | (1,643) | |
Fair Value | 90,575 | 139,126 | |
Fixed maturity securities | CMBS | |||
Gross unrealized gains and losses on fixed maturity securities included in assets | |||
Fixed maturity securities, available-for-sale, amortized cost | 53,219 | 111,313 | |
Gross Unrealized Gains | 1,570 | 7,008 | |
Gross Unrealized Losses | (217) | (361) | |
Fair Value | 54,572 | 117,960 | |
Fixed maturity securities | RMBS - non-agency | |||
Gross unrealized gains and losses on fixed maturity securities included in assets | |||
Fixed maturity securities, available-for-sale, amortized cost | 89,432 | 109,110 | |
Credit Loss Allowance | (503) | (859) | $ (1,089) |
Gross Unrealized Gains | 5,262 | 8,619 | |
Gross Unrealized Losses | (474) | (734) | |
Fair Value | 93,717 | 116,136 | |
Fixed maturity securities | RMBS - agency | |||
Gross unrealized gains and losses on fixed maturity securities included in assets | |||
Fixed maturity securities, available-for-sale, amortized cost | 116,997 | 146,582 | |
Gross Unrealized Gains | 808 | 3,721 | |
Gross Unrealized Losses | (1,113) | (15) | |
Fair Value | $ 116,692 | $ 150,288 |
Investments - Unrealized Loss P
Investments - Unrealized Loss Position (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021USD ($)security | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)security | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($)security | |
Unrealized Losses | |||||
Fixed maturity securities, unrealized loss position | security | 360 | 360 | 212 | ||
Credit loss allowance expense (benefit) for fixed maturity securities | $ 0 | $ 1,600 | $ 400 | $ 2,000 | |
Fixed maturity securities | |||||
Fair Value | |||||
Less Than 12 Months | 420,027 | 420,027 | $ 119,476 | ||
Greater Than 12 Months | 148,769 | 148,769 | 204,714 | ||
Total Fair Value | 568,796 | 568,796 | 324,190 | ||
Unrealized Losses | |||||
Less Than 12 Months | (5,404) | (5,404) | (2,004) | ||
Greater Than 12 Months | (10,337) | (10,337) | (7,777) | ||
Total Unrealized Losses | (15,741) | (15,741) | (9,781) | ||
Fixed maturity securities | U.S. Treasury securities | |||||
Fair Value | |||||
Less Than 12 Months | 23,079 | 23,079 | |||
Total Fair Value | 23,079 | 23,079 | |||
Unrealized Losses | |||||
Less Than 12 Months | (28) | (28) | |||
Total Unrealized Losses | (28) | (28) | |||
Fixed maturity securities | Government agency securities | |||||
Fair Value | |||||
Less Than 12 Months | 11,949 | 11,949 | |||
Total Fair Value | 11,949 | 11,949 | |||
Unrealized Losses | |||||
Less Than 12 Months | (171) | (171) | |||
Total Unrealized Losses | (171) | (171) | |||
Fixed maturity securities | Corporate debt securities | |||||
Fair Value | |||||
Less Than 12 Months | 193,335 | 193,335 | 36,450 | ||
Greater Than 12 Months | 88,194 | 88,194 | 101,628 | ||
Total Fair Value | 281,529 | 281,529 | 138,078 | ||
Unrealized Losses | |||||
Less Than 12 Months | (3,096) | (3,096) | (740) | ||
Greater Than 12 Months | (9,580) | (9,580) | (5,745) | ||
Total Unrealized Losses | (12,676) | (12,676) | (6,485) | ||
Fixed maturity securities | Municipal debt obligations | |||||
Fair Value | |||||
Less Than 12 Months | 48,243 | 48,243 | 12,211 | ||
Greater Than 12 Months | 2,162 | 2,162 | 3,344 | ||
Total Fair Value | 50,405 | 50,405 | 15,555 | ||
Unrealized Losses | |||||
Less Than 12 Months | (431) | (431) | (73) | ||
Greater Than 12 Months | (4) | (4) | (43) | ||
Total Unrealized Losses | (435) | (435) | (116) | ||
Fixed maturity securities | ABS | |||||
Fair Value | |||||
Less Than 12 Months | 25,627 | 25,627 | 9,121 | ||
Greater Than 12 Months | 6,421 | 6,421 | 9,461 | ||
Total Fair Value | 32,048 | 32,048 | 18,582 | ||
Unrealized Losses | |||||
Less Than 12 Months | (136) | (136) | (364) | ||
Greater Than 12 Months | (64) | (64) | (63) | ||
Total Unrealized Losses | (200) | (200) | (427) | ||
Fixed maturity securities | CLO | |||||
Fair Value | |||||
Less Than 12 Months | 7,596 | 7,596 | 29,909 | ||
Greater Than 12 Months | 41,476 | 41,476 | 82,758 | ||
Total Fair Value | 49,072 | 49,072 | 112,667 | ||
Unrealized Losses | |||||
Less Than 12 Months | (17) | (17) | (215) | ||
Greater Than 12 Months | (410) | (410) | (1,428) | ||
Total Unrealized Losses | (427) | (427) | (1,643) | ||
Fixed maturity securities | CMBS | |||||
Fair Value | |||||
Less Than 12 Months | 12,138 | 12,138 | 17,559 | ||
Greater Than 12 Months | 4,695 | 4,695 | 800 | ||
Total Fair Value | 16,833 | 16,833 | 18,359 | ||
Unrealized Losses | |||||
Less Than 12 Months | (202) | (202) | (348) | ||
Greater Than 12 Months | (15) | (15) | (13) | ||
Total Unrealized Losses | (217) | (217) | (361) | ||
Fixed maturity securities | RMBS - non-agency | |||||
Fair Value | |||||
Less Than 12 Months | 15,300 | 15,300 | 11,759 | ||
Greater Than 12 Months | 5,821 | 5,821 | 6,723 | ||
Total Fair Value | 21,121 | 21,121 | 18,482 | ||
Unrealized Losses | |||||
Less Than 12 Months | (210) | (210) | (249) | ||
Greater Than 12 Months | (264) | (264) | (485) | ||
Total Unrealized Losses | (474) | (474) | (734) | ||
Fixed maturity securities | RMBS - agency | |||||
Fair Value | |||||
Less Than 12 Months | 82,760 | 82,760 | 2,467 | ||
Total Fair Value | 82,760 | 82,760 | 2,467 | ||
Unrealized Losses | |||||
Less Than 12 Months | (1,113) | (1,113) | (15) | ||
Total Unrealized Losses | $ (1,113) | $ (1,113) | $ (15) |
Investments - Rollforward of th
Investments - Rollforward of the credit losses allowance for fixed maturity securities (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Beginning Balance | $ 1,457 | |
Ending Balance | 1,011 | |
Fixed maturity securities | ||
Beginning Balance | 1,457 | |
Additions New Securities | $ 1,986 | |
Reduction Sales | (170) | (1) |
Changes in securities with previous allowance | (276) | |
Ending Balance | 1,011 | 1,985 |
Fixed maturity securities | Corporate debt securities | ||
Beginning Balance | 598 | |
Additions New Securities | 615 | |
Reduction Sales | (111) | |
Changes in securities with previous allowance | 21 | |
Ending Balance | 508 | 615 |
Fixed maturity securities | ABS | ||
Additions New Securities | 275 | |
Ending Balance | 275 | |
Fixed maturity securities | CLO | ||
Additions New Securities | 6 | |
Ending Balance | 6 | |
Fixed maturity securities | RMBS - non-agency | ||
Beginning Balance | 859 | |
Additions New Securities | 1,090 | |
Reduction Sales | (59) | (1) |
Changes in securities with previous allowance | (297) | |
Ending Balance | $ 503 | $ 1,089 |
Investments - Amortized Cost an
Investments - Amortized Cost and Fair Value of Fixed Maturity Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Amortized Cost | ||
Due in one year or less | $ 112,908 | |
Due after one through five years | 506,126 | |
Due after five through ten years | 389,723 | |
Due after ten years | 207,925 | |
Amortized Cost | 1,216,682 | |
Amortized Cost | 1,651,797 | $ 2,159,743 |
Fair Value | ||
Due in one year or less | 114,423 | |
Due after one through five years | 517,934 | |
Due after five through ten years | 400,097 | |
Due after ten years | 213,753 | |
Fair Value | 1,246,207 | |
Debt Securities, Available-for-sale, Total | 1,686,570 | $ 2,266,057 |
Government agency securities | ||
Amortized Cost | ||
Amortized Cost - Structured securities | 19,935 | |
Fair Value | ||
Fair Value - Structured securities | 19,912 | |
ABS | ||
Amortized Cost | ||
Amortized Cost - Structured securities | 64,590 | |
Fair Value | ||
Fair Value - Structured securities | 64,895 | |
CLO | ||
Amortized Cost | ||
Amortized Cost - Structured securities | 90,942 | |
Fair Value | ||
Fair Value - Structured securities | 90,575 | |
CMBS | ||
Amortized Cost | ||
Amortized Cost - Structured securities | 53,219 | |
Fair Value | ||
Fair Value - Structured securities | 54,572 | |
RMBS - non-agency | ||
Amortized Cost | ||
Amortized Cost - Structured securities | 89,432 | |
Fair Value | ||
Fair Value - Structured securities | 93,717 | |
RMBS - agency | ||
Amortized Cost | ||
Amortized Cost - Structured securities | 116,997 | |
Fair Value | ||
Fair Value - Structured securities | $ 116,692 |
Investments - Limited Partnersh
Investments - Limited Partnerships and Limited Liability Company Investments (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Investments | ||
Limited partnerships and limited liability companies (fair value) | $ 97,150 | $ 90,468 |
Threshold notice period to withdraw funds | 90 days | |
Minimum holding period | 1 year | |
PIMCO Tactical Opportunities Fund | ||
Investments | ||
Limited partnerships and limited liability companies (fair value) | $ 49,200 |
Investments - Gain Loss on Inve
Investments - Gain Loss on Investment (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Investments | |||||
Allowance for loan losses | $ 0 | $ 0 | $ 0 | ||
Proceeds from sales and redemptions in AFS securities | 726.2 | $ 154 | 1,207.6 | $ 306.8 | |
Gross realized gains from sales and redemptions in AFS securities | 17.1 | 3.7 | 49.9 | 4.7 | |
Gross realized losses from sales and redemptions of AFS investments | $ 1.4 | $ 0.2 | $ 1.5 | $ 0.6 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Investments | ||||
Gross investment income (loss) | $ 15,827 | $ 24,441 | $ 33,271 | $ 33,931 |
Less: investment income attributable to funds withheld liabilities | 98 | 118 | 202 | 254 |
Less: expenses | 1,148 | 532 | 1,809 | 1,071 |
Net investment income | 14,581 | 23,791 | 31,260 | 32,606 |
Fixed maturity securities | ||||
Investments | ||||
Gross investment income (loss) | 11,826 | 15,849 | 25,585 | 32,131 |
Net limited partnerships gains | ||||
Investments | ||||
Gross investment income (loss) | 2,917 | 8,131 | 8,100 | 1,254 |
Other | ||||
Investments | ||||
Gross investment income (loss) | $ 1,084 | $ 461 | $ (414) | $ 546 |
Investments - Additional Inform
Investments - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Investments | |||||
Securities required to be held with various regulatory authorities as required by law | $ 230.5 | $ 230.5 | $ 233.4 | ||
Fair value of assets on deposit in collateral agreements | 254.5 | 254.5 | 256.4 | ||
Carrying value of assets on deposit in collateral agreements | $ 243.5 | $ 243.5 | $ 241 | ||
Securities lending | |||||
Collateral received as a percentage of domestic securities loaned | 102.00% | 102.00% | |||
Collateral received as a percentage of foreign securities loaned | 105.00% | 105.00% | |||
Fair value of cash collateral received | $ 11.4 | $ 11.4 | |||
Non-redeemable preferred stock securities | |||||
Non-redeemable preferred stock securities | |||||
Net gain (loss) recognized | 0.1 | $ 0.4 | 0.5 | $ 0.1 | |
Unrealized gain (loss) | (0.4) | $ 0.4 | $ 0.1 | ||
Realized gain (loss) on sale | 0.5 | 0.5 | |||
Bond exchange-traded funds | |||||
Bond exchange-traded funds | |||||
Net gain (loss) recognized | 0.2 | (1.3) | |||
Realized gain (loss) on sale | $ 0.2 | $ (1.3) |
Fair Value Measurements - Asset
Fair Value Measurements - Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Major categories of assets measured at fair value on a recurring basis | ||
Limited partnerships and limited liability companies (fair value) | $ 97,150 | $ 90,468 |
Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 1,687,970 | 2,317,988 |
Limited partnerships and limited liability companies (fair value) | 97,150 | 90,468 |
Total invested assets carried at fair value | 1,785,120 | 2,408,456 |
Level 1 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 44,882 | |
Level 2 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 1,375,521 | 2,013,741 |
Level 3 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 312,449 | 259,365 |
Non-redeemable preferred stock securities | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 1,400 | 7,049 |
Non-redeemable preferred stock securities | Level 2 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 5,649 | |
Non-redeemable preferred stock securities | Level 3 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 1,400 | 1,400 |
Bond exchange-traded funds | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 44,882 | |
Bond exchange-traded funds | Level 1 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 44,882 | |
Fixed maturity securities | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 1,686,570 | 2,266,057 |
Fixed maturity securities | Level 2 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 1,375,521 | 2,008,092 |
Fixed maturity securities | Level 3 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 311,049 | 257,965 |
Fixed maturity securities | U.S. Treasury securities | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 46,796 | 52,157 |
Fixed maturity securities | U.S. Treasury securities | Level 2 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 46,796 | 52,157 |
Fixed maturity securities | Corporate debt securities | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 1,052,390 | 1,397,031 |
Fixed maturity securities | Corporate debt securities | Level 2 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 741,341 | 1,139,066 |
Fixed maturity securities | Corporate debt securities | Level 3 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 311,049 | 257,965 |
Fixed maturity securities | Government agency securities | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 19,912 | 31,007 |
Fixed maturity securities | Government agency securities | Level 2 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 19,912 | 31,007 |
Fixed maturity securities | Municipal debt obligations | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 147,021 | 207,094 |
Fixed maturity securities | Municipal debt obligations | Level 2 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 147,021 | 207,094 |
Fixed maturity securities | ABS | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 64,895 | 55,258 |
Fixed maturity securities | ABS | Level 2 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 64,895 | 55,258 |
Fixed maturity securities | CLO | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 90,575 | 139,126 |
Fixed maturity securities | CLO | Level 2 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 90,575 | 139,126 |
Fixed maturity securities | CMBS | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 54,572 | 117,960 |
Fixed maturity securities | CMBS | Level 2 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 54,572 | 117,960 |
Fixed maturity securities | RMBS - non-agency | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 93,717 | 116,136 |
Fixed maturity securities | RMBS - non-agency | Level 2 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 93,717 | 116,136 |
Fixed maturity securities | RMBS - agency | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | 116,692 | 150,288 |
Fixed maturity securities | RMBS - agency | Level 2 | Recurring | ||
Major categories of assets measured at fair value on a recurring basis | ||
Investments | $ 116,692 | $ 150,288 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Liabilities | ||
Notes payable net of debt issuance costs | $ 204,029 | $ 203,267 |
Carrying Value | ||
Assets | ||
Commercial levered loans | 5,299 | 12,308 |
Fair Value | ||
Assets | ||
Commercial levered loans | 5,269 | 12,180 |
Level 3 | Fair Value | ||
Assets | ||
Commercial levered loans | 5,269 | 12,180 |
Notes Payable | Carrying Value | ||
Liabilities | ||
Notes payable | 207,000 | 207,000 |
Unamortized debt issuance costs | (2,971) | (3,733) |
Notes payable net of debt issuance costs | 204,029 | 203,267 |
Notes Payable | Fair Value | ||
Liabilities | ||
Notes payable | $ 207,661 | $ 207,537 |
Fair value of the notes payable as a percentage of par value | 100.30% | 100.30% |
Notes Payable | Level 2 | Fair Value | ||
Liabilities | ||
Notes payable | $ 207,661 | $ 207,537 |
Secured Loan Payable | Carrying Value | ||
Liabilities | ||
Unamortized debt issuance costs | (72) | (82) |
Secured loan payable | 20,845 | 22,750 |
Secured loan payable, net of issuance costs | 20,773 | 22,668 |
Secured Loan Payable | Fair Value | ||
Liabilities | ||
Secured loan payable | $ 21,039 | $ 23,265 |
Fair value of the loan payable as a percentage of par value | 101.30% | 102.30% |
Secured Loan Payable | Level 2 | Fair Value | ||
Liabilities | ||
Secured loan payable | $ 21,039 | $ 23,265 |
Fair Value Measurements - Secur
Fair Value Measurements - Securities Measured Using Level 3 (Details) - Level 3 - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Changes in fair value of securities measured using Level 3 inputs | ||
Fair value at beginning of period | $ 259,365 | |
Other comprehensive loss | (2,922) | |
Net realized gain (loss) | (165) | |
Purchases | 70,894 | |
Settlements | (14,723) | |
Fair value at end of period | 312,449 | |
Corporate debt securities | ||
Changes in fair value of securities measured using Level 3 inputs | ||
Fair value at beginning of period | 257,965 | $ 149,631 |
Other comprehensive loss | (2,922) | (8,563) |
Net realized gain (loss) | (165) | (2) |
Purchases | 70,894 | 22,634 |
Settlements | (14,723) | (1,623) |
Fair value at end of period | 311,049 | $ 162,077 |
Non-redeemable preferred stock securities | ||
Changes in fair value of securities measured using Level 3 inputs | ||
Fair value at beginning of period | 1,400 | |
Fair value at end of period | $ 1,400 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Components of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
AOCI Attributable to Parent, Net of Tax | ||||
Balance at the beginning of period, gross | $ 39,909 | $ (31,469) | $ 111,755 | $ 46,123 |
Unrealized holding gains (losses) on fixed maturity securities, gross | 15,275 | 99,307 | (23,048) | 22,241 |
Amounts reclassified into net income, gross | 16,542 | 3,678 | 49,642 | 4,620 |
Amounts reclassified as credit losses, gross | 23 | (1,570) | 446 | (1,986) |
Other comprehensive (loss) income, gross | (1,290) | 97,199 | (73,136) | 19,607 |
Balance at the end of period, gross | 38,619 | 65,730 | 38,619 | 65,730 |
Balance at the beginning of period, tax | 7,625 | (7,481) | 22,633 | 8,670 |
Unrealized holding gains (losses) on fixed income securities, tax | 3,206 | 20,851 | (4,849) | 4,749 |
Amounts reclassified into net income, tax | 3,310 | 726 | 10,174 | 862 |
Amounts reclassified as credit losses, tax expense (benefit) | 5 | (330) | 94 | (417) |
Other comprehensive (loss) income, tax | (109) | 20,455 | (15,117) | 4,304 |
Balance at the end of period, tax | 7,516 | 12,974 | 7,516 | 12,974 |
Balance at the beginning of period, net | 32,284 | (23,988) | 89,122 | 37,453 |
Unrealized holding gains (losses) on fixed income securities | 12,069 | 78,456 | (18,199) | 17,492 |
Amounts reclassified into net income | 13,232 | 2,952 | 39,468 | 3,758 |
Amounts reclassified as credit losses, net | 18 | (1,240) | 352 | (1,569) |
Other comprehensive income (loss) | (1,181) | 76,744 | (58,019) | 15,303 |
Balance at the end of period, net | $ 31,103 | $ 52,756 | $ 31,103 | $ 52,756 |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) - Reclassifications Out of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Unrealized gains on securities, tax expense (benefit) | $ 3,310 | $ 726 | $ 10,174 | $ 862 |
Reclassification adjustment for credit losses included in net income | 23 | (1,570) | 446 | (1,986) |
Reclassification adjustment for credit losses included in net income, tax expense (benefit) | 5 | (330) | 94 | (417) |
Total reclassifications | 13,250 | 1,712 | 39,820 | 2,189 |
Realized Investment Gains (Losses) | ||||
Unrealized gains (losses) on securities | 16,542 | 3,678 | 49,642 | 4,620 |
Reclassification adjustment for credit losses included in net income | 23 | (1,570) | 446 | (1,986) |
Income Tax Expense | ||||
Unrealized gains on securities, tax expense (benefit) | 3,310 | 726 | 10,174 | 862 |
Reclassification adjustment for credit losses included in net income, tax expense (benefit) | $ 5 | $ (330) | $ 94 | $ (417) |
Related-Party Information (Deta
Related-Party Information (Details) - Former CEO - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Related party transactions | ||||
Niche management fees | $ 0.3 | $ 0.6 | ||
Other Expense | ||||
Related party transactions | ||||
Severance expense | $ 0 | $ 0 | $ 0 | $ 0.3 |
Insurance Operations - Reinsura
Insurance Operations - Reinsurance Ceded and Assumed (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Written premiums | ||||
Direct written premiums | $ 239,587 | $ 185,722 | $ 408,359 | $ 398,673 |
Assumed from other companies | 672 | 1,505 | ||
Assumed from other companies | (1,065) | (446) | ||
Ceded to other companies | 26,811 | 29,771 | 44,281 | 53,372 |
Net written premiums | 211,711 | 156,623 | 363,632 | 346,806 |
Earned premiums | ||||
Direct earned premiums | 206,280 | 206,028 | 406,212 | 434,608 |
Assumed from other companies | 697 | 100 | 1,439 | |
Assumed from other companies | (590) | |||
Ceded to other companies | 26,793 | 25,096 | 54,444 | 48,756 |
Net premiums earned | $ 178,897 | $ 181,629 | $ 351,868 | $ 387,291 |
Percent of amount assumed to net | 0.40% | 0.00% | 0.40% | |
Percent of amount assumed to net | (0.30%) | |||
Losses and loss adjustment expenses incurred | ||||
Direct net losses and loss adjustment expenses incurred | $ 136,827 | $ 120,680 | $ 244,284 | $ 265,057 |
Assumed from other companies | 3,434 | 1,984 | 3,087 | 627 |
Ceded to other companies | 25,861 | 10,191 | 27,448 | 25,654 |
Net losses and loss adjustment expenses incurred | $ 114,400 | $ 112,473 | $ 219,923 | $ 240,030 |
Insurance Operations - Allowanc
Insurance Operations - Allowance for Credit Losses (Details) - USD ($) $ in Millions | Jun. 30, 2021 | Dec. 31, 2020 |
Allowance for credit losses | ||
Allowance for uncollectible premiums receivable | $ 5.3 | $ 6.9 |
Amount currently with collection agencies | 5.5 | |
Allowance for uncollectible reinsurance | $ 0.7 | $ 0.7 |
Insurance Operations - Gross Wr
Insurance Operations - Gross Written Premiums (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021USD ($)item | Jun. 30, 2020USD ($)item | Jun. 30, 2021USD ($)item | Jun. 30, 2020USD ($)item | |
Insurance Operations | ||||
Number of distribution partners contributing the largest amounts of direct written premiums | item | 3 | 3 | 3 | 3 |
Direct premiums written by the largest distribution partners | $ | $ 96.7 | $ 80.8 | $ 153.5 | $ 146.9 |
Insurance Operations - Unpaid L
Insurance Operations - Unpaid Losses (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Gross reserve for unpaid losses and loss expenses, at beginning of year | $ 1,602,902 | $ 1,521,648 |
Ceded reserve for unpaid losses and loss expenses, at beginning of year | 170,522 | 193,952 |
Net reserve for unpaid losses and loss expenses, at beginning of year | 1,432,380 | 1,327,696 |
Incurred losses and loss expenses occurring in the: | ||
Current year | 210,287 | 227,842 |
Prior years | 5,690 | 508 |
Prior years attributable to adjusted premium | 3,946 | 11,680 |
Total net losses and loss adjustment expenses incurred | 219,923 | 240,030 |
Paid losses and loss expenses for claims occurring in the: | ||
Current year | 24,087 | 12,168 |
Prior years | 181,357 | 152,862 |
Total paid losses and loss expenses for claims | 205,444 | 165,030 |
Net reserves for unpaid losses and loss expenses, at end of period | 1,446,859 | 1,402,696 |
Ceded reserve for unpaid losses and loss expenses, at end of period | 152,075 | 141,427 |
Gross reserve for unpaid losses and loss expenses, at end of period | 1,598,934 | 1,544,123 |
Commercial Auto | ||
Incurred losses and loss expenses occurring in the: | ||
Prior years | 2,900 | (5,200) |
General Liability | ||
Incurred losses and loss expenses occurring in the: | ||
Prior years | (3,200) | 12,100 |
Workers' Compensation | ||
Incurred losses and loss expenses occurring in the: | ||
Prior years | (6,200) | (8,300) |
Commercial Multiple Peril | ||
Incurred losses and loss expenses occurring in the: | ||
Prior years | 4,700 | 4,300 |
All Other Lines | ||
Incurred losses and loss expenses occurring in the: | ||
Prior years | $ 7,500 | $ (2,400) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - subsidiary | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Taxes | ||||
Number of non-US subsidiaries | 1 | |||
Effective income tax rate | 20.60% | 21.60% | 21.40% | 21.90% |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)segment | Jun. 30, 2020USD ($) | |
Segment information | ||||
Number of reportable segments | segment | 1 | |||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 238,522 | $ 186,394 | $ 407,913 | $ 400,178 |
Gross written premiums, percent | 100.00% | 100.00% | 100.00% | 100.00% |
Commercial Auto | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 58,271 | $ 20,649 | $ 94,391 | $ 60,980 |
Gross written premiums, percent | 24.40% | 11.10% | 23.10% | 15.20% |
General Liability | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 107,612 | $ 81,876 | $ 178,505 | $ 160,409 |
Gross written premiums, percent | 45.10% | 43.90% | 43.80% | 40.10% |
Workers' Compensation | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 12,007 | $ 20,420 | $ 23,852 | $ 49,241 |
Gross written premiums, percent | 5.00% | 10.90% | 5.90% | 12.30% |
Commercial Multiple Peril | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 13,915 | $ 10,928 | $ 28,167 | $ 27,293 |
Gross written premiums, percent | 5.90% | 5.90% | 6.90% | 6.80% |
All Other Lines | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 46,717 | $ 52,521 | $ 82,998 | $ 102,255 |
Gross written premiums, percent | 19.60% | 28.20% | 20.30% | 25.60% |
Customer Segment | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 237,353 | $ 184,221 | $ 405,331 | $ 396,505 |
Gross written premiums, percent | 99.50% | 98.80% | 99.40% | 99.10% |
Construction | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 38,968 | $ 27,704 | $ 65,463 | $ 52,218 |
Gross written premiums, percent | 16.30% | 14.90% | 16.00% | 13.00% |
Consumer Services | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 41,784 | $ 40,730 | $ 64,408 | $ 71,298 |
Gross written premiums, percent | 17.50% | 21.80% | 15.80% | 17.80% |
Marine and Energy | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 33,013 | $ 26,821 | $ 57,224 | $ 59,611 |
Gross written premiums, percent | 13.80% | 14.40% | 14.00% | 14.90% |
Media and Entertainment | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 23,013 | $ 17,454 | $ 43,861 | $ 47,921 |
Gross written premiums, percent | 9.70% | 9.40% | 10.80% | 12.00% |
Professional Services | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 33,896 | $ 31,891 | $ 68,337 | $ 61,589 |
Gross written premiums, percent | 14.20% | 17.10% | 16.80% | 15.40% |
Real Estate | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 40,765 | $ 47,273 | $ 60,677 | $ 80,488 |
Gross written premiums, percent | 17.10% | 25.30% | 14.90% | 20.10% |
Sports | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 5,026 | $ 4,688 | $ 10,683 | $ 14,253 |
Gross written premiums, percent | 2.10% | 2.50% | 2.60% | 3.60% |
Transportation | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 20,888 | $ 34,678 | $ 9,127 | |
Gross written premiums | $ (12,340) | |||
Gross written premiums, percent | 8.80% | (6.60%) | 8.50% | 2.30% |
Other | ||||
Summary of the Company's gross written premium by customer segments within our Specialty Insurance segment | ||||
Gross written premiums | $ 1,169 | $ 2,173 | $ 2,582 | $ 3,673 |
Gross written premiums, percent | 0.50% | 1.20% | 0.60% | 0.90% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Basic EPS- Income: | ||||
Net income (loss) available to common stockholders, continuing operations | $ 18,062 | $ 17,283 | $ 55,609 | $ 24,094 |
Net income (loss) available to common stockholders, discontinued operations | $ (1,544) | $ 279 | $ (3,882) | $ 536 |
Basic EPS - Shares: | ||||
Shares outstanding, basic (in shares) | 43,955 | 43,810 | 43,946 | 43,866 |
Basic EPS - Per Share Amount: | ||||
Net income from continuing operations | $ 0.41 | $ 0.39 | $ 1.27 | $ 0.55 |
Net Income available to common stockholders, discontinued operations (in dollars per share) | $ (0.03) | $ 0.01 | $ (0.09) | $ 0.01 |
Effect of dilutive securities - Shares: | ||||
Stock compensation plans (in shares) | 868 | 17 | 807 | 190 |
Diluted EPS - Income | ||||
Diluted EPS, continuing operations | $ 18,062 | $ 17,283 | $ 55,609 | $ 24,094 |
Diluted EPS, discontinued operations | $ (1,544) | $ 279 | $ (3,882) | $ 536 |
Diluted EPS - Shares | ||||
Shares outstanding, diluted (in shares) | 44,823 | 43,827 | 44,753 | 44,056 |
Diluted EPS - Per Share Amount | ||||
Diluted earnings per share - continuing operations (in dollars per share) | $ 0.40 | $ 0.39 | $ 1.24 | $ 0.55 |
Diluted EPS, discontinued operations (in dollars per share) | $ (0.03) | $ 0.01 | $ (0.08) | $ 0.01 |
Share-Based Compensation - 2019
Share-Based Compensation - 2019 Equity Incentive Plan (Details) - 2019 Equity Incentive Plan | Jul. 24, 2019shares |
Share-based Compensation | |
Number of common stock authorized | 4,500,000 |
Number of common shares reserved for issuance | 4,500,000 |
Share-Based Compensation - 20_2
Share-Based Compensation - 2019 Plan Restricted Stock Activity (Details) $ / shares in Units, $ in Millions | 6 Months Ended |
Jun. 30, 2021USD ($)$ / sharesshares | |
Unrecognized Share-based Compensation | |
Unrecognized stock-based compensation expense | $ | $ 7.8 |
Expected weighted average recognition period | 1 year 2 months 12 days |
Restricted stock units | |
Restricted Stock Units | |
Unvested at beginning of period | shares | 1,705,441 |
Granted | shares | 15,634 |
Vested | shares | (76,213) |
Forfeited | shares | (31,488) |
Unvested at end of period | shares | 1,613,374 |
Weighted Average Grant Date Fair Value Per Share | |
Non vested outstanding at beginning of period | $ / shares | $ 13.46 |
Granted | $ / shares | 12.55 |
Vested | $ / shares | 12.97 |
Forfeited | $ / shares | 12.60 |
Non vested outstanding at end of period | $ / shares | $ 13.49 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 12, 2020 | Mar. 15, 2019 | Jun. 30, 2021 |
7.5% Senior Unsecured Notes due November 2020 | ||||
Debt | ||||
Interest rate (as a percent) | 7.50% | |||
6.5% Senior Notes due November 2020 | ||||
Debt | ||||
Interest rate (as a percent) | 6.50% | |||
Secured Loan Payable | ||||
Debt | ||||
Face amount of the debt | $ 24,900 | |||
Interest rate (as a percent) | 4.83% | |||
Prior Credit Agreement | ||||
Debt | ||||
Maximum borrowing capacity | $ 50,000 | |||
Number of days before the maturity of the senior notes due November 2020 that the credit facility matures | 91 days | |||
Number of days before the maturity of the senior notes due November 2020, as amended or replaced, that the credit facility matures | 91 days | |||
Amount outstanding | $ 0 | |||
Credit Agreement | ||||
Debt | ||||
Debt issuance costs incurred | 4,600 | |||
Amount outstanding | $ 0 | $ 165,000 | ||
Term Loan Facility | ||||
Debt | ||||
Maximum borrowing capacity | 165,000 | |||
Revolving Credit Facility | ||||
Debt | ||||
Maximum borrowing capacity | 65,000 | $ 35,000 | ||
Debt issuance costs incurred | 500 | |||
Amount outstanding | $ 0 | $ 42,000 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Leases | ||||
Lessee, operating lease, discount rate | 2.10% | 2.10% | ||
Operating lease, cost | $ 0.7 | $ 0.8 | $ 1.4 | $ 1.6 |
Weighted Average | ||||
Leases | ||||
Lessee, operating lease, term of contract | 2 years 3 months 18 days | 2 years 3 months 18 days |
Commitments and Contingencies_2
Commitments and Contingencies - Lease Liabilities and Right-of-Use Lease Assets (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Lease Liabilities | |
One year or less | $ 1,678 |
Total | 1,678 |
Less: difference between lease payments and discounted lease liabilities | 13 |
Lease liability | 1,665 |
Right-of-use assets | 1,461 |
Prepaid lease assets, net of lease allowances and incentives | 204 |
Total | $ 1,665 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Other Liabilities |