Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 13, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NI Holdings, Inc. | |
Entity Central Index Key | 1,681,206 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 22,359,844 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
Unaudited Consolidated Balance
Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets: | ||
Cash and cash equivalents | $ 51,660 | $ 27,594 |
Fixed income securities, at fair value | 247,406 | 236,758 |
Equity securities, at fair value | 59,725 | 47,561 |
Other investments | 1,954 | 1,972 |
Total cash and investments | 360,745 | 313,885 |
Premiums and agents' balances receivable | 62,745 | 25,632 |
Deferred policy acquisition costs | 11,793 | 8,859 |
Reinsurance premiums receivable | 2,311 | |
Reinsurance recoverables on losses | 5,628 | 4,128 |
Federal income tax recoverable | 34 | |
Accrued investment income | 1,796 | 1,996 |
Property and equipment | 6,104 | 5,877 |
Receivable from Federal Crop Insurance Corporation | 29,284 | 10,501 |
Goodwill and intangibles | 7,036 | 2,628 |
Other assets | 3,406 | 3,482 |
Total assets | 490,882 | 376,988 |
Liabilities: | ||
Unpaid losses and loss adjustment expenses | 105,653 | 45,890 |
Unearned premiums | 98,308 | 63,262 |
Reinsurance payable | 3,055 | 428 |
Federal income tax payable | 991 | |
Deferred income taxes, net | 2,391 | 2,539 |
Accrued expenses and other liabilities | 12,083 | 8,305 |
Commitments and Contingencies | ||
Total liabilities | 221,490 | 121,415 |
Equity: | ||
Common stock, $0.01 par value, authorized: 25,000,000 shares; issued: 23,000,000 shares; and outstanding: 2018 - 22,359,844 shares, 2017 - 22,337,644 shares | 230 | 230 |
Preferred stock, without par value, authorized 5,000,000 shares, no shares issued or outstanding | ||
Additional paid-in capital | 94,087 | 93,496 |
Unearned employee stock ownership plan shares | (2,157) | (2,157) |
Retained earnings | 169,057 | 152,865 |
Accumulated other comprehensive income, net of income taxes | 12,637 | 15,998 |
Treasury stock, at cost, 2018 - 424,471 shares, 2017 - 446,671 shares | (7,638) | (8,037) |
Non-controlling interest | 3,176 | 3,178 |
Total equity | 269,392 | 255,573 |
Total liabilities and equity | $ 490,882 | $ 376,988 |
Unaudited Consolidated Balanc_2
Unaudited Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 23,000,000 | 23,000,000 |
Common stock, shares outstanding | 22,359,844 | 22,337,644 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury stock, shares | 424,471 | 446,671 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Net premiums earned | $ 54,136 | $ 52,525 | $ 140,925 | $ 130,987 |
Fee and other income | 5,175 | 752 | 6,022 | 1,420 |
Net investment income | 1,629 | 1,404 | 4,521 | 3,706 |
Net realized capital gain on investments | 3,160 | 1,885 | 3,879 | 2,840 |
Total revenues | 64,100 | 56,566 | 155,347 | 138,953 |
Expenses: | ||||
Losses and loss adjustment expenses | 37,456 | 49,599 | 97,026 | 103,550 |
Amortization of deferred policy acquisition costs | 10,951 | 9,792 | 26,608 | 21,102 |
Other underwriting and general expenses | 3,787 | 300 | 11,809 | 10,434 |
Total expenses | 52,194 | 59,691 | 135,443 | 135,086 |
Income (loss) before income taxes | 11,906 | (3,125) | 19,904 | 3,867 |
Income taxes (benefit) | 2,029 | (432) | 3,619 | 1,694 |
Net income (loss) | 9,877 | (2,693) | 16,285 | 2,173 |
Net income attributable to non-controlling interest | 33 | 40 | 93 | 88 |
Net income (loss) attributable to NI Holdings, Inc. | $ 9,844 | $ (2,733) | $ 16,192 | $ 2,085 |
Basic earnings (loss) per common share | $ 0.44 | $ (0.12) | $ 0.72 | $ 0.09 |
Diluted earnings (loss) per common share | $ 0.44 | $ (0.12) | $ 0.72 | $ 0.09 |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Net income (loss) | $ 9,877 | $ (2,693) | $ 16,285 | $ 2,173 |
Other comprehensive loss, before income taxes: | ||||
Holding gains (losses) on investments | 2,773 | 1,611 | (495) | 5,322 |
Reclassification adjustment for net realized capital gain included in net income | (3,160) | (1,885) | (3,879) | (2,840) |
Other comprehensive loss, before income taxes | (387) | (274) | (4,374) | 2,482 |
Income tax benefit related to items of other comprehensive income | 81 | 95 | 918 | (869) |
Other comprehensive loss, net of income taxes | (306) | (179) | (3,456) | 1,613 |
Comprehensive income (loss) | 9,571 | (2,872) | 12,829 | 3,786 |
Attributable to NI Holdings, [Member] | ||||
Net income (loss) | 9,844 | (2,733) | 16,192 | 2,085 |
Other comprehensive loss, before income taxes: | ||||
Holding gains (losses) on investments | 2,787 | 1,602 | (375) | 5,299 |
Reclassification adjustment for net realized capital gain included in net income | (3,160) | (1,909) | (3,879) | (2,891) |
Other comprehensive loss, before income taxes | (373) | (307) | (4,254) | 2,408 |
Income tax benefit related to items of other comprehensive income | 78 | 107 | 893 | (843) |
Other comprehensive loss, net of income taxes | (295) | (200) | (3,361) | 1,565 |
Comprehensive income (loss) | 9,549 | (2,933) | 12,831 | 3,650 |
Attributable to Non-Controlling Interest [Member] | ||||
Net income (loss) | 33 | 40 | 93 | 88 |
Other comprehensive loss, before income taxes: | ||||
Holding gains (losses) on investments | (14) | 9 | (120) | 23 |
Reclassification adjustment for net realized capital gain included in net income | 24 | 51 | ||
Other comprehensive loss, before income taxes | (14) | 33 | (120) | 74 |
Income tax benefit related to items of other comprehensive income | 3 | (12) | 25 | (26) |
Other comprehensive loss, net of income taxes | (11) | 21 | (95) | 48 |
Comprehensive income (loss) | $ 22 | $ 61 | $ (2) | $ 136 |
Unaudited Consolidated Statem_3
Unaudited Consolidated Statement of Changes in Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Unearned Employee Stock Ownership Plan Shares [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income, Net of Income Taxes [Member] | Treasury Stock | Non-controlling Interest [Member] | Total |
Balance at Dec. 31, 2016 | $ 139,591 | $ 10,305 | $ 3,522 | $ 153,418 | ||||
Issuance of common stock | 230 | 92,915 | (2,400) | 90,745 | ||||
Net income (loss) | 2,085 | 88 | 2,173 | |||||
Other comprehensive income (loss), net of income taxes | 1,565 | 48 | 1,613 | |||||
Purchase of treasury stock | (8,037) | (8,037) | ||||||
Balance at Sep. 30, 2017 | 230 | 92,915 | (2,400) | 141,676 | 11,870 | (8,037) | 3,658 | 239,912 |
Balance at Jun. 30, 2017 | 230 | 92,915 | (2,400) | 144,409 | 12,070 | (8,037) | 3,597 | 242,784 |
Net income (loss) | (2,733) | 40 | (2,693) | |||||
Other comprehensive income (loss), net of income taxes | (200) | 21 | (179) | |||||
Balance at Sep. 30, 2017 | 230 | 92,915 | (2,400) | 141,676 | 11,870 | (8,037) | 3,658 | 239,912 |
Balance at Dec. 31, 2017 | 230 | 93,496 | (2,157) | 152,865 | 15,998 | (8,037) | 3,178 | 255,573 |
Net income (loss) | 16,192 | 93 | 16,285 | |||||
Other comprehensive income (loss), net of income taxes | (3,361) | (95) | (3,456) | |||||
Share-based compensation | $ 990 | $ 990 | ||||||
Issuance of vested award shares | (399) | 399 | ||||||
Balance at Sep. 30, 2018 | $ 230 | $ 94,087 | $ (2,157) | $ 169,057 | $ 12,637 | $ (7,638) | $ 3,176 | $ 269,392 |
Balance at Jun. 30, 2018 | 230 | 93,832 | (2,157) | 159,213 | 12,932 | (7,638) | 3,154 | 259,566 |
Net income (loss) | 9,844 | 33 | 9,877 | |||||
Other comprehensive income (loss), net of income taxes | (295) | (11) | (306) | |||||
Share-based compensation | 255 | 255 | ||||||
Balance at Sep. 30, 2018 | $ 230 | $ 94,087 | $ (2,157) | $ 169,057 | $ 12,637 | $ (7,638) | $ 3,176 | $ 269,392 |
Unaudited Consolidated Statem_4
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flows from Operating Activities: | ||
Net income | $ 16,285 | $ 2,173 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Gain on acquisition of Direct Auto Insurance Company | (4,578) | |
Net realized capital gain on investments | (3,879) | (2,840) |
Deferred income taxes | (670) | |
Depreciation of property and equipment | 372 | 376 |
Amortization of intangibles | 1,094 | 34 |
Share-based compensation | 990 | |
Amortization of deferred policy acquisition costs | 26,608 | 21,102 |
Deferral of policy acquisition costs | (29,542) | (23,913) |
Net amortization of premiums and discounts on investments | 896 | 973 |
Changes in assets and liabilities which provided (used) cash: | ||
Premiums and agents' balances receivable | (31,264) | (50,587) |
Reinsurance receivables / payables | 316 | 1,233 |
Reinsurance recoverables on losses | (1,500) | (1,488) |
Accrued investment income | 263 | (473) |
Receivable from Federal Crop Insurance Corporation | (18,783) | (3,922) |
Federal income tax recoverable / payable | (2,511) | (156) |
Other assets | 184 | 885 |
Unpaid losses and loss adjustment expenses | 18,796 | 25,795 |
Unearned premiums | 19,091 | 18,371 |
Accrued expenses and other liabilities | 3,121 | 4,642 |
Net cash used in operating activities | (4,712) | (7,795) |
Cash flows from investing activities: | ||
Proceeds from sales of fixed income securities | 51,298 | 19,800 |
Proceeds from sales of equity securities | 16,689 | 6,679 |
Purchases of fixed income securities | (57,423) | (95,008) |
Purchases of equity securities | (8,722) | (20,891) |
Purchases of property and equipment, net | (567) | (829) |
Acquisition of Direct Auto Insurance Company (cash consideration paid net of cash and cash equivalents acquired) | 27,485 | |
Other | 18 | 2 |
Net cash provided by (used in) investing activities | 28,778 | (90,247) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 93,145 | |
Purchases of treasury stock | (8,037) | |
Loan to employee stock ownership plan | (2,400) | |
Net cash provided by financing activities | 82,708 | |
Net increase (decrease) in cash and cash equivalents | 24,066 | (15,334) |
Cash and cash equivalents at beginning of period | 27,594 | 18,318 |
Cash and cash equivalents at end of period | $ 51,660 | $ 2,984 |
Unaudited Consolidated Statem_5
Unaudited Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Cash Flows [Abstract] | ||
Paid income tax | $ 6,800 | $ 1,850 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | 1. Organization NI Holdings, Inc. (“NI Holdings”) is a North Dakota business corporation that is the stock holding company of Nodak Insurance Company and became such in connection with the conversion of Nodak Mutual Insurance Company from a mutual to stock form of organization and the creation of a mutual holding company. The conversion was consummated on March 13, 2017. Immediately following the conversion, all of the outstanding shares of common stock of Nodak Insurance Company (the successor to Nodak Mutual Insurance Company) were issued to Nodak Mutual Group, Inc., which then contributed the shares to NI Holdings in exchange for 55% of the outstanding shares of common stock of NI Holdings. Nodak Insurance Company then became a wholly-owned stock subsidiary of NI Holdings. Prior to completion of the conversion, NI Holdings conducted no business and had no assets or liabilities. As a result of the conversion, NI Holdings became the holding company for Nodak Insurance Company and its existing subsidiaries. The newly issued shares of NI Holdings were available for public trading on March 16, 2017. These consolidated financial statements of NI Holdings include the financial position and results of NI Holdings and six other entities: · Nodak Insurance Company (“Nodak Insurance”, formerly Nodak Mutual Insurance Company prior to the conversion); · Nodak Agency, Inc. (“Nodak Agency”); · American West Insurance Company (“American West”); · Primero Insurance Company (“Primero”); · Battle Creek Mutual Insurance Company (“Battle Creek”, an affiliated company with Nodak Insurance); and · Direct Auto Insurance Company (“Direct Auto”). Nodak Insurance is the largest domestic property and casualty insurance company in North Dakota. Nodak Insurance was incorporated on April 15, 1946 under the laws of North Dakota, and benefits from a strong marketing affiliation with the North Dakota Farm Bureau (“NDFB”). Nodak Insurance specializes in providing private passenger auto, homeowners, farmowners, commercial, crop hail, and Federal multi-peril crop insurance coverages. Nodak Agency, a wholly-owned subsidiary of Nodak Insurance, is an inactive shell corporation. American West, a wholly-owned subsidiary of Nodak Insurance, is a property and casualty insurance company licensed in eight states in the Midwest and Western regions of the United States. American West began writing policies in 2002 and primarily writes personal auto, homeowners, and farm coverages in South Dakota. American West also writes personal auto in North Dakota, as well as crop hail and Federal multi-peril crop insurance coverages in Minnesota and South Dakota. Primero is a wholly-owned subsidiary of Tri-State, Ltd. Tri-State, Ltd. is an inactive shell corporation 100% owned by Nodak Insurance. Primero is a property and casualty insurance company writing non-standard automobile coverage in the states of Nevada, Arizona, North Dakota and South Dakota. Battle Creek is controlled by Nodak Insurance via a surplus note and 100% quota-share agreement. The terms of the surplus note and quota-share agreement allow Nodak Insurance to appoint two-thirds of the Battle Creek Board of Directors. Battle Creek is a property and casualty insurance company writing personal auto, homeowners, and farm coverages solely in the state of Nebraska. Direct Auto, a wholly-owned subsidiary of NI Holdings, is a property and casualty company licensed in Illinois. Direct Auto began writing non-standard automobile coverage in 2007, and was acquired by NI Holdings on August 31, 2018 via a stock purchase agreement. See Note 4. The same executive management team provides oversight and strategic direction for the entire organization. Nodak Insurance provides common product oversight, pricing practices, and underwriting standards, as well as underwriting and claims administration, to itself, American West, and Battle Creek. Primero and Direct Auto personnel manage the day-to-day operations of their respective companies. The insurance companies share a combined business plan to achieve market penetration and underwriting profitability objectives. Distinctions within the products of the insurance companies generally relate to the states in which the risk is located and specific risk profiles targeted within similar classes of business. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 2. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the interim periods ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ended December 31, 2018. Our consolidated financial statements include our accounts and those of our wholly-owned subsidiaries, as well as Battle Creek, an entity we control via contract. We have eliminated all significant inter-company accounts and transactions in consolidation. The terms “we”, “us”, “our”, or “the Company” as used herein refer to the consolidated entity. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Use of Estimates: In preparing our consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet and revenues and expenses for the periods then ended. Actual results could differ significantly from those estimates. We make estimates and assumptions that can have a significant effect on amounts and disclosures we report in our consolidated financial statements. The most significant estimates relate to our reserves for unpaid losses and loss adjustment expenses, earned premiums for crop insurance, valuation of investments, determination of other-than-temporary impairments, valuation allowances for deferred income tax assets, deferred policy acquisition costs, and the valuations used to establish intangible assets acquired related to business combinations. While we believe our estimates are appropriate, the ultimate amounts may differ from the estimates provided. We regularly review our methods for making these estimates as well as the continuing appropriateness of the estimated amounts, and we reflect any adjustment we consider necessary in our current results of operations. Variable-Interest Entities: Any company deemed to be a variable interest entity (“VIE”) is required to be consolidated by the primary beneficiary of the VIE. We assess our investments in other entities at inception to determine if any meet the qualifications of a VIE. We consider an investment in another company to be a VIE if (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) the characteristics of a controlling financial interest are missing (either the ability to make decisions through voting or other rights, the obligation to absorb expected losses of the entity or the right to receive the expected residual returns of the entity), or (c) the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the entity and/or the rights to receive the expected residual returns of the entity, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. Upon the occurrence of certain events, we would reassess our initial determination of whether the investment is a VIE. We evaluate whether we are the primary beneficiary of each VIE and we consolidate the VIE if we have both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity. We consider the contractual agreements that define the ownership structure, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights, and board representation of the respective parties in determining whether we qualify as the primary beneficiary. Our assessment of whether we are the primary beneficiary of a VIE is performed at least annually. We control Battle Creek via a 100% quota-share reinsurance agreement between Nodak Insurance and Battle Creek, as well as the ability to control a majority of the Board of Directors of Battle Creek. Through the effects of the 100% quota-share agreement with Battle Creek, we are considered the primary beneficiary of Battle Creek’s operating results excluding investment income, bad debt expense, and income taxes. Therefore, we consolidate the financial statements of Battle Creek, and Battle Creek’s policyholders’ interest in Battle Creek is reflected as a non-controlling interest in Equity in our Consolidated Balance Sheet. Cash and Cash Equivalents: Cash and cash equivalents include certain investments in highly liquid debt instruments with original maturities of three months or less. Cost approximates fair value for these short-term investments. Investments: We have categorized our investment portfolio as “available-for-sale” and have reported the portfolio at fair value, with unrealized gains and losses, net of income taxes, reported in accumulated other comprehensive income. Fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Amortization of premium and accretion of discount are computed using an effective interest method. Realized gains and losses are determined using the specific identification method and included in the determination of net income. Net investment income includes interest and dividend income together with amortization of purchase premiums and discounts, and is net of investment management and custody fees. We review our investments each quarter to determine whether a decline in fair value below the amortized cost basis is other than temporary. Accordingly, we assess whether we intend to sell or it is more likely than not that we will be required to sell a security before recovery of its amortized cost basis. For fixed income securities that are considered other-than-temporarily impaired and that we do not intend to sell and will not be required to sell prior to recovery of the amortized cost basis, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows discounted at the security’s effective yield. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and, therefore, is not required to be recognized as losses in the Consolidated Statement of Operations, but is recognized in other comprehensive income. We classify each fair value measurement at the appropriate level in the fair value hierarchy. The hierarchy gives the highest priority to unadjusted quoted market price in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements). An asset’s or liability’s classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. Level I – Quoted price in active markets for identical assets and liabilities. Level II – Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level II inputs include quoted prices for similar assets or liabilities other than quoted in prices in Level I, quoted prices in markets that are not active, or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level III – Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions that market participants would use in pricing the asset or liability. Level III assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Fair Value of Other Financial Instruments: Our other financial instruments, aside from investments, are cash and cash equivalents, premiums and agents’ balances receivable, and accrued expenses and accounts payable. The carrying amounts for cash and cash equivalents, premiums and agents’ balances receivable, and accrued expenses and accounts payable approximate their fair value based on their short-term nature. Other invested assets that do not have observable inputs and little or no market activity are carried on a cost basis. The carrying value of these other invested assets was $1,954 at September 30, 2018 and $1,972 at December 31, 2017. Reclassifications: Certain amounts in the 2017 consolidated financial statements have been reclassified to conform to the 2018 presentation. This includes a change in the Company’s reportable segments that was made in the fourth quarter of the year ended December 31, 2017. The prior segments were non-standard auto, crop, and other property and casualty. The new segments used throughout this report are private passenger auto, non-standard auto, home and farm, crop, and all other. Revenue Recognition: We record premiums written at policy inception and recognize them as revenue on a pro rata basis over the policy term or, in the case of crop insurance, over the period of risk. The portion of premiums that could be earned in the future is deferred and reported as unearned premiums. When policies lapse, the Company reverses the unearned portion of the written premium and removes the applicable unearned premium. Policy-related fee income is recognized when collected. The Company uses the direct write-off method for recognizing bad debts. Accounts are deemed to be delinquent after 60 days except for those accounts associated with amounts due from insureds for premiums, in which case policy cancellation procedures are commenced in accordance with state insurance regulations. Any earned but uncollected premiums are written off immediately upon the effective date of policy cancellation. Policy Acquisition Costs: We defer our policy acquisition costs, consisting primarily of commissions, premium taxes and certain other underwriting costs, reduced by ceding commissions, which vary with and relate directly to the production of business. We amortize these deferred policy acquisition costs over the period in which we earn the premiums. The method we follow in computing deferred policy acquisition costs limits the amount of such deferred costs to their estimated realizable value, which gives effect to the premium to be earned, related investment income, losses and loss adjustment expenses, and certain other costs we expect to incur as we earn the premium. Property and Equipment: We report property and equipment at cost less accumulated depreciation. Depreciation is computed using the straight-line method based upon the estimated useful lives of the assets. Losses and Loss Adjustment Expenses: Liabilities for unpaid losses and loss adjustment expenses are estimates at a given point in time of the amounts we expect to pay with respect to policyholder claims based on facts and circumstances then known. At the time of establishing our estimates, we recognize that our ultimate liability for losses and loss adjustment expenses will exceed or be less than such estimates. We base our estimates of liabilities for unpaid losses and loss adjustment expenses on assumptions as to future loss trends, expected claims severity, judicial theories of liability, and other factors. During the loss adjustment period, we may learn additional facts regarding certain claims, and, consequently, it often becomes necessary for us to refine and adjust our estimates of the liability. We reflect any adjustments to our liabilities for unpaid losses and loss adjustment expenses in our operating results in the period in which we determine the need for a change in the estimates. We maintain liabilities for unpaid losses and loss adjustment expenses with respect to both reported and unreported claims. We establish these liabilities for the purpose of covering the ultimate costs of settling all losses, including investigation and litigation costs. We base the amount of our liability for reported losses primarily upon a case-by-case evaluation of the type of risk involved, knowledge of the circumstances surrounding each claim, and the insurance policy provisions relating to the type of loss our policyholder incurred. We determine the amount of our liability for unreported losses and loss adjustment expenses on the basis of historical information by line of insurance. Inflation is not explicitly selected in the loss reserve analysis. However, historical inflation is embedded in the estimated loss reserving function through analysis of costs and trends and reviews of historical reserving results. We closely monitor our liabilities and update them periodically using new information on reported claims and a variety of statistical techniques. We do not discount our liabilities for unpaid losses and loss adjustment expense. Reserve estimates can change over time because of unexpected changes in assumptions related to our external environment and, to a lesser extent, assumptions as to our internal operations. Assumptions related to our external environment include the absence of significant changes in tort law and the legal environment which may impact liability exposure, the trends in judicial interpretations of insurance coverage and policy provisions, and the rate of loss cost inflation. Internal assumptions include consistency in the recording of premium and loss statistics, consistency in the recording of claims, payment and case reserving methodologies, accurate measurement of the impact of rate changes and changes in policy provisions, consistency in the quality and characteristics of business written within a given line of business, and consistency in reinsurance coverage and collectability of reinsured losses, among other items. To the extent we determine that underlying factors impacting our assumptions have changed, we attempt to make appropriate adjustments for such changes in our reserves. Accordingly, our ultimate liability for unpaid losses and loss adjustment expenses will likely differ from the amount recorded. Income Taxes: With the exception of Battle Creek, which files a stand-alone federal income tax return, we currently file a consolidated federal income tax return. For the year ended December 31, 2016, the consolidated federal income tax return included Nodak Mutual Insurance Company and its wholly-owned subsidiaries. For the year ended December 31, 2017 and thereafter, the consolidated federal income tax return included and will include thereafter NI Holdings and its wholly-owned subsidiaries. Direct Auto became part of the consolidated federal income tax return as of its acquisition date. The Company reports tax-related interest and penalties, if any, as part of income tax expense in the year such amounts are determinable. We account for deferred income taxes using the asset and liability method. The objective of the asset and liability method is to establish deferred income tax assets and liabilities for the temporary differences between the financial reporting basis and the income tax basis of our assets and liabilities at enacted tax rates expected to be in effect when we realize or settle such amounts. Accounting guidance requires that companies re-measure existing deferred income tax assets (including loss carryforwards) and liabilities when a change in tax rate occurs, and record an offset for the net amount of the change as a component of income tax expense from continuing operations in the period of enactment. The guidance also requires any change to a previously recorded valuation allowance as a result of re-measuring existing temporary differences and loss carryforwards to be reflected as a component of income tax expense from continuing operations. The Company has elected to reclassify any tax effects stranded in accumulated other comprehensive income as a result of a change in income tax rates to retained earnings. Credit Risk: Our primary investment objective is to earn competitive returns by investing in a diversified portfolio of securities. Our portfolio of fixed income securities and, to a lesser extent, short-term investments, is subject to credit risk. We define this risk as the potential loss in fair value resulting from adverse changes in the borrower’s ability to repay the debt. We manage this risk by performing an analysis of prospective investments and through regular reviews of our portfolio by our investment staff and advisors. We also limit the amount of our total investment portfolio that we invest in any one security. Property and liability insurance coverages are marketed through captive agents in North Dakota and through independent insurance agencies located throughout all operating areas. All business is billed directly to policyholders. We maintain cash balances primarily at one bank, which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250. During the normal course of business, balances are maintained above the FDIC insurance limit. The Company maintains short-term investment balances in investment grade money market accounts that are insured by the Securities Investor Protection Corporation (“SIPC”) up to $500. On occasion, balances for these accounts are maintained in excess of the SIPC insurance limit. Reinsurance: The Company limits the maximum net loss that can arise from large risks or risks in concentrated areas of exposure by reinsuring (ceding) certain levels of risks to other insurers or reinsurers, either on an automatic basis under general reinsurance contracts knows as “treaties” or by negotiation on substantial individual risks. Ceded reinsurance is treated as the risk and liability of the assuming companies. Reinsurance contracts do not relieve the Company from its obligations to policyholders. In the event that all or any of the reinsuring companies might be unable to meet their obligations under existing reinsurance agreements, the Company would be liable for such defaulted amounts. Goodwill and Intangibles: Goodwill represents the excess of the purchase price over the underlying fair value of acquired entities. When completing acquisitions, we seek also to identify separately identifiable intangible assets that we have acquired. We assess goodwill and intangible assets with an indefinite useful life for impairment annually. We also assess goodwill and other intangible assets for impairment upon the occurrence of certain events. In making our assessment, we consider a number of factors including operating results, business plans, economic projections, anticipated future cash flows, and current market data. Inherent uncertainties exist with respect to these factors and to our judgment in applying them when we make our assessment. Impairment of goodwill and other intangible assets could result from changes in economic and operating conditions in future periods. We did not record any impairments of goodwill or other intangible assets during the three and nine month periods ended September 30, 2018 and 2017. Goodwill arising from the acquisition of Primero in 2014 represents the excess of the purchase price over the fair value of the net assets acquired. The purchase price in excess of the fair value of net assets acquired was negotiated at arms-length with an unrelated party and was based upon the strategic decision by Company management to expand both the geographic footprint and product lines of the Company. The nature of the business acquired was such that there were limited intangible assets not reflected in the net assets acquired. The purchase price was paid with a combination of cash and cancellation of obligations owed to the acquired company by the sellers. The goodwill which arose from this transaction is included in the basis of the net assets acquired and is not deductible for income tax purposes. Intangible assets arising from the acquisition of Direct Auto in 2018 represent the estimated fair values of certain intangible assets, including a bargain lease contract, a state insurance license, the value of the Direct Auto trade name, and the value of business acquired (“VOBA”). The state insurance license asset has an indefinite life, while the bargain lease contract, Direct Auto trade name, and VOBA assets will be amortized over eighteen months, five years, and twelve months, respectively, from the August 31, 2018 valuation date. |
Acquisition of Direct Auto Insu
Acquisition of Direct Auto Insurance Company | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisition of Direct Auto Insurance Company | 4. Acquisition of Direct Auto Insurance Company On August 31, 2018, the Company completed the acquisition of 100% of the common stock of Direct Auto from private shareholders and Direct Auto became a consolidated subsidiary of the Company. Direct Auto is a property and casualty insurance company specializing in non-standard automobile insurance in the state of Illinois. The Company realized a $4,578 gain on the bargain purchase of Direct Auto. Direct Auto will remain headquartered in Chicago, Illinois and the current president (who was also one of the principal shareholders) of Direct Auto will continue to manage the Direct Auto insurance operations along with the current staff and management team. The results of Direct Auto are included as part of the Company’s non-standard auto business segment following the closing date. We account for business acquisitions in accordance with the acquisition method of accounting, which requires, among other things, that most assets acquired, liabilities assumed, and contingent consideration be recognized at their fair values as of the acquisition date, which is the closing date for the Direct Auto transaction. During the measurement period, adjustments to provisional purchase price allocations are recognized if new information is obtained about the facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends as soon as it is determined that no more information is obtainable, but in no case shall the measurement period exceed one year from the acquisition date. The acquired Direct Auto business contributed revenues of $3,663 and net income of $260 to the Company for the period from September 1, 2018 to September 30, 2018. The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2017: Pro forma Three Months Ended September 30, Pro forma Nine Months Ended September 30, 2018 2017 2018 2017 Revenues $ 67,126 $ 65,219 $ 180,323 $ 167,724 Net income (loss) attributable to NI Holdings, Inc. 5,550 (2,272 ) 12,029 7,750 Basic earnings (loss) per share attributable to NI Holdings, Inc. 0.25 (0.10 ) 0.54 0.34 Other than the gain on bargain purchase, the Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination to be included in the reported pro forma revenue and earnings. These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Direct Auto to reflect the deferral and amortization of policy acquisition costs and the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2017, with the consequential tax effects. The gain is recognized in the first quarter of 2017 instead of the third quarter of 2018 for these pro forma amounts. In 2018, the Company incurred $91 of acquisition-related costs. These expenses are included in other underwriting and general expense in the Company’s Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and are reflected in pro forma earnings for the year ended December 31, 2017 in the table above. The Company paid $17,000 in cash consideration to the private shareholders of Direct Auto. The acquisition of Direct Auto did not include any contingent consideration. The following table summarizes the consideration transferred to acquire Direct Auto and the amounts of identified assets acquired and liabilities assumed at the acquisition date: Acquisition of Direct Auto Insurance Company Fair Value of Consideration: Total cash consideration transferred $ 17,000 Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed: Identifiable net assets: Cash and cash equivalents $ 44,485 Fixed income securities, at fair value 11,414 Equity securities, at fair value 14,634 Premiums and agents' balances receivable 5,849 Accrued investment income 63 Property and equipment 31 Bargain lease contract (included in intangibles) 20 License (included in intangibles) 100 Trade name (included in intangibles) 248 Value of business acquired (included in intangibles) 5,134 Other assets 107 Unpaid losses and loss adjustment expenses (40,967 ) Unearned premiums (15,955 ) Federal income tax payable (1,486 ) Deferred income taxes, net (1,442 ) Accrued expenses and other liabilities (657 ) Total identifiable net assets $ 21,578 Gain on bargain purchase $ 4,578 The fair value of the assets acquired includes premiums and agents’ balances receivable of $5,849. This is the gross amount due from policyholders and agents, none of which is anticipated to be uncollectible. The Company did not acquire any other material class of receivable as a result of the acquisition of Direct Auto. The fair values of the acquired bargain lease contract, state insurance license, Direct Auto trade name, and VOBA intangible assets of $20, $100, $248, and $5,134, respectively, are provisional pending receipt of the final valuations for those assets. The state insurance license has an indefinite life, while the other intangible assets will be amortized over useful lives of up to five years. The gain realized on bargain purchase gain of $4,578 from the Direct Auto acquisition is included in fee and other income in the Company’s Consolidated Statements of Operations for the three and nine months ended September 30, 2018. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Recent Accounting Pronouncements | 5. Recent Accounting Pronouncements As an emerging growth company, we have elected to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. The following discussion includes effective dates for both public business entities and emerging growth companies, as well as whether specific guidance may be adopted early. Adopted On July 1, 2017, the Company early adopted amended guidance from the Financial Accounting Standards Board (the “FASB”) on goodwill impairment testing. Under the amended guidance, the optional qualitative assessment (Step 0) and the first step of the quantitative assessment (Step 1) remain unchanged. Step 2 is eliminated. As a result, for annual impairment testing or in the event a test is required prior to the annual test, the Company will use Step 0 to determine if an impairment might exist and Step 1 to determine the amount of goodwill impairment. An impairment loss will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill in the reporting unit. This guidance is effective for annual and interim reporting periods beginning after December 15, 2019 for public business entities. For private companies and emerging growth companies, this guidance is also effective for annual and interim reporting periods beginning after December 15, 2021. Early adoption is permitted for all entities beginning in 2017. The Company early adopted this guidance on a prospective basis as a change in accounting principle, therefore at the date of adoption there was no impact to the Company’s financial position or results of operations. In March 2016, the FASB issued amended guidance to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the Consolidated Statement of Cash Flows. All excess income tax benefits and income tax deficiencies should be recognized as income tax expense or benefit in the Consolidated Statement of Operations, instead of affecting additional paid-in-capital on the Consolidated Balance Sheet. These discrete income tax items should be classified along with other income tax cash flows as an operating activity on the Consolidated Statement of Cash Flows. In addition, cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity. This guidance is effective for annual periods beginning after December 15, 2016 for public business entities. For private companies and emerging growth companies, this guidance is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for all entities in any period. An entity that elects early adoption must adopt all amendments in the same period. Amendments requiring recognition of excess income tax benefits and income tax deficiencies in the Consolidated Statement of Operations should be applied prospectively. The Company early adopted this guidance on a prospective basis for the year ended December 31, 2017. At the date of adoption, there was an immaterial impact to the computation of diluted earnings per share, but no impact to the Company’s financial position or results of operations. In February 2018, the FASB issued new guidance to provide companies the option to reclassify income tax effects that are stranded in accumulated other comprehensive income as a result of income tax reform to retained earnings. This guidance is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted for reporting periods for which financial statements have not yet been issued or made available for issuance. In the period of adoption, an entity would be able to choose whether to apply the amendments retrospectively or in the period of adoption. The Company elected to early adopt this guidance on a prospective basis, resulting in a $2,717 reclassification of stranded income tax effects from accumulated other comprehensive income to retained earnings within the Equity section of the Consolidated Balance Sheet as of December 31, 2017. There was no impact to the Company’s financial position, results of operations, or cash flows. Not Yet Adopted In May 2014, the FASB issued guidance that establishes the manner in which an entity recognizes the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. While the guidance will replace most existing GAAP revenue recognition guidance, the scope of the guidance excludes insurance contracts. The Company has reviewed its sources of revenues, and has determined that no material revenues are derived from non-insurance contracts and thus subject to the new revenue recognition guidance. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017 for public business entities. For private companies and emerging growth companies, this guidance is effective for annual reporting periods beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted for all entities. We currently believe that this guidance will have no impact on our financial position, results of operations, or cash flows. In January 2016, the FASB issued amended guidance that generally requires entities to measure equity securities at fair value and recognize changes in fair value in their results of operations. The FASB issued other impairment, disclosure, and presentation improvements related to financial instruments within the guidance. This guidance is to be applied through a cumulative-effect adjustment to beginning retained earnings which results in no impact to the Company’s results of operations at the date of adoption. We will adopt this standard on its effective date of January 1, 2019 for emerging growth companies. The most significant anticipated impact, using values as of September 30, 2018, relate to the change in accounting for equity securities, where $19,826 of pre-tax unrealized net capital gains would be reclassified from accumulated other comprehensive income to retained earnings. The after-tax change in accounting for equity securities will not likely affect the Company’s equity; however, the unrealized net capital gains reclassified at the transition date to retained earnings will never be recognized in net income. Going forward, the accounting used for equity securities will record the market fluctuations attributed to equity securities through our results of operations rather than as a component of Other Comprehensive Income, which will add a level of volatility to our net income. In February 2016, the FASB issued new guidance that requires lessees to recognize leases, including operating leases, on the lessee’s Consolidated Balance Sheet, unless a lease is considered a short-term lease. The new guidance also requires entities to make new judgments to identify leases. In July 2018, the FASB issued additional guidance to allow an optional transition method. An entity may apply the new leases guidance at the beginning of the earliest period presented in the financial statements, or at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of cumulative adoption. The new guidance, which replaces the current lease guidance, is effective for annual and interim reporting periods beginning after December 15, 2018 for public business entities. For private companies and emerging growth companies, this guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities. We do not expect the adoption of this new guidance to have a significant impact on our financial position, results of operations, or cash flows. In June 2016, the FASB issued a new standard that will require timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The guidance will require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better form their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the guidance requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Finally, the guidance amends the accounting for credit losses on available-for-sale fixed income securities and purchased financial assets with credit deterioration. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 for public business entities which are SEC filers. For private companies and emerging growth companies, this guidance is effective for annual reporting periods beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021. Early adoption is permitted for all entities as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are evaluating the impact this new guidance will have on our financial position, results of operations, and cash flows. In August 2016, the FASB issued amended guidance that addresses diversity in how certain cash receipts and cash payments are presented and classified in the Consolidated Statement of Cash Flows. The amendments provide clarity on the treatment of eight specifically defined types of cash inflows and outflows. For private companies and emerging growth companies, this guidance is effective for annual reporting periods beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019 using a retrospective transition method to each period presented or prospectively if adoption of an issue is impracticable. The adoption of this amended guidance will have no effect on our financial position or results of operations. We do not expect this amended guidance to have a significant impact on our Consolidated Statement of Cash Flows. In November 2016, the FASB issued amended guidance on the presentation of restricted cash in the Consolidated Statement of Cash Flows. Entities will be required to explain the changes during a reporting period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. For private companies and emerging growth companies, this guidance is effective for annual reporting periods beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments are to be applied using a retrospective transition method to each period presented. The adoption of this amended guidance will no effect on our financial position or results of operations. We do not expect this amended guidance to have a significant impact on our Consolidated Statement of Cash Flows. In March 2017, the FASB issued amended guidance to shorten the amortization period of premiums on certain purchased callable fixed income securities to the earliest call date. The amended guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For private companies and emerging growth companies, this amended guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We are evaluating the requirements of this guidance and the potential impact to our financial position, results of operations, and cash flows. In August 2018, the FASB issued modified disclosure requirements relating to the fair value of assets and liabilities. The amended requirements are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. We do not expect these modified requirements will have a material impact on our financial disclosures. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2018 | |
Marketable Securities [Abstract] | |
Investments | 6. Investments The amortized cost and estimated fair value of investment securities as of September 30, 2018 and December 31, 2017, were as follows: September 30, 2018 Cost or Amortized Gross Unrealized Gross Unrealized Fair Value Fixed income securities: U.S. Government and agencies $ 18,977 $ 95 $ (304 ) $ 18,768 Obligations of states and political subdivisions 51,760 278 (860 ) 51,178 Corporate securities 100,329 242 (1,565 ) 99,006 Residential mortgage-backed securities 45,901 1 (1,215 ) 44,687 Commercial mortgage-backed securities 14,418 — (382 ) 14,036 Asset-backed securities 19,910 — (179 ) 19,731 Total fixed income securities 251,295 616 (4,505 ) 247,406 Equity securities: Basic materials 1,605 39 (15 ) 1,629 Communications 5,415 1,681 (204 ) 6,892 Consumer, cyclical 5,223 4,132 — 9,355 Consumer, non-cyclical 9,478 5,652 (300 ) 14,830 Energy 1,805 209 (1 ) 2,013 Financial 4,490 273 (107 ) 4,656 Industrial 4,762 3,627 (29 ) 8,360 Technology 7,121 5,069 (200 ) 11,990 Total equity securities 39,899 20,682 (856 ) 59,725 Total investments $ 291,194 $ 21,298 $ (5,361 ) $ 307,131 December 31, 2017 Cost or Amortized Gross Unrealized Gross Unrealized Fair Value Fixed income securities: U.S. Government and agencies $ 9,531 $ 175 $ (57 ) $ 9,649 Obligations of states and political subdivisions 81,741 1,171 (317 ) 82,595 Corporate securities 88,474 1,197 (220 ) 89,451 Residential mortgage-backed securities 28,557 124 (157 ) 28,524 Commercial mortgage-backed securities 11,228 61 (119 ) 11,170 Asset-backed securities 15,447 10 (88 ) 15,369 Total fixed income securities 234,978 2,738 (958 ) 236,758 Equity securities: Basic materials 768 124 — 892 Communications 3,027 1,449 (154 ) 4,322 Consumer, cyclical 5,303 4,156 (120 ) 9,339 Consumer, non-cyclical 7,090 3,940 (125 ) 10,905 Energy 2,003 272 (44 ) 2,231 Financial 2,007 410 — 2,417 Industrial 5,038 4,167 — 9,205 Technology 3,792 4,668 (210 ) 8,250 Total equity securities 29,028 19,186 (653 ) 47,561 Total investments $ 264,006 $ 21,924 $ (1,611 ) $ 284,319 The amortized cost and estimated fair value of fixed income securities by contractual maturity are shown below. Actual maturities could differ from contractual maturities because issuers of the securities may have the right to call or prepay certain obligations, which may or may not include call or prepayment penalties. September 30, 2018 Amortized Cost Fair Value Due to mature: One year or less $ 13,432 $ 13,423 After one year through five years 96,945 96,322 After five years through ten years 56,627 55,359 After ten years 4,062 3,848 Mortgage / asset-backed securities 80,229 78,454 Total fixed income securities $ 251,295 $ 247,406 December 31, 2017 Amortized Cost Fair Value Due to mature: One year or less $ 12,761 $ 12,766 After one year through five years 86,830 87,642 After five years through ten years 69,586 70,680 After ten years 10,569 10,607 Mortgage / asset-backed securities 55,232 55,063 Total fixed income securities $ 234,978 $ 236,758 Fixed income securities with a fair value of $4,861 at September 30, 2018 and $3,493 at December 31, 2017, were deposited with various state regulatory agencies as required by law. The increase was primarily due to the Direct Auto acquisition. The Company has not pledged any assets to secure any obligations. The investment category and duration of the Company’s gross unrealized losses on fixed income securities and equity securities were as follows: September 30, 2018 Less than 12 Months Greater than 12 months Total Fair Unrealized Fair Unrealized Fair Unrealized Fixed income securities: U.S. Government and agencies $ 12,433 $ (196 ) $ 2,321 $ (108 ) $ 14,754 $ (304 ) Obligations of states and political subdivisions 23,395 (571 ) 7,155 (289 ) 30,550 (860 ) Corporate securities 63,676 (1,286 ) 12,724 (279 ) 76,400 (1,565 ) Residential mortgage-backed securities 30,864 (609 ) 12,339 (606 ) 43,203 (1,215 ) Commercial mortgage-backed securities 11,280 (225 ) 2,756 (157 ) 14,036 (382 ) Asset-backed securities 6,153 (53 ) 9,073 (126 ) 15,226 (179 ) Total fixed income securities 147,801 (2,940 ) 46,368 (1,565 ) 194,169 (4,505 ) Equity securities: Basic materials 893 (15 ) — — 893 (15 ) Communications 3,468 (149 ) 158 (55 ) 3,626 (204 ) Consumer, cyclical — — — — — — Consumer, non-cyclical 3,724 (300 ) — — 3,724 (300 ) Energy 367 (1 ) — — 367 (1 ) Financial 1,928 (107 ) — — 1,928 (107 ) Industrial 696 (29 ) — — 696 (29 ) Technology 2,449 (140 ) 151 (60 ) 2,600 (200 ) Total equity securities 13,525 (741 ) 309 (115 ) 13,834 (856 ) Total investments $ 161,326 $ (3,681 ) $ 46,677 $ (1,680 ) $ 208,003 $ (5,361 ) December 31, 2017 Less than 12 Months Greater than 12 months Total Fair Unrealized Fair Unrealized Fair Unrealized Fixed income securities: U.S. Government and agencies $ 6,442 $ (54 ) $ 497 $ (3 ) $ 6,939 $ (57 ) Obligations of states and political subdivisions 28,219 (251 ) 3,593 (66 ) 31,812 (317 ) Corporate securities 39,025 (201 ) 1,195 (19 ) 40,220 (220 ) Residential mortgage-backed securities 7,573 (40 ) 7,248 (117 ) 14,821 (157 ) Commercial mortgage-backed securities 4,652 (64 ) 1,643 (55 ) 6,295 (119 ) Asset-backed securities 13,386 (80 ) 781 (8 ) 14,167 (88 ) Total fixed income securities 99,297 (690 ) 14,957 (268 ) 114,254 (958 ) Equity securities: Communications 840 (48 ) 107 (106 ) 947 (154 ) Consumer, cyclical 898 (116 ) 214 (4 ) 1,112 (120 ) Consumer, non-cyclical 1,894 (125 ) — — 1,894 (125 ) Energy 243 (44 ) — — 243 (44 ) Technology 634 (120 ) 152 (90 ) 786 (210 ) Total equity securities 4,509 (453 ) 473 (200 ) 4,982 (653 ) Total investments $ 103,806 $ (1,143 ) $ 15,430 $ (468 ) $ 119,236 $ (1,611 ) Investments with unrealized losses are categorized with a duration of greater than 12 months when all positions of a security have continually been in a loss position for at least 12 months. We frequently review our investment portfolio for declines in fair value. Our process for identifying declines in the fair value of investments that are other than temporary involves consideration of several factors. These factors include (i) the time period in which there has been a significant decline in value, (ii) an analysis of the liquidity, business prospects, and overall financial condition of the issuer, (iii) the significance of the decline, and (iv) our intent and ability to hold the investment for a sufficient period of time for the value to recover. When our analysis of the above factors results in the conclusion that declines in fair values are other than temporary, the cost of the securities is written down to fair value and the previously unrealized loss is therefore reflected as a realized capital loss on investment. The Company recorded impairments of $382 during the three and nine months ended September 30, 2018. The Company recorded impairments of $124 during the three months ended September 30, 2017 and impairments of $330 during the nine months ended September 30, 2017. As of September 30, 2018, we held 348 fixed income securities with unrealized losses. As of December 31, 2017, we held 196 fixed income securities with unrealized losses. In conjunction with our outside investment advisors, we analyzed the credit ratings of the securities as well as the historical monthly amortized cost to fair value ratio of securities in an unrealized loss position. This analysis yielded no fixed income securities which had fair values less than 80% of amortized cost for the preceding 12-month period. Net investment income consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Fixed income securities $ 1,800 $ 1,703 $ 5,073 $ 4,614 Equity securities 244 79 716 242 Real estate 91 89 273 262 Cash and cash equivalents 31 6 93 50 Total gross investment income 2,166 1,877 6,155 5,168 Investment expenses 537 473 1,634 1,462 Net investment income $ 1,629 $ 1,404 $ 4,521 $ 3,706 Net realized capital gain on investments consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Gross realized gains $ 3,973 $ 2,104 $ 5,168 $ 3,284 Gross realized losses, excluding other-than-temporary impairment losses (431 ) (95 ) (907 ) (114 ) Other-than-temporary impairment losses (382 ) (124 ) (382 ) (330 ) Net realized capital gain on investments $ 3,160 $ 1,885 $ 3,879 $ 2,840 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Investments, All Other Investments [Abstract] | |
Fair Value Measurements | 7. Fair Value Measurements We maximize the use of observable inputs in our valuation techniques and apply unobservable inputs only to the extent that observable inputs are unavailable. The largest class of assets and liabilities carried at fair value by the Company at September 30, 2018 and December 31, 2017 were fixed income securities. Prices provided by independent pricing services and independent broker quotes can vary widely, even for the same security. Our available-for-sale investments are comprised of a variety of different securities, which are classified into levels based on the valuation technique and inputs used in their valuation. The valuation of cash equivalents and equity securities are generally based on Level I inputs, which use the market approach valuation technique. The valuation of fixed income securities generally incorporates significant Level II inputs using the market and income approach techniques. We may assign a lower level to inputs typically considered to be Level II based on our assessment of liquidity and relative level of uncertainty surrounding inputs. There were no assets or liabilities classified as Level III at September 30, 2018 or December 31, 2017. The following tables set forth our assets which are measured on a recurring basis by the level within the fair value hierarchy in which fair value measurements fall: September 30, 2018 Total Level I Level II Level III Fixed income securities: U.S. Government and agencies $ 18,768 $ — $ 18,768 $ — Obligations of states and political subdivisions 51,178 — 51,178 — Corporate securities 99,006 — 99,006 — Residential mortgage-backed securities 44,687 — 44,687 — Commercial mortgage-backed securities 14,036 — 14,036 — Asset-backed securities 19,731 — 19,731 — Total fixed income securities 247,406 — 247,406 — Equity securities: Basic materials 1,629 1,629 — — Communications 6,892 6,892 — — Consumer, cyclical 9,355 9,355 — — Consumer, non-cyclical 14,830 14,830 — — Energy 2,013 2,013 — — Financial 4,656 4,656 — — Industrial 8,360 8,360 — — Technology 11,990 11,990 — — Total equity securities 59,725 59,725 — — Cash and cash equivalents 51,660 51,660 — — Total assets at fair value $ 358,791 $ 111,385 $ 247,406 $ — December 31, 2017 Total Level I Level II Level III Fixed income securities: U.S. Government and agencies $ 9,649 $ — $ 9,649 $ — Obligations of states and political subdivisions 82,595 — 82,595 — Corporate securities 89,451 — 89,451 — Residential mortgage-backed securities 28,524 — 28,524 — Commercial mortgage-backed securities 11,170 — 11,170 — Asset-backed securities 15,369 — 15,369 — Total fixed income securities 236,758 — 236,758 — Equity securities: Basic materials 892 892 — — Communications 4,322 4,322 — — Consumer, cyclical 9,339 9,339 — — Consumer, non-cyclical 10,905 10,905 — — Energy 2,231 2,231 — — Financial 2,417 2,417 — — Industrial 9,205 9,205 — — Technology 8,250 8,250 — — Total equity securities 47,561 47,561 — — Cash and cash equivalents 27,594 27,594 — — Total assets at fair value $ 311,913 $ 75,155 $ 236,758 $ — There were no liabilities measured at fair value on a recurring basis at September 30, 2018 or December 31, 2017. |
Reinsurance
Reinsurance | 9 Months Ended |
Sep. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | 8. Reinsurance The Company will assume and cede certain premiums and losses to and from various companies and associations under various reinsurance agreements. The Company seeks to limit the maximum net loss that can arise from large risks or risks in concentrated areas of exposure through use of these agreements, either on an automatic basis under general reinsurance contracts known as treaties or by negotiation on substantial individual risks. Reinsurance contracts do not relieve the Company from its obligation to policyholders. Additionally, failure of reinsurers to honor their obligations could result in significant losses to us. There can be no assurance that reinsurance will continue to be available to us at the same extent, and at the same cost, as it has in the past. The Company may choose in the future to reevaluate the use of reinsurance to increase or decrease the amounts of risk ceded to reinsurers. As a group, during the nine months ended September 30, 2018, the Company retained the first $10,000 of weather-related losses from catastrophic events and had reinsurance under various reinsurance agreements up to $74,600 in excess of its $10,000 retained risk. These reinsurance risk limits are unchanged from 2017. The Company actively monitors and evaluates the financial condition of the reinsurers and develops estimates of the uncollectible amounts due from reinsurers. Such estimates are made based on periodic evaluation of balances due from reinsurers, judgments regarding reinsurers’ solvency, known disputes, reporting characteristics of the underlying reinsured business, historical experience, current economic conditions, and the state of reinsurer relations in general. Collection risk is mitigated from reinsurers by entering into reinsurance arrangements only with reinsurers that have strong credit ratings and statutory surplus above certain levels. The Company’s largest reinsurance recoverables on paid and unpaid losses were due from reinsurance companies with A.M. Best ratings of “A” or higher. A reconciliation of direct to net premiums on both a written and an earned basis is as follows: Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Premiums Written Premiums Earned Premiums Written Premiums Earned Direct premium $ 46,220 $ 63,737 $ 174,074 $ 154,916 Assumed premium 974 1,084 5,506 5,572 Ceded premium (10,685 ) (10,685 ) (19,563 ) (19,563 ) Net premiums $ 36,509 $ 54,136 $ 160,017 $ 140,925 Percentage of assumed earned premium to net earned premium 2.0 % 4.0 % Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Premiums Written Premiums Earned Premiums Written Premiums Earned Direct premium $ 39,005 $ 57,979 $ 159,056 $ 140,659 Assumed premium 1,112 1,190 5,703 5,729 Ceded premium (3,970 ) (6,644 ) (15,401 ) (15,401 ) Net premiums $ 36,147 $ 52,525 $ 149,358 $ 130,987 Percentage of assumed earned premium to net earned premium 2.3 % 4.4 % A reconciliation of direct to net losses and loss adjustment expenses is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Direct losses and loss adjustment expenses $ 39,219 $ 48,295 $ 98,977 $ 104,030 Assumed losses and loss adjustment expenses 827 2,699 1,903 5,312 Ceded losses and loss adjustment expenses (2,590 ) (1,395 ) (3,854 ) (5,792 ) Net losses and loss adjustment expenses $ 37,456 $ 49,599 $ 97,026 $ 103,550 If 100% of our ceded reinsurance was cancelled as of September 30, 2018 or December 31, 2017, no ceded commissions would need to be returned to the reinsurers. Reinsurance contracts are typically effective from January 1 through December 31 each year. |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs | 9 Months Ended |
Sep. 30, 2018 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | |
Deferred Policy Acquisition Costs | 9. Deferred Policy Acquisition Costs Activity with regards to our deferred policy acquisition costs was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Balance, beginning of period $ 12,190 $ 14,126 $ 8,859 $ 8,942 Deferral of policy acquisition costs 10,554 7,419 29,542 23,913 Amortization of deferred policy acquisition costs (10,951 ) (9,792 ) (26,608 ) (21,102 ) Balance, end of period $ 11,793 $ 11,753 $ 11,793 $ 11,753 |
Unpaid Losses and Loss Adjustme
Unpaid Losses and Loss Adjustment Expenses | 9 Months Ended |
Sep. 30, 2018 | |
Liability for Unpaid Claims and Claims Adjustment Expense, Activity in Liability [Abstract] | |
Unpaid Losses and Loss Adjustment Expenses | 10. Unpaid Losses and Loss Adjustment Expenses Activity in the liability for unpaid losses and loss adjustment expenses is summarized as follows: Nine Months Ended September 30, 2018 2017 Balance at beginning of period: Liability for unpaid losses and loss adjustment expenses $ 45,890 $ 59,632 Reinsurance recoverables on losses 4,128 7,192 Net balance at beginning of period 41,762 52,440 Acquired unpaid losses and loss adjustment expenses related to: Current year 17,795 — Prior year 23,172 — Total incurred 40,967 — Incurred related to: Current year 100,191 110,199 Prior years (3,165 ) (6,649 ) Total incurred 97,026 103,550 Paid related to: Current year 59,708 53,241 Prior years 20,022 26,002 Total paid 79,730 79,243 Balance at end of period: Liability for unpaid losses and loss adjustment expenses 105,653 85,427 Reinsurance recoverables on losses 5,628 8,680 Net balance at end of period $ 100,025 $ 76,747 The prior years’ provision for unpaid losses and loss adjustment expenses decreased by $3,165 during the nine months ended September 30, 2018, compared to a decrease of $6,649 during the nine months ended September 30, 2017. Increases and decreases are generally the result of ongoing analysis of loss development trends. As additional information becomes known regarding individual claims, original estimates are increased or decreased accordingly. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 11. Property and Equipment Property and equipment consisted of the following: September 30, 2018 December 31, 2017 Estimated Useful Life Cost: Real estate $ 11,041 $ 10,633 10 - 31 years Electronic data processing equipment 1,455 1,288 5-7 years Furniture and fixtures 3,536 3,511 5-7 years Automobiles 1,557 1,595 2-3 years Gross cost 17,589 17,027 Accumulated depreciation (11,485 ) (11,150 ) Total property and equipment, net $ 6,104 $ 5,877 Depreciation expense was $129 and $127 for the three months ended September 30, 2018 and 2017, respectively, and $372 and $376 for the nine months ended September 30, 2018 and 2017, respectively. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 12. Related Party Transactions We were organized by the NDFB to provide insurance protection for its members. We have a royalty agreement with the NDFB that recognizes the use of their trademark and provides royalties to the NDFB based on the premiums written on Nodak Insurance’s insurance policies. Royalties paid to the NDFB were $383 and $351 during the three months ended September 30, 2018 and 2017, respectively. Royalties paid to the NDFB were $1,065 and $1,002 during the nine months ended September 30, 2018 and 2017, respectively. Royalty amounts payable of $30 and $99 were accrued as a liability to the NDFB at September 30, 2018 and December 31, 2017, respectively. State insurance laws require our insurance subsidiaries to maintain certain minimum capital and surplus amounts on a statutory basis. Our insurance subsidiaries are subject to regulations that restrict the payment of dividends from statutory surplus and may require prior approval from their domiciliary insurance regulatory authorities. Our insurance subsidiaries are also subject to risk-based capital (“RBC”) requirements that may further affect their ability to pay dividends. Our insurance subsidiaries statutory capital and surplus at December 31, 2017 exceeded the amount of statutory capital and surplus necessary to satisfy regulatory requirements, including the RBC requirements, by a significant margin. The amount available for payment of dividends from Nodak Insurance to NI Holdings after the conversion without the prior approval of the North Dakota Insurance Department is $15,654 based upon the policyholders’ surplus of Nodak Insurance at December 31, 2017. Prior to its payment of any extraordinary dividend, Nodak Insurance will be required to provide notice of the dividend to the North Dakota Insurance Department. This notice must be provided to the North Dakota Insurance Department 30 days prior to the payment of an extraordinary dividend and 10 days prior to the payment of an ordinary dividend. The North Dakota Insurance Department has the power to limit or prohibit dividend payments if Nodak Insurance is in violation of any law or regulation. These restrictions or any subsequently imposed restrictions may affect our future liquidity. No dividends were declared or paid by Nodak Insurance during the nine months ended September 30, 2018 or the year ended December 31, 2017. The amount available for payment of dividends from Direct Auto to NI Holdings without the prior approval of the Illinois Department of Insurance is $1,206 based upon the policyholders’ surplus of Direct Auto at December 31, 2017. Prior to its payment of any dividend, Direct Auto will be required to provide notice of the dividend to the Illinois Department of Insurance. This notice must be provided to the Illinois Department of Insurance within five business days following declaration of any dividend and no less than 30 days prior to the payment of an extraordinary dividend or 10 days prior to the payment of an ordinary dividend. The Illinois Department of Insurance has the power to limit or prohibit dividend payments if Direct Auto is in violation of any law or regulation. These restrictions or any subsequently imposed restrictions may affect our future liquidity. No dividends were declared or paid by Direct Auto subsequent to December 31, 2017. The following table illustrates the impact of including Battle Creek in our Consolidated Balance Sheets prior to intercompany eliminations: September 30, 2018 December 31, 2017 Assets: Cash and cash equivalents (overdraft) $ (375 ) $ (726 ) Investments 4,336 4,364 Premiums and agents’ balances receivable 4,725 4,055 Reinsurance recoverables on losses (1) 22,337 20,932 Accrued investment income 33 29 Deferred income tax asset, net 390 389 Property and equipment 361 370 Other assets 53 54 Total assets $ 31,860 $ 29,467 Liabilities: Unpaid losses and loss adjustment expenses $ 7,401 $ 7,995 Unearned premiums 14,962 12,937 Notes payable (1) 3,000 3,000 Reinsurance payable (1) 2,333 965 Accrued expenses and other liabilities 988 1,392 Total liabilities 28,684 26,289 Equity: Non-controlling interest 3,176 3,178 Total equity 3,176 3,178 Total liabilities and equity $ 31,860 $ 29,467 (1) Total statutory revenues and expenses of Battle Creek after intercompany eliminations, which is limited to net investment income and certain miscellaneous other income and expenses, were $36 and $0, respectively, during the three months ended September 30, 2018, and $19 and $0, respectively, during the three months ended September 30, 2017. Total statutory revenues and expenses of Battle Creek after intercompany eliminations, which is limited to net investment income and certain miscellaneous other income and expenses, were $112 and $0, respectively, during the nine months ended September 30, 2018, and $88 and $0, respectively, during the nine months ended September 30, 2017. |
Benefit Plans
Benefit Plans | 9 Months Ended |
Sep. 30, 2018 | |
Compensation Related Costs [Abstract] | |
Benefit Plans | 13. Benefit Plans The Company sponsors a profit-sharing plan that covers all eligible employees. Plan costs are funded annually as they are earned. The Company’s contribution expense for the profit-sharing plan totaled $255 and $176 during the three months ended September 30, 2018 and 2017, respectively, and totaled $847 and $702 during the nine months ended September 30, 2018 and 2017, respectively. The Company also sponsors a 401(k) plan with an automatic contribution to all eligible employees and a matching contribution for eligible employees of 50% up to 3% of eligible compensation. The Company’s contributions expense to the 401(k) plan totaled $182 and $115 during the three months ended September 30, 2018 and 2017, respectively, and totaled $421 and $345 during the nine months ended September 30, 2018 and 2017, respectively. All fees associated with both plans are deducted from the eligible employee accounts. Deferred Compensation Plan Effective April 28, 2016, the Board of Directors authorized a non-qualified deferred compensation plan covering key executives of the Company as designated by the Board of Directors. The Company’s policy is to fund the plan in a given calendar year by amounts that exceed the maximum contribution allowed by the Employee Retirement Income Security Act (“ERISA”), beginning in 2017. Funds deposited were $13 and $11 during the three months ended September 30, 2018 and 2017, respectively. Funds deposited were $171 and $128 during the nine months ended September 30, 2018 and 2017, respectively. Employee Stock Ownership Plan The Company has established an Employee Stock Ownership Plan (the “ESOP”). The ESOP is intended to be an employee stock ownership plan within the meaning of Internal Revenue Code Section 4975(e)(7) and will invest primarily in common stock of the Company. In connection with our initial public offering in March 2017, Nodak Insurance loaned $2,400 to the ESOP’s related trust (the “ESOP Trust”). The ESOP loan will be for a period of ten years and bears interest at the long-term Applicable Federal Rate effective on the closing date of the offering (2.79% annually). The ESOP Trust used the proceeds of the loan to purchase shares in our initial public offering, which results in the ESOP Trust owning approximately 1.0% of the Company’s authorized shares. The ESOP has purchased the shares for investment and not for resale. The shares purchased by the ESOP Trust in the offering are held in a suspense account as collateral for the ESOP loan. The shares held in the ESOP’s suspense account are not considered outstanding for earnings per share purposes. Nodak Insurance will make semi-annual cash contributions to the ESOP in amounts no smaller than the amounts required for the ESOP Trust to make its loan payments to Nodak Insurance. While the ESOP makes two loan payments per year, a pre-determined portion of the shares will be released from the suspense account and allocated to participant accounts at the end of the calendar year. This release and allocation will occur on an annual basis over the ten-year term of the ESOP loan. Nodak Insurance will have a lien on the shares of common stock of the Company held by the ESOP to secure repayment of the loan from the ESOP to Nodak Insurance. If the ESOP is terminated as a result of a change in control of the Company, the ESOP may be required to pay the costs of terminating the plan. It is anticipated that the only assets held by the ESOP will be shares of the Company’s common stock. Participants in the ESOP cannot direct the investment of any assets allocated to their accounts. The initial ESOP participants are employees of Nodak Insurance. The employees of Primero and Direct Auto will not participate in the ESOP. American West and Battle Creek have no employees. Each employee of Nodak Insurance will automatically become a participant in the ESOP if such employee is at least 21 years old, has completed a minimum of one thousand hours of service with Nodak Insurance, and has completed an Eligibility Computation Period. Employees are not permitted to make any contributions to the ESOP. Participants in the ESOP will receive annual reports from the Company showing the number of shares of common stock of the Company allocated to the participant’s account and the market value of those shares. The shares are allocated to participants based on compensation as provided for in the ESOP. In connection with the initial public offering, the Company created a contra-equity account on the Company’s Consolidated Balance Sheet equal to the ESOP’s basis in the shares. The basis of those shares was set at $10.00 per share as part of the initial public offering. As shares are released from the ESOP suspense account, the contra-equity account will be credited, which shall reduce the impact of the contra-equity account on the Company’s Consolidated Balance Sheet. The Company shall record a compensation expense related to the shares released, which compensation expense is equal to the number of shares released from the suspense account multiplied by the average market value of the Company’s stock during the period. The Company recognized compensation expense of $100 and $303 during the three and nine months ended September 30, 2018, respectively. The Company recognized compensation expense of $295 and $295 during the three and nine months ended September 30, 2017. At December 31, 2017, 24,315 ESOP shares were released and allocated to participants, with a remainder of 215,685 ESOP shares in suspense at both December 31, 2017 and September 30, 2018. Using the Company’s quarter-end market price of $16.87 per share, the fair value of the unearned ESOP shares was $3,639 at September 30, 2018. |
Line of Credit
Line of Credit | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Line of Credit | 14. Line of Credit Nodak Insurance has a $3,000 line of credit with Wells Fargo Bank, N.A., of which there were no outstanding amounts as of September 30, 2018 or December 31, 2017. This line of credit is scheduled to expire on November 30, 2018. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 15. Income Taxes At September 30, 2018 and December 31, 2017, we had no unrecognized tax benefits, no accrued interest and penalties, and no significant uncertain tax positions. No interest and penalties were recognized during the three or nine months ended September 30, 2018 or 2017. At September 30, 2018 and December 31, 2017, the Company, other than Battle Creek, had no income tax related carryovers for net operating losses, alternative minimum tax credits, or capital losses. Battle Creek, which files its income tax returns on a stand-alone basis, had $4,951 of net operating loss carryover at December 31, 2017. The net operating loss carryforward expires beginning in 2021 through 2030. |
Operating Leases
Operating Leases | 9 Months Ended |
Sep. 30, 2018 | |
Leases, Operating [Abstract] | |
Operating Leases | 16. Operating Leases Our Primero subsidiary leases a facility in Spearfish, South Dakota under a non-cancellable operating lease expiring in 2023. Our Direct Auto subsidiary leases a facility in Chicago, Illinois under a non-cancellable operating lease expiring in 2020. We leased equipment and software under non-cancellable operating leases expiring at various times in 2017. There were expenses of $35 and $15 related to these leases during the three months ended September 30, 2018 and 2017, and expenses of $65 and $65 during the nine months ended September 30, 2018 and 2017, respectively. As of September 30, 2018, we have minimum future commitments under non-cancellable leases as follows: Year ending December 31, Estimated Future Remaining 2018 $ 75 2019 301 2020 121 2021 60 2022 60 2023 30 We also sub-lease portions of our home office building under non-cancellable operating leases. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | 17. Contingencies We have been named as a defendant in various lawsuits relating to our insurance operations. Contingent liabilities arising from litigation, income taxes and other matters are not considered to be material to our financial position. The Company does not have any unrecorded or potential contingent liabilities or material commitments requiring the use of assets as of September 30, 2018 or December 31, 2017. |
Common Stock
Common Stock | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Common Stock | 18. Common Stock Changes in the number of common stock shares outstanding are as follows: Nine Months Ended September 30, 2018 2017 Shares outstanding, beginning of period 22,337,644 — Initial public offering — 23,000,000 Shares repurchased related to employee stock ownership plan — (240,000 ) Treasury shares repurchased through stock repurchase authorization — (446,671 ) Issuance of treasury shares for vesting of restricted stock units 22,200 — Shares outstanding, end of period 22,359,844 22,313,329 Note: Shares were not available prior to the Company’s initial public offering in March 2017. On May 23, 2017, our Board of Directors approved an authorization for the repurchase of up to $8 million of the Company’s outstanding common stock. We completed the repurchase of 446,671 shares of our common stock for $8,037 during the three months ended June 30, 2017, and reflected the cost of this treasury stock as a reduction of Equity within our Consolidated Balance Sheet as of December 31, 2017. On February 28, 2018, our Board of Directors approved an authorization for the repurchase of up to approximately $10 million of the Company’s outstanding common stock. No shares of our common stock have been repurchased under this authorization. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | 19. Stock Based Compensation At its 2017 Annual Shareholders’ Meeting, the NI Holdings, Inc. 2017 Stock and Incentive Plan (the “Plan”) was approved by shareholders. The purpose of the Plan is to promote the interests of the Company and its shareholders by aiding the Company in attracting and retaining employees, officers, consultants, advisors, and non-employee directors capable of assuring the future success of the Company, to offer such persons incentives to put forth maximum efforts for the success of the Company’s business, to compensate such persons through various stock and cash-based arrangements, and to provide them with opportunities for stock ownership in the Company, thereby aligning the interests of such persons with the Company’s shareholders. The Plan provides for the grant of nonqualified stock options, incentive stock options, restricted stock units (“RSUs”), stock appreciation rights, dividend equivalents, and performance share units (“PSUs”) to employees, officers, consultants, advisors, non-employee directors, and independent contractors designated by the Compensation Committee of the Board of Directors (the “Compensation Committee”). Awards made under the Plan are based upon, among other things, a participant’s level of responsibility and performance within the Company. The total aggregate number of shares of common stock that awards may be issued under all awards made under the Plan shall not exceed 500,000 shares of common stock, subject to adjustments as provided in the Plan. No eligible participant may be granted more than 100,000 shares from any stock options, stock appreciation rights, or performance awards denominated in shares, in the aggregate in any calendar year, subject to adjustment in accordance with the Plan. The aggregate amount payable pursuant to all performance awards denominated in cash to any eligible person in any calendar year is limited to $1,000 in value. Directors who are not also employees of the Company may not be granted awards denominated in shares that exceed $100 in any calendar year. Restricted Stock Units On December 1, 2017, the Compensation Committee awarded RSUs to non-employee directors and select executives. RSUs are promises to issue actual shares of common stock at the end of a vesting period. The RSUs granted to executives under the Plan were based on salary and generally vest 20% per year over a five-year period, while RSUs granted to non-employee directors vest in May 2018. Dividend equivalents on RSUs are accrued during the vesting period and paid in cash at the end of the vesting period, but are subject to forfeiture until the underlying shares become vested. Participants do not have voting rights with respect to RSUs. On March 1, 2018, the first tranche of executive RSUs vested. On March 1, 2018, the Compensation Committee awarded additional RSUs to select executives with the same terms as the previous awards. On May 22, 2018, the RSUs awarded to non-employee directors vested. Additional RSUs were awarded to non-employee directors to vest on the date of the next annual meeting of shareholders. The Company recognizes stock-based compensation costs based on the grant date fair value over the vesting period of the awards. Estimated forfeitures are included in the determination of compensation costs. No forfeitures are currently estimated. A summary of the Company’s outstanding RSUs for the nine months ended September 30, 2018, is presented below: Shares Weighted- Fair Value Per Share Units outstanding at December 31, 2017 65,500 $ 17.31 Grants 40,000 16.25 Vested (26,200 ) 17.31 Units outstanding at September 30, 2018 79,300 $ 16.88 The following table shows the impact of RSU activity to the Company’s financial results: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 RSU compensation expense $ 185 $ — $ 827 $ — Income tax benefit (39 ) — (174 ) — RSU compensation expense, net of income taxes $ 146 $ — $ 653 $ — Note: Share-based compensation was not available prior to the Company’s initial public offering in March 2017. At September 30, 2018, there was $836 of unrecognized compensation cost related to outstanding RSUs. That cost is expected to be recognized over a weighted-average period of 3.43 years. Performance Stock Units On March 1, 2018, the Compensation Committee awarded PSUs to select executives. PSUs are promises to issue actual shares of common stock at the end of a vesting period, if certain performance conditions are met. The PSUs granted to employees under the Plan were based on salary and include a three-year book value cumulative growth target with threshold and stretch goals. They will vest on the third anniversary of the grant date, subject to the participant’s continuous employment through the vesting date and the level of performance achieved. Dividend equivalents on PSUs are accrued and paid in cash at the end of the performance period in accordance with the level of performance achieved, but are subject to forfeiture until the underlying shares become vested. Participants do not have voting rights with respect to PSUs. The Company recognizes stock-based compensation costs based on the grant date fair value over the performance period of the awards. Estimated forfeitures are included in the determination of compensation costs. No forfeitures are currently estimated. The current cost estimate assumes that the cumulative growth target will be achieved. A summary of the Company’s outstanding PSUs for the nine months ended September 30, 2018, is presented below: Performance Share Weighted-Average Fair Value Per Share Units outstanding at December 31, 2017 — $ — Grants (at target) 48,600 16.25 Units outstanding at September 30, 2018 48,600 $ 16.25 The following table shows the impact of PSU activity to the Company’s financial results: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 PSU compensation expense $ 70 $ — $ 163 $ — Income tax benefit (14 ) — (34 ) — PSU compensation expense, net of income taxes $ 56 $ — $ 129 $ — Note: Share-based compensation was not available prior to the Company’s initial public offering in March 2017. The PSU grants above represent initial target awards and do not reflect potential increases or decreases resulting from financial performance objectives to be determined at the end of the performance period. The actual number of shares to be issued at the end of the performance period will range from 0% to 150% of the initial target awards. At September 30, 2018, there was $627 of unrecognized compensation cost related to outstanding PSUs. That cost is expected to be recognized over a weighted-average period of 2.25 years. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 20. Earnings Per Share As described in Note 1, the conversion of the mutual company to a stock company resulted in the issuance of NI Holdings common shares on March 13, 2017. Earnings per share are computed by dividing net income available to common shareholders for the period by the weighted average number of common shares outstanding for the same period. The weighted average number of common shares outstanding was 22,381,344 and 22,373,579, respectively, during the three and nine months ended September 30, 2018, and 22,313,329 and 22,577,233, respectively, during the three and nine months ended September 30, 2017. For the period prior to the date of the conversion, we assumed that the net common shares issued in the initial public offering of 22,760,000 shares were outstanding since January 1, 2017. Unearned ESOP shares are not considered outstanding until they are released and allocated to plan participants. Unearned RSU and PSU shares are not considered outstanding until they are earned by award participants. The following table presents a reconciliation of the numerators and denominators we used in the basic and diluted per share computations for our common stock: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Basic earnings per common share: Numerator: Net income attributable to NI Holdings, Inc. $ 9,844 $ (2,733 ) $ 16,192 $ 2,085 Denominator: Weighted average shares outstanding 22,381,344 22,313,329 22,373,579 22,577,233 Basic earnings per common share $ 0.44 $ (0.12 ) $ 0.72 $ 0.09 Diluted earnings per common share: Numerator: Net income attributable to NI Holdings, Inc. $ 9,844 $ (2,733 ) $ 16,192 $ 2,085 Denominator: Number of shares used in basic computation 22,381,344 22,313,329 22,373,579 22,577,233 Weighted average effect of dilutive securities Add: Restricted stock units and performance share units 32,732 — 21,598 — Number of shares used in per share computations 22,414,076 22,313,329 22,395,177 22,577,233 Diluted earnings per common share $ 0.44 $ (0.12 ) $ 0.72 $ 0.09 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | 21. Segment Information We have four primary reportable operating segments, which consist of private passenger auto insurance, non-standard auto insurance, home and farm insurance, and crop insurance. A fifth segment captures all other insurance coverages we sell, including commercial coverages and our assumed reinsurance lines of business. We operate only in the United States, and no single customer or agent provides 10 percent or more of our revenues. The following tables provide available information of these segments for the three and nine months ended September 30, 2018 and 2017. Prior years have been restated to reflect the change in segments. For presentation in these tables, “LAE” refers to loss adjustment expenses. Three Months Ended September 30, 2018 Private Non- Home and Crop All Other Total Direct premiums earned $ 16,718 $ 7,052 $ 17,977 $ 19,880 $ 2,110 $ 63,737 Assumed premiums earned 3 — (4 ) 27 1,058 1,084 Ceded premiums earned (829 ) — (1,736 ) (7,947 ) (173 ) (10,685 ) Net premiums earned 15,892 7,052 16,237 11,960 2,995 54,136 Direct losses and LAE 11,940 4,387 16,414 4,976 1,502 39,219 Assumed losses and LAE 140 — (122 ) 530 279 827 Ceded losses and LAE (176 ) — 78 (1,991 ) (501 ) (2,590 ) Net losses and LAE 11,904 4,387 16,370 3,515 1,280 37,456 Gross margin 3,988 2,665 (133 ) 8,445 1,715 16,680 Underwriting and general expenses 4,235 2,348 4,678 2,695 782 14,738 Underwriting gain (loss) (247 ) 317 (4,811 ) 5,750 933 1,942 Fee and other income 343 5,175 660 Net investment income 1,629 Net realized capital gain on investments 3,160 Income before income taxes 11,906 Income taxes 2,029 Net income 9,877 Net income attributable to non-controlling interest 33 Net income attributable to NI Holdings, Inc. $ 9,844 Non-GAAP Ratios: Loss and LAE ratio 74.9% 62.2% 100.8% 29.4% 42.7% 69.2% Expense ratio 26.6% 33.3% 28.8% 22.5% 26.1% 27.2% Combined ratio 101.6% 95.5% 129.6% 51.9% 68.8% 96.4% Balances at September 30, 2018: Premiums receivable $ 17,003 $ 7,498 $ 9,094 $ 27,710 $ 1,440 $ 62,745 Deferred policy acquisition costs 3,663 1,356 5,195 1,001 578 11,793 Reinsurance recoverables 42 — 979 2,425 2,182 5,628 Receivable from Federal Crop Insurance Corporation — — — 29,284 — 29,284 Unpaid losses and LAE 19,094 48,020 15,536 13,714 9,289 105,653 Unearned premiums 26,363 17,871 36,764 12,509 4,801 98,308 Three Months Ended September 30, 2017 Private Non- Home and Crop All Other Total Direct premiums earned $ 15,015 $ 2,663 $ 16,327 $ 21,999 $ 1,975 $ 57,979 Assumed premiums earned 4 — (15 ) 90 1,111 1,190 Ceded premiums earned (744 ) — (1,403 ) (4,333 ) (164 ) (6,644 ) Net premiums earned 14,275 2,663 14,909 17,756 2,922 52,525 Direct losses and LAE 10,475 1,564 15,032 19,930 1,294 48,295 Assumed losses and LAE (52 ) — — (34 ) 2,785 2,699 Ceded losses and LAE 48 — 37 (1,683 ) 203 (1,395 ) Net losses and LAE 10,471 1,564 15,069 18,213 4,282 49,599 Gross margin 3,804 1,099 (160 ) (457 ) (1,360 ) 2,926 Underwriting and general expenses 2,225 738 3,855 2,782 492 10,092 Underwriting gain (loss) 1,579 361 (4,015 ) (3,239 ) (1,852 ) (7,166 ) Fee and other income 276 752 637 Net investment income 1,404 Net realized capital gain on investments 1,885 Loss before income taxes (3,125 ) Income taxes (benefit) (432 ) Net (loss) (2,693 ) Net income attributable to non-controlling interest 40 Net (loss) attributable to NI Holdings, Inc. $ (2,733 ) Non-GAAP Ratios: Loss and LAE ratio 73.4 % 58.7 % 101.1 % 102.6 % 146.5 % 94.4 % Expense ratio 15.6 % 27.7 % 25.9 % 15.7 % 16.8 % 19.2 % Combined ratio 88.9 % 86.4 % 126.9 % 118.2 % 163.4 % 113.6 % Balances at September 30, 2017: Premiums receivable $ 15,400 $ 1,188 $ 7,970 $ 46,782 $ 1,233 $ 72,573 Deferred policy acquisition costs 3,506 304 4,797 2,593 553 11,753 Reinsurance recoverables 650 — 2,248 3,664 2,118 8,680 Receivable from Federal Crop Insurance Corporation — — — 20,683 — 20,683 Unpaid losses and LAE 21,281 5,573 15,013 32,577 10,983 85,427 Unearned premiums 24,597 1,771 33,012 11,937 4,499 75,816 Nine Months Ended September 30, 2018 Private Non- Home and Crop All Other Total Direct premiums earned $ 48,436 $ 13,519 $ 51,840 $ 34,963 $ 6,158 $ 154,916 Assumed premiums earned 11 — (13 ) 2,311 3,263 5,572 Ceded premiums earned (2,420 ) — (4,851 ) (11,772 ) (520 ) (19,563 ) Net premiums earned 46,027 13,519 46,976 25,502 8,901 140,925 Direct losses and LAE 33,303 9,324 38,372 15,040 2,938 98,977 Assumed losses and LAE 188 — (171 ) 693 1,193 1,903 Ceded losses and LAE (290 ) — 18 (2,896 ) (686 ) (3,854 ) Net losses and LAE 33,201 9,324 38,219 12,837 3,445 97,026 Gross margin 12,826 4,195 8,757 12,665 5,456 43,899 Underwriting and general expenses 13,357 4,273 14,770 3,346 2,671 38,417 Underwriting gain (loss) (531 ) (78 ) (6,013 ) 9,319 2,785 5,482 Fee and other income 994 6,022 916 Net investment income 4,521 Net realized capital gain on investments 3,879 Income before income taxes 19,904 Income taxes 3,619 Net income 16,285 Net income attributable to non-controlling interest 93 Net income attributable to NI Holdings, Inc. $ 16,192 Non-GAAP Ratios: Loss and LAE ratio 72.1% 69.0% 81.4% 50.3% 38.7% 68.8% Expense ratio 29.0% 31.6% 31.4% 13.1% 30.0% 27.3% Combined ratio 101.2% 100.6% 112.8% 63.5% 68.7% 96.1% Balances at September 30, 2018: Premiums receivable $ 17,003 $ 7,498 $ 9,094 $ 27,710 $ 1,440 $ 62,745 Deferred policy acquisition costs 3,663 1,356 5,195 1,001 578 11,793 Reinsurance recoverables 42 — 979 2,425 2,182 5,628 Receivable from Federal Crop Insurance Corporation — — — 29,284 — 29,284 Unpaid losses and LAE 19,094 48,020 15,536 13,714 9,289 105,653 Unearned premiums 26,363 17,871 36,764 12,509 4,801 98,308 Nine Months Ended September 30, 2017 Private Non- Home and Crop All Other Total Direct premiums earned $ 42,893 $ 7,784 $ 47,047 $ 37,162 $ 5,773 $ 140,659 Assumed premiums earned 11 — (12 ) 2,527 3,203 5,729 Ceded premiums earned (2,465 ) — (4,417 ) (8,019 ) (500 ) (15,401 ) Net premiums earned 40,439 7,784 42,618 31,670 8,476 130,987 Direct losses and LAE 27,936 6,284 34,541 32,036 3,233 104,030 Assumed losses and LAE 258 — — 1,369 3,685 5,312 Ceded losses and LAE (3 ) — (469 ) (3,698 ) (1,622 ) (5,792 ) Net losses and LAE 28,191 6,284 34,072 29,707 5,296 103,550 Gross margin 12,248 1,500 8,546 1,963 3,180 27,437 Underwriting and general expenses 12,353 2,231 13,632 1,390 1,930 31,536 Underwriting gain (loss) (105 ) (731 ) (5,086 ) 573 1,250 (4,099 ) Fee and other income 802 1,420 71 Net investment income 3,706 Net realized capital gain on investments 2,840 Income before income taxes 3,867 Income taxes 1,694 Net income 2,173 Net income attributable to non-controlling interest 88 Net income attributable to NI Holdings, Inc. $ 2,085 Non-GAAP Ratios: Loss and LAE ratio 69.7 % 80.7 % 79.9 % 93.8 % 62.5 % 79.1 % Expense ratio 30.5 % 28.7 % 32.0 % 4.4 % 22.8 % 24.1 % Combined ratio 100.3 % 109.4 % 111.9 % 98.2 % 85.3 % 103.1 % Balances at September 30, 2017: Premiums receivable $ 15,400 $ 1,188 $ 7,970 $ 46,782 $ 1,233 $ 72,573 Deferred policy acquisition costs 3,506 304 4,797 2,593 553 11,753 Reinsurance recoverables 650 — 2,248 3,664 2,118 8,680 Receivable from Federal Crop Insurance Corporation — — — 20,683 — 20,683 Unpaid losses and LAE 21,281 5,573 15,013 32,577 10,983 85,427 Unearned premiums 24,597 1,771 33,012 11,937 4,499 75,816 For purposes of evaluating profitability of the non-standard auto segment, management combines the policy fees paid by the insured with the underwriting gain or loss as its primary measure. As a result, these fees are allocated to the non-standard auto segment (included in fee and other income) in the above tables. The remaining fee and other income amounts are not allocated to any segment, including the $4,578 gain realized on the bargain purchase of Direct Auto in the third quarter of 2018. We do not assign or allocate all Consolidated Statement of Operations or Consolidated Balance Sheet line items to our operating segments. Those line items include investment income, net realized capital gain on investments, other income excluding non-standard auto insurance fees, and income taxes within the Consolidated Statement of Operations. For the Consolidated Balance Sheet, those items include cash and investments, property and equipment, other assets, accrued expenses, federal income taxes recoverable or payable, and equity. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 22. Subsequent Events We have evaluated subsequent events through November 13, 2018, the date these consolidated financial statements were available for issuance. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates: In preparing our consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet and revenues and expenses for the periods then ended. Actual results could differ significantly from those estimates. We make estimates and assumptions that can have a significant effect on amounts and disclosures we report in our consolidated financial statements. The most significant estimates relate to our reserves for unpaid losses and loss adjustment expenses, earned premiums for crop insurance, valuation of investments, determination of other-than-temporary impairments, valuation allowances for deferred income tax assets, deferred policy acquisition costs, and the valuations used to establish intangible assets acquired related to business combinations. While we believe our estimates are appropriate, the ultimate amounts may differ from the estimates provided. We regularly review our methods for making these estimates as well as the continuing appropriateness of the estimated amounts, and we reflect any adjustment we consider necessary in our current results of operations. |
Variable-Interest Entities | Variable-Interest Entities: Any company deemed to be a variable interest entity (“VIE”) is required to be consolidated by the primary beneficiary of the VIE. We assess our investments in other entities at inception to determine if any meet the qualifications of a VIE. We consider an investment in another company to be a VIE if (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) the characteristics of a controlling financial interest are missing (either the ability to make decisions through voting or other rights, the obligation to absorb expected losses of the entity or the right to receive the expected residual returns of the entity), or (c) the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the entity and/or the rights to receive the expected residual returns of the entity, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. Upon the occurrence of certain events, we would reassess our initial determination of whether the investment is a VIE. We evaluate whether we are the primary beneficiary of each VIE and we consolidate the VIE if we have both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity. We consider the contractual agreements that define the ownership structure, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights, and board representation of the respective parties in determining whether we qualify as the primary beneficiary. Our assessment of whether we are the primary beneficiary of a VIE is performed at least annually. We control Battle Creek via a 100% quota-share reinsurance agreement between Nodak Insurance and Battle Creek, as well as the ability to control a majority of the Board of Directors of Battle Creek. Through the effects of the 100% quota-share agreement with Battle Creek, we are considered the primary beneficiary of Battle Creek’s operating results excluding investment income, bad debt expense, and income taxes. Therefore, we consolidate the financial statements of Battle Creek, and Battle Creek’s policyholders’ interest in Battle Creek is reflected as a non-controlling interest in Equity in our Consolidated Balance Sheet. |
Cash and Cash Equivalents | Cash and Cash Equivalents: Cash and cash equivalents include certain investments in highly liquid debt instruments with original maturities of three months or less. Cost approximates fair value for these short-term investments. |
Investments | Investments: We have categorized our investment portfolio as “available-for-sale” and have reported the portfolio at fair value, with unrealized gains and losses, net of income taxes, reported in accumulated other comprehensive income. Fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Amortization of premium and accretion of discount are computed using an effective interest method. Realized gains and losses are determined using the specific identification method and included in the determination of net income. Net investment income includes interest and dividend income together with amortization of purchase premiums and discounts, and is net of investment management and custody fees. We review our investments each quarter to determine whether a decline in fair value below the amortized cost basis is other than temporary. Accordingly, we assess whether we intend to sell or it is more likely than not that we will be required to sell a security before recovery of its amortized cost basis. For fixed income securities that are considered other-than-temporarily impaired and that we do not intend to sell and will not be required to sell prior to recovery of the amortized cost basis, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows discounted at the security’s effective yield. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and, therefore, is not required to be recognized as losses in the Consolidated Statement of Operations, but is recognized in other comprehensive income. We classify each fair value measurement at the appropriate level in the fair value hierarchy. The hierarchy gives the highest priority to unadjusted quoted market price in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements). An asset’s or liability’s classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. Level I – Quoted price in active markets for identical assets and liabilities. Level II – Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level II inputs include quoted prices for similar assets or liabilities other than quoted in prices in Level I, quoted prices in markets that are not active, or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level III – Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions that market participants would use in pricing the asset or liability. Level III assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
Fair Value of Other Financial Instruments | Fair Value of Other Financial Instruments: Our other financial instruments, aside from investments, are cash and cash equivalents, premiums and agents’ balances receivable, and accrued expenses and accounts payable. The carrying amounts for cash and cash equivalents, premiums and agents’ balances receivable, and accrued expenses and accounts payable approximate their fair value based on their short-term nature. Other invested assets that do not have observable inputs and little or no market activity are carried on a cost basis. The carrying value of these other invested assets was $1,954 at September 30, 2018 and $1,972 at December 31, 2017. |
Reclassifications | Reclassifications: Certain amounts in the 2017 consolidated financial statements have been reclassified to conform to the 2018 presentation. This includes a change in the Company’s reportable segments that was made in the fourth quarter of the year ended December 31, 2017. The prior segments were non-standard auto, crop, and other property and casualty. The new segments used throughout this report are private passenger auto, non-standard auto, home and farm, crop, and all other. |
Revenue Recognition | Revenue Recognition: We record premiums written at policy inception and recognize them as revenue on a pro rata basis over the policy term or, in the case of crop insurance, over the period of risk. The portion of premiums that could be earned in the future is deferred and reported as unearned premiums. When policies lapse, the Company reverses the unearned portion of the written premium and removes the applicable unearned premium. Policy-related fee income is recognized when collected. The Company uses the direct write-off method for recognizing bad debts. Accounts are deemed to be delinquent after 60 days except for those accounts associated with amounts due from insureds for premiums, in which case policy cancellation procedures are commenced in accordance with state insurance regulations. Any earned but uncollected premiums are written off immediately upon the effective date of policy cancellation. |
Policy Acquisition Costs | Policy Acquisition Costs: We defer our policy acquisition costs, consisting primarily of commissions, premium taxes and certain other underwriting costs, reduced by ceding commissions, which vary with and relate directly to the production of business. We amortize these deferred policy acquisition costs over the period in which we earn the premiums. The method we follow in computing deferred policy acquisition costs limits the amount of such deferred costs to their estimated realizable value, which gives effect to the premium to be earned, related investment income, losses and loss adjustment expenses, and certain other costs we expect to incur as we earn the premium. |
Property and Equipment | Property and Equipment: We report property and equipment at cost less accumulated depreciation. Depreciation is computed using the straight-line method based upon the estimated useful lives of the assets. |
Losses and Loss Adjustment Expenses | Losses and Loss Adjustment Expenses: Liabilities for unpaid losses and loss adjustment expenses are estimates at a given point in time of the amounts we expect to pay with respect to policyholder claims based on facts and circumstances then known. At the time of establishing our estimates, we recognize that our ultimate liability for losses and loss adjustment expenses will exceed or be less than such estimates. We base our estimates of liabilities for unpaid losses and loss adjustment expenses on assumptions as to future loss trends, expected claims severity, judicial theories of liability, and other factors. During the loss adjustment period, we may learn additional facts regarding certain claims, and, consequently, it often becomes necessary for us to refine and adjust our estimates of the liability. We reflect any adjustments to our liabilities for unpaid losses and loss adjustment expenses in our operating results in the period in which we determine the need for a change in the estimates. We maintain liabilities for unpaid losses and loss adjustment expenses with respect to both reported and unreported claims. We establish these liabilities for the purpose of covering the ultimate costs of settling all losses, including investigation and litigation costs. We base the amount of our liability for reported losses primarily upon a case-by-case evaluation of the type of risk involved, knowledge of the circumstances surrounding each claim, and the insurance policy provisions relating to the type of loss our policyholder incurred. We determine the amount of our liability for unreported losses and loss adjustment expenses on the basis of historical information by line of insurance. Inflation is not explicitly selected in the loss reserve analysis. However, historical inflation is embedded in the estimated loss reserving function through analysis of costs and trends and reviews of historical reserving results. We closely monitor our liabilities and update them periodically using new information on reported claims and a variety of statistical techniques. We do not discount our liabilities for unpaid losses and loss adjustment expense. Reserve estimates can change over time because of unexpected changes in assumptions related to our external environment and, to a lesser extent, assumptions as to our internal operations. Assumptions related to our external environment include the absence of significant changes in tort law and the legal environment which may impact liability exposure, the trends in judicial interpretations of insurance coverage and policy provisions, and the rate of loss cost inflation. Internal assumptions include consistency in the recording of premium and loss statistics, consistency in the recording of claims, payment and case reserving methodologies, accurate measurement of the impact of rate changes and changes in policy provisions, consistency in the quality and characteristics of business written within a given line of business, and consistency in reinsurance coverage and collectability of reinsured losses, among other items. To the extent we determine that underlying factors impacting our assumptions have changed, we attempt to make appropriate adjustments for such changes in our reserves. Accordingly, our ultimate liability for unpaid losses and loss adjustment expenses will likely differ from the amount recorded. |
Income Taxes | Income Taxes: With the exception of Battle Creek, which files a stand-alone federal income tax return, we currently file a consolidated federal income tax return. For the year ended December 31, 2016, the consolidated federal income tax return included Nodak Mutual Insurance Company and its wholly-owned subsidiaries. For the year ended December 31, 2017 and thereafter, the consolidated federal income tax return included and will include thereafter NI Holdings and its wholly-owned subsidiaries. Direct Auto became part of the consolidated federal income tax return as of its acquisition date. The Company reports tax-related interest and penalties, if any, as part of income tax expense in the year such amounts are determinable. We account for deferred income taxes using the asset and liability method. The objective of the asset and liability method is to establish deferred income tax assets and liabilities for the temporary differences between the financial reporting basis and the income tax basis of our assets and liabilities at enacted tax rates expected to be in effect when we realize or settle such amounts. Accounting guidance requires that companies re-measure existing deferred income tax assets (including loss carryforwards) and liabilities when a change in tax rate occurs, and record an offset for the net amount of the change as a component of income tax expense from continuing operations in the period of enactment. The guidance also requires any change to a previously recorded valuation allowance as a result of re-measuring existing temporary differences and loss carryforwards to be reflected as a component of income tax expense from continuing operations. The Company has elected to reclassify any tax effects stranded in accumulated other comprehensive income as a result of a change in income tax rates to retained earnings. |
Credit Risk | Credit Risk: Our primary investment objective is to earn competitive returns by investing in a diversified portfolio of securities. Our portfolio of fixed income securities and, to a lesser extent, short-term investments, is subject to credit risk. We define this risk as the potential loss in fair value resulting from adverse changes in the borrower’s ability to repay the debt. We manage this risk by performing an analysis of prospective investments and through regular reviews of our portfolio by our investment staff and advisors. We also limit the amount of our total investment portfolio that we invest in any one security. Property and liability insurance coverages are marketed through captive agents in North Dakota and through independent insurance agencies located throughout all operating areas. All business is billed directly to policyholders. We maintain cash balances primarily at one bank, which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250. During the normal course of business, balances are maintained above the FDIC insurance limit. The Company maintains short-term investment balances in investment grade money market accounts that are insured by the Securities Investor Protection Corporation (“SIPC”) up to $500. On occasion, balances for these accounts are maintained in excess of the SIPC insurance limit. |
Reinsurance | Reinsurance: The Company limits the maximum net loss that can arise from large risks or risks in concentrated areas of exposure by reinsuring (ceding) certain levels of risks to other insurers or reinsurers, either on an automatic basis under general reinsurance contracts knows as “treaties” or by negotiation on substantial individual risks. Ceded reinsurance is treated as the risk and liability of the assuming companies. Reinsurance contracts do not relieve the Company from its obligations to policyholders. In the event that all or any of the reinsuring companies might be unable to meet their obligations under existing reinsurance agreements, the Company would be liable for such defaulted amounts. |
Goodwill and Intangibles | Goodwill and Intangibles: Goodwill represents the excess of the purchase price over the underlying fair value of acquired entities. When completing acquisitions, we seek also to identify separately identifiable intangible assets that we have acquired. We assess goodwill and intangible assets with an indefinite useful life for impairment annually. We also assess goodwill and other intangible assets for impairment upon the occurrence of certain events. In making our assessment, we consider a number of factors including operating results, business plans, economic projections, anticipated future cash flows, and current market data. Inherent uncertainties exist with respect to these factors and to our judgment in applying them when we make our assessment. Impairment of goodwill and other intangible assets could result from changes in economic and operating conditions in future periods. We did not record any impairments of goodwill or other intangible assets during the three and nine month periods ended September 30, 2018 and 2017. Goodwill arising from the acquisition of Primero in 2014 represents the excess of the purchase price over the fair value of the net assets acquired. The purchase price in excess of the fair value of net assets acquired was negotiated at arms-length with an unrelated party and was based upon the strategic decision by Company management to expand both the geographic footprint and product lines of the Company. The nature of the business acquired was such that there were limited intangible assets not reflected in the net assets acquired. The purchase price was paid with a combination of cash and cancellation of obligations owed to the acquired company by the sellers. The goodwill which arose from this transaction is included in the basis of the net assets acquired and is not deductible for income tax purposes. Intangible assets arising from the acquisition of Direct Auto in 2018 represent the estimated fair values of certain intangible assets, including a bargain lease contract, a state insurance license, the value of the Direct Auto trade name, and the value of business acquired (“VOBA”). The state insurance license asset has an indefinite life, while the bargain lease contract, Direct Auto trade name, and VOBA assets will be amortized over eighteen months, five years, and twelve months, respectively, from the August 31, 2018 valuation date. |
Acquisition of Direct Auto In_2
Acquisition of Direct Auto Insurance Company (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Proforma Information of Business Combination | The acquired Direct Auto business contributed revenues of $3,663 and net income of $260 to the Company for the period from September 1, 2018 to September 30, 2018. The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2017: Pro forma Three Months Ended September 30, Pro forma Nine Months Ended September 30, 2018 2017 2018 2017 Revenues $ 67,126 $ 65,219 $ 180,323 $ 167,724 Net income (loss) attributable to NI Holdings, Inc. 5,550 (2,272 ) 12,029 7,750 Basic earnings (loss) per share attributable to NI Holdings, Inc. 0.25 (0.10 ) 0.54 0.34 |
Schedule of Identified Assets Acquired and Liabilities Assumed | The Company paid $17,000 in cash consideration to the private shareholders of Direct Auto. The acquisition of Direct Auto did not include any contingent consideration. The following table summarizes the consideration transferred to acquire Direct Auto and the amounts of identified assets acquired and liabilities assumed at the acquisition date: Acquisition of Direct Auto Insurance Company Fair Value of Consideration: Total cash consideration transferred $ 17,000 Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed: Identifiable net assets: Cash and cash equivalents $ 44,485 Fixed income securities, at fair value 11,414 Equity securities, at fair value 14,634 Premiums and agents' balances receivable 5,849 Accrued investment income 63 Property and equipment 31 Bargain lease contract (included in intangibles) 20 License (included in intangibles) 100 Trade name (included in intangibles) 248 Value of business acquired (included in intangibles) 5,134 Other assets 107 Unpaid losses and loss adjustment expenses (40,967 ) Unearned premiums (15,955 ) Federal income tax payable (1,486 ) Deferred income taxes, net (1,442 ) Accrued expenses and other liabilities (657 ) Total identifiable net assets $ 21,578 Gain on bargain purchase $ 4,578 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Marketable Securities [Abstract] | |
Schedule of amortized cost and estimated fair value of securities | The amortized cost and estimated fair value of investment securities as of September 30, 2018 and December 31, 2017, were as follows: September 30, 2018 Cost or Amortized Gross Unrealized Gross Unrealized Fair Value Fixed income securities: U.S. Government and agencies $ 18,977 $ 95 $ (304 ) $ 18,768 Obligations of states and political subdivisions 51,760 278 (860 ) 51,178 Corporate securities 100,329 242 (1,565 ) 99,006 Residential mortgage-backed securities 45,901 1 (1,215 ) 44,687 Commercial mortgage-backed securities 14,418 — (382 ) 14,036 Asset-backed securities 19,910 — (179 ) 19,731 Total fixed income securities 251,295 616 (4,505 ) 247,406 Equity securities: Basic materials 1,605 39 (15 ) 1,629 Communications 5,415 1,681 (204 ) 6,892 Consumer, cyclical 5,223 4,132 — 9,355 Consumer, non-cyclical 9,478 5,652 (300 ) 14,830 Energy 1,805 209 (1 ) 2,013 Financial 4,490 273 (107 ) 4,656 Industrial 4,762 3,627 (29 ) 8,360 Technology 7,121 5,069 (200 ) 11,990 Total equity securities 39,899 20,682 (856 ) 59,725 Total investments $ 291,194 $ 21,298 $ (5,361 ) $ 307,131 December 31, 2017 Cost or Amortized Gross Unrealized Gross Unrealized Fair Value Fixed income securities: U.S. Government and agencies $ 9,531 $ 175 $ (57 ) $ 9,649 Obligations of states and political subdivisions 81,741 1,171 (317 ) 82,595 Corporate securities 88,474 1,197 (220 ) 89,451 Residential mortgage-backed securities 28,557 124 (157 ) 28,524 Commercial mortgage-backed securities 11,228 61 (119 ) 11,170 Asset-backed securities 15,447 10 (88 ) 15,369 Total fixed income securities 234,978 2,738 (958 ) 236,758 Equity securities: Basic materials 768 124 — 892 Communications 3,027 1,449 (154 ) 4,322 Consumer, cyclical 5,303 4,156 (120 ) 9,339 Consumer, non-cyclical 7,090 3,940 (125 ) 10,905 Energy 2,003 272 (44 ) 2,231 Financial 2,007 410 — 2,417 Industrial 5,038 4,167 — 9,205 Technology 3,792 4,668 (210 ) 8,250 Total equity securities 29,028 19,186 (653 ) 47,561 Total investments $ 264,006 $ 21,924 $ (1,611 ) $ 284,319 |
Schedule of amortized cost and fair value of fixed income securities by contractual maturity | The amortized cost and estimated fair value of fixed income securities by contractual maturity are shown below. Actual maturities could differ from contractual maturities because issuers of the securities may have the right to call or prepay certain obligations, which may or may not include call or prepayment penalties. September 30, 2018 Amortized Cost Fair Value Due to mature: One year or less $ 13,432 $ 13,423 After one year through five years 96,945 96,322 After five years through ten years 56,627 55,359 After ten years 4,062 3,848 Mortgage / asset-backed securities 80,229 78,454 Total fixed income securities $ 251,295 $ 247,406 December 31, 2017 Amortized Cost Fair Value Due to mature: One year or less $ 12,761 $ 12,766 After one year through five years 86,830 87,642 After five years through ten years 69,586 70,680 After ten years 10,569 10,607 Mortgage / asset-backed securities 55,232 55,063 Total fixed income securities $ 234,978 $ 236,758 |
Schedule of unrealized loss of securities | The investment category and duration of the Company’s gross unrealized losses on fixed income securities and equity securities were as follows: September 30, 2018 Less than 12 Months Greater than 12 months Total Fair Unrealized Fair Unrealized Fair Unrealized Fixed income securities: U.S. Government and agencies $ 12,433 $ (196 ) $ 2,321 $ (108 ) $ 14,754 $ (304 ) Obligations of states and political subdivisions 23,395 (571 ) 7,155 (289 ) 30,550 (860 ) Corporate securities 63,676 (1,286 ) 12,724 (279 ) 76,400 (1,565 ) Residential mortgage-backed securities 30,864 (609 ) 12,339 (606 ) 43,203 (1,215 ) Commercial mortgage-backed securities 11,280 (225 ) 2,756 (157 ) 14,036 (382 ) Asset-backed securities 6,153 (53 ) 9,073 (126 ) 15,226 (179 ) Total fixed income securities 147,801 (2,940 ) 46,368 (1,565 ) 194,169 (4,505 ) Equity securities: Basic materials 893 (15 ) — — 893 (15 ) Communications 3,468 (149 ) 158 (55 ) 3,626 (204 ) Consumer, cyclical — — — — — — Consumer, non-cyclical 3,724 (300 ) — — 3,724 (300 ) Energy 367 (1 ) — — 367 (1 ) Financial 1,928 (107 ) — — 1,928 (107 ) Industrial 696 (29 ) — — 696 (29 ) Technology 2,449 (140 ) 151 (60 ) 2,600 (200 ) Total equity securities 13,525 (741 ) 309 (115 ) 13,834 (856 ) Total investments $ 161,326 $ (3,681 ) $ 46,677 $ (1,680 ) $ 208,003 $ (5,361 ) December 31, 2017 Less than 12 Months Greater than 12 months Total Fair Unrealized Fair Unrealized Fair Unrealized Fixed income securities: U.S. Government and agencies $ 6,442 $ (54 ) $ 497 $ (3 ) $ 6,939 $ (57 ) Obligations of states and political subdivisions 28,219 (251 ) 3,593 (66 ) 31,812 (317 ) Corporate securities 39,025 (201 ) 1,195 (19 ) 40,220 (220 ) Residential mortgage-backed securities 7,573 (40 ) 7,248 (117 ) 14,821 (157 ) Commercial mortgage-backed securities 4,652 (64 ) 1,643 (55 ) 6,295 (119 ) Asset-backed securities 13,386 (80 ) 781 (8 ) 14,167 (88 ) Total fixed income securities 99,297 (690 ) 14,957 (268 ) 114,254 (958 ) Equity securities: Communications 840 (48 ) 107 (106 ) 947 (154 ) Consumer, cyclical 898 (116 ) 214 (4 ) 1,112 (120 ) Consumer, non-cyclical 1,894 (125 ) — — 1,894 (125 ) Energy 243 (44 ) — — 243 (44 ) Technology 634 (120 ) 152 (90 ) 786 (210 ) Total equity securities 4,509 (453 ) 473 (200 ) 4,982 (653 ) Total investments $ 103,806 $ (1,143 ) $ 15,430 $ (468 ) $ 119,236 $ (1,611 ) |
Schedule of net investment income | Net investment income consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Fixed income securities $ 1,800 $ 1,703 $ 5,073 $ 4,614 Equity securities 244 79 716 242 Real estate 91 89 273 262 Cash and cash equivalents 31 6 93 50 Total gross investment income 2,166 1,877 6,155 5,168 Investment expenses 537 473 1,634 1,462 Net investment income $ 1,629 $ 1,404 $ 4,521 $ 3,706 |
Schedule of net realized gain (loss) on investments | Net realized capital gain on investments consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Gross realized gains $ 3,973 $ 2,104 $ 5,168 $ 3,284 Gross realized losses, excluding other-than-temporary impairment losses (431 ) (95 ) (907 ) (114 ) Other-than-temporary impairment losses (382 ) (124 ) (382 ) (330 ) Net realized capital gain on investments $ 3,160 $ 1,885 $ 3,879 $ 2,840 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investments, All Other Investments [Abstract] | |
Schedule of Financial Instruments at Fair Value Measured on a Recurring Basis | The following tables set forth our assets which are measured on a recurring basis by the level within the fair value hierarchy in which fair value measurements fall: September 30, 2018 Total Level I Level II Level III Fixed income securities: U.S. Government and agencies $ 18,768 $ — $ 18,768 $ — Obligations of states and political subdivisions 51,178 — 51,178 — Corporate securities 99,006 — 99,006 — Residential mortgage-backed securities 44,687 — 44,687 — Commercial mortgage-backed securities 14,036 — 14,036 — Asset-backed securities 19,731 — 19,731 — Total fixed income securities 247,406 — 247,406 — Equity securities: Basic materials 1,629 1,629 — — Communications 6,892 6,892 — — Consumer, cyclical 9,355 9,355 — — Consumer, non-cyclical 14,830 14,830 — — Energy 2,013 2,013 — — Financial 4,656 4,656 — — Industrial 8,360 8,360 — — Technology 11,990 11,990 — — Total equity securities 59,725 59,725 — — Cash and cash equivalents 51,660 51,660 — — Total assets at fair value $ 358,791 $ 111,385 $ 247,406 $ — December 31, 2017 Total Level I Level II Level III Fixed income securities: U.S. Government and agencies $ 9,649 $ — $ 9,649 $ — Obligations of states and political subdivisions 82,595 — 82,595 — Corporate securities 89,451 — 89,451 — Residential mortgage-backed securities 28,524 — 28,524 — Commercial mortgage-backed securities 11,170 — 11,170 — Asset-backed securities 15,369 — 15,369 — Total fixed income securities 236,758 — 236,758 — Equity securities: Basic materials 892 892 — — Communications 4,322 4,322 — — Consumer, cyclical 9,339 9,339 — — Consumer, non-cyclical 10,905 10,905 — — Energy 2,231 2,231 — — Financial 2,417 2,417 — — Industrial 9,205 9,205 — — Technology 8,250 8,250 — — Total equity securities 47,561 47,561 — — Cash and cash equivalents 27,594 27,594 — — Total assets at fair value $ 311,913 $ 75,155 $ 236,758 $ — |
Reinsurance (Tables)
Reinsurance (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Schedule of reconciliation of direct to net premiums on both a written and an earned basis | A reconciliation of direct to net premiums on both a written and an earned basis is as follows: Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Premiums Written Premiums Earned Premiums Written Premiums Earned Direct premium $ 46,220 $ 63,737 $ 174,074 $ 154,916 Assumed premium 974 1,084 5,506 5,572 Ceded premium (10,685 ) (10,685 ) (19,563 ) (19,563 ) Net premiums $ 36,509 $ 54,136 $ 160,017 $ 140,925 Percentage of assumed earned premium to net earned premium 2.0 % 4.0 % Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Premiums Written Premiums Earned Premiums Written Premiums Earned Direct premium $ 39,005 $ 57,979 $ 159,056 $ 140,659 Assumed premium 1,112 1,190 5,703 5,729 Ceded premium (3,970 ) (6,644 ) (15,401 ) (15,401 ) Net premiums $ 36,147 $ 52,525 $ 149,358 $ 130,987 Percentage of assumed earned premium to net earned premium 2.3 % 4.4 % |
Schedule of reconciliation of direct to net losses and loss adjustment expenses | A reconciliation of direct to net losses and loss adjustment expenses is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Direct losses and loss adjustment expenses $ 39,219 $ 48,295 $ 98,977 $ 104,030 Assumed losses and loss adjustment expenses 827 2,699 1,903 5,312 Ceded losses and loss adjustment expenses (2,590 ) (1,395 ) (3,854 ) (5,792 ) Net losses and loss adjustment expenses $ 37,456 $ 49,599 $ 97,026 $ 103,550 |
Deferred Policy Acquisition C_2
Deferred Policy Acquisition Costs (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Schedule of deferred policy acquisition costs | Activity with regards to our deferred policy acquisition costs was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Balance, beginning of period $ 12,190 $ 14,126 $ 8,859 $ 8,942 Deferral of policy acquisition costs 10,554 7,419 29,542 23,913 Amortization of deferred policy acquisition costs (10,951 ) (9,792 ) (26,608 ) (21,102 ) Balance, end of period $ 11,793 $ 11,753 $ 11,793 $ 11,753 |
Unpaid Losses and Loss Adjust_2
Unpaid Losses and Loss Adjustment Expenses (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Liability for Unpaid Claims and Claims Adjustment Expense, Activity in Liability [Abstract] | |
Schedule of Activity in the liability for unpaid losses and loss adjustment expenses | Activity in the liability for unpaid losses and loss adjustment expenses is summarized as follows: Nine Months Ended September 30, 2018 2017 Balance at beginning of period: Liability for unpaid losses and loss adjustment expenses $ 45,890 $ 59,632 Reinsurance recoverables on losses 4,128 7,192 Net balance at beginning of period 41,762 52,440 Acquired unpaid losses and loss adjustment expenses related to: Current year 17,795 — Prior year 23,172 — Total incurred 40,967 — Incurred related to: Current year 100,191 110,199 Prior years (3,165 ) (6,649 ) Total incurred 97,026 103,550 Paid related to: Current year 59,708 53,241 Prior years 20,022 26,002 Total paid 79,730 79,243 Balance at end of period: Liability for unpaid losses and loss adjustment expenses 105,653 85,427 Reinsurance recoverables on losses 5,628 8,680 Net balance at end of period $ 100,025 $ 76,747 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Schedule of Property and equipment | Property and equipment consisted of the following: September 30, 2018 December 31, 2017 Estimated Useful Life Cost: Real estate $ 11,041 $ 10,633 10 - 31 years Electronic data processing equipment 1,455 1,288 5-7 years Furniture and fixtures 3,536 3,511 5-7 years Automobiles 1,557 1,595 2-3 years Gross cost 17,589 17,027 Accumulated depreciation (11,485 ) (11,150 ) Total property and equipment, net $ 6,104 $ 5,877 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of illustrates the impact of consolidating Battle Creek into our consolidated balance sheets prior to intercompany eliminations | The following table illustrates the impact of including Battle Creek in our Consolidated Balance Sheets prior to intercompany eliminations: September 30, 2018 December 31, 2017 Assets: Cash and cash equivalents (overdraft) $ (375 ) $ (726 ) Investments 4,336 4,364 Premiums and agents’ balances receivable 4,725 4,055 Reinsurance recoverables on losses (1) 22,337 20,932 Accrued investment income 33 29 Deferred income tax asset, net 390 389 Property and equipment 361 370 Other assets 53 54 Total assets $ 31,860 $ 29,467 Liabilities: Unpaid losses and loss adjustment expenses $ 7,401 $ 7,995 Unearned premiums 14,962 12,937 Notes payable (1) 3,000 3,000 Reinsurance payable (1) 2,333 965 Accrued expenses and other liabilities 988 1,392 Total liabilities 28,684 26,289 Equity: Non-controlling interest 3,176 3,178 Total equity 3,176 3,178 Total liabilities and equity $ 31,860 $ 29,467 (1) |
Operating Leases (Tables)
Operating Leases (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Operating Leases Tables Abstract | |
Schedule of Minimum Future Commitments Under Non-Cancellable Leases | As of September 30, 2018, we have minimum future commitments under non-cancellable leases as follows: Year ending December 31, Estimated Future Remaining 2018 $ 75 2019 301 2020 121 2021 60 2022 60 2023 30 |
Common Stock (Tables)
Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Common Stock Tables Abstract | |
Schedule of number of common stock shares | Changes in the number of common stock shares outstanding are as follows: Nine Months Ended September 30, 2018 2017 Shares outstanding, beginning of period 22,337,644 — Initial public offering — 23,000,000 Shares repurchased related to employee stock ownership plan — (240,000 ) Treasury shares repurchased through stock repurchase authorization — (446,671 ) Issuance of treasury shares for vesting of restricted stock units 22,200 — Shares outstanding, end of period 22,359,844 22,313,329 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Restricted Stock Outstanding | A summary of the Company’s outstanding RSUs for the nine months ended September 30, 2018, is presented below: Shares Weighted- Fair Value Per Share Units outstanding at December 31, 2017 65,500 $ 17.31 Grants 40,000 16.25 Vested (26,200 ) 17.31 Units outstanding at September 30, 2018 79,300 $ 16.88 |
Schedule of RSU activity | The following table shows the impact of RSU activity to the Company’s financial results: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 RSU compensation expense $ 185 $ — $ 827 $ — Income tax benefit (39 ) — (174 ) — RSU compensation expense, net of income taxes $ 146 $ — $ 653 $ — Note: Share-based compensation was not available prior to the Company’s initial public offering in March 2017. |
Schedule of Performance Stock Outstanding | A summary of the Company’s outstanding PSUs for the nine months ended September 30, 2018, is presented below: Performance Share Weighted-Average Fair Value Per Share Units outstanding at December 31, 2017 — $ — Grants (at target) 48,600 16.25 Units outstanding at September 30, 2018 48,600 $ 16.25 |
Schedule of PSU activity | The following table shows the impact of PSU activity to the Company’s financial results: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 PSU compensation expense $ 70 $ — $ 163 $ — Income tax benefit (14 ) — (34 ) — PSU compensation expense, net of income taxes $ 56 $ — $ 129 $ — Note: Share-based compensation was not available prior to the Company’s initial public offering in March 2017. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of the numerators and denominators we used in the basic and diluted per share | The following table presents a reconciliation of the numerators and denominators we used in the basic and diluted per share computations for our common stock: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Basic earnings per common share: Numerator: Net income attributable to NI Holdings, Inc. $ 9,844 $ (2,733 ) $ 16,192 $ 2,085 Denominator: Weighted average shares outstanding 22,381,344 22,313,329 22,373,579 22,577,233 Basic earnings per common share $ 0.44 $ (0.12 ) $ 0.72 $ 0.09 Diluted earnings per common share: Numerator: Net income attributable to NI Holdings, Inc. $ 9,844 $ (2,733 ) $ 16,192 $ 2,085 Denominator: Number of shares used in basic computation 22,381,344 22,313,329 22,373,579 22,577,233 Weighted average effect of dilutive securities Add: Restricted stock units and performance share units 32,732 — 21,598 — Number of shares used in per share computations 22,414,076 22,313,329 22,395,177 22,577,233 Diluted earnings per common share $ 0.44 $ (0.12 ) $ 0.72 $ 0.09 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of revenue by insurance product line | The following tables provide available information of these segments for the three and nine months ended September 30, 2018 and 2017. Prior years have been restated to reflect the change in segments. For presentation in these tables, “LAE” refers to loss adjustment expenses. Three Months Ended September 30, 2018 Private Non- Home and Crop All Other Total Direct premiums earned $ 16,718 $ 7,052 $ 17,977 $ 19,880 $ 2,110 $ 63,737 Assumed premiums earned 3 — (4 ) 27 1,058 1,084 Ceded premiums earned (829 ) — (1,736 ) (7,947 ) (173 ) (10,685 ) Net premiums earned 15,892 7,052 16,237 11,960 2,995 54,136 Direct losses and LAE 11,940 4,387 16,414 4,976 1,502 39,219 Assumed losses and LAE 140 — (122 ) 530 279 827 Ceded losses and LAE (176 ) — 78 (1,991 ) (501 ) (2,590 ) Net losses and LAE 11,904 4,387 16,370 3,515 1,280 37,456 Gross margin 3,988 2,665 (133 ) 8,445 1,715 16,680 Underwriting and general expenses 4,235 2,348 4,678 2,695 782 14,738 Underwriting gain (loss) (247 ) 317 (4,811 ) 5,750 933 1,942 Fee and other income 343 5,175 660 Net investment income 1,629 Net realized capital gain on investments 3,160 Income before income taxes 11,906 Income taxes 2,029 Net income 9,877 Net income attributable to non-controlling interest 33 Net income attributable to NI Holdings, Inc. $ 9,844 Non-GAAP Ratios: Loss and LAE ratio 74.9% 62.2% 100.8% 29.4% 42.7% 69.2% Expense ratio 26.6% 33.3% 28.8% 22.5% 26.1% 27.2% Combined ratio 101.6% 95.5% 129.6% 51.9% 68.8% 96.4% Balances at September 30, 2018: Premiums receivable $ 17,003 $ 7,498 $ 9,094 $ 27,710 $ 1,440 $ 62,745 Deferred policy acquisition costs 3,663 1,356 5,195 1,001 578 11,793 Reinsurance recoverables 42 — 979 2,425 2,182 5,628 Receivable from Federal Crop Insurance Corporation — — — 29,284 — 29,284 Unpaid losses and LAE 19,094 48,020 15,536 13,714 9,289 105,653 Unearned premiums 26,363 17,871 36,764 12,509 4,801 98,308 Three Months Ended September 30, 2017 Private Non- Home and Crop All Other Total Direct premiums earned $ 15,015 $ 2,663 $ 16,327 $ 21,999 $ 1,975 $ 57,979 Assumed premiums earned 4 — (15 ) 90 1,111 1,190 Ceded premiums earned (744 ) — (1,403 ) (4,333 ) (164 ) (6,644 ) Net premiums earned 14,275 2,663 14,909 17,756 2,922 52,525 Direct losses and LAE 10,475 1,564 15,032 19,930 1,294 48,295 Assumed losses and LAE (52 ) — — (34 ) 2,785 2,699 Ceded losses and LAE 48 — 37 (1,683 ) 203 (1,395 ) Net losses and LAE 10,471 1,564 15,069 18,213 4,282 49,599 Gross margin 3,804 1,099 (160 ) (457 ) (1,360 ) 2,926 Underwriting and general expenses 2,225 738 3,855 2,782 492 10,092 Underwriting gain (loss) 1,579 361 (4,015 ) (3,239 ) (1,852 ) (7,166 ) Fee and other income 276 752 637 Net investment income 1,404 Net realized capital gain on investments 1,885 Loss before income taxes (3,125 ) Income taxes (benefit) (432 ) Net (loss) (2,693 ) Net income attributable to non-controlling interest 40 Net (loss) attributable to NI Holdings, Inc. $ (2,733 ) Non-GAAP Ratios: Loss and LAE ratio 73.4 % 58.7 % 101.1 % 102.6 % 146.5 % 94.4 % Expense ratio 15.6 % 27.7 % 25.9 % 15.7 % 16.8 % 19.2 % Combined ratio 88.9 % 86.4 % 126.9 % 118.2 % 163.4 % 113.6 % Balances at September 30, 2017: Premiums receivable $ 15,400 $ 1,188 $ 7,970 $ 46,782 $ 1,233 $ 72,573 Deferred policy acquisition costs 3,506 304 4,797 2,593 553 11,753 Reinsurance recoverables 650 — 2,248 3,664 2,118 8,680 Receivable from Federal Crop Insurance Corporation — — — 20,683 — 20,683 Unpaid losses and LAE 21,281 5,573 15,013 32,577 10,983 85,427 Unearned premiums 24,597 1,771 33,012 11,937 4,499 75,816 Nine Months Ended September 30, 2018 Private Non- Home and Crop All Other Total Direct premiums earned $ 48,436 $ 13,519 $ 51,840 $ 34,963 $ 6,158 $ 154,916 Assumed premiums earned 11 — (13 ) 2,311 3,263 5,572 Ceded premiums earned (2,420 ) — (4,851 ) (11,772 ) (520 ) (19,563 ) Net premiums earned 46,027 13,519 46,976 25,502 8,901 140,925 Direct losses and LAE 33,303 9,324 38,372 15,040 2,938 98,977 Assumed losses and LAE 188 — (171 ) 693 1,193 1,903 Ceded losses and LAE (290 ) — 18 (2,896 ) (686 ) (3,854 ) Net losses and LAE 33,201 9,324 38,219 12,837 3,445 97,026 Gross margin 12,826 4,195 8,757 12,665 5,456 43,899 Underwriting and general expenses 13,357 4,273 14,770 3,346 2,671 38,417 Underwriting gain (loss) (531 ) (78 ) (6,013 ) 9,319 2,785 5,482 Fee and other income 994 6,022 916 Net investment income 4,521 Net realized capital gain on investments 3,879 Income before income taxes 19,904 Income taxes 3,619 Net income 16,285 Net income attributable to non-controlling interest 93 Net income attributable to NI Holdings, Inc. $ 16,192 Non-GAAP Ratios: Loss and LAE ratio 72.1% 69.0% 81.4% 50.3% 38.7% 68.8% Expense ratio 29.0% 31.6% 31.4% 13.1% 30.0% 27.3% Combined ratio 101.2% 100.6% 112.8% 63.5% 68.7% 96.1% Balances at September 30, 2018: Premiums receivable $ 17,003 $ 7,498 $ 9,094 $ 27,710 $ 1,440 $ 62,745 Deferred policy acquisition costs 3,663 1,356 5,195 1,001 578 11,793 Reinsurance recoverables 42 — 979 2,425 2,182 5,628 Receivable from Federal Crop Insurance Corporation — — — 29,284 — 29,284 Unpaid losses and LAE 19,094 48,020 15,536 13,714 9,289 105,653 Unearned premiums 26,363 17,871 36,764 12,509 4,801 98,308 Nine Months Ended September 30, 2017 Private Non- Home and Crop All Other Total Direct premiums earned $ 42,893 $ 7,784 $ 47,047 $ 37,162 $ 5,773 $ 140,659 Assumed premiums earned 11 — (12 ) 2,527 3,203 5,729 Ceded premiums earned (2,465 ) — (4,417 ) (8,019 ) (500 ) (15,401 ) Net premiums earned 40,439 7,784 42,618 31,670 8,476 130,987 Direct losses and LAE 27,936 6,284 34,541 32,036 3,233 104,030 Assumed losses and LAE 258 — — 1,369 3,685 5,312 Ceded losses and LAE (3 ) — (469 ) (3,698 ) (1,622 ) (5,792 ) Net losses and LAE 28,191 6,284 34,072 29,707 5,296 103,550 Gross margin 12,248 1,500 8,546 1,963 3,180 27,437 Underwriting and general expenses 12,353 2,231 13,632 1,390 1,930 31,536 Underwriting gain (loss) (105 ) (731 ) (5,086 ) 573 1,250 (4,099 ) Fee and other income 802 1,420 71 Net investment income 3,706 Net realized capital gain on investments 2,840 Income before income taxes 3,867 Income taxes 1,694 Net income 2,173 Net income attributable to non-controlling interest 88 Net income attributable to NI Holdings, Inc. $ 2,085 Non-GAAP Ratios: Loss and LAE ratio 69.7 % 80.7 % 79.9 % 93.8 % 62.5 % 79.1 % Expense ratio 30.5 % 28.7 % 32.0 % 4.4 % 22.8 % 24.1 % Combined ratio 100.3 % 109.4 % 111.9 % 98.2 % 85.3 % 103.1 % Balances at September 30, 2017: Premiums receivable $ 15,400 $ 1,188 $ 7,970 $ 46,782 $ 1,233 $ 72,573 Deferred policy acquisition costs 3,506 304 4,797 2,593 553 11,753 Reinsurance recoverables 650 — 2,248 3,664 2,118 8,680 Receivable from Federal Crop Insurance Corporation — — — 20,683 — 20,683 Unpaid losses and LAE 21,281 5,573 15,013 32,577 10,983 85,427 Unearned premiums 24,597 1,771 33,012 11,937 4,499 75,816 |
Organization (Details)
Organization (Details) - Nodak Insurance [Member] | 9 Months Ended |
Sep. 30, 2018 | |
Percentage of shares exchanged | 55.00% |
Percentage of quota share agreement | 100.00% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Other invested assets | $ 1,954 | $ 1,972 |
Federal Deposit Insurance Corporation amount | 250 | |
Short-term investment balances in investment that are insured by SIPC | $ 500 | |
Nodak Insurance [Member] | ||
Ownership percentage | 100.00% | |
Battle Creek [Member] | ||
Ownership percentage | 100.00% |
Acquisition of Direct Auto In_3
Acquisition of Direct Auto Insurance Company (Narrative) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Aug. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Business Acquisition [Line Items] | ||||||
Revenue contribution | $ 64,100 | $ 56,566 | $ 155,347 | $ 138,953 | ||
Net income | 9,877 | $ (2,693) | 16,285 | $ 2,173 | ||
Direct Auto Insurance Company [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Ownership percentage in acquisition | 100.00% | |||||
Gain on bargain purchase | $ 4,578 | 4,578 | ||||
Revenue contribution | $ 3,663 | |||||
Net income | 260 | |||||
Acquisition related costs incurred | $ 91 | $ 91 | $ 91 |
Acquisition of Direct Auto In_4
Acquisition of Direct Auto Insurance Company (Schedule of Proforma Information of Business Combination) (Details) - Direct Auto Insurance Company [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Business Acquisition [Line Items] | ||||
Revenues | $ 67,126 | $ 65,219 | $ 180,323 | $ 167,724 |
Net income (loss) attributable to NI Holdings, Inc. | $ 5,550 | $ (2,272) | $ 12,029 | $ 7,750 |
Basic earnings (loss) per share attributable to NI Holdings, Inc. | $ 0.25 | $ (0.10) | $ 0.54 | $ 0.34 |
Acquisition of Direct Auto In_5
Acquisition of Direct Auto Insurance Company (Schedule of Identified Assets Acquired and Liabilities Assumed) (Details) - Direct Auto Insurance Company [Member] - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended |
Aug. 31, 2018 | Sep. 30, 2018 | |
Fair Value of Consideration: | ||
Total cash consideration transferred | $ 17,000 | |
Identifiable net assets: | ||
Cash and cash equivalents | 44,485 | |
Fixed income securities, at fair value | 11,414 | |
Equity securities, at fair value | 14,634 | |
Premiums and agents' balances receivable | 5,849 | |
Accrued investment income | 63 | |
Property and equipment | 31 | |
Bargain lease contract (included in intangibles) | 20 | |
License (included in intangibles) | 100 | |
Trade name (included in intangibles) | 248 | |
Value of business acquired (included in intangibles) | 5,134 | |
Other assets | 107 | |
Unpaid losses and loss adjustment expenses | (40,967) | |
Unearned premiums | (15,955) | |
Federal income tax payable | (1,486) | |
Deferred income taxes, net | (1,442) | |
Accrued expenses and other liabilities | (657) | |
Total identifiable net assets | 21,578 | |
Gain on bargain purchase | $ 4,578 | $ 4,578 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Narrative) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Recent Accounting Pronouncements Narrative | |
Income tax effects from accumulated other comprehensive income to retained earnings | $ 2,717 |
Pre-tax unrealized net capital gains | $ 19,826 |
Investments (Narrative) (Detail
Investments (Narrative) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Investments [Abstract] | |||||
Fixed income securities with a fair value | $ 4,861 | $ 4,861 | $ 3,493 | ||
Impairment of investments | $ 382 | $ 124 | $ 382 | $ 330 | |
Percentage of fixed maturities amortized cost values | 80.00% | ||||
Fixed income securities [Member] | |||||
Investments [Abstract] | |||||
Number of securities | 348 | 348 | 196 |
Investments (Schedule of amorti
Investments (Schedule of amortized cost and estimated fair value of investment securities) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Cost or Amortized Cost | $ 291,194 | $ 264,006 |
Gross Unrealized Gains | 21,298 | 21,924 |
Gross Unrealized Losses | (5,361) | (1,611) |
Fair Value | 307,131 | 284,319 |
Fixed income securities [Member] | ||
Cost or Amortized Cost | 251,295 | 234,978 |
Gross Unrealized Gains | 616 | 2,738 |
Gross Unrealized Losses | (4,505) | (958) |
Fair Value | 247,406 | 236,758 |
Fixed income securities [Member] | U.S. Government and agencies [Member] | ||
Cost or Amortized Cost | 18,977 | 9,531 |
Gross Unrealized Gains | 95 | 175 |
Gross Unrealized Losses | (304) | (57) |
Fair Value | 18,768 | 9,649 |
Fixed income securities [Member] | Obligations of states and political subdivisions [Member] | ||
Cost or Amortized Cost | 51,760 | 81,741 |
Gross Unrealized Gains | 278 | 1,171 |
Gross Unrealized Losses | (860) | (317) |
Fair Value | 51,178 | 82,595 |
Fixed income securities [Member] | Corporate securities [Member] | ||
Cost or Amortized Cost | 100,329 | 88,474 |
Gross Unrealized Gains | 242 | 1,197 |
Gross Unrealized Losses | (1,565) | (220) |
Fair Value | 99,006 | 89,451 |
Fixed income securities [Member] | Residential mortgage-backed securities [Member] | ||
Cost or Amortized Cost | 45,901 | 28,557 |
Gross Unrealized Gains | 1 | 124 |
Gross Unrealized Losses | (1,215) | (157) |
Fair Value | 44,687 | 28,524 |
Fixed income securities [Member] | Commercial mortgage-backed securities [Member] | ||
Cost or Amortized Cost | 14,418 | 11,228 |
Gross Unrealized Gains | 61 | |
Gross Unrealized Losses | (382) | (119) |
Fair Value | 14,036 | 11,170 |
Fixed income securities [Member] | Asset backed securities [Member] | ||
Cost or Amortized Cost | 19,910 | 15,447 |
Gross Unrealized Gains | 10 | |
Gross Unrealized Losses | (179) | (88) |
Fair Value | 19,731 | 15,369 |
Equity Securities [Member] | ||
Cost or Amortized Cost | 39,899 | 29,028 |
Gross Unrealized Gains | 20,682 | 19,186 |
Gross Unrealized Losses | (856) | (653) |
Fair Value | 59,725 | 47,561 |
Equity Securities [Member] | Basic materials [Member] | ||
Cost or Amortized Cost | 1,605 | 768 |
Gross Unrealized Gains | 39 | 124 |
Gross Unrealized Losses | (15) | |
Fair Value | 1,629 | 892 |
Equity Securities [Member] | Communications [Member] | ||
Cost or Amortized Cost | 5,415 | 3,027 |
Gross Unrealized Gains | 1,681 | 1,449 |
Gross Unrealized Losses | (204) | (154) |
Fair Value | 6,892 | 4,322 |
Equity Securities [Member] | Consumer, cyclical [Member] | ||
Cost or Amortized Cost | 5,223 | 5,303 |
Gross Unrealized Gains | 4,132 | 4,156 |
Gross Unrealized Losses | (120) | |
Fair Value | 9,355 | 9,339 |
Equity Securities [Member] | Consumer, non-cyclical [Member] | ||
Cost or Amortized Cost | 9,478 | 7,090 |
Gross Unrealized Gains | 5,652 | 3,940 |
Gross Unrealized Losses | (300) | (125) |
Fair Value | 14,830 | 10,905 |
Equity Securities [Member] | Energy [Member] | ||
Cost or Amortized Cost | 1,805 | 2,003 |
Gross Unrealized Gains | 209 | 272 |
Gross Unrealized Losses | (1) | (44) |
Fair Value | 2,013 | 2,231 |
Equity Securities [Member] | Financial [Member] | ||
Cost or Amortized Cost | 4,490 | 2,007 |
Gross Unrealized Gains | 273 | 410 |
Gross Unrealized Losses | (107) | |
Fair Value | 4,656 | 2,417 |
Equity Securities [Member] | Industrial [Member] | ||
Cost or Amortized Cost | 4,762 | 5,038 |
Gross Unrealized Gains | 3,627 | 4,167 |
Gross Unrealized Losses | (29) | |
Fair Value | 8,360 | 9,205 |
Equity Securities [Member] | Technology [Member] | ||
Cost or Amortized Cost | 7,121 | 3,792 |
Gross Unrealized Gains | 5,069 | 4,668 |
Gross Unrealized Losses | (200) | (210) |
Fair Value | $ 11,990 | $ 8,250 |
Investments (Schedule of Fixed
Investments (Schedule of Fixed Maturities) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Marketable Securities [Abstract] | ||
Amortized Cost, Due to mature One year or less | $ 13,432 | $ 12,761 |
Amortized Cost, Due to mature After one year through five years | 96,945 | 86,830 |
Amortized Cost, Due to mature After five years through ten years | 56,627 | 69,586 |
Amortized Cost, Due to mature After ten years | 4,062 | 10,569 |
Amortized Cost, Due to mature Mortgage/asset-backed securities | 80,229 | 55,232 |
Available-for-sale Securities, Debt Maturities, Amortized Cost | 251,295 | 234,978 |
Fair Value, Due to mature One year or less | 13,423 | 12,766 |
Fair Value, Due to mature After one year through five years | 96,322 | 87,642 |
Fair Value, Due to mature After five years through ten years | 55,359 | 70,680 |
Fair Value, Due to mature After ten years | 3,848 | 10,607 |
Fair Value, Due to mature Mortgage/asset-backed securities | 78,454 | 55,063 |
Available-for-sale Securities, Debt Securities, Estimated Fair Value | $ 247,406 | $ 236,758 |
Investments (Schedule of aggreg
Investments (Schedule of aggregate fair value and unrealized loss) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Less than 12 months Fair Value | $ 161,326 | $ 103,806 |
Less than 12 months Unrealized Losses | (3,681) | (1,143) |
Greater than 12 months Fair Value | 46,677 | 15,430 |
Greater than 12 months Unrealized Losses | (1,680) | (468) |
Fair Value, Total | 208,003 | 119,236 |
Unrealized Losses, Total | (5,361) | (1,611) |
Fixed income securities [Member] | ||
Less than 12 months Fair Value | 147,801 | 99,297 |
Less than 12 months Unrealized Losses | (2,940) | (690) |
Greater than 12 months Fair Value | 46,368 | 14,957 |
Greater than 12 months Unrealized Losses | (1,565) | (268) |
Fair Value, Total | 194,169 | 114,254 |
Unrealized Losses, Total | (4,505) | (958) |
Fixed income securities [Member] | U.S. Government and agencies [Member] | ||
Less than 12 months Fair Value | 12,433 | 6,442 |
Less than 12 months Unrealized Losses | (196) | (54) |
Greater than 12 months Fair Value | 2,321 | 497 |
Greater than 12 months Unrealized Losses | (108) | (3) |
Fair Value, Total | 14,754 | 6,939 |
Unrealized Losses, Total | (304) | (57) |
Fixed income securities [Member] | Obligations of states and political subdivisions [Member] | ||
Less than 12 months Fair Value | 23,395 | 28,219 |
Less than 12 months Unrealized Losses | (571) | (251) |
Greater than 12 months Fair Value | 7,155 | 3,593 |
Greater than 12 months Unrealized Losses | (289) | (66) |
Fair Value, Total | 30,550 | 31,812 |
Unrealized Losses, Total | (860) | (317) |
Fixed income securities [Member] | Corporate securities [Member] | ||
Less than 12 months Fair Value | 63,676 | 39,025 |
Less than 12 months Unrealized Losses | (1,286) | (201) |
Greater than 12 months Fair Value | 12,724 | 1,195 |
Greater than 12 months Unrealized Losses | (279) | (19) |
Fair Value, Total | 76,400 | 40,220 |
Unrealized Losses, Total | (1,565) | (220) |
Fixed income securities [Member] | Residential mortgage-backed securities [Member] | ||
Less than 12 months Fair Value | 30,864 | 7,573 |
Less than 12 months Unrealized Losses | (609) | (40) |
Greater than 12 months Fair Value | 12,339 | 7,248 |
Greater than 12 months Unrealized Losses | (606) | (117) |
Fair Value, Total | 43,203 | 14,821 |
Unrealized Losses, Total | (1,215) | (157) |
Fixed income securities [Member] | Commercial mortgage-backed securities [Member] | ||
Less than 12 months Fair Value | 11,280 | 4,652 |
Less than 12 months Unrealized Losses | (225) | (64) |
Greater than 12 months Fair Value | 2,756 | 1,643 |
Greater than 12 months Unrealized Losses | (157) | (55) |
Fair Value, Total | 14,036 | 6,295 |
Unrealized Losses, Total | (382) | (119) |
Fixed income securities [Member] | Asset backed securities [Member] | ||
Less than 12 months Fair Value | 6,153 | 13,386 |
Less than 12 months Unrealized Losses | (53) | (80) |
Greater than 12 months Fair Value | 9,073 | 781 |
Greater than 12 months Unrealized Losses | (126) | (8) |
Fair Value, Total | 15,226 | 14,167 |
Unrealized Losses, Total | (179) | (88) |
Equity Securities [Member] | ||
Less than 12 months Fair Value | 13,525 | 4,509 |
Less than 12 months Unrealized Losses | (741) | (453) |
Greater than 12 months Fair Value | 309 | 473 |
Greater than 12 months Unrealized Losses | (115) | (200) |
Fair Value, Total | 13,834 | 4,982 |
Unrealized Losses, Total | (856) | (653) |
Equity Securities [Member] | Basic materials [Member] | ||
Less than 12 months Fair Value | 893 | |
Less than 12 months Unrealized Losses | (15) | |
Greater than 12 months Fair Value | ||
Greater than 12 months Unrealized Losses | ||
Fair Value, Total | 893 | |
Unrealized Losses, Total | (15) | |
Equity Securities [Member] | Communications [Member] | ||
Less than 12 months Fair Value | 3,468 | 840 |
Less than 12 months Unrealized Losses | (149) | (48) |
Greater than 12 months Fair Value | 158 | 107 |
Greater than 12 months Unrealized Losses | (55) | (106) |
Fair Value, Total | 3,626 | 947 |
Unrealized Losses, Total | (204) | (154) |
Equity Securities [Member] | Consumer, cyclical [Member] | ||
Less than 12 months Fair Value | 898 | |
Less than 12 months Unrealized Losses | (116) | |
Greater than 12 months Fair Value | 214 | |
Greater than 12 months Unrealized Losses | (4) | |
Fair Value, Total | 1,112 | |
Unrealized Losses, Total | (120) | |
Equity Securities [Member] | Consumer, non-cyclical [Member] | ||
Less than 12 months Fair Value | 3,724 | 1,894 |
Less than 12 months Unrealized Losses | (300) | (125) |
Greater than 12 months Fair Value | ||
Greater than 12 months Unrealized Losses | ||
Fair Value, Total | 3,724 | 1,894 |
Unrealized Losses, Total | (300) | (125) |
Equity Securities [Member] | Energy [Member] | ||
Less than 12 months Fair Value | 367 | 243 |
Less than 12 months Unrealized Losses | (1) | (44) |
Greater than 12 months Fair Value | ||
Greater than 12 months Unrealized Losses | ||
Fair Value, Total | 367 | 243 |
Unrealized Losses, Total | (1) | (44) |
Equity Securities [Member] | Financial [Member] | ||
Less than 12 months Fair Value | 1,928 | |
Less than 12 months Unrealized Losses | (107) | |
Greater than 12 months Fair Value | ||
Greater than 12 months Unrealized Losses | ||
Fair Value, Total | 1,928 | |
Unrealized Losses, Total | (107) | |
Equity Securities [Member] | Industrial [Member] | ||
Less than 12 months Fair Value | 696 | |
Less than 12 months Unrealized Losses | (29) | |
Greater than 12 months Fair Value | ||
Greater than 12 months Unrealized Losses | ||
Fair Value, Total | 696 | |
Unrealized Losses, Total | (29) | |
Equity Securities [Member] | Technology [Member] | ||
Less than 12 months Fair Value | 2,449 | 634 |
Less than 12 months Unrealized Losses | (140) | (120) |
Greater than 12 months Fair Value | 151 | 152 |
Greater than 12 months Unrealized Losses | (60) | (90) |
Fair Value, Total | 2,600 | 786 |
Unrealized Losses, Total | $ (200) | $ (210) |
Investments (Schedule of Net In
Investments (Schedule of Net Investment Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Total gross investment income | $ 2,166 | $ 1,877 | $ 6,155 | $ 5,168 |
Investment expenses | 537 | 473 | 1,634 | 1,462 |
Net investment income | 1,629 | 1,404 | 4,521 | 3,706 |
Fixed income securities [Member] | ||||
Total gross investment income | 1,800 | 1,703 | 5,073 | 4,614 |
Equity Securities [Member] | ||||
Total gross investment income | 244 | 79 | 716 | 242 |
Real estate [Member] | ||||
Total gross investment income | 91 | 89 | 273 | 262 |
Cash and Cash Equivalents [Member] | ||||
Total gross investment income | $ 31 | $ 6 | $ 93 | $ 50 |
Investments (Schedule of compon
Investments (Schedule of components of Net realized capital gains on investments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Marketable Securities [Abstract] | ||||
Gross realized gains | $ 3,973 | $ 2,104 | $ 5,168 | $ 3,284 |
Gross realized losses, excluding other-than-temporary impairment losses | (431) | (95) | (907) | (114) |
Other-than-temporary impairment losses | (382) | (124) | (382) | (330) |
Net realized capital gains on investments | $ 3,160 | $ 1,885 | $ 3,879 | $ 2,840 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of assets, which are measured on a recurring basis) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Total fixed income securities | $ 247,406 | $ 236,758 | ||
Total equity securities | 59,725 | 47,561 | ||
Cash and cash equivalents | 51,660 | 27,594 | $ 2,984 | $ 18,318 |
Total assets at fair value | 358,791 | 311,913 | ||
U.S. Government and agencies [Member] | ||||
Total fixed income securities | 18,768 | 9,649 | ||
Obligations of states and political subdivisions [Member] | ||||
Total fixed income securities | 51,178 | 82,595 | ||
Corporate securities [Member] | ||||
Total fixed income securities | 99,006 | 89,451 | ||
Residential mortgage-backed securities [Member] | ||||
Total fixed income securities | 44,687 | 28,524 | ||
Commercial mortgage-backed securities [Member] | ||||
Total fixed income securities | 14,036 | 11,170 | ||
Asset backed securities [Member] | ||||
Total fixed income securities | 19,731 | 15,369 | ||
Basic materials [Member] | ||||
Total equity securities | 1,629 | 892 | ||
Communications [Member] | ||||
Total equity securities | 6,892 | 4,322 | ||
Consumer, cyclical [Member] | ||||
Total equity securities | 9,355 | 9,339 | ||
Consumer, non-cyclical [Member] | ||||
Total equity securities | 14,830 | 10,905 | ||
Energy [Member] | ||||
Total equity securities | 2,013 | 2,231 | ||
Financial [Member] | ||||
Total equity securities | 4,656 | 2,417 | ||
Industrial [Member] | ||||
Total equity securities | 8,360 | 9,205 | ||
Technology [Member] | ||||
Total equity securities | 11,990 | 8,250 | ||
Level I [Member] | ||||
Total fixed income securities | ||||
Total equity securities | 59,725 | 47,561 | ||
Cash and cash equivalents | 51,660 | 27,594 | ||
Total assets at fair value | 111,385 | 75,155 | ||
Level I [Member] | U.S. Government and agencies [Member] | ||||
Total fixed income securities | ||||
Level I [Member] | Obligations of states and political subdivisions [Member] | ||||
Total fixed income securities | ||||
Level I [Member] | Corporate securities [Member] | ||||
Total fixed income securities | ||||
Level I [Member] | Residential mortgage-backed securities [Member] | ||||
Total fixed income securities | ||||
Level I [Member] | Commercial mortgage-backed securities [Member] | ||||
Total fixed income securities | ||||
Level I [Member] | Asset backed securities [Member] | ||||
Total fixed income securities | ||||
Level I [Member] | Basic materials [Member] | ||||
Total equity securities | 1,629 | 892 | ||
Level I [Member] | Communications [Member] | ||||
Total equity securities | 6,892 | 4,322 | ||
Level I [Member] | Consumer, cyclical [Member] | ||||
Total equity securities | 9,355 | 9,339 | ||
Level I [Member] | Consumer, non-cyclical [Member] | ||||
Total equity securities | 14,830 | 10,905 | ||
Level I [Member] | Energy [Member] | ||||
Total equity securities | 2,013 | 2,231 | ||
Level I [Member] | Financial [Member] | ||||
Total equity securities | 4,656 | 2,417 | ||
Level I [Member] | Industrial [Member] | ||||
Total equity securities | 8,360 | 9,205 | ||
Level I [Member] | Technology [Member] | ||||
Total equity securities | 11,990 | 8,250 | ||
Level II [Member] | ||||
Total fixed income securities | 247,406 | 236,758 | ||
Total equity securities | ||||
Cash and cash equivalents | ||||
Total assets at fair value | 247,406 | 236,758 | ||
Level II [Member] | U.S. Government and agencies [Member] | ||||
Total fixed income securities | 18,768 | 9,649 | ||
Level II [Member] | Obligations of states and political subdivisions [Member] | ||||
Total fixed income securities | 51,178 | 82,595 | ||
Level II [Member] | Corporate securities [Member] | ||||
Total fixed income securities | 99,006 | 89,451 | ||
Level II [Member] | Residential mortgage-backed securities [Member] | ||||
Total fixed income securities | 44,687 | 28,524 | ||
Level II [Member] | Commercial mortgage-backed securities [Member] | ||||
Total fixed income securities | 14,036 | 11,170 | ||
Level II [Member] | Asset backed securities [Member] | ||||
Total fixed income securities | 19,731 | 15,369 | ||
Level II [Member] | Basic materials [Member] | ||||
Total equity securities | ||||
Level II [Member] | Communications [Member] | ||||
Total equity securities | ||||
Level II [Member] | Consumer, cyclical [Member] | ||||
Total equity securities | ||||
Level II [Member] | Consumer, non-cyclical [Member] | ||||
Total equity securities | ||||
Level II [Member] | Energy [Member] | ||||
Total equity securities | ||||
Level II [Member] | Financial [Member] | ||||
Total equity securities | ||||
Level II [Member] | Industrial [Member] | ||||
Total equity securities | ||||
Level II [Member] | Technology [Member] | ||||
Total equity securities | ||||
Level III [Member] | ||||
Total fixed income securities | ||||
Total equity securities | ||||
Cash and cash equivalents | ||||
Total assets at fair value | ||||
Level III [Member] | U.S. Government and agencies [Member] | ||||
Total fixed income securities | ||||
Level III [Member] | Obligations of states and political subdivisions [Member] | ||||
Total fixed income securities | ||||
Level III [Member] | Corporate securities [Member] | ||||
Total fixed income securities | ||||
Level III [Member] | Residential mortgage-backed securities [Member] | ||||
Total fixed income securities | ||||
Level III [Member] | Commercial mortgage-backed securities [Member] | ||||
Total fixed income securities | ||||
Level III [Member] | Asset backed securities [Member] | ||||
Total fixed income securities | ||||
Level III [Member] | Basic materials [Member] | ||||
Total equity securities | ||||
Level III [Member] | Communications [Member] | ||||
Total equity securities | ||||
Level III [Member] | Consumer, cyclical [Member] | ||||
Total equity securities | ||||
Level III [Member] | Consumer, non-cyclical [Member] | ||||
Total equity securities | ||||
Level III [Member] | Energy [Member] | ||||
Total equity securities | ||||
Level III [Member] | Financial [Member] | ||||
Total equity securities | ||||
Level III [Member] | Industrial [Member] | ||||
Total equity securities | ||||
Level III [Member] | Technology [Member] | ||||
Total equity securities |
Reinsurance (Narrative) (Detail
Reinsurance (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2018 | |
Reinsurance Disclosures [Abstract] | ||
Reinsurance Retention Policy, Excess Retention, Amount Reinsured | $ 74,600 | |
Retained risk amount | $ 10,000 | |
Catastrophic retention amount increased | $ 10,000 | |
Ceded reinsurance commission percentage | 100.00% | 100.00% |
Reinsurance (Schedule of reconc
Reinsurance (Schedule of reconciliation of direct to net premiums on both a written and an earned basis) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Premiums Written | ||||
Direct premium | $ 46,220 | $ 39,005 | $ 174,074 | $ 159,056 |
Assumed premium | 974 | 1,112 | 5,506 | 5,703 |
Ceded premium | (10,685) | (3,970) | (19,563) | (15,401) |
Net premiums | 36,509 | 36,147 | 160,017 | 149,358 |
Premiums Earned | ||||
Direct premium | 63,737 | 57,979 | 154,916 | 140,659 |
Assumed premium | 1,084 | 1,190 | 5,572 | 5,729 |
Ceded premium | (10,685) | (6,644) | (19,563) | (15,401) |
Net premiums | $ 54,136 | $ 52,525 | $ 140,925 | $ 130,987 |
Percentage of assumed premium to net earned premium | 2.00% | 2.30% | 4.00% | 4.40% |
Reinsurance (Schedule of reco_2
Reinsurance (Schedule of reconciliation of direct to net losses and loss adjustment expenses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Reinsurance Disclosures [Abstract] | ||||
Direct losses and loss adjustment expenses | $ 39,219 | $ 48,295 | $ 98,977 | $ 104,030 |
Assumed losses and loss adjustment expenses | 827 | 2,699 | 1,903 | 5,312 |
Ceded losses and loss adjustment expenses | (2,590) | (1,395) | (3,854) | (5,792) |
Net losses and loss adjustment expenses | $ 37,456 | $ 49,599 | $ 97,026 | $ 103,550 |
Deferred Policy Acquisition C_3
Deferred Policy Acquisition Costs (Schedule of deferred policy acquisition costs) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | ||||
Balance, beginning of period | $ 12,190 | $ 14,126 | $ 8,859 | $ 8,942 |
Deferral of policy acquisition costs | 10,554 | 7,419 | 29,542 | 23,913 |
Amortization of deferred policy acquisition costs | (10,951) | (9,792) | (26,608) | (21,102) |
Balance, end of period | $ 11,793 | $ 11,753 | $ 11,793 | $ 11,753 |
Unpaid Losses and Loss Adjust_3
Unpaid Losses and Loss Adjustment Expenses (Schedule of liability for unpaid losses and loss adjustment expenses) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Liability for Unpaid Claims and Claims Adjustment Expense, Activity in Liability [Abstract] | ||
Liability for unpaid losses and loss adjustment expense | $ 45,890 | $ 59,632 |
Reinsurance recoverables on losses | 4,128 | 7,192 |
Net balance at beginning of period | 41,762 | 52,440 |
Acquired unpaid losses and loss adjustment expenses related to: | ||
Current year | 17,795 | |
Prior year | 23,172 | |
Total incurred | 40,967 | |
Incurred related to: | ||
Current year | 100,191 | 110,199 |
Prior years | (3,165) | (6,649) |
Total Incurred | 97,026 | 103,550 |
Paid related to: | ||
Current year | 59,708 | 53,241 |
Prior years | 20,022 | 26,002 |
Total paid | 79,730 | 79,243 |
Liability for unpaid losses and loss adjustment expenses | 105,653 | 85,427 |
Reinsurance ceded | 5,628 | 8,680 |
Net balance at end of period | $ 100,025 | $ 76,747 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Cost: | $ 17,589 | $ 17,589 | $ 17,027 | ||
Accumulated depreciation | (11,485) | (11,485) | (11,150) | ||
Total property and equipment, net | 6,104 | 6,104 | 5,877 | ||
Depreciation expense | 129 | $ 127 | 372 | $ 376 | |
Real estate [Member] | |||||
Cost: | 11,041 | $ 11,041 | 10,633 | ||
Real estate [Member] | Minimum [Member] | |||||
Estimated Useful Life | 10 years | ||||
Real estate [Member] | Maximum [Member] | |||||
Estimated Useful Life | 31 years | ||||
Electronic data processing equipment [Member] | |||||
Cost: | 1,455 | $ 1,455 | 1,288 | ||
Electronic data processing equipment [Member] | Minimum [Member] | |||||
Estimated Useful Life | 5 years | ||||
Electronic data processing equipment [Member] | Maximum [Member] | |||||
Estimated Useful Life | 7 years | ||||
Furniture and Fixtures [Member] | |||||
Cost: | 3,536 | $ 3,536 | 3,511 | ||
Furniture and Fixtures [Member] | Minimum [Member] | |||||
Estimated Useful Life | 5 years | ||||
Furniture and Fixtures [Member] | Maximum [Member] | |||||
Estimated Useful Life | 7 years | ||||
Automobiles [Member] | |||||
Cost: | $ 1,557 | $ 1,557 | $ 1,595 | ||
Automobiles [Member] | Minimum [Member] | |||||
Estimated Useful Life | 2 years | ||||
Automobiles [Member] | Maximum [Member] | |||||
Estimated Useful Life | 3 years |
Related Party Transactions (Nar
Related Party Transactions (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | |||||
Payment of dividends | $ 15,654 | ||||
NDFB [Member] | |||||
Related Party Transaction [Line Items] | |||||
Royalties | $ 383 | $ 351 | $ 1,065 | $ 1,002 | |
Accrued royalties | 30 | 30 | 99 | ||
Battle Creek [Member] | |||||
Related Party Transaction [Line Items] | |||||
Related party revenues | 36 | 19 | 112 | 88 | |
Related party expenses | $ 0 | $ 0 | $ 0 | $ 0 | |
Direct Auto Insurance Company [Member] | |||||
Related Party Transaction [Line Items] | |||||
Payment of dividends | $ 1,206 |
Related Party Transactions (Sch
Related Party Transactions (Schedule of impact of consolidating Battle Creek into our consolidated balance sheets) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Assets: | |||||||
Accrued investment income | $ 1,796 | $ 1,996 | |||||
Property and equipment | 6,104 | 5,877 | |||||
Other assets | 3,406 | 3,482 | |||||
Total assets | 490,882 | 376,988 | |||||
Liabilities: | |||||||
Unpaid losses and loss adjustment expenses | 105,653 | 45,890 | $ 85,427 | ||||
Unearned premiums | 98,308 | 63,262 | 75,816 | ||||
Reinsurance payable | 3,055 | 428 | |||||
Total liabilities | 221,490 | 121,415 | |||||
Equity: | |||||||
Non-controlling interest | 3,176 | 3,178 | |||||
Total equity | 269,392 | $ 259,566 | 255,573 | $ 239,912 | $ 242,784 | $ 153,418 | |
Total liabilities and equity | 490,882 | 376,988 | |||||
Battle Creek [Member] | |||||||
Assets: | |||||||
Cash and cash equivalents (overdraft) | (375) | (726) | |||||
Investments | 4,336 | 4,364 | |||||
Premiums and agents' balances receivable | 4,725 | 4,055 | |||||
Reinsurance recoverables on losses | [1] | 22,337 | 20,932 | ||||
Accrued investment income | 33 | 29 | |||||
Deferred income tax asset, net | 390 | 389 | |||||
Property and equipment | 361 | 370 | |||||
Other assets | 53 | 54 | |||||
Total assets | 31,860 | 29,467 | |||||
Liabilities: | |||||||
Unpaid losses and loss adjustment expenses | 7,401 | 7,995 | |||||
Unearned premiums | 14,962 | 12,937 | |||||
Notes payable | [1] | 3,000 | 3,000 | ||||
Reinsurance payable | [1] | 2,333 | 965 | ||||
Accrued expenses and other liabilities | 988 | 1,392 | |||||
Total liabilities | 28,684 | 26,289 | |||||
Equity: | |||||||
Non-controlling interest | 3,176 | 3,178 | |||||
Total equity | 3,176 | 3,178 | |||||
Total liabilities and equity | $ 31,860 | $ 29,467 | |||||
[1] | Amount eliminated in consolidation. |
Benefit Plans (Details)
Benefit Plans (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Company's Total contribution to the profit sharing plan | $ 255 | $ 176 | $ 847 | $ 702 | ||
Company's total contributions to the 401(k) plan | 182 | 115 | 421 | 345 | ||
Funds deposited in deferred compensation | 13 | 11 | 171 | 128 | ||
Compensation expense | $ 100 | $ 295 | $ 303 | $ 295 | ||
ESOP shares were released and allocated | 24,315 | |||||
ESOP shares in suspense | 215,685 | 215,685 | 215,685 | |||
Market price | $ 16.87 | |||||
Fair value of unearned ESOP shares | $ 3,639 | $ 3,639 | ||||
Debt from ESOP | $ 2,400 | |||||
Debt term | 10 years | |||||
Interest rate | 2.79% | |||||
Percentage of ESOP in authorized shares | 1.00% | |||||
Per share price | $ 10 | |||||
Minimum [Member] | ||||||
Employee contribution in percentage | 3.00% | |||||
Maximum [Member] | ||||||
Employee contribution in percentage | 50.00% |
Line of Credit (Details)
Line of Credit (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Debt Disclosure [Abstract] | |
Line of credit with Wells Fargo | $ 3,000 |
Line of credit expiration date | Nov. 30, 2018 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Unrecognized tax benefits | ||
Interest and penalties | ||
Battle Creek [Member] | ||
Net operating loss carryover | $ 4,951 | |
Expiration date | Dec. 31, 2030 |
Operating Leases (Details)
Operating Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Operating Leased Assets [Line Items] | ||||
Operating lease expenses | $ 35 | $ 15 | $ 65 | $ 65 |
Primero Subsidiary Lease [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Lease expiration date | Dec. 31, 2023 | |||
Direct Auto Subsidiary Lease [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Lease expiration date | Dec. 31, 2020 |
Operating Leases (Schedule of M
Operating Leases (Schedule of Minimum Future Commitments Under Non-Cancellable Leases) (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Leases, Operating [Abstract] | |
Remaining 2,018 | $ 75 |
2,019 | 301 |
2,020 | 121 |
2,021 | 60 |
2,022 | 60 |
2,023 | $ 30 |
Common Stock (Narrative) (Detai
Common Stock (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Feb. 28, 2018 | May 23, 2017 | |
Equity [Abstract] | |||||
Authorization for repurchase of shares value | $ 10,000 | $ 8,000 | |||
Shares repurchased | 446,671 | 446,671 | |||
Shares repurchased, value | $ 8,037 | $ 8,037 |
Common Stock (Schedule of chang
Common Stock (Schedule of changes in number of common stock) (Details) - shares | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Equity [Abstract] | |||
Shares outstanding, beginning of period | 22,337,644 | ||
Initial public offering | 23,000,000 | ||
Shares repurchased related to employee stock ownership plan | (240,000) | ||
Treasury shares repurchased through stock repurchase authorization | (446,671) | (446,671) | |
Issuance of treasury shares for vesting of restricted stock units | 22,200 | ||
Shares outstanding, end of period | 22,359,844 | 22,313,329 |
Stock Based Compensation (Narra
Stock Based Compensation (Narrative) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-Based Compensation | $ 990 | |
All award [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share issued | 500,000 | |
Shares granted | 100,000 | |
Outstanding, Aggregate Intrinsic Value | $ 1,000 | |
All award [Member] | Director [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share granted not exceed | $ 100 | |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares granted | 40,000 | |
Vesting period | 5 years | |
Total unrecognized compensation cost | $ 836 | |
Total unrecognized compensation cost, weighted average period | 3 years 5 months 5 days | |
Percentage of RSU granted to employees per year | 20.00% | |
Performance Stock Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares granted | 48,600 | |
Total unrecognized compensation cost | $ 627 | |
Total unrecognized compensation cost, weighted average period | 2 years 2 months 30 days |
Stock Based Compensation (Sched
Stock Based Compensation (Schedule of Restricted Stock Outstanding) (Details) - Restricted Stock [Member] | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Shares | |
Units outstanding at December 31, 2017 | shares | 65,500 |
Grants | shares | 40,000 |
Vested | shares | (26,200) |
Units outstanding at September 30, 2018 | shares | 79,300 |
Weighted Average Grant-Date Fair Value Per Share | |
Units outstanding at December 31, 2017 | $ / shares | $ 17.31 |
Grants | $ / shares | 16.25 |
Vested | $ / shares | 17.31 |
Units outstanding at September 30, 2018 | $ / shares | $ 16.88 |
Stock Based Compensation (Sch_2
Stock Based Compensation (Schedule of RSU activity) (Details) - Restricted Stock [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
RSU compensation expense | $ 185 | $ 827 | ||
Income tax benefit | (39) | (174) | ||
RSU compensation expense, net of income taxes | $ 146 | $ 653 |
Stock Based Compensation (Sch_3
Stock Based Compensation (Schedule of Outstanding Performance Stock Units) (Details) - Performance Stock Units [Member] | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Shares | |
Units outstanding at December 31, 2017 | shares | |
Grants (at target) | shares | 48,600 |
Units outstanding at September 30, 2018 | shares | 48,600 |
Weighted Average Grant Date Fair Value | |
Units outstanding at December 31, 2017 | $ / shares | |
Grants (at target) | $ / shares | 16.25 |
Units outstanding at September 30, 2018 | $ / shares | $ 16.25 |
Stock Based Compensation (Sch_4
Stock Based Compensation (Schedule of PSU Activity) (Details) - Performance Stock Units [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
PSU compensation expense | $ 70 | $ 163 | ||
Income tax benefit | (14) | (34) | ||
PSU compensation expense, net of income taxes | $ 56 | $ 129 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Weighted average shares outstanding | 22,381,344 | 22,313,329 | 22,373,579 | 22,577,233 | |
Net common shares outstanding | 22,359,844 | 22,359,844 | 22,337,644 | ||
Common Stock [Member] | |||||
Net common shares outstanding | 22,760,000 |
Earnings per Share (Schedule of
Earnings per Share (Schedule of Calculations of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Basic earnings per common share: | ||||
Net income attributable to NI Holdings, Inc. | $ 9,844 | $ (2,733) | $ 16,192 | $ 2,085 |
Weighted average shares outstanding | 22,381,344 | 22,313,329 | 22,373,579 | 22,577,233 |
Basic earnings per common share | $ 0.44 | $ (0.12) | $ 0.72 | $ 0.09 |
Numerator: | ||||
Net income attributable to NI Holdings, Inc. | $ 9,844 | $ (2,733) | $ 16,192 | $ 2,085 |
Denominator: | ||||
Number of shares used in basic computation | 22,381,344 | 22,313,329 | 22,373,579 | 22,577,233 |
Weighted average effect of dilutive securities | ||||
Add: Restricted stock units and performance share units | 32,732 | 21,598 | ||
Number of shares used in per share computations | 22,414,076 | 22,313,329 | 22,395,177 | 22,577,233 |
Diluted earnings per common share | $ 0.44 | $ (0.12) | $ 0.72 | $ 0.09 |
Segment Information (Schedule o
Segment Information (Schedule of revenue by insurance product line) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Direct premiums earned | $ 63,737 | $ 57,979 | $ 154,916 | $ 140,659 | ||||
Assumed premiums earned | 1,084 | 1,190 | 5,572 | 5,729 | ||||
Ceded premiums earned | (10,685) | (6,644) | (19,563) | (15,401) | ||||
Net premiums earned | 54,136 | 52,525 | 140,925 | 130,987 | ||||
Direct losses and LAE | 39,219 | 48,295 | 98,977 | 104,030 | ||||
Assumed losses and LAE | 827 | 2,699 | 1,903 | 5,312 | ||||
Ceded losses and LAE | (2,590) | (1,395) | (3,854) | (5,792) | ||||
Net losses and LAE | 37,456 | 49,599 | 97,026 | 103,550 | ||||
Gross margin | 16,680 | 2,926 | 43,899 | 27,437 | ||||
Underwriting and general expenses | 14,738 | 10,092 | 38,417 | 31,536 | ||||
Underwriting gain (loss) | 1,942 | (7,166) | 5,482 | (4,099) | ||||
Fee and other income | 5,175 | 752 | 6,022 | 1,420 | ||||
Net investment income | 1,629 | 1,404 | 4,521 | 3,706 | ||||
Net realized capital gain on investments | 3,160 | 1,885 | 3,879 | 2,840 | ||||
Income loss before income taxes | 11,906 | (3,125) | 19,904 | 3,867 | ||||
Income taxes (benefit) | 2,029 | (432) | 3,619 | 1,694 | ||||
Net income (loss) | 9,877 | (2,693) | 16,285 | 2,173 | ||||
Net income loss attributable to non-controlling interest | 33 | 40 | 93 | 88 | ||||
Net income attributable to NI Holdings, Inc. | $ 9,844 | $ (2,733) | $ 16,192 | $ 2,085 | ||||
Non-GAAP Ratios: | ||||||||
Loss and LAE ratio | 69.20% | 94.40% | 68.80% | 79.10% | ||||
Expense ratio | 27.20% | 19.20% | 27.30% | 24.10% | ||||
Combined ratio | 96.40% | 113.60% | 96.10% | 103.10% | ||||
Premiums receivable | $ 62,745 | $ 72,573 | $ 62,745 | $ 72,573 | $ 25,632 | |||
Deferred policy acquisition costs | 11,793 | 11,753 | 11,793 | 11,753 | $ 12,190 | 8,859 | $ 14,126 | $ 8,942 |
Reinsurance recoverables | 5,628 | 8,680 | 5,628 | 8,680 | 4,128 | |||
Receivable from Federal Crop Insurance Corporation | 29,284 | 20,683 | 29,284 | 20,683 | 10,501 | |||
Unpaid losses and LAE | 105,653 | 85,427 | 105,653 | 85,427 | 45,890 | |||
Unearned premiums | 98,308 | 75,816 | 98,308 | 75,816 | $ 63,262 | |||
Private Passenger Auto [Member] | ||||||||
Direct premiums earned | 16,718 | 15,015 | 48,436 | 42,893 | ||||
Assumed premiums earned | 3 | 4 | 11 | 11 | ||||
Ceded premiums earned | (829) | (744) | (2,420) | (2,465) | ||||
Net premiums earned | 15,892 | 14,275 | 46,027 | 40,439 | ||||
Direct losses and LAE | 11,940 | 10,475 | 33,303 | 27,936 | ||||
Assumed losses and LAE | 140 | (52) | 188 | 258 | ||||
Ceded losses and LAE | (176) | 48 | (290) | (3) | ||||
Net losses and LAE | 11,904 | 10,471 | 33,201 | 28,191 | ||||
Gross margin | 3,988 | 3,804 | 12,826 | 12,248 | ||||
Underwriting and general expenses | 4,235 | 2,225 | 13,357 | 12,353 | ||||
Underwriting gain (loss) | $ (247) | $ 1,579 | $ (531) | $ (105) | ||||
Non-GAAP Ratios: | ||||||||
Loss and LAE ratio | 74.90% | 73.40% | 72.10% | 69.70% | ||||
Expense ratio | 26.60% | 15.60% | 29.00% | 30.50% | ||||
Combined ratio | 101.60% | 88.90% | 101.20% | 100.30% | ||||
Premiums receivable | $ 17,003 | $ 15,400 | $ 17,003 | $ 15,400 | ||||
Deferred policy acquisition costs | 3,663 | 3,506 | 3,663 | 3,506 | ||||
Reinsurance recoverables | 42 | 650 | 42 | 650 | ||||
Receivable from Federal Crop Insurance Corporation | ||||||||
Unpaid losses and LAE | 19,094 | 21,281 | 19,094 | 21,281 | ||||
Unearned premiums | 26,363 | 24,597 | 26,363 | 24,597 | ||||
Non Standard Auto [Member] | ||||||||
Direct premiums earned | 7,052 | 2,663 | 13,519 | 7,784 | ||||
Assumed premiums earned | ||||||||
Ceded premiums earned | ||||||||
Net premiums earned | 7,052 | 2,663 | 13,519 | 7,784 | ||||
Direct losses and LAE | 4,387 | 1,564 | 9,324 | 6,284 | ||||
Assumed losses and LAE | ||||||||
Ceded losses and LAE | ||||||||
Net losses and LAE | 4,387 | 1,564 | 9,324 | 6,284 | ||||
Gross margin | 2,665 | 1,099 | 4,195 | 1,500 | ||||
Underwriting and general expenses | 2,348 | 738 | 4,273 | 2,231 | ||||
Underwriting gain (loss) | 317 | 361 | (78) | (731) | ||||
Fee and other income | 343 | 276 | 994 | 802 | ||||
Other income net | $ 660 | $ 637 | $ 916 | $ 71 | ||||
Non-GAAP Ratios: | ||||||||
Loss and LAE ratio | 62.20% | 58.70% | 69.00% | 80.70% | ||||
Expense ratio | 33.30% | 27.70% | 31.60% | 28.70% | ||||
Combined ratio | 95.50% | 86.40% | 100.60% | 109.40% | ||||
Premiums receivable | $ 7,498 | $ 1,188 | $ 7,498 | $ 1,188 | ||||
Deferred policy acquisition costs | 1,356 | 304 | 1,356 | 304 | ||||
Reinsurance recoverables | ||||||||
Receivable from Federal Crop Insurance Corporation | ||||||||
Unpaid losses and LAE | 48,020 | 5,573 | 48,020 | 5,573 | ||||
Unearned premiums | 17,871 | 1,771 | 17,871 | 1,771 | ||||
Home and Farm [Member] | ||||||||
Direct premiums earned | 17,977 | 16,327 | 51,840 | 47,047 | ||||
Assumed premiums earned | (4) | (15) | (13) | (12) | ||||
Ceded premiums earned | (1,736) | (1,403) | (4,851) | (4,417) | ||||
Net premiums earned | 16,237 | 14,909 | 46,976 | 42,618 | ||||
Direct losses and LAE | 16,414 | 15,032 | 38,372 | 34,541 | ||||
Assumed losses and LAE | (122) | (171) | ||||||
Ceded losses and LAE | 78 | 37 | 18 | (469) | ||||
Net losses and LAE | 16,370 | 15,069 | 38,219 | 34,072 | ||||
Gross margin | (133) | (160) | 8,757 | 8,546 | ||||
Underwriting and general expenses | 4,678 | 3,855 | 14,770 | 13,632 | ||||
Underwriting gain (loss) | $ (4,811) | $ (4,015) | $ (6,013) | $ (5,086) | ||||
Non-GAAP Ratios: | ||||||||
Loss and LAE ratio | 100.80% | 101.10% | 81.40% | 79.90% | ||||
Expense ratio | 28.80% | 25.90% | 31.40% | 32.00% | ||||
Combined ratio | 129.60% | 126.90% | 112.80% | 111.90% | ||||
Premiums receivable | $ 9,094 | $ 7,970 | $ 9,094 | $ 7,970 | ||||
Deferred policy acquisition costs | 5,195 | 4,797 | 5,195 | 4,797 | ||||
Reinsurance recoverables | 979 | 2,248 | 979 | 2,248 | ||||
Receivable from Federal Crop Insurance Corporation | ||||||||
Unpaid losses and LAE | 15,536 | 15,013 | 15,536 | 15,013 | ||||
Unearned premiums | 36,764 | 33,012 | 36,764 | 33,012 | ||||
Crop [Member] | ||||||||
Direct premiums earned | 19,880 | 21,999 | 34,963 | 37,162 | ||||
Assumed premiums earned | 27 | 90 | 2,311 | 2,527 | ||||
Ceded premiums earned | (7,947) | (4,333) | (11,772) | (8,019) | ||||
Net premiums earned | 11,960 | 17,756 | 25,502 | 31,670 | ||||
Direct losses and LAE | 4,976 | 19,930 | 15,040 | 32,036 | ||||
Assumed losses and LAE | 530 | (34) | 693 | 1,369 | ||||
Ceded losses and LAE | (1,991) | (1,683) | (2,896) | (3,698) | ||||
Net losses and LAE | 3,515 | 18,213 | 12,837 | 29,707 | ||||
Gross margin | 8,445 | (457) | 12,665 | 1,963 | ||||
Underwriting and general expenses | 2,695 | 2,782 | 3,346 | 1,390 | ||||
Underwriting gain (loss) | $ 5,750 | $ (3,239) | $ 9,319 | $ 573 | ||||
Non-GAAP Ratios: | ||||||||
Loss and LAE ratio | 29.40% | 102.60% | 50.30% | 93.80% | ||||
Expense ratio | 22.50% | 15.70% | 13.10% | 4.40% | ||||
Combined ratio | 51.90% | 118.20% | 63.50% | 98.20% | ||||
Premiums receivable | $ 27,710 | $ 46,782 | $ 27,710 | $ 46,782 | ||||
Deferred policy acquisition costs | 1,001 | 2,593 | 1,001 | 2,593 | ||||
Reinsurance recoverables | 2,425 | 3,664 | 2,425 | 3,664 | ||||
Receivable from Federal Crop Insurance Corporation | 29,284 | 20,683 | 29,284 | 20,683 | ||||
Unpaid losses and LAE | 13,714 | 32,577 | 13,714 | 32,577 | ||||
Unearned premiums | 12,509 | 11,937 | 12,509 | 11,937 | ||||
All Other [Member] | ||||||||
Direct premiums earned | 2,110 | 1,975 | 6,158 | 5,773 | ||||
Assumed premiums earned | 1,058 | 1,111 | 3,263 | 3,203 | ||||
Ceded premiums earned | (173) | (164) | (520) | (500) | ||||
Net premiums earned | 2,995 | 2,922 | 8,901 | 8,476 | ||||
Direct losses and LAE | 1,502 | 1,294 | 2,938 | 3,233 | ||||
Assumed losses and LAE | 279 | 2,785 | 1,193 | 3,685 | ||||
Ceded losses and LAE | (501) | 203 | (686) | (1,622) | ||||
Net losses and LAE | 1,280 | 4,282 | 3,445 | 5,296 | ||||
Gross margin | 1,715 | (1,360) | 5,456 | 3,180 | ||||
Underwriting and general expenses | 782 | 492 | 2,671 | 1,930 | ||||
Underwriting gain (loss) | $ 933 | $ (1,852) | $ 2,785 | $ 1,250 | ||||
Non-GAAP Ratios: | ||||||||
Loss and LAE ratio | 42.70% | 146.50% | 38.70% | 62.50% | ||||
Expense ratio | 26.10% | 16.80% | 30.00% | 22.80% | ||||
Combined ratio | 68.80% | 163.40% | 68.70% | 85.30% | ||||
Premiums receivable | $ 1,440 | $ 1,233 | $ 1,440 | $ 1,233 | ||||
Deferred policy acquisition costs | 578 | 553 | 578 | 553 | ||||
Reinsurance recoverables | 2,182 | 2,118 | 2,182 | 2,118 | ||||
Receivable from Federal Crop Insurance Corporation | ||||||||
Unpaid losses and LAE | 9,289 | 10,983 | 9,289 | 10,983 | ||||
Unearned premiums | $ 4,801 | $ 4,499 | $ 4,801 | $ 4,499 |
Segment Information (Narrative)
Segment Information (Narrative) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Direct Auto Insurance Company [Member] | |
Gain on bargain purchase | $ 4,578 |