Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 26, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | TREAN INSURANCE GROUP, INC. | |
Entity Central Index Key | 0001801754 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Small Business | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 51,154,097 |
Condensed Combined Balance Shee
Condensed Combined Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Investments [Abstract] | ||
Fixed maturities, at fair value (amortized cost of $359,355 and $329,640, respectively) | $ 375,705 | $ 337,865 |
Equity securities, FV-NI | 3,753 | 835 |
Equity method investments | 11,693 | 12,173 |
Total investments | 391,151 | 350,873 |
Cash and cash equivalents | 97,326 | 74,268 |
Restricted cash | 7,746 | 1,800 |
Accrued investment income | 2,605 | 2,468 |
Premiums and other receivables | 75,017 | 62,460 |
Related party receivables | 20,385 | 22,221 |
Reinsurance recoverable | 334,124 | 307,338 |
Prepaid reinsurance premiums | 91,311 | 80,088 |
Deferred policy acquisition cost, net | 2,951 | 2,115 |
Property and equipment, net | 8,130 | 7,937 |
Right of use asset | 5,958 | |
Deferred tax asset | 0 | 1,367 |
Goodwill | 3,339 | 2,822 |
Other assets | 9,889 | 3,277 |
Total assets | 1,049,932 | 919,034 |
Liabilities | ||
Unpaid loss and loss adjustment expenses | 442,500 | 406,716 |
Unearned premiums | 120,427 | 103,789 |
Funds held under reinsurance agreements | 165,371 | 163,445 |
Reinsurance premiums payable | 54,030 | 53,620 |
Accounts payable and accrued expenses | 73,325 | 14,995 |
Lease liability | 6,186 | |
Income taxes payable | 3,999 | 714 |
Deferred tax liability | 12 | 0 |
Long-term debt | 39,698 | 29,040 |
Total liabilities | 905,548 | 772,319 |
Commitments and contingencies | ||
Redeemable preferred stock (1,000,000 authorized; 51 outstanding) | 5,100 | 5,100 |
Members' equity | ||
Members' equity | 78,478 | 78,438 |
Additional paid-in capital | 16,542 | 17,995 |
Retained earnings | 35,561 | 40,361 |
Accumulated other comprehensive income | 8,703 | 4,821 |
Total members' equity | 139,284 | 141,615 |
Total liabilities and members' equity | 1,049,932 | 919,034 |
Preferred Stock | ||
Investments [Abstract] | ||
Equity securities, FV-NI | 325 | 343 |
Common Stock | ||
Investments [Abstract] | ||
Equity securities, FV-NI | $ 3,428 | $ 492 |
Condensed Combined Balance Sh_2
Condensed Combined Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Amortized cost | $ 359,355 | $ 329,640 |
Redeemable preferred stock authorized (in shares) | 1,000,000 | 1,000,000 |
Redeemable preferred stock outstanding (in shares) | 51 | 51 |
Preferred Stock | ||
Equity securities, cost | $ 332 | $ 337 |
Common Stock | ||
Equity securities, cost | $ 1,554 | $ 492 |
Condensed Combined Statements o
Condensed Combined Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues [Abstract] | ||||
Gross written premiums | $ 109,612 | $ 104,420 | $ 217,471 | $ 205,954 |
Increase in gross unearned premiums | (9,265) | (1,535) | (16,638) | (12,487) |
Gross earned premiums | 100,347 | 102,885 | 200,833 | 193,467 |
Ceded earned premiums | 78,968 | 79,508 | 156,995 | 150,466 |
Net earned premiums | 21,379 | 23,377 | 43,838 | 43,001 |
Net investment income | 1,524 | 1,570 | 4,796 | 2,857 |
Net realized capital gains (losses) | (4) | 111 | 3,230 | 723 |
Other revenue | 1,530 | 1,893 | 5,922 | 5,488 |
Total revenue | 24,429 | 26,951 | 57,786 | 52,069 |
Expenses | ||||
Losses and loss adjustment expenses | 12,183 | 13,014 | 25,117 | 24,470 |
General and administrative expenses | 8,316 | 6,193 | 16,476 | 10,162 |
Interest expense | 501 | 561 | 962 | 1,185 |
Total expenses | 21,000 | 19,768 | 42,555 | 35,817 |
Other income | 40 | 33 | 54 | 126 |
Income before taxes | 3,469 | 7,216 | 15,285 | 16,378 |
Income tax expense | 979 | 1,690 | 3,891 | 3,009 |
Equity earnings in affiliates, net of tax | 1,230 | 865 | 1,932 | 1,473 |
Net income | $ 3,720 | $ 6,391 | $ 13,326 | $ 14,842 |
Condensed Combined Statements_2
Condensed Combined Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 3,720 | $ 6,391 | $ 13,326 | $ 14,842 |
Unrealized investment gains: | ||||
Unrealized investment gains arising during the period | 6,252 | 2,782 | 5,029 | 7,753 |
Income tax expense | 1,310 | 585 | 1,054 | 1,629 |
Unrealized investment gains, net of tax | 4,942 | 2,197 | 3,975 | 6,124 |
Less reclassification adjustments to: | ||||
Net realized investment gains (losses) included in net realized capital gains (losses) | (1) | 111 | 118 | 89 |
Income tax expense (benefit) | (1) | 24 | 25 | 19 |
Total reclassifications included in net income, net of tax | 0 | 87 | 93 | 70 |
Other comprehensive income | 4,942 | 2,110 | 3,882 | 6,054 |
Total comprehensive income | $ 8,662 | $ 8,501 | $ 17,208 | $ 20,896 |
Condensed Combined Statements_3
Condensed Combined Statements of Members’ Equity and Redeemable Preferred Stock - USD ($) $ in Thousands | Total | Series A Preferred Stock | Series B Preferred Stock | Common StockClass A - Non Voting | Common StockClass B - Voting | Common StockClass B - Non Voting | Common StockClass C - Non Voting | Additional Paid in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Retained EarningsSeries A Preferred Stock | Retained EarningsSeries B Preferred Stock | Cumulative Effect, Period of Adoption, Adjustment | Cumulative Effect, Period of Adoption, AdjustmentRetained Earnings |
Preferred Stock | ||||||||||||||
Cumulative effect of adopting ASC Topic 606 | $ 105,131 | $ 65,037 | $ 5,045 | $ 8,160 | $ 118 | $ 17,995 | $ (2,003) | $ 9,779 | $ 695 | $ 695 | ||||
Redeemable preferred stock beginning balance (in shares) at Dec. 31, 2018 | 60 | |||||||||||||
Redeemable preferred stock beginning balance at Dec. 31, 2018 | $ 6,000 | |||||||||||||
Redeemable preferred stock ending balance (in shares) at Jun. 30, 2019 | 60 | |||||||||||||
Redeemable preferred stock ending balance at Jun. 30, 2019 | $ 6,000 | |||||||||||||
Preferred stock beginning balance (in shares) at Dec. 31, 2018 | 10 | |||||||||||||
Preferred stock beginning balance at Dec. 31, 2018 | $ 1,000 | |||||||||||||
Preferred stock ending balance (in shares) at Jun. 30, 2019 | 10 | |||||||||||||
Preferred stock ending balance at Jun. 30, 2019 | $ 1,000 | |||||||||||||
Beginning balance (in shares) at Dec. 31, 2018 | 65,036,780 | 5,045,215 | 8,159,775 | 117,953 | ||||||||||
Beginning balance at Dec. 31, 2018 | $ 105,131 | $ 65,037 | $ 5,045 | $ 8,160 | $ 118 | 17,995 | (2,003) | 9,779 | 695 | 695 | ||||
Preferred Stock | ||||||||||||||
Accounting standards update | us-gaap:AccountingStandardsUpdate201409Member | |||||||||||||
Cumulative effect of adopting ASC Topic 606 | $ 126,352 | $ 65,037 | $ 5,045 | $ 8,160 | $ 157 | 17,995 | 4,051 | 24,907 | $ 695 | $ 695 | ||||
Issuance of Class C units (in shares) | 39,317 | |||||||||||||
Issuance of Class C units | 39 | $ 39 | ||||||||||||
Distributions to members | (313) | (313) | ||||||||||||
Dividends paid on Series preferred stock | $ (22) | $ (74) | $ (22) | $ (74) | ||||||||||
Other comprehensive income | 6,054 | 6,054 | ||||||||||||
Net income | 14,842 | 14,842 | ||||||||||||
Ending balance (in shares) at Jun. 30, 2019 | 65,036,780 | 5,045,215 | 8,159,775 | 157,270 | ||||||||||
Ending balance at Jun. 30, 2019 | 126,352 | $ 65,037 | $ 5,045 | $ 8,160 | $ 157 | 17,995 | 4,051 | 24,907 | ||||||
Preferred Stock | ||||||||||||||
Cumulative effect of adopting ASC Topic 606 | $ 118,231 | $ 65,037 | $ 5,045 | $ 8,160 | $ 137 | 17,995 | 1,941 | 18,916 | ||||||
Redeemable preferred stock beginning balance (in shares) at Mar. 31, 2019 | 60 | |||||||||||||
Redeemable preferred stock beginning balance at Mar. 31, 2019 | $ 6,000 | |||||||||||||
Redeemable preferred stock ending balance (in shares) at Jun. 30, 2019 | 60 | |||||||||||||
Redeemable preferred stock ending balance at Jun. 30, 2019 | $ 6,000 | |||||||||||||
Preferred stock beginning balance (in shares) at Mar. 31, 2019 | 10 | |||||||||||||
Preferred stock beginning balance at Mar. 31, 2019 | $ 1,000 | |||||||||||||
Preferred stock ending balance (in shares) at Jun. 30, 2019 | 10 | |||||||||||||
Preferred stock ending balance at Jun. 30, 2019 | $ 1,000 | |||||||||||||
Beginning balance (in shares) at Mar. 31, 2019 | 65,036,780 | 5,045,215 | 8,159,775 | 137,612 | ||||||||||
Beginning balance at Mar. 31, 2019 | 118,231 | $ 65,037 | $ 5,045 | $ 8,160 | $ 137 | 17,995 | 1,941 | 18,916 | ||||||
Preferred Stock | ||||||||||||||
Cumulative effect of adopting ASC Topic 606 | 126,352 | $ 65,037 | $ 5,045 | $ 8,160 | $ 157 | 17,995 | 4,051 | 24,907 | ||||||
Issuance of Class C units (in shares) | 19,658 | |||||||||||||
Issuance of Class C units | 20 | $ 20 | ||||||||||||
Distributions to members | (313) | (313) | ||||||||||||
Dividends paid on Series preferred stock | $ (13) | (74) | $ (13) | (74) | ||||||||||
Other comprehensive income | 2,110 | 2,110 | ||||||||||||
Net income | 6,391 | 6,391 | ||||||||||||
Ending balance (in shares) at Jun. 30, 2019 | 65,036,780 | 5,045,215 | 8,159,775 | 157,270 | ||||||||||
Ending balance at Jun. 30, 2019 | 126,352 | $ 65,037 | $ 5,045 | $ 8,160 | $ 157 | 17,995 | 4,051 | 24,907 | ||||||
Preferred Stock | ||||||||||||||
Cumulative effect of adopting ASC Topic 606 | 126,352 | 65,037 | 5,045 | 8,160 | 157 | 17,995 | 4,051 | 24,907 | ||||||
Cumulative effect of adopting ASC Topic 606 | $ 141,615 | $ 65,037 | $ 5,045 | $ 8,160 | $ 196 | 17,995 | 4,821 | 40,361 | ||||||
Redeemable preferred stock beginning balance (in shares) at Dec. 31, 2019 | 51 | |||||||||||||
Redeemable preferred stock beginning balance at Dec. 31, 2019 | $ 5,100 | |||||||||||||
Redeemable preferred stock ending balance (in shares) at Jun. 30, 2020 | 51 | |||||||||||||
Redeemable preferred stock ending balance at Jun. 30, 2020 | $ 5,100 | |||||||||||||
Preferred stock beginning balance (in shares) at Dec. 31, 2019 | 0 | |||||||||||||
Preferred stock beginning balance at Dec. 31, 2019 | $ 0 | |||||||||||||
Preferred stock ending balance (in shares) at Jun. 30, 2020 | 0 | |||||||||||||
Preferred stock ending balance at Jun. 30, 2020 | $ 0 | |||||||||||||
Beginning balance (in shares) at Dec. 31, 2019 | 65,036,780 | 5,045,215 | 8,159,775 | 196,588 | ||||||||||
Beginning balance at Dec. 31, 2019 | $ 141,615 | $ 65,037 | $ 5,045 | $ 8,160 | $ 196 | 17,995 | 4,821 | 40,361 | ||||||
Preferred Stock | ||||||||||||||
Accounting standards update | us-gaap:AccountingStandardsUpdate201602Member | |||||||||||||
Cumulative effect of adopting ASC Topic 606 | $ 139,284 | $ 65,037 | $ 5,045 | $ 8,160 | $ 236 | 16,542 | 8,703 | 35,561 | ||||||
Issuance of Class C units (in shares) | 39,317 | |||||||||||||
Issuance of Class C units | 40 | $ 40 | ||||||||||||
Distributions to members | (19,496) | (1,453) | (18,043) | |||||||||||
Dividends paid on Series preferred stock | (83) | (83) | ||||||||||||
Other comprehensive income | 3,882 | 3,882 | ||||||||||||
Net income | 13,326 | 13,326 | ||||||||||||
Ending balance (in shares) at Jun. 30, 2020 | 65,036,780 | 5,045,215 | 8,159,775 | 235,905 | ||||||||||
Ending balance at Jun. 30, 2020 | 139,284 | $ 65,037 | $ 5,045 | $ 8,160 | $ 236 | 16,542 | 8,703 | 35,561 | ||||||
Preferred Stock | ||||||||||||||
Cumulative effect of adopting ASC Topic 606 | $ 150,181 | $ 65,037 | $ 5,045 | $ 8,160 | $ 216 | 17,995 | 3,761 | 49,967 | ||||||
Redeemable preferred stock beginning balance (in shares) at Mar. 31, 2020 | 51 | |||||||||||||
Redeemable preferred stock beginning balance at Mar. 31, 2020 | $ 5,100 | |||||||||||||
Redeemable preferred stock ending balance (in shares) at Jun. 30, 2020 | 51 | |||||||||||||
Redeemable preferred stock ending balance at Jun. 30, 2020 | $ 5,100 | |||||||||||||
Preferred stock beginning balance (in shares) at Mar. 31, 2020 | 0 | |||||||||||||
Preferred stock beginning balance at Mar. 31, 2020 | $ 0 | |||||||||||||
Preferred stock ending balance (in shares) at Jun. 30, 2020 | 0 | |||||||||||||
Preferred stock ending balance at Jun. 30, 2020 | $ 0 | |||||||||||||
Beginning balance (in shares) at Mar. 31, 2020 | 65,036,780 | 5,045,215 | 8,159,775 | 216,247 | ||||||||||
Beginning balance at Mar. 31, 2020 | 150,181 | $ 65,037 | $ 5,045 | $ 8,160 | $ 216 | 17,995 | 3,761 | 49,967 | ||||||
Preferred Stock | ||||||||||||||
Cumulative effect of adopting ASC Topic 606 | 139,284 | $ 65,037 | $ 5,045 | $ 8,160 | $ 236 | 16,542 | 8,703 | 35,561 | ||||||
Issuance of Class C units (in shares) | 19,658 | |||||||||||||
Issuance of Class C units | 20 | $ 20 | ||||||||||||
Distributions to members | (19,496) | (1,453) | (18,043) | |||||||||||
Dividends paid on Series preferred stock | $ (83) | $ (83) | ||||||||||||
Other comprehensive income | 4,942 | 4,942 | ||||||||||||
Net income | 3,720 | 3,720 | ||||||||||||
Ending balance (in shares) at Jun. 30, 2020 | 65,036,780 | 5,045,215 | 8,159,775 | 235,905 | ||||||||||
Ending balance at Jun. 30, 2020 | 139,284 | $ 65,037 | $ 5,045 | $ 8,160 | $ 236 | 16,542 | 8,703 | 35,561 | ||||||
Preferred Stock | ||||||||||||||
Cumulative effect of adopting ASC Topic 606 | $ 139,284 | $ 65,037 | $ 5,045 | $ 8,160 | $ 236 | $ 16,542 | $ 8,703 | $ 35,561 |
Condensed Combined Statements_4
Condensed Combined Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Operating activities | ||
Net income | $ 13,326 | $ 14,842 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation and amortization | 458 | 360 |
Net capital gains (losses) on investments | (5,042) | 67 |
Deferred offering costs | (1,339) | 0 |
Gain on bargain purchase of subsidiary | 0 | (634) |
Bond amortization and accretion | 944 | 863 |
Issuance of member units as compensation | 40 | 39 |
Equity earnings in affiliates, net of tax | (1,932) | (1,473) |
Distributions from equity method investments | 2,413 | 2,127 |
Deferred income taxes | 349 | (506) |
Deferred financing costs | 48 | 51 |
Changes in operating assets and liabilities: | ||
Accrued investment income | (137) | (109) |
Premiums and other receivables | (10,666) | (17,347) |
Reinsurance recoverable on paid and unpaid losses | (26,786) | (27,040) |
Prepaid reinsurance premiums | (11,223) | (11,048) |
Right of use asset | (5,958) | |
Other assets | (3,284) | (1,391) |
Unpaid loss and loss adjustment expenses | 35,784 | 35,632 |
Unearned premiums | 16,638 | 11,601 |
Funds held under reinsurance agreements | (1,306) | (6,030) |
Reinsurance premiums payable | 409 | 11,409 |
Increase (Decrease) in Accounts Payable and Accrued Liabilities | 19,591 | 5,271 |
Lease liability | 6,186 | |
Income taxes payable | 3,270 | (1,992) |
Net cash provided by operating activities | 31,783 | 14,692 |
Investing activities | ||
Payments for capital expenditures | (554) | (493) |
Proceeds from sale of equity method investment | 3,000 | 0 |
Return of capital on equity method investment | 115 | 0 |
Purchase of investments, available for sale | (55,695) | (51,196) |
Proceeds from investments sold, matured or repaid | 60,339 | 49,405 |
Acquisition of subsidiary, net of cash received | (1,098) | (5,496) |
Net cash provided by (used in) investing activities | 6,107 | (7,780) |
Financing activities | ||
Proceeds from credit agreement | 32,453 | 0 |
Principal payments on long-term debt | (21,843) | (4,145) |
Distributions to members | (19,496) | (313) |
Dividends paid on preferred stock | 0 | (127) |
Net cash used in financing activities | (8,886) | (4,585) |
Net increase in cash, cash equivalents and restricted cash | 29,004 | 2,327 |
Cash, cash equivalents and restricted cash ‑ beginning of period | 76,068 | 55,962 |
Cash, cash equivalents and restricted cash ‑ end of period | 105,072 | 58,289 |
Disaggregation of cash and restricted cash: | ||
Total cash, cash equivalents and restricted cash | 105,072 | 58,289 |
Supplemental disclosure of cash flow information: | ||
Interest | 914 | 1,323 |
Income taxes | 201 | $ 5,462 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 6,906 | |
Operating cash flows from operating leases | $ 906 |
Business and Basis of Presentat
Business and Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Basis of Presentation | Business and Basis of Presentation The condensed combined financial statements include the accounts, after elimination of intercompany accounts and transactions, of BIC Holdings LLC (BIC), a property and casualty insurance holding company, and Trean Holdings LLC (Trean), an insurance services company, along with their wholly owned subsidiaries, collectively the “Company”. BIC and Trean are owned by the same members. In July 2020, Trean Insurance Group, Inc. completed its initial public offering of common stock. As the accompanying financial statements are as of and for the three and six months ended June 30, 2020, they are presented on a combined basis rather than on a consolidated basis. All dollar amounts are shown in thousands, except unit and per unit amounts. The Company is an established and growing company providing products and services to the specialty insurance market. Historically, the Company has focused on specialty casualty markets that are believed to be under served and where the Company’s expertise allows the Company to achieve higher rates, such as niche workers' compensation markets and small- to medium-sized specialty casualty insurance programs. The Company underwrites specialty-casualty insurance products both through programs where the Company partners with other organizations (Program Partners), and also through the Company’s own managing general agencies (Owned MGAs). The Company also provides Program Partners with a variety of services, including issuing carrier services, claims administration, and reinsurance brokerage from which the Company generates fee-based revenues. BIC’s wholly owned subsidiary is Benchmark Holding Company, a property and casualty insurance holding company, which owns Benchmark Insurance Company (Benchmark), a property and casualty insurance company domiciled in the state of Kansas, and American Liberty Insurance Company (ALIC), a property and casualty insurance company domiciled in the state of Utah. Trean’s wholly owned subsidiaries are Trean Compstar Holdings, LLC, a limited liability company created for the purchase of an interest in Compstar Insurance Services LLC, a California-based general agency, and Trean Corporation (Trean Corp), a reinsurance intermediary manager and a managing general agent, which consists of the following wholly owned subsidiaries: Trean Reinsurance Services, LLC (TRS), a reinsurance intermediary broker; Benchmark Administrators LLC (BIC Admin), a claims third-party administrator; and Westcap Insurance Services, LLC (Westcap), a managing general agent based in California. The accompanying condensed combined financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Form 10-Q under the Securities Exchange Act of 1934. Accordingly, they do not contain all of the information included in the Company's annual combined financial statements and notes. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of the Company’s condensed combined financial position and results of operations for the periods presented have been included. Although management believes the disclosures and information presented are adequate, these interim condensed combined financial statements should be read in conjunction with the Company's most recent audited combined financial statements and notes thereto for the year ended December 31, 2019 , filed with the Securities and Exchange Commission (SEC) on Form S-1 (File No. 333-239291), which was declared effective by the SEC on July 15, 2020. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ended December 31, 2020 . Use of estimates While preparing the condensed combined financial statements, the Company has made certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed combined financial statements, as well as reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require extensive use of estimates include the reserves for unpaid losses and loss adjustment expenses (LAE), reinsurance recoveries, investments and goodwill. Except for the captions on the condensed combined balance sheets and condensed combined statements of comprehensive income, generally, the term loss(es) is used to collectively refer to both loss and LAE. Accounting pronouncements Recently adopted policies In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04). This update provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This standard is effective for the period between March 12, 2020 and December 31, 2022. The adoption of this standard did not have a material impact on the condensed combined financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13). This update modifies the existing disclosure requirements on fair value measurements in Topic 820 by changing requirements regarding Level 1, Level 2 and Level 3 investments. The Company adopted this standard effective January 1, 2020 on a prospective basis. The adoption of this standard did not have a material impact on the condensed combined financial statements. In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842) (ASU 2016-02), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of lease payments. Management adopted this standard effective January 1, 2020 under the modified retrospective approach. Adoption of this standard resulted in the Company recognizing initial right-of-use assets of $5,946 and initial lease liabilities of $5,946 and did not result in a cumulative effect adjustment on retained earnings. The adoption of this standard did not have a material impact on the condensed combined statements of operations or condensed combined statements of cash flows. Pending policies Trean Insurance Group, Inc. completed its initial public offering in July 2020, and is an emerging growth company as defined under federal securities laws. As such, the Company has elected to adopt pending accounting policies under the dates required for private companies. Therefore, the dates included within this section reflect the effective dates for the adoption of new accounting policies required by private companies. In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments (ASU 2020-03). This update represents changes to clarify and improve the codification to allow for easier application by eliminating inconsistencies and providing clarification. Certain issues addressed in this update are effective for annual periods beginning after December 15, 2020 and others are effective for annual periods beginning after December 15, 2022. The Company will adopt each standard upon their respective effective dates of January 1, 2021 and January 1, 2023. Adoption of this standard is not expected to have a material impact on the condensed combined financial statements. In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 (ASU 2020-01). This update addresses the accounting for certain equity securities upon the application or discontinuation of the equity method of accounting. Further, the update addresses scope considerations for forward contracts and purchased options on certain securities. ASU 2020-01 is effective for annual periods beginning after December 15, 2021, including interim periods thereafter. The Company will adopt this standard effective January 1, 2022. Adoption of this standard is not expected to have a material impact on the condensed combined financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). This update simplifies the manner in which an entity is required to test goodwill for impairment. ASU 2017-04 is effective for annual periods beginning after December 15, 2021, including interim periods thereafter, with early adoption permitted. The Company will adopt this standard effective January 1, 2022. Adoption of this standard is not expected to have a material impact on the condensed combined financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (ASU 2016-13). This update requires financial assets measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Additionally, credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which the fair value is below the amortized cost. ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2023. The Company is currently evaluating the impact of this standard on the condensed combined financial statements. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions LCTA Risk Services, Inc. Effective April 1, 2020, Trean Corp purchased 100% of the operating assets and assumed the liabilities of LCTA Risk Services, Inc. The total purchase price was $1,400 . The following table summarizes the consideration paid and the amounts of estimated fair value of the net assets acquired and liabilities assumed at the acquisition date (in thousands): Fair value of total consideration transferred $ 1,400 Recognized amounts of identifiable assets acquired and liabilities assumed: Cash and cash equivalents 302 Premiums and other receivables 55 Property and equipment 63 Goodwill 517 Other assets 494 Accounts payable (17 ) Income taxes payable (14 ) Net assets acquired $ 1,400 The Company recorded $517 of goodwill associated with the business combination. The goodwill recognized is attributable to the expected growth resulting from the acquisition and the synergies gained to assist in reducing operating expenses. American Liberty Insurance Company Effective March 31, 2019, Benchmark Holdings Company purchased the remaining 25% of outstanding voting shares in ALIC for $1,155 . The purchase price was determined based on the statutory surplus of ALIC. First Choice Casualty Insurance Company Effective February 19, 2019, Benchmark purchased 100% of the operating assets and assumed the liabilities of First Choice Casualty Insurance Company (FCCIC). The total purchase price was $5,314 . As part of the acquisition, the Company recorded a bargain purchase gain of $634 which is included in net realized capital gains (losses) on the condensed combined statements of operations. The Company was able to realize a bargain purchase gain as the seller was looking to exit the workers' compensation market with the sale of their management agreement to a new manager. With the new manager, the seller had a lack of interest and expertise in maintaining workers' compensation policies, which had historically been underwritten and managed by Trean Corp. The following table summarizes the consideration paid and the amounts of estimated fair value of the assets acquired and liabilities assumed at the acquisition date (in thousands): Fair value of total consideration transferred $ 5,314 Recognized amounts of identifiable assets acquired and liabilities assumed: Cash 973 Investments 4,252 Accrued investment income 40 Premiums and other receivables 1,571 Deferred tax asset 242 Other assets 10 Unpaid loss and loss adjustment expenses (6,426 ) Unearned premiums (1,003 ) Funds held under reinsurance agreements 7,980 Reinsurance premiums payable (1,037 ) Accounts payable and accrued expenses (316 ) Income taxes payable (338 ) Net assets acquired 5,948 Gain on bargain purchase $ 634 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company’s financial instruments include assets and liabilities carried at fair value. The inputs to valuation techniques used to measure fair value are prioritized into a three level hierarchy. The fair value hierarchy is as follows: Level 1 : Fair values primarily based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 : Fair values primarily based on observable inputs, other than quoted prices included in Level 1, or based on prices for similar assets and liabilities. Level 3 : Fair values primarily based on valuations derived when one or more of the significant inputs are unobservable. With little or no observable market, the determination of fair value uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability. The Company classifies the financial asset or liability by level based upon the lowest level input that is significant to the determination of the fair value. The following tables present the estimated fair value of the Company’s significant financial instruments. June 30, 2020 (in thousands) Level 1 Level 2 Level 3 Total Fixed maturities: U.S. government and government securities $ 16,073 $ 175 $ — $ 16,248 Foreign governments — 305 — 305 States, territories and possessions — 7,544 — 7,544 Political subdivisions of states territories and possessions — 28,915 — 28,915 Special revenue and special assessment obligations — 71,875 — 71,875 Industrial and public utilities — 129,892 — 129,892 Commercial mortgage-backed securities — 17,908 — 17,908 Residential mortgage-backed securities — 59,412 — 59,412 Other loan-backed securities — 43,250 — 43,250 Hybrid securities — 356 — 356 Total fixed maturities 16,073 359,632 — 375,705 Equity securities: Preferred stock — 325 — 325 Common stock 852 576 2,000 3,428 Total equity securities 852 901 2,000 3,753 Total investments $ 16,925 $ 360,533 $ 2,000 $ 379,458 Funds held under reinsurance agreements — 165,371 — 165,371 Long-term debt: Junior subordinated debt — 7,732 — 7,732 Secured credit facility — 32,794 — 32,794 Total long-term debt $ — $ 40,526 $ — $ 40,526 December 31, 2019 (in thousands) Level 1 Level 2 Level 3 Total Fixed maturities: U.S. government and government securities $ 16,129 $ — $ — $ 16,129 Foreign governments — 302 — 302 States, territories and possessions — 4,923 — 4,923 Political subdivisions of states, territories and possessions — 25,104 — 25,104 Special revenue and special assessment obligations — 61,405 — 61,405 Industrial and public utilities — 123,207 — 123,207 Commercial mortgage-backed securities — 16,312 — 16,312 Residential mortgage-backed securities — 54,109 — 54,109 Other loan-backed securities — 36,011 — 36,011 Hybrid securities — 363 — 363 Total fixed maturities 16,129 321,736 — 337,865 Equity securities: Preferred stock — 343 — 343 Common stock — 492 — 492 Total equity securities — 835 — 835 Total investments $ 16,129 $ 322,571 $ — $ 338,700 Funds held under reinsurance agreements — 163,445 — 163,445 Long-term debt: Junior subordinated debt — 7,732 — 7,732 Secured credit facility — 21,637 — 21,637 Total long-term debt $ — $ 29,369 $ — $ 29,369 Bonds and preferred stocks: The Company uses a variety of sources such as Reuters, Iboxx, PricingDirect, ICE BofAML Index, ICE Data Services, and for equities, Bloomberg. Equity securities are valued at the closing price on the exchange on which they are primarily traded as provided by a third-party pricing service. Fixed income securities are generally valued at an evaluated bid as provided by a third-party pricing service. Securities and other assets generally valued using third-party pricing services may also be valued at broker/dealer bid quotations. Values obtained from third-party pricing services can utilize several data sources for inputs such as transaction data, yield, quality, coupon rate, maturity, issue type, trading characteristics and market activity. To validate the reasonableness of the quoted prices, the Company performs various qualitative and quantitative procedures such as analysis of recent activity, analytical review of fair values and an evaluation of the underlying pricing methodologies. Based on these procedures, the Company did not adjust the prices or quotes from the third-party pricing service. Funds held under reinsurance agreements: The Company holds certain investments as collateral under reinsurance contracts and values these investments consistent with its other investments using third-party pricing services. To validate the reasonableness of the quoted prices, the Company performs various qualitative and quantitative procedures such as analysis of recent activity, analytical review of fair values and an evaluation of the underlying pricing methodologies. Based on these procedures, the Company did not adjust the prices or quotes from the third-party pricing service. Long-term debt: The Company held long-term debt related to multiple credit agreements. The Company has determined that the remaining balance of the debt reflected its fair value as this would represent the total amount to repay the debt. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments The cost or amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the investments in securities classified as available for sale are as follows: June 30, 2020 (in thousands) Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Fixed maturities: U.S. government and government securities $ 15,778 $ 470 $ — $ 16,248 Foreign governments 300 5 — 305 States, territories and possessions 7,299 245 — 7,544 Political subdivisions of states, territories and possessions 27,684 1,231 — 28,915 Special revenue and special assessment obligations 68,065 3,815 (5 ) 71,875 Industrial and public utilities 122,814 7,223 (145 ) 129,892 Commercial mortgage-backed securities 16,400 1,598 (90 ) 17,908 Residential mortgage-backed securities 57,787 1,714 (89 ) 59,412 Other loan-backed securities 42,871 772 (393 ) 43,250 Hybrid securities 357 2 (3 ) 356 Total fixed maturities available for sale $ 359,355 $ 17,075 $ (725 ) $ 375,705 December 31, 2019 (in thousands) Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Fixed maturities: U.S. government and government securities $ 15,965 $ 167 $ (3 ) $ 16,129 Foreign governments 299 3 — 302 States, territories and possessions 4,789 134 — 4,923 Political subdivisions of states, territories and possessions 24,444 670 (10 ) 25,104 Special revenue and special assessment obligations 59,149 2,298 (42 ) 61,405 Industrial and public utilities 119,735 3,490 (18 ) 123,207 Commercial mortgage-backed securities 15,586 757 (31 ) 16,312 Residential mortgage-backed securities 53,467 679 (37 ) 54,109 Other loan-backed securities 35,849 281 (119 ) 36,011 Hybrid securities 357 6 — 363 Total fixed maturities available for sale $ 329,640 $ 8,485 $ (260 ) $ 337,865 The following table illustrates the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position: June 30, 2020 Less Than 12 Months 12 Months or More Total (in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Fixed maturities: U.S. government and government securities $ 505 $ — $ — $ — $ 505 $ — Foreign governments — — — — — — States, territories and possessions — — — — — — Political subdivisions of states, territories and possessions — — — — — — Special revenue and special assessment obligations 932 (5 ) — — 932 (5 ) Industrial and public utilities 1,512 (145 ) — — 1,512 (145 ) Commercial mortgage-backed securities 936 (90 ) — — 936 (90 ) Residential mortgage-backed securities 1,575 (67 ) 308 (22 ) 1,883 (89 ) Other loan-backed securities 10,148 (89 ) 10,488 (304 ) 20,636 (393 ) Hybrid securities 104 (3 ) — — 104 (3 ) Total bonds $ 15,712 $ (399 ) $ 10,796 $ (326 ) $ 26,508 $ (725 ) December 31, 2019 Less Than 12 Months 12 Months or More Total (in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Fixed maturities: U.S. government and government securities $ 293 $ (2 ) $ 1,349 $ (1 ) $ 1,642 $ (3 ) Foreign governments — — — — — — States, territories and possessions — — — — — — Political subdivisions of states, territories and possessions 1,500 (9 ) 690 (1 ) 2,190 (10 ) Special revenue and special assessment obligations 3,206 (42 ) 181 — 3,387 (42 ) Industrial and public utilities 5,939 (16 ) 1,094 (2 ) 7,033 (18 ) Commercial mortgage-backed securities 2,138 (30 ) 129 (1 ) 2,267 (31 ) Residential mortgage-backed securities 6,936 (13 ) 1,917 (24 ) 8,853 (37 ) Other loan-backed securities 2,189 (11 ) 13,885 (108 ) 16,074 (119 ) Hybrid securities — — — — — — Total bonds $ 22,201 $ (123 ) $ 19,245 $ (137 ) $ 41,446 $ (260 ) The unrealized losses on the Company’s available for sale securities as of June 30, 2020 and December 31, 2019 were primarily caused by widening in corporate and tax exempt spreads, rather than credit-related problems. The amortized cost and estimated fair value of fixed maturities as of June 30, 2020 , by contractual maturity, are as follows: (in thousands) Cost or Amortized Cost Fair Value Available for sale: Due in one year or less $ 22,078 $ 22,266 Due after one year but before five years 118,280 124,043 Due after five years but before ten years 58,074 62,674 Due after ten years 43,865 46,152 Commercial mortgage-backed securities 16,400 17,908 Residential mortgage-backed securities 57,787 59,412 Other loan-backed securities 42,871 43,250 Total $ 359,355 $ 375,705 Actual maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Realized gains and losses on investments included in the condensed combined statements of operations for the three and six months ended June 30, 2020 and 2019 are as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2020 2019 2020 2019 Fixed maturities: Gains $ — $ 119 $ 119 $ 120 Losses (1 ) (8 ) (1 ) (31 ) Total fixed maturities (1 ) 111 118 89 Equity securities: Equity method investments: Gains — — 3,115 — Total equity securities — — 3,115 — Total net investment realized gains (losses) $ (1 ) $ 111 $ 3,233 $ 89 Net investment income consists of the following for the three and six months ended June 30, 2020 and 2019 : Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2020 2019 2020 2019 Fixed maturities $ 1,408 $ 1,558 $ 2,880 $ 2,827 Preferred stock 34 (19 ) 20 (23 ) Common stock 75 — 1,874 — Interest earned on cash and short-term investments 7 31 22 53 Net investment income $ 1,524 $ 1,570 $ 4,796 $ 2,857 |
Equity Method Investments
Equity Method Investments | 6 Months Ended |
Jun. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Equity Method Investments The Company has investments in Compstar Holding Company LLC (Compstar) and Trean Intermediaries (TRI). Equity earnings and losses are reported in equity earnings in affiliates, net of tax on the condensed combined statements of operations. The Company owned 45% of Compstar which had a carrying value of approximately $11,461 and $11,831 as of June 30, 2020 and December 31, 2019 , respectively. The Company recorded earnings for the three months ended June 30, 2020 and 2019 of $1,230 and $692 , respectively. Distributions received from Compstar for the three months ended June 30, 2020 and 2019 were $1,024 and $1,334 , respectively. The Company recorded earnings for the six months ended June 30, 2020 and 2019 of $1,932 and $1,134 , respectively. Distributions received from Compstar for the six months ended June 30, 2020 and 2019 were $2,302 and $1,537 , respectively. On January 3, 2020, the Company sold 15% of its previous 25% ownership in TRI for cash proceeds of $3,000 . The Company currently maintains a 10% ownership interest in TRI. As a result of its significant ownership reduction and its inability to have significant influence over the operations and policies of TRI, the Company reclassified its TRI investment, at fair value, to investments in common stock in the first quarter of 2020. The Company realized a gain on the sale of $3,115 which is included in net realized capital gains on the condensed combined statements of operations. The Company subsequently re-measured its TRI investment shares resulting in an unrealized gain of $2,000 which is recorded in net investment income on the condensed combined statement of operations. The carrying value of TRI as of December 31, 2019 was approximately $110 . The Company received distributions totaling $225 for the six months ended June 30, 2020 . The Company recorded earnings of $174 and $340 for the three and six months ended June 30, 2019 , respectively. The Company received distributions of $275 and $590 for the three and six months ended June 30, 2019 , respectively. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long‑term debt consisted of the following: (in thousands) June 30, 2020 December 31, 2019 Junior subordinated debt $ 7,732 $ 7,732 Secured credit facility 32,794 21,637 Long-term debt 40,526 29,369 Less: unamortized deferred financing costs (828 ) (329 ) Net long‑term debt $ 39,698 $ 29,040 Junior Subordinated Debt In June 2006, Trean Capital Trust I (the Trust) issued 7,500 shares of preferred capital securities to qualified institutional buyers and 232 common securities to Trean Corp. The proceeds of such issuances were invested by the Trust in $7,732 aggregate principal amount of Trean Corp's Junior Subordinated Debt due 2036 (the Subordinated Notes). The Subordinated Notes represent the sole assets of the Trust. The Subordinated Notes mature on July 7, 2036. The interest rate was a fixed rate of 9.167% until July 7, 2011, at which time a variable interest rate of LIBOR ( 1.22% and 1.99% as of June 30, 2020 and December 31, 2019 , respectively) plus 3.50% is in effect. The interest rate totaled 4.72% and 5.49% as of June 30, 2020 and December 31, 2019 , respectively. There are optional dates for redemption of the Subordinated Notes, at the option of the Company, on any January 7, April 7, July 7, or October 7 following July 7, 2011. There are no funding requirements for Trean Corp to the Trust except for the necessary quarterly interest payments. Trean Corp is the guarantor of the debt. The preferred capital securities issued by the Trust in turn pay quarterly cash distributions at an annual rate of 9.167% per annum of the liquidation amount of $1 per security until July 7, 2011 and thereafter at a variable rate per annum, reset quarterly, equal to LIBOR plus 3.50% . The preferred capital securities do not have a stated maturity date, although they are subject to mandatory redemption upon maturity of the Subordinated Notes on July 7, 2036, or upon earlier redemption. These preferred securities are fully guaranteed by the Company. The Company recorded $92 and $119 of interest expense associated with the Subordinated Notes during the three months ended June 30, 2020 and 2019 , respectively. During the six months ended June 30, 2020 and 2019 , the Company recorded $196 and $241 of interest expense, respectively, associated with the Subordinated Notes. The terms of this agreement require the Company to maintain certain general and financial covenants and ratios. The Company was in compliance with all covenants and ratios as of June 30, 2020 and December 31, 2019 . Secured Credit Facility In April 2018, Trean Corp entered into a credit agreement with a bank which includes a term loan facility totaling $27,500 and a revolving credit facility of $3,000 . Borrowings are secured by substantially all of the assets of Trean and its subsidiaries. On May 26, 2020, the Company entered into a new Amended and Restated Credit Agreement which, among other things, extended the Company's credit facility for a period of five years through May 26, 2025 and increased its term loan facility by $11,707 resulting in a total term loan debt amount of $33,000 at the time of closing. The loan has a variable interest rate of LIBOR plus 3.50% and 3.00% , which was 5.95% and 6.33% as of June 30, 2020 and December 31, 2019 , respectively. The outstanding principal balance of the loan is to be repaid in quarterly installments which escalate from $206 to $825 . All shares of Trean and its subsidiaries have been pledged as guaranteed collateral. The Company recorded $388 and $420 of interest expense associated with its credit facility during the three months ended June 30, 2020 and 2019 , respectively. During the six months ended June 30, 2020 and 2019 , the Company recorded $722 and $892 of interest expense, respectively, associated with its credit facility. The terms of this agreement require the Company to maintain certain financial covenants and ratios. The Company was in compliance with all covenants and ratios as of June 30, 2020 and December 31, 2019 . |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers Revenue from contracts with customers, included in other revenue, includes brokerage, management, third-party administrative and consulting fees. Revenue from contracts with customers was $1,530 and $5,922 for the three and six months ended June 30, 2020 , respectively, compared to $1,893 and $5,488 for the three and six months ended June 30, 2019 , respectively. The following table presents the revenues recognized from contracts with customers included in the condensed combined statements of operations. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2020 2019 2020 2019 Brokerage $ 755 $ 912 $ 4,448 $ 3,615 Managing general agent fees 254 227 408 567 Third-party administrator fees 383 559 767 973 Consulting fees 138 195 299 333 Total revenue from contracts with customers $ 1,530 $ 1,893 $ 5,922 $ 5,488 The Company did not have any contract liabilities as of June 30, 2020 or December 31, 2019 . The following table provides information related to the contract assets from contracts with customers. Contract assets are included within other assets on the condensed combined balance sheets. (in thousands) June 30, 2020 December 31, 2019 Contract assets $ 2,569 $ 1,103 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense for interim periods is measured using an estimated effective income tax rate for the annual period. The Company's effective tax rate was 28.2% and 25.5% for the three and six months ended June 30, 2020 , respectively. The effective tax rate differed from the statutory rate primarily due to the impact of state taxes and the deferred tax effect of a tax accounting method change on excess ceding commissions. The Company's effective tax rate was 23.4% for the three months ended June 30, 2019 . The effective tax rate differed from the statutory rate of 21% due to the impact of state taxes. The Company's effective tax rate was 18.4% for six months ended June 30, 2019 . The effective tax rate differed from the statutory rate primarily due to book and tax basis differences resulting from the acquisition of FCCIC and deferred tax benefits related to the tax impact of deferred acquisition costs. |
Liability for Unpaid Losses and
Liability for Unpaid Losses and Loss Adjustment Expense | 6 Months Ended |
Jun. 30, 2020 | |
Insurance [Abstract] | |
Liability for Unpaid Losses and Loss Adjustment Expense | Liability for Unpaid Losses and Loss Adjustment Expense The following table represents a reconciliation of changes in the liability for unpaid losses and LAE. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2020 2019 2020 2019 Unpaid losses and LAE reserves at beginning of period $ 418,757 $ 364,360 $ 406,716 $ 340,415 Less losses ceded through reinsurance (312,105 ) (271,005 ) (304,005 ) (257,421 ) Net unpaid losses and LAE at beginning of period 106,652 93,355 102,711 82,994 Acquisition of First Choice Casualty Insurance Company — — — 6,366 Incurred losses and LAE related to: Current period 13,020 14,350 27,189 27,279 Prior period (837 ) (1,336 ) (2,072 ) (2,809 ) Total incurred losses and LAE 12,183 13,014 25,117 24,470 Paid losses and LAE, net of reinsurance, related to: Current period 3,392 1,230 4,590 2,328 Prior period 5,708 6,640 13,503 13,003 Total paid losses and LAE 9,100 7,870 18,093 15,331 Net unpaid losses and LAE at end of period 109,735 98,499 109,735 98,499 Plus losses ceded through reinsurance 332,765 283,974 332,765 283,974 Unpaid losses and LAE reserves at end of period $ 442,500 $ 382,473 $ 442,500 $ 382,473 As a result of changes in estimates of insured events in prior years, the provision for unpaid losses and loss adjustment expenses decreased by approximately $837 and $1,336 for the three months ended June 30, 2020 and 2019 , respectively, and decreased by approximately $2,072 and $2,809 for the six months ended June 30, 2020 and 2019 , respectively, primarily attributable to the development in the Company’s workers’ compensation book of business. |
Reinsurance
Reinsurance | 6 Months Ended |
Jun. 30, 2020 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Reinsurance The Company utilizes reinsurance contracts to reduce its exposure to losses in all aspects of its insurance business. Such reinsurance permits recovery of a portion of losses from reinsurers, although it does not relieve the Company from its primary liability to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial strength of potential reinsurers and continually monitors the financial condition of its reinsurers. A summary of the impact of ceded reinsurance on premiums written and premiums earned is as follows: Three Months Ended June 30, 2020 2019 (in thousands) Gross Assumed Ceded Net Gross Assumed Ceded Net Written premiums $ 107,596 $ 2,016 $ (86,586 ) $ 23,026 $ 102,962 $ 1,458 $ (82,183 ) $ 22,237 Earned premiums 98,337 2,010 (78,968 ) 21,379 101,097 1,788 (79,508 ) 23,377 Six Months Ended June 30, 2020 2019 (in thousands) Gross Assumed Ceded Net Gross Assumed Ceded Net Written premiums $ 213,573 $ 3,898 $ (168,218 ) $ 49,253 $ 202,320 $ 3,634 $ (162,632 ) $ 43,322 Earned premiums 196,880 3,953 (156,995 ) 43,838 189,650 3,817 (150,466 ) 43,001 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases Adoption of Leases, Topic 842 On January 1, 2020, the Company adopted ASU No. 2016-02, Leases (Topic 842), and all related amendments under the modified retrospective approach. Under this transition approach, comparative prior periods, including disclosures, were not restated. The Company elected the transition package of practical expedients which, among other things, allowed the Company to carry forward historical lease classification. The Company chose not to elect the hindsight practical expedient. The Company has elected, as a practical expedient, to account for lease components and any non-lease components within a contract as a single lease component, and therefore allocates all of the expected lease payments to the lease component. The adoption of the standard did not have an impact on the Company's condensed combined statements of operations and there was no adjustment to its retained earnings opening balance sheet as of January 1, 2020. The Company does not expect the adoption of the new standard to have a material impact on the Company's operating results on an ongoing basis. The most significant impact of the new lease standard was the recognition of right-of-use assets and lease liabilities for operating leases. On January 1, 2020, the adoption of the new standard resulted in the recognition of a right-of-use asset and total lease liability of $5,946 . The Company's leases consist of operating leases for office space and equipment. The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Some of the Company's leases include options to extend the term, which is only included in the lease liability and right-of-use assets calculation when it is reasonably certain the Company will exercise that option. Our leases have remaining terms ranging from one month to 60 months , some of which have options to extend the lease for up to 5 years . As of June 30, 2020 , the lease liability and right-of-use assets did not include the impact of any lease extension options as it is not reasonably certain that the Company will exercise the extension options. Total lease expense for the three months ended June 30, 2020 was $535 , inclusive of $22 in variable lease expense. The Company also sublets some of its leased office space and recorded $36 of sublease income for the three months ended June 30, 2020 , which is included in other income on the condensed combined statements of operations. Total rent expense was $389 and sublease income was $30 for the three months ended June 30, 2019 , which were recorded prior to the adoption of ASU 2016-02. Total lease expense for the six months ended June 30, 2020 was $1,114 , inclusive of $142 in variable lease expense. The Company also sublets some of its leased office space and recorded $48 of sublease income for the six months ended June 30, 2020 , which is included in other income on the condensed combined statement of operations. Total rent expense was $737 and sublease income was $120 for the six months ended June 30, 2019 , which were recorded prior to the adoption of ASU 2016-02. Supplemental balance sheet information, the weighted average remaining lease term and weighted average discount rate related to leases were as follows: (dollars in thousands) June 30, 2020 Right of use asset $ 5,958 Lease liability $ 6,186 Weighted average remaining lease term 3.64 years Weighted average discount rate 6.49 % Future maturities of lease liabilities as of June 30, 2020 are as follows: (in thousands) Operating Leases 2020 $ 1,005 2021 1,949 2022 1,899 2023 1,313 2024 699 Thereafter 82 Total lease payments 6,947 Less: imputed interest (761 ) Total lease liabilities $ 6,186 The Company had the following minimum annual commitments for payment of leases as of December 31, 2019 : (in thousands) Rent Expense 2020 $ 1,718 2021 1,614 2022 1,594 2023 1,191 2024 669 Thereafter 46 Total lease payments $ 6,832 |
Equity
Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Equity | Equity Members' Equity BIC Holdings LLC and Trean Holdings LLC were each formed in the state of Delaware as a limited liability company (LLC). Any debts, expenses, obligations and liabilities of the Company are solely the responsibility of the Company. Any member of the LLC does not have any liability for the obligations or liabilities of the Company solely by reason of being a member or acting as a member of the Company. The Company has three classes of ownership units, each with its respective rights, preferences and privileges as follows: 1) Class A Units : Receive an allocation of profits and losses incurred by the Company as well as maintain the right to receive distributions, along with Class B Units, on a pro rata basis prior to distributions made to other classes of ownership units. 2) Class B Units : Receive an allocation of profits and losses incurred by the Company as well as maintain the right to receive distributions, along with Class A Units, on a pro rata basis prior to distributions made to other classes of ownership units. Class B maintains both voting and non-voting units. Each Class B Voting Unit is entitled to one vote per Class B Voting Unit on each matter to which the members are entitled to vote. Class B Non-Voting Units maintain all rights, preferences and privileges allowed to Class B Voting Units with the exception of voting rights. 3) Class C Units : Receive an allocation of profits and losses incurred by the Company. Participating Class C Units maintain the right to receive distributions after any Class A or Class B units based on the unit holders’ pro rata share. Redeemable Preferred Stock Trean Corp has designated and authorized 1,000,000 shares as Series A Redeemable Preferred Stock (Series A) which have no voting rights. The holder is entitled to receive annual cumulative dividends at 4.5 percent of the original cost per share. In the event of liquidation, dissolution, or winding up of the affairs of Trean Corp, liquidation distributions are made to preferred stockholders before common stockholders. Series A contained no conversion features. During 2019 the Company redeemed all of its remaining shares of Series A. Benchmark Holding Company has designated and authorized 1,000,000 shares as Series B Redeemable Preferred Stock (Series B) which have no voting rights. The holder is entitled to receive annual cumulative dividends as a percentage of the original cost per share or the actual earning on the invested funds. In the event of liquidation, dissolution, or winding up of the affairs of Benchmark Holding Company, liquidation distributions are made to preferred stockholders before common stockholders. Series B contains no conversion features. The liquidation preference and redemptive value of Series B is equivalent to its carrying value as of June 30, 2020 and December 31, 2019 . The Company classified the shares of Series B within temporary equity on the condensed combined balance sheets as of June 30, 2020 and December 31, 2019 , due to the liquidation rights associated with the termination of the shareholder customer agreement. The Company is required to redeem all shares of outstanding Series A or Series B if any of the following events occur: 1. Upon demand by a majority of the shareholders having voting rights in the Company 2. Upon termination of the underlying stock purchase agreement between the Series A holders and Trean (only applicable to Series A shares) 3. Any refinancing, recapitalization, sale of assets or stock by Trean Corp or Benchmark Holding Company that results in a realization of gain by the shareholders, to the extent the same is distributed to shareholders, whether in a single or a series of distributions (only applicable to Series A shares) 4. Change in the majority control of the Company (only applicable to Series B shares) 5. The termination of the shareholder customer agreement (only applicable to Series B shares) 6. A qualified initial public offering of Trean Corp or Benchmark Holding Company The cumulative dividends earned by Series B holders totaled approximately $83 for the three and six months ended June 30, 2020 , which consist of the following (in thousands, except share and per share amounts): Three and Six Months Ended June 30, 2020 Total Dividend Dividend per Share Weighted Average Shares Dividends on preferred shares - Series B $ 83 $ 1,622.90 51.00 The cumulative dividends earned by Series A and Series B holders totaled approximately $87 and $96 for the three and six months ended June 30, 2019 , respectively, which consist of the following (in thousands, except share and pre share amounts): Three Months Ended June 30, 2019 Total Dividend Dividend per Share Weighted Average Shares Dividends on preferred shares - Series A $ 13 $ 1,352.82 10.00 Dividends on preferred shares - Series B 74 1,240.46 60.00 Total preferred share dividends $ 87 Six Months Ended June 30, 2019 Total Dividend Dividend per Share Weighted Average Shares Dividends on preferred shares - Series A $ 22 $ 2,231.51 10.00 Dividends on preferred shares - Series B 74 1,240.46 60.00 Total preferred share dividends $ 96 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income The following table presents the changes in accumulated other comprehensive income for unrealized gains and losses on available-for-sale securities: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2020 2019 2020 2019 Balance at beginning of period $ 3,761 $ 1,941 $ 4,821 $ (2,003 ) Other comprehensive income, net of tax: Unrealized investment gains: Unrealized investment gains arising during the period 6,252 2,782 5,029 7,753 Income tax expense 1,310 585 1,054 1,629 Unrealized investment gains, net of tax 4,942 2,197 3,975 6,124 Less: reclassification adjustments to: Net realized investment gains (losses) included in net realized capital gains (losses) (1 ) 111 118 89 Income tax expense (benefit) (1 ) 24 25 19 Total reclassifications included in net income, net of tax — 87 93 70 Other comprehensive income 4,942 2,110 3,882 6,054 Balance at end of period $ 8,703 $ 4,051 $ 8,703 $ 4,051 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation On June 15, 2017, the Company entered into a Management Incentive Unit Agreement with an individual, who is a member of the Board of Managers of the Company, to issue Class C shares as partial compensation for future services to the Company. The shares issued under this agreement are subject to terms in the agreements between the Company and the recipient. The Company had approximately $157 and $197 of unrecognized stock compensation expense as of June 30, 2020 and December 31, 2019 , respectively, related to non-vested stock-based compensation granted. The remaining non-vested stock-based compensation will become vested in the third quarter of 2020 in conjunction with the initial public offering of Trean Insurance Group, Inc. The Company recognized approximately $20 and $40 of stock based compensation expense for the three and six months ended June 30, 2020 , respectively. The Company recognized approximately $20 and $39 of stock based compensation expense for the three and six months ended June 30, 2019 . |
Transactions with Related Parti
Transactions with Related Parties | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Transactions with Related Parties The Company owed Altaris Capital Partners, LLC, a private equity firm, approximately $83 , which is included within accounts payable and accrued expenses on the condensed combined balance sheet as of December 31, 2019. The Company was owed amounts from TRI of approximately $14 as of December 31, 2019, which is included in related party receivables on the December 31, 2019 condensed combined balance sheet. The Company recorded $50 and $100 of revenue for consulting services provided to TRI for the three and six months ended June 30, 2020 , respectively, which is included in other revenue on the condensed combined statements of operations. The Company recorded $50 and $100 of revenue for consulting services provided to TRI for the three and six months ended June 30, 2019 , respectively. The Company owns a 45% interest in Compstar, a program manager which handles the underwriting, premium collection and servicing of insurance policies for the Company. The Company recorded $43,917 and $90,199 of gross earned premiums resulting in gross commissions of $7,737 and $17,709 for the three and six months ended June 30, 2020 , respectively. The Company recorded $45,668 and $79,691 of gross earned premiums resulting in gross commissions of $9,191 and $16,554 due to Compstar for the three and six months ended June 30, 2019 , respectively. All receivables are stated net of the commissions due under the Program Manager Agreement and totaled $20,385 and $22,207 as of June 30, 2020 and December 31, 2019 , respectively, which is recorded in related party receivables on the condensed combined balance sheets. The Company’s ownership interest, and right to receive any distributions, is listed as collateral on debt taken out by Compstar. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Events or transactions that occur after the balance sheet date, but before the condensed combined financial statements are complete, are reviewed by the Company to determine if they are to be recognized and/or disclosed as appropriate. The ongoing global COVID-19 pandemic and response thereto has significantly impacted financial markets, businesses, households and communities and has caused a contraction in business activity and volatility in financial markets. The Company took several actions to protect the health of the public and its employees and to comply with directives and advice of governmental authorities, including restricting business travel and transitioning from an office-based company to primarily a remote working culture. As state, city and county guidelines progress, the Company has implemented new health and safety in-office procedures to prepare for transitioning its workforce back to working in offices on a limited basis. To date, the effects of the COVID-19 pandemic have not had a significant impact on the Company's financial position, results of operations or cash flows. However, continuation of the COVID-19 pandemic could cause additional reduction in business activity and financial market instability. The extent of the impact or continuation of the COVID-19 pandemic on the Company's future operational and financial performance will depend on several factors, including the duration of the pandemic and actions taken by government and health officials in response, all of which are uncertain and cannot be predicted. The Company will continue to monitor the impact of the ongoing continuation of the COVID-19 pandemic on its business, including how it will impact premium revenue, loss experience and loss expense, liquidity, regulatory capital and surplus, and operations. On July 20, 2020, Trean Insurance Group, Inc. closed the sale of 10,714,286 shares of its common stock in its initial public offering (IPO), comprised of 7,142,857 shares issued and sold by Trean Insurance Group, Inc. and 3,571,429 shares sold by selling stockholders. On July 22, 2020, Trean Insurance Group, Inc. closed the sale of an additional 1,207,142 shares by certain selling stockholders in the IPO pursuant to the exercise of the underwriters’ option to purchase additional shares to cover over-allotments. The initial public offering price per share was $15.00 . The aggregate initial public offering price for all shares sold in the IPO was approximately $107,142 and the aggregate initial public offering price for all shares sold by the selling stockholders in the IPO was approximately $71,678 . The shares began trading on the Nasdaq Global Select Market on July 16, 2020 under the symbol "TIG". The offer and sale was pursuant to a registration statement on Form S-1 (File No. 333-239291), which was declared effective by the SEC on July 15, 2020. Trean Insurance Group, Inc. received net proceeds from the sale of shares in the IPO of approximately $94,906 after deducting underwriting discounts and commissions of $7,500 and estimated offering expenses of $4,737 . Trean Insurance Group, Inc. did not receive any proceeds from the sale of shares by the selling stockholders. In addition, and in conjunction with its IPO, Trean Insurance Group, Inc. issued 6,613,606 shares of common stock, with a purchase price value of $99,204 , to acquire the remaining 55% ownership in Compstar Holding Company LLC. See Part II, Item 2, "Unregistered Sales of Equity Securities and Use of Proceeds" for a detailed discussion of use of proceeds associated with the IPO. Prior to the completion of the above offering, the Company effected the following reorganization transactions: (i) each of Trean Holdings LLC (Trean) and BIC Holdings LLC (BIC) contributed all of their respective assets and liabilities to Trean Insurance Group, Inc., a newly formed direct subsidiary of BIC, in exchange for shares of common stock in Trean Insurance Group, Inc., (ii) upon the completion of the transfers by Trean and BIC, Trean and BIC were dissolved and distributed in-kind common shares to the pre-IPO unitholders. On July 16, 2020, Benchmark Holding Company entered into an agreement to acquire 7710 Holdings, LLC (7710), which includes 7710 Insurance Company as well as its associated program manager and agency, 7710 Service Company, LLC and Creekwood Insurance Agency, LLC for a purchase price of $12,000 . 7710 Insurance Company underwrites workers' compensation primarily for emergency services, including firefighters and emergency medical services (EMS). 7710 focuses on reducing costs and claims through the implementation of a propriety safety preparedness and loss control program (S.H.I.E.L.D.), created and staffed by experienced firefighters and EMS professionals. All of the effects of subsequent events that provide additional evidence about conditions that existed at the condensed combined balance sheet date, including the estimates inherent in the process of preparing the condensed combined financial statements, are recognized in the condensed combined financial statements. |
Business and Basis of Present_2
Business and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of estimates | Use of estimates While preparing the condensed combined financial statements, the Company has made certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed combined financial statements, as well as reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require extensive use of estimates include the reserves for unpaid losses and loss adjustment expenses (LAE), reinsurance recoveries, investments and goodwill. Except for the captions on the condensed combined balance sheets and condensed combined statements of comprehensive income, generally, the term loss(es) is used to collectively refer to both loss and LAE. |
Accounting pronouncements | Accounting pronouncements Recently adopted policies In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04). This update provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This standard is effective for the period between March 12, 2020 and December 31, 2022. The adoption of this standard did not have a material impact on the condensed combined financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13). This update modifies the existing disclosure requirements on fair value measurements in Topic 820 by changing requirements regarding Level 1, Level 2 and Level 3 investments. The Company adopted this standard effective January 1, 2020 on a prospective basis. The adoption of this standard did not have a material impact on the condensed combined financial statements. In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842) (ASU 2016-02), which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of lease payments. Management adopted this standard effective January 1, 2020 under the modified retrospective approach. Adoption of this standard resulted in the Company recognizing initial right-of-use assets of $5,946 and initial lease liabilities of $5,946 and did not result in a cumulative effect adjustment on retained earnings. The adoption of this standard did not have a material impact on the condensed combined statements of operations or condensed combined statements of cash flows. Pending policies Trean Insurance Group, Inc. completed its initial public offering in July 2020, and is an emerging growth company as defined under federal securities laws. As such, the Company has elected to adopt pending accounting policies under the dates required for private companies. Therefore, the dates included within this section reflect the effective dates for the adoption of new accounting policies required by private companies. In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments (ASU 2020-03). This update represents changes to clarify and improve the codification to allow for easier application by eliminating inconsistencies and providing clarification. Certain issues addressed in this update are effective for annual periods beginning after December 15, 2020 and others are effective for annual periods beginning after December 15, 2022. The Company will adopt each standard upon their respective effective dates of January 1, 2021 and January 1, 2023. Adoption of this standard is not expected to have a material impact on the condensed combined financial statements. In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 (ASU 2020-01). This update addresses the accounting for certain equity securities upon the application or discontinuation of the equity method of accounting. Further, the update addresses scope considerations for forward contracts and purchased options on certain securities. ASU 2020-01 is effective for annual periods beginning after December 15, 2021, including interim periods thereafter. The Company will adopt this standard effective January 1, 2022. Adoption of this standard is not expected to have a material impact on the condensed combined financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). This update simplifies the manner in which an entity is required to test goodwill for impairment. ASU 2017-04 is effective for annual periods beginning after December 15, 2021, including interim periods thereafter, with early adoption permitted. The Company will adopt this standard effective January 1, 2022. Adoption of this standard is not expected to have a material impact on the condensed combined financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (ASU 2016-13). This update requires financial assets measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Additionally, credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which the fair value is below the amortized cost. ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2023. The Company is currently evaluating the impact of this standard on the condensed combined financial statements. |
Fair value measurements | Fair Value Measurements The Company’s financial instruments include assets and liabilities carried at fair value. The inputs to valuation techniques used to measure fair value are prioritized into a three level hierarchy. The fair value hierarchy is as follows: Level 1 : Fair values primarily based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 : Fair values primarily based on observable inputs, other than quoted prices included in Level 1, or based on prices for similar assets and liabilities. Level 3 : Fair values primarily based on valuations derived when one or more of the significant inputs are unobservable. With little or no observable market, the determination of fair value uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability. The Company classifies the financial asset or liability by level based upon the lowest level input that is significant to the determination of the fair value. The following tables present the estimated fair value of the Company’s significant financial instruments. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed | The following table summarizes the consideration paid and the amounts of estimated fair value of the net assets acquired and liabilities assumed at the acquisition date (in thousands): Fair value of total consideration transferred $ 1,400 Recognized amounts of identifiable assets acquired and liabilities assumed: Cash and cash equivalents 302 Premiums and other receivables 55 Property and equipment 63 Goodwill 517 Other assets 494 Accounts payable (17 ) Income taxes payable (14 ) Net assets acquired $ 1,400 The following table summarizes the consideration paid and the amounts of estimated fair value of the assets acquired and liabilities assumed at the acquisition date (in thousands): Fair value of total consideration transferred $ 5,314 Recognized amounts of identifiable assets acquired and liabilities assumed: Cash 973 Investments 4,252 Accrued investment income 40 Premiums and other receivables 1,571 Deferred tax asset 242 Other assets 10 Unpaid loss and loss adjustment expenses (6,426 ) Unearned premiums (1,003 ) Funds held under reinsurance agreements 7,980 Reinsurance premiums payable (1,037 ) Accounts payable and accrued expenses (316 ) Income taxes payable (338 ) Net assets acquired 5,948 Gain on bargain purchase $ 634 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value Options | The following tables present the estimated fair value of the Company’s significant financial instruments. June 30, 2020 (in thousands) Level 1 Level 2 Level 3 Total Fixed maturities: U.S. government and government securities $ 16,073 $ 175 $ — $ 16,248 Foreign governments — 305 — 305 States, territories and possessions — 7,544 — 7,544 Political subdivisions of states territories and possessions — 28,915 — 28,915 Special revenue and special assessment obligations — 71,875 — 71,875 Industrial and public utilities — 129,892 — 129,892 Commercial mortgage-backed securities — 17,908 — 17,908 Residential mortgage-backed securities — 59,412 — 59,412 Other loan-backed securities — 43,250 — 43,250 Hybrid securities — 356 — 356 Total fixed maturities 16,073 359,632 — 375,705 Equity securities: Preferred stock — 325 — 325 Common stock 852 576 2,000 3,428 Total equity securities 852 901 2,000 3,753 Total investments $ 16,925 $ 360,533 $ 2,000 $ 379,458 Funds held under reinsurance agreements — 165,371 — 165,371 Long-term debt: Junior subordinated debt — 7,732 — 7,732 Secured credit facility — 32,794 — 32,794 Total long-term debt $ — $ 40,526 $ — $ 40,526 December 31, 2019 (in thousands) Level 1 Level 2 Level 3 Total Fixed maturities: U.S. government and government securities $ 16,129 $ — $ — $ 16,129 Foreign governments — 302 — 302 States, territories and possessions — 4,923 — 4,923 Political subdivisions of states, territories and possessions — 25,104 — 25,104 Special revenue and special assessment obligations — 61,405 — 61,405 Industrial and public utilities — 123,207 — 123,207 Commercial mortgage-backed securities — 16,312 — 16,312 Residential mortgage-backed securities — 54,109 — 54,109 Other loan-backed securities — 36,011 — 36,011 Hybrid securities — 363 — 363 Total fixed maturities 16,129 321,736 — 337,865 Equity securities: Preferred stock — 343 — 343 Common stock — 492 — 492 Total equity securities — 835 — 835 Total investments $ 16,129 $ 322,571 $ — $ 338,700 Funds held under reinsurance agreements — 163,445 — 163,445 Long-term debt: Junior subordinated debt — 7,732 — 7,732 Secured credit facility — 21,637 — 21,637 Total long-term debt $ — $ 29,369 $ — $ 29,369 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Debt Securities, Available-for-sale | The cost or amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the investments in securities classified as available for sale are as follows: June 30, 2020 (in thousands) Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Fixed maturities: U.S. government and government securities $ 15,778 $ 470 $ — $ 16,248 Foreign governments 300 5 — 305 States, territories and possessions 7,299 245 — 7,544 Political subdivisions of states, territories and possessions 27,684 1,231 — 28,915 Special revenue and special assessment obligations 68,065 3,815 (5 ) 71,875 Industrial and public utilities 122,814 7,223 (145 ) 129,892 Commercial mortgage-backed securities 16,400 1,598 (90 ) 17,908 Residential mortgage-backed securities 57,787 1,714 (89 ) 59,412 Other loan-backed securities 42,871 772 (393 ) 43,250 Hybrid securities 357 2 (3 ) 356 Total fixed maturities available for sale $ 359,355 $ 17,075 $ (725 ) $ 375,705 December 31, 2019 (in thousands) Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Fixed maturities: U.S. government and government securities $ 15,965 $ 167 $ (3 ) $ 16,129 Foreign governments 299 3 — 302 States, territories and possessions 4,789 134 — 4,923 Political subdivisions of states, territories and possessions 24,444 670 (10 ) 25,104 Special revenue and special assessment obligations 59,149 2,298 (42 ) 61,405 Industrial and public utilities 119,735 3,490 (18 ) 123,207 Commercial mortgage-backed securities 15,586 757 (31 ) 16,312 Residential mortgage-backed securities 53,467 679 (37 ) 54,109 Other loan-backed securities 35,849 281 (119 ) 36,011 Hybrid securities 357 6 — 363 Total fixed maturities available for sale $ 329,640 $ 8,485 $ (260 ) $ 337,865 |
Schedule of Continuous Unrealized Loss Position | The following table illustrates the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position: June 30, 2020 Less Than 12 Months 12 Months or More Total (in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Fixed maturities: U.S. government and government securities $ 505 $ — $ — $ — $ 505 $ — Foreign governments — — — — — — States, territories and possessions — — — — — — Political subdivisions of states, territories and possessions — — — — — — Special revenue and special assessment obligations 932 (5 ) — — 932 (5 ) Industrial and public utilities 1,512 (145 ) — — 1,512 (145 ) Commercial mortgage-backed securities 936 (90 ) — — 936 (90 ) Residential mortgage-backed securities 1,575 (67 ) 308 (22 ) 1,883 (89 ) Other loan-backed securities 10,148 (89 ) 10,488 (304 ) 20,636 (393 ) Hybrid securities 104 (3 ) — — 104 (3 ) Total bonds $ 15,712 $ (399 ) $ 10,796 $ (326 ) $ 26,508 $ (725 ) December 31, 2019 Less Than 12 Months 12 Months or More Total (in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Fixed maturities: U.S. government and government securities $ 293 $ (2 ) $ 1,349 $ (1 ) $ 1,642 $ (3 ) Foreign governments — — — — — — States, territories and possessions — — — — — — Political subdivisions of states, territories and possessions 1,500 (9 ) 690 (1 ) 2,190 (10 ) Special revenue and special assessment obligations 3,206 (42 ) 181 — 3,387 (42 ) Industrial and public utilities 5,939 (16 ) 1,094 (2 ) 7,033 (18 ) Commercial mortgage-backed securities 2,138 (30 ) 129 (1 ) 2,267 (31 ) Residential mortgage-backed securities 6,936 (13 ) 1,917 (24 ) 8,853 (37 ) Other loan-backed securities 2,189 (11 ) 13,885 (108 ) 16,074 (119 ) Hybrid securities — — — — — — Total bonds $ 22,201 $ (123 ) $ 19,245 $ (137 ) $ 41,446 $ (260 ) |
Summary of Investments by Contractual Maturity | The amortized cost and estimated fair value of fixed maturities as of June 30, 2020 , by contractual maturity, are as follows: (in thousands) Cost or Amortized Cost Fair Value Available for sale: Due in one year or less $ 22,078 $ 22,266 Due after one year but before five years 118,280 124,043 Due after five years but before ten years 58,074 62,674 Due after ten years 43,865 46,152 Commercial mortgage-backed securities 16,400 17,908 Residential mortgage-backed securities 57,787 59,412 Other loan-backed securities 42,871 43,250 Total $ 359,355 $ 375,705 |
Sumnary of Realized Gain (Loss) on Investments | Realized gains and losses on investments included in the condensed combined statements of operations for the three and six months ended June 30, 2020 and 2019 are as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2020 2019 2020 2019 Fixed maturities: Gains $ — $ 119 $ 119 $ 120 Losses (1 ) (8 ) (1 ) (31 ) Total fixed maturities (1 ) 111 118 89 Equity securities: Equity method investments: Gains — — 3,115 — Total equity securities — — 3,115 — Total net investment realized gains (losses) $ (1 ) $ 111 $ 3,233 $ 89 |
Summary of Net Investment Income | Net investment income consists of the following for the three and six months ended June 30, 2020 and 2019 : Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2020 2019 2020 2019 Fixed maturities $ 1,408 $ 1,558 $ 2,880 $ 2,827 Preferred stock 34 (19 ) 20 (23 ) Common stock 75 — 1,874 — Interest earned on cash and short-term investments 7 31 22 53 Net investment income $ 1,524 $ 1,570 $ 4,796 $ 2,857 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Long‑term debt consisted of the following: (in thousands) June 30, 2020 December 31, 2019 Junior subordinated debt $ 7,732 $ 7,732 Secured credit facility 32,794 21,637 Long-term debt 40,526 29,369 Less: unamortized deferred financing costs (828 ) (329 ) Net long‑term debt $ 39,698 $ 29,040 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Disaggregation of Revenue | The following table presents the revenues recognized from contracts with customers included in the condensed combined statements of operations. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2020 2019 2020 2019 Brokerage $ 755 $ 912 $ 4,448 $ 3,615 Managing general agent fees 254 227 408 567 Third-party administrator fees 383 559 767 973 Consulting fees 138 195 299 333 Total revenue from contracts with customers $ 1,530 $ 1,893 $ 5,922 $ 5,488 |
Schedule of Contract with Customer, Contract Assets | Contract assets are included within other assets on the condensed combined balance sheets. (in thousands) June 30, 2020 December 31, 2019 Contract assets $ 2,569 $ 1,103 |
Liability for Unpaid Losses a_2
Liability for Unpaid Losses and Loss Adjustment Expense (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Insurance [Abstract] | |
Schedule of Liability for Unpaid Losses and Loss Adjustment Expense | The following table represents a reconciliation of changes in the liability for unpaid losses and LAE. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2020 2019 2020 2019 Unpaid losses and LAE reserves at beginning of period $ 418,757 $ 364,360 $ 406,716 $ 340,415 Less losses ceded through reinsurance (312,105 ) (271,005 ) (304,005 ) (257,421 ) Net unpaid losses and LAE at beginning of period 106,652 93,355 102,711 82,994 Acquisition of First Choice Casualty Insurance Company — — — 6,366 Incurred losses and LAE related to: Current period 13,020 14,350 27,189 27,279 Prior period (837 ) (1,336 ) (2,072 ) (2,809 ) Total incurred losses and LAE 12,183 13,014 25,117 24,470 Paid losses and LAE, net of reinsurance, related to: Current period 3,392 1,230 4,590 2,328 Prior period 5,708 6,640 13,503 13,003 Total paid losses and LAE 9,100 7,870 18,093 15,331 Net unpaid losses and LAE at end of period 109,735 98,499 109,735 98,499 Plus losses ceded through reinsurance 332,765 283,974 332,765 283,974 Unpaid losses and LAE reserves at end of period $ 442,500 $ 382,473 $ 442,500 $ 382,473 |
Reinsurance (Tables)
Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Reinsurance Disclosures [Abstract] | |
Summary of Effects of Reinsurance | A summary of the impact of ceded reinsurance on premiums written and premiums earned is as follows: Three Months Ended June 30, 2020 2019 (in thousands) Gross Assumed Ceded Net Gross Assumed Ceded Net Written premiums $ 107,596 $ 2,016 $ (86,586 ) $ 23,026 $ 102,962 $ 1,458 $ (82,183 ) $ 22,237 Earned premiums 98,337 2,010 (78,968 ) 21,379 101,097 1,788 (79,508 ) 23,377 Six Months Ended June 30, 2020 2019 (in thousands) Gross Assumed Ceded Net Gross Assumed Ceded Net Written premiums $ 213,573 $ 3,898 $ (168,218 ) $ 49,253 $ 202,320 $ 3,634 $ (162,632 ) $ 43,322 Earned premiums 196,880 3,953 (156,995 ) 43,838 189,650 3,817 (150,466 ) 43,001 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information | Supplemental balance sheet information, the weighted average remaining lease term and weighted average discount rate related to leases were as follows: (dollars in thousands) June 30, 2020 Right of use asset $ 5,958 Lease liability $ 6,186 Weighted average remaining lease term 3.64 years Weighted average discount rate 6.49 % |
Schedule of Future Maturities of Lease Liabilities | Future maturities of lease liabilities as of June 30, 2020 are as follows: (in thousands) Operating Leases 2020 $ 1,005 2021 1,949 2022 1,899 2023 1,313 2024 699 Thereafter 82 Total lease payments 6,947 Less: imputed interest (761 ) Total lease liabilities $ 6,186 |
Schedule of Future Minimum Rental Payments for Operating Leases | The Company had the following minimum annual commitments for payment of leases as of December 31, 2019 : (in thousands) Rent Expense 2020 $ 1,718 2021 1,614 2022 1,594 2023 1,191 2024 669 Thereafter 46 Total lease payments $ 6,832 |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Schedule of Cumulative Dividends | The cumulative dividends earned by Series B holders totaled approximately $83 for the three and six months ended June 30, 2020 , which consist of the following (in thousands, except share and per share amounts): Three and Six Months Ended June 30, 2020 Total Dividend Dividend per Share Weighted Average Shares Dividends on preferred shares - Series B $ 83 $ 1,622.90 51.00 The cumulative dividends earned by Series A and Series B holders totaled approximately $87 and $96 for the three and six months ended June 30, 2019 , respectively, which consist of the following (in thousands, except share and pre share amounts): Three Months Ended June 30, 2019 Total Dividend Dividend per Share Weighted Average Shares Dividends on preferred shares - Series A $ 13 $ 1,352.82 10.00 Dividends on preferred shares - Series B 74 1,240.46 60.00 Total preferred share dividends $ 87 Six Months Ended June 30, 2019 Total Dividend Dividend per Share Weighted Average Shares Dividends on preferred shares - Series A $ 22 $ 2,231.51 10.00 Dividends on preferred shares - Series B 74 1,240.46 60.00 Total preferred share dividends $ 96 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income | The following table presents the changes in accumulated other comprehensive income for unrealized gains and losses on available-for-sale securities: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2020 2019 2020 2019 Balance at beginning of period $ 3,761 $ 1,941 $ 4,821 $ (2,003 ) Other comprehensive income, net of tax: Unrealized investment gains: Unrealized investment gains arising during the period 6,252 2,782 5,029 7,753 Income tax expense 1,310 585 1,054 1,629 Unrealized investment gains, net of tax 4,942 2,197 3,975 6,124 Less: reclassification adjustments to: Net realized investment gains (losses) included in net realized capital gains (losses) (1 ) 111 118 89 Income tax expense (benefit) (1 ) 24 25 19 Total reclassifications included in net income, net of tax — 87 93 70 Other comprehensive income 4,942 2,110 3,882 6,054 Balance at end of period $ 8,703 $ 4,051 $ 8,703 $ 4,051 |
Business and Basis of Present_3
Business and Basis of Presentation (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jan. 01, 2020 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accounting standards update | us-gaap:AccountingStandardsUpdate201602Member | us-gaap:AccountingStandardsUpdate201409Member | |
Right of use asset | $ 5,958 | ||
Lease liability | $ 6,186 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Right of use asset | $ 5,946 | ||
Lease liability | $ 5,946 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | Apr. 01, 2020 | Mar. 31, 2019 | Feb. 19, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Business Acquisition [Line Items] | |||||
Bargain purchase gain amount | $ 0 | $ 634 | |||
LCTA Risk Services, Inc. | |||||
Business Acquisition [Line Items] | |||||
Percentage of voting interests acquired | 100.00% | ||||
Consideration transferred | $ 1,400 | ||||
American Liberty Insurance Company | |||||
Business Acquisition [Line Items] | |||||
Percentage of voting interests acquired | 25.00% | ||||
Consideration transferred | $ 1,155 | ||||
First Choice Casualty Insurance Company | |||||
Business Acquisition [Line Items] | |||||
Percentage of voting interests acquired | 100.00% | ||||
Consideration transferred | $ 5,314 | ||||
Bargain purchase gain amount | $ 634 |
Acquisitions - Schedule of Asse
Acquisitions - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Apr. 01, 2020 | Feb. 19, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 3,339 | $ 2,822 | |||
Gain on bargain purchase | $ 0 | $ 634 | |||
LCTA Risk Services, Inc. | |||||
Business Acquisition [Line Items] | |||||
Fair value of total consideration transferred | $ 1,400 | ||||
Cash | 302 | ||||
Premiums and other receivables | 55 | ||||
Property and equipment | 63 | ||||
Goodwill | 517 | ||||
Other assets | 494 | ||||
Accounts payable | (17) | ||||
Income taxes payable | (14) | ||||
Net assets acquired | $ 1,400 | ||||
First Choice Casualty Insurance Company | |||||
Business Acquisition [Line Items] | |||||
Fair value of total consideration transferred | $ 5,314 | ||||
Cash | 973 | ||||
Premiums and other receivables | 1,571 | ||||
Other assets | 10 | ||||
Funds held under reinsurance agreements | 7,980 | ||||
Investments | 4,252 | ||||
Accrued investment income | 40 | ||||
Deferred tax asset | 242 | ||||
Unpaid loss and loss adjustment expenses | (6,426) | ||||
Unearned premiums | (1,003) | ||||
Reinsurance premiums payable | (1,037) | ||||
Accounts payable and accrued expenses | (316) | ||||
Income taxes payable | (338) | ||||
Net assets acquired | 5,948 | ||||
Gain on bargain purchase | $ 634 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | $ 375,705 | $ 337,865 |
Equity securities: | 3,753 | 835 |
Total investments | 391,151 | 350,873 |
Funds held under reinsurance agreements | 165,371 | 163,445 |
Total long-term debt | 40,526 | 29,369 |
Junior subordinated debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total long-term debt | 7,732 | 7,732 |
Secured credit facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total long-term debt | 32,794 | 21,637 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 16,073 | 16,129 |
Equity securities: | 852 | 0 |
Funds held under reinsurance agreements | 0 | 0 |
Total long-term debt | 0 | 0 |
Level 1 | Junior subordinated debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total long-term debt | 0 | 0 |
Level 1 | Secured credit facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total long-term debt | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 359,632 | 321,736 |
Equity securities: | 901 | 835 |
Funds held under reinsurance agreements | 165,371 | 163,445 |
Total long-term debt | 40,526 | 29,369 |
Level 2 | Junior subordinated debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total long-term debt | 7,732 | 7,732 |
Level 2 | Secured credit facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total long-term debt | 32,794 | 21,637 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Equity securities: | 2,000 | 0 |
Funds held under reinsurance agreements | 0 | 0 |
Total long-term debt | 0 | 0 |
Level 3 | Junior subordinated debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total long-term debt | 0 | 0 |
Level 3 | Secured credit facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total long-term debt | 0 | 0 |
U.S. government and government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 16,248 | 16,129 |
U.S. government and government securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 16,073 | 16,129 |
U.S. government and government securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 175 | 0 |
U.S. government and government securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Foreign governments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 305 | 302 |
Foreign governments | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Foreign governments | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 305 | 302 |
Foreign governments | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
States, territories and possessions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 7,544 | 4,923 |
States, territories and possessions | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
States, territories and possessions | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 7,544 | 4,923 |
States, territories and possessions | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Political subdivisions of states territories and possessions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 28,915 | 25,104 |
Political subdivisions of states territories and possessions | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Political subdivisions of states territories and possessions | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 28,915 | 25,104 |
Political subdivisions of states territories and possessions | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Special revenue and special assessment obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 71,875 | 61,405 |
Special revenue and special assessment obligations | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Special revenue and special assessment obligations | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 71,875 | 61,405 |
Special revenue and special assessment obligations | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Industrial and public utilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 129,892 | 123,207 |
Industrial and public utilities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Industrial and public utilities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 129,892 | 123,207 |
Industrial and public utilities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Commercial mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 17,908 | 16,312 |
Commercial mortgage-backed securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Commercial mortgage-backed securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 17,908 | 16,312 |
Commercial mortgage-backed securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Residential mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 59,412 | 54,109 |
Residential mortgage-backed securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Residential mortgage-backed securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 59,412 | 54,109 |
Residential mortgage-backed securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Other loan-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 43,250 | 36,011 |
Other loan-backed securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Other loan-backed securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 43,250 | 36,011 |
Other loan-backed securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Hybrid securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 356 | 363 |
Hybrid securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Hybrid securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 356 | 363 |
Hybrid securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Preferred stock | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities: | 325 | 343 |
Preferred stock | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities: | 0 | 0 |
Preferred stock | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities: | 325 | 343 |
Preferred stock | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities: | 0 | 0 |
Common stock | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities: | 3,428 | 492 |
Common stock | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities: | 852 | 0 |
Common stock | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities: | 576 | 492 |
Common stock | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities: | 2,000 | 0 |
Available-For-Sale and Equity Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 379,458 | 338,700 |
Available-For-Sale and Equity Securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 16,925 | 16,129 |
Available-For-Sale and Equity Securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 360,533 | 322,571 |
Available-For-Sale and Equity Securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | $ 2,000 | $ 0 |
Investments - Schedule of Debt
Investments - Schedule of Debt Securities, Available-for-sale (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | $ 359,355 | $ 329,640 |
Gross Unrealized Gains | 17,075 | 8,485 |
Gross Unrealized Losses | (725) | (260) |
Fair Value | 375,705 | 337,865 |
U.S. government and government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 15,778 | 15,965 |
Gross Unrealized Gains | 470 | 167 |
Gross Unrealized Losses | 0 | (3) |
Fair Value | 16,248 | 16,129 |
Foreign governments | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 300 | 299 |
Gross Unrealized Gains | 5 | 3 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 305 | 302 |
States, territories and possessions | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 7,299 | 4,789 |
Gross Unrealized Gains | 245 | 134 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 7,544 | 4,923 |
Political subdivisions of states territories and possessions | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 27,684 | 24,444 |
Gross Unrealized Gains | 1,231 | 670 |
Gross Unrealized Losses | 0 | (10) |
Fair Value | 28,915 | 25,104 |
Special revenue and special assessment obligations | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 68,065 | 59,149 |
Gross Unrealized Gains | 3,815 | 2,298 |
Gross Unrealized Losses | (5) | (42) |
Fair Value | 71,875 | 61,405 |
Industrial and public utilities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 122,814 | 119,735 |
Gross Unrealized Gains | 7,223 | 3,490 |
Gross Unrealized Losses | (145) | (18) |
Fair Value | 129,892 | 123,207 |
Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 16,400 | 15,586 |
Gross Unrealized Gains | 1,598 | 757 |
Gross Unrealized Losses | (90) | (31) |
Fair Value | 17,908 | 16,312 |
Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 57,787 | 53,467 |
Gross Unrealized Gains | 1,714 | 679 |
Gross Unrealized Losses | (89) | (37) |
Fair Value | 59,412 | 54,109 |
Other loan-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 42,871 | 35,849 |
Gross Unrealized Gains | 772 | 281 |
Gross Unrealized Losses | (393) | (119) |
Fair Value | 43,250 | 36,011 |
Hybrid securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 357 | 357 |
Gross Unrealized Gains | 2 | 6 |
Gross Unrealized Losses | (3) | 0 |
Fair Value | $ 356 | $ 363 |
Investments - Schedule of Conti
Investments - Schedule of Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | $ 15,712 | $ 22,201 |
Unrealized Loss, less than 12 months | (399) | (123) |
Fair Value, 12 months or more | 10,796 | 19,245 |
Unrealized Loss, 12 months or more | (326) | (137) |
Fair Value | 26,508 | 41,446 |
Unrealized Loss | (725) | (260) |
U.S. government and government securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 505 | 293 |
Unrealized Loss, less than 12 months | 0 | (2) |
Fair Value, 12 months or more | 0 | 1,349 |
Unrealized Loss, 12 months or more | 0 | (1) |
Fair Value | 505 | 1,642 |
Unrealized Loss | 0 | (3) |
Foreign governments | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 0 | 0 |
Unrealized Loss, less than 12 months | 0 | 0 |
Fair Value, 12 months or more | 0 | 0 |
Unrealized Loss, 12 months or more | 0 | 0 |
Fair Value | 0 | 0 |
Unrealized Loss | 0 | 0 |
States, territories and possessions | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 0 | 0 |
Unrealized Loss, less than 12 months | 0 | 0 |
Fair Value, 12 months or more | 0 | 0 |
Unrealized Loss, 12 months or more | 0 | 0 |
Fair Value | 0 | 0 |
Unrealized Loss | 0 | 0 |
Political subdivisions of states territories and possessions | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 0 | 1,500 |
Unrealized Loss, less than 12 months | 0 | (9) |
Fair Value, 12 months or more | 0 | 690 |
Unrealized Loss, 12 months or more | 0 | (1) |
Fair Value | 0 | 2,190 |
Unrealized Loss | 0 | (10) |
Special revenue and special assessment obligations | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 932 | 3,206 |
Unrealized Loss, less than 12 months | (5) | (42) |
Fair Value, 12 months or more | 0 | 181 |
Unrealized Loss, 12 months or more | 0 | 0 |
Fair Value | 932 | 3,387 |
Unrealized Loss | (5) | (42) |
Industrial and public utilities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 1,512 | 5,939 |
Unrealized Loss, less than 12 months | (145) | (16) |
Fair Value, 12 months or more | 0 | 1,094 |
Unrealized Loss, 12 months or more | 0 | (2) |
Fair Value | 1,512 | 7,033 |
Unrealized Loss | (145) | (18) |
Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 936 | 2,138 |
Unrealized Loss, less than 12 months | (90) | (30) |
Fair Value, 12 months or more | 0 | 129 |
Unrealized Loss, 12 months or more | 0 | (1) |
Fair Value | 936 | 2,267 |
Unrealized Loss | (90) | (31) |
Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 1,575 | 6,936 |
Unrealized Loss, less than 12 months | (67) | (13) |
Fair Value, 12 months or more | 308 | 1,917 |
Unrealized Loss, 12 months or more | (22) | (24) |
Fair Value | 1,883 | 8,853 |
Unrealized Loss | (89) | (37) |
Other loan-backed securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 10,148 | 2,189 |
Unrealized Loss, less than 12 months | (89) | (11) |
Fair Value, 12 months or more | 10,488 | 13,885 |
Unrealized Loss, 12 months or more | (304) | (108) |
Fair Value | 20,636 | 16,074 |
Unrealized Loss | (393) | (119) |
Hybrid securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 104 | 0 |
Unrealized Loss, less than 12 months | (3) | 0 |
Fair Value, 12 months or more | 0 | 0 |
Unrealized Loss, 12 months or more | 0 | 0 |
Fair Value | 104 | 0 |
Unrealized Loss | $ (3) | $ 0 |
Investments - Summary of Invest
Investments - Summary of Investments by Contractual Maturity (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Cost or Amortized Cost | ||
Due in one year or less | $ 22,078 | |
Due after one year but before five years | 118,280 | |
Due after five years but before ten years | 58,074 | |
Due after ten years | 43,865 | |
Cost or Amortized Cost | 359,355 | $ 329,640 |
Fair Value | ||
Due in one year or less | 22,266 | |
Due after one year but before five years | 124,043 | |
Due after five years but before ten years | 62,674 | |
Due after ten years | 46,152 | |
Total Fair Value | 375,705 | 337,865 |
Commercial mortgage-backed securities | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 16,400 | 15,586 |
Fair Value | ||
Total Fair Value | 17,908 | 16,312 |
Residential mortgage-backed securities | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 57,787 | 53,467 |
Fair Value | ||
Total Fair Value | 59,412 | 54,109 |
Other loan-backed securities | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 42,871 | 35,849 |
Fair Value | ||
Total Fair Value | $ 43,250 | $ 36,011 |
Investments - Sumnary of Realiz
Investments - Sumnary of Realized Gain (Loss) on Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Debt Securities, Available-for-sale, Realized Gain (Loss) [Abstract] | ||||
Gains | $ 0 | $ 119 | $ 119 | $ 120 |
Losses | (1) | (8) | (1) | (31) |
Total fixed maturities | (1) | 111 | 118 | 89 |
Equity Securities, FV-NI, Realized Gain (Loss) [Abstract] | ||||
Gains | 0 | 0 | 3,115 | 0 |
Total equity securities | 0 | 0 | 3,115 | 0 |
Total net investment realized gains (losses) | $ (1) | $ 111 | $ 3,233 | $ 89 |
Investments - Summary of Net In
Investments - Summary of Net Investment Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Net Investment Income [Line Items] | ||||
Net investment income | $ 1,524 | $ 1,570 | $ 4,796 | $ 2,857 |
Fixed maturities | ||||
Net Investment Income [Line Items] | ||||
Net investment income | 1,408 | 1,558 | 2,880 | 2,827 |
Preferred stock | ||||
Net Investment Income [Line Items] | ||||
Net investment income | 34 | (19) | 20 | (23) |
Common stock | ||||
Net Investment Income [Line Items] | ||||
Net investment income | 75 | 0 | 1,874 | 0 |
Interest earned on cash and short-term investments | ||||
Net Investment Income [Line Items] | ||||
Net investment income | $ 7 | $ 31 | $ 22 | $ 53 |
Equity Method Investments (Deta
Equity Method Investments (Details) - USD ($) $ in Thousands | Jan. 03, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jan. 02, 2020 | Dec. 31, 2019 |
Schedule of Equity Method Investments [Line Items] | |||||||
Carrying value of equity method investments | $ 11,693 | $ 11,693 | $ 12,173 | ||||
Income from equity method investments | 1,230 | $ 865 | 1,932 | $ 1,473 | |||
Distributions from equity method investments | (2,413) | (2,127) | |||||
Proceeds from sale of equity method investment | 3,000 | 0 | |||||
Unrealized gain on sale of equity method investment | $ 1,524 | 1,570 | $ 4,796 | 2,857 | |||
Compstar Holding Company LLC | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Ownership percentage | 45.00% | 45.00% | |||||
Carrying value of equity method investments | $ 11,461 | $ 11,461 | 11,831 | ||||
Income from equity method investments | 1,230 | 692 | 1,932 | 1,134 | |||
Distributions from equity method investments | $ (1,024) | (1,334) | (2,302) | (1,537) | |||
Trean Intermediaries | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Ownership percentage | 25.00% | ||||||
Carrying value of equity method investments | $ 110 | ||||||
Income from equity method investments | 174 | 340 | |||||
Distributions from equity method investments | $ (275) | $ (225) | $ (590) | ||||
Ownership percentage sold | 15.00% | ||||||
Proceeds from sale of equity method investment | $ 3,000 | ||||||
Cumulative percentage ownership after all transactions | 10.00% | ||||||
Realized gain (loss) on sale | 3,115 | ||||||
Unrealized gain on sale of equity method investment | $ 2,000 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 21, 2006 |
Debt Instrument [Line Items] | |||
Long-term debt | $ 40,526 | $ 29,369 | |
Less: unamortized deferred financing costs | (828) | (329) | |
Net long‑term debt | 39,698 | 29,040 | |
Junior subordinated debt | |||
Debt Instrument [Line Items] | |||
Long-term debt | 7,732 | 7,732 | $ 7,732 |
Secured credit facility | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 32,794 | $ 21,637 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | Jun. 30, 2020 | May 26, 2020 | Dec. 31, 2019 | Jul. 07, 2011 | Jun. 21, 2006 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2020 | Apr. 03, 2018 |
Debt Instrument [Line Items] | ||||||||||||
Long-term debt | $ 40,526,000 | $ 29,369,000 | $ 40,526,000 | $ 40,526,000 | $ 40,526,000 | $ 40,526,000 | ||||||
Junior subordinated debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Long-term debt | $ 7,732,000 | $ 7,732,000 | $ 7,732,000 | $ 7,732,000 | $ 7,732,000 | $ 7,732,000 | $ 7,732,000 | |||||
Effective percentage | 4.72% | 5.49% | 4.72% | 4.72% | 4.72% | 4.72% | ||||||
Debt interest expense | $ 92,000 | $ 119,000 | $ 196,000 | $ 241,000 | ||||||||
Junior subordinated debt | London Interbank Offered Rate (LIBOR) | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Basis spread on variable rate | 1.22% | 1.99% | 3.50% | |||||||||
Secured credit facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Long-term debt | $ 32,794,000 | $ 21,637,000 | $ 32,794,000 | 32,794,000 | $ 32,794,000 | $ 32,794,000 | ||||||
Secured credit facility | Term Loan | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity | $ 27,500,000 | |||||||||||
Secured credit facility | Amended and Restated Credit Agreement | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity | $ 33,000,000 | |||||||||||
Extension term | 5 years | |||||||||||
Increase (decrease) to term loan debt amount | $ 11,707,000 | |||||||||||
Secured credit facility | Amended and Restated Credit Agreement | Minimum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Quarterly installment payments | 206,000 | |||||||||||
Secured credit facility | Amended and Restated Credit Agreement | Maximum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Quarterly installment payments | $ 825,000 | |||||||||||
Secured credit facility | Amended and Restated Credit Agreement | London Interbank Offered Rate (LIBOR) | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Basis spread on variable rate | 5.95% | 6.33% | 3.00% | 3.50% | ||||||||
Preferred Capital Securities | Junior subordinated debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Shares issued during period | 7,500 | |||||||||||
Preferred capital securities interest rate | 9.167% | |||||||||||
Liquidation preference per share (in dollars per share) | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | |||||||
Common Securities | Junior subordinated debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Shares issued during period | 232 | |||||||||||
Secured credit facility | Secured credit facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt interest expense | $ 388,000 | $ 420,000 | $ 722,000 | $ 892,000 | ||||||||
Maximum borrowing capacity | $ 3,000,000 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Summary of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | $ 1,530 | $ 1,893 | $ 5,922 | $ 5,488 |
Brokerage | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 755 | 912 | 4,448 | 3,615 |
Managing general agent fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 254 | 227 | 408 | 567 |
Third-party administrator fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | 383 | 559 | 767 | 973 |
Consulting fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from contracts with customers | $ 138 | $ 195 | $ 299 | $ 333 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Schedule of Contract with Customer, Contract Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 2,569 | $ 1,103 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate, percent | 28.20% | 23.40% | 25.50% | 18.40% |
Federal statutory income tax rate, percent | 21.00% |
Liability for Unpaid Losses a_3
Liability for Unpaid Losses and Loss Adjustment Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||||||||
Unpaid losses and LAE reserves at beginning of period | $ 418,757 | $ 364,360 | $ 406,716 | $ 340,415 | ||||||
Less losses ceded through reinsurance | (312,105) | (271,005) | (304,005) | (257,421) | ||||||
Net unpaid losses and LAE at beginning of period | 109,735 | 98,499 | 109,735 | 98,499 | $ 109,735 | $ 106,652 | $ 102,711 | $ 98,499 | $ 93,355 | $ 82,994 |
Acquisition of First Choice Casualty Insurance Company | 0 | 0 | 0 | 6,366 | ||||||
Incurred losses and LAE related to: | ||||||||||
Current period | 13,020 | 14,350 | 27,189 | 27,279 | ||||||
Prior period | (837) | (1,336) | (2,072) | (2,809) | ||||||
Total incurred losses and LAE | 12,183 | 13,014 | 25,117 | 24,470 | ||||||
Paid losses and LAE, net of reinsurance, related to: | ||||||||||
Current period | 3,392 | 1,230 | 4,590 | 2,328 | ||||||
Prior period | 5,708 | 6,640 | 13,503 | 13,003 | ||||||
Total paid losses and LAE | 9,100 | 7,870 | 18,093 | 15,331 | ||||||
Net unpaid losses and LAE at end of period | 109,735 | 98,499 | 109,735 | 98,499 | ||||||
Plus losses ceded through reinsurance | 312,105 | 271,005 | 304,005 | 257,421 | $ 332,765 | $ 312,105 | $ 304,005 | $ 283,974 | $ 271,005 | $ 257,421 |
Unpaid losses and LAE reserves at end of period | $ 442,500 | $ 382,473 | $ 442,500 | $ 382,473 |
Reinsurance (Details)
Reinsurance (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Written premiums | ||||
Gross | $ 107,596 | $ 102,962 | $ 213,573 | $ 202,320 |
Assumed | 2,016 | 1,458 | 3,898 | 3,634 |
Ceded | (86,586) | (82,183) | (168,218) | (162,632) |
Net Written Pemiums | 23,026 | 22,237 | 49,253 | 43,322 |
Earned premiums | ||||
Gross | 98,337 | 101,097 | 196,880 | 189,650 |
Assumed | 2,010 | 1,788 | 3,953 | 3,817 |
Ceded | (78,968) | (79,508) | (156,995) | (150,466) |
Net earned premiums | $ 21,379 | $ 23,377 | $ 43,838 | $ 43,001 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jan. 01, 2020 | |
Lessee, Lease, Description [Line Items] | |||||
Accounting standards update | us-gaap:AccountingStandardsUpdate201602Member | us-gaap:AccountingStandardsUpdate201409Member | |||
Right of use asset | $ 5,958 | $ 5,958 | |||
Lease liability | $ 6,186 | $ 6,186 | |||
Renewal term | 5 years | 5 years | |||
Lease expense | $ 535 | $ 1,114 | |||
Variable lease expense | 22 | 142 | |||
Sublease income | $ 36 | $ 48 | |||
Rent expense | $ 389 | $ 737 | |||
Sublease income | $ 30 | $ 120 | |||
Accounting Standards Update 2016-02 | |||||
Lessee, Lease, Description [Line Items] | |||||
Right of use asset | $ 5,946 | ||||
Lease liability | $ 5,946 | ||||
Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Term of contract | 1 month | 1 month | |||
Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Term of contract | 60 months | 60 months |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Balance Sheet Information (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
Right of use asset | $ 5,958 |
Lease liability | $ 6,186 |
Weighted average remaining lease term | 3 years 235 days |
Weighted average discount rate | 6.49% |
Leases - Schedule of Future Mat
Leases - Schedule of Future Maturities of Lease Liabilities (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
2020 | $ 1,005 |
2021 | 1,949 |
2022 | 1,899 |
2023 | 1,313 |
2024 | 699 |
Thereafter | 82 |
Total lease payments | 6,947 |
Less: imputed interest | (761) |
Total lease liabilities | $ 6,186 |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Rental Payments for Operating Leases (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 1,718 |
2021 | 1,614 |
2022 | 1,594 |
2023 | 1,191 |
2024 | 669 |
Thereafter | 46 |
Total lease payments | $ 6,832 |
Equity - Narrative (Details)
Equity - Narrative (Details) - shares | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Class of Stock [Line Items] | ||
Redeemable preferred stock authorized (in shares) | 1,000,000 | 1,000,000 |
Series A Redeemable Preferred Stock | ||
Class of Stock [Line Items] | ||
Redeemable preferred stock authorized (in shares) | 1,000,000 | |
Annual cumulative dividends percentage | 4.50% | |
Series B Redeemable Preferred Stock | ||
Class of Stock [Line Items] | ||
Redeemable preferred stock authorized (in shares) | 1,000,000 |
Equity - Schedule of Cumulative
Equity - Schedule of Cumulative Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Class of Stock [Line Items] | ||||
Cumulative dividends | $ 87 | $ 96 | ||
Series A Redeemable Preferred Stock | ||||
Class of Stock [Line Items] | ||||
Cumulative dividends | $ 13 | $ 22 | ||
Dividends per share (in dollars per share) | $ 1,352.82 | $ 2,231.51 | ||
Weighted Average Shares | 10 | 10 | ||
Series B Redeemable Preferred Stock | ||||
Class of Stock [Line Items] | ||||
Cumulative dividends | $ 83 | $ 74 | $ 83 | $ 74 |
Dividends per share (in dollars per share) | $ 1,622.9 | $ 1,240.46 | $ 1,622.9 | $ 1,240.46 |
Weighted Average Shares | 51 | 60 | 51 | 60 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | $ 150,181 | $ 118,231 | $ 141,615 | $ 105,131 |
Less reclassification adjustments to: | ||||
Other comprehensive income | 4,942 | 2,110 | 3,882 | 6,054 |
Ending balance | 139,284 | 126,352 | 139,284 | 126,352 |
Accumulated Other Comprehensive Income (Loss) | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | 3,761 | 1,941 | 4,821 | (2,003) |
Less reclassification adjustments to: | ||||
Other comprehensive income | 4,942 | 2,110 | 3,882 | 6,054 |
Ending balance | 8,703 | 4,051 | 8,703 | 4,051 |
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-sale, Parent | ||||
Unrealized investment gains: | ||||
Unrealized investment gains arising during the period | 6,252 | 2,782 | 5,029 | 7,753 |
Income tax expense | 1,310 | 585 | 1,054 | 1,629 |
Unrealized investment gains, net of tax | 4,942 | 2,197 | 3,975 | 6,124 |
Less reclassification adjustments to: | ||||
Net realized investment gains (losses) included in net realized capital gains (losses) | (1) | 111 | 118 | 89 |
Income tax expense (benefit) | (1) | 24 | 25 | 19 |
Total reclassifications included in net income, net of tax | 0 | 87 | 93 | 70 |
Other comprehensive income | $ 4,942 | $ 2,110 | $ 3,882 | $ 6,054 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |||||
Non-vested stock-based compensation expense | $ 157 | $ 157 | $ 197 | ||
Stock-based compensation expense | $ 20 | $ 20 | $ 40 | $ 39 |
Transactions with Related Par_2
Transactions with Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jan. 02, 2020 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | ||||||
Due from related parties | $ 20,385 | $ 20,385 | $ 22,221 | |||
Gross earned premiums | 100,347 | $ 102,885 | 200,833 | $ 193,467 | ||
Altaris Capital Partners | Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Due to related parties | 83 | |||||
Trean Intermediaries | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership percentage | 25.00% | |||||
Trean Intermediaries | Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Due from related parties | 14 | |||||
Revenue from related parties | $ 50 | 50 | $ 100 | 100 | ||
Compstar Holding Company LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership percentage | 45.00% | 45.00% | ||||
Compstar Holding Company LLC | Program Manager Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Due from related parties | $ 20,385 | $ 20,385 | $ 22,207 | |||
Compstar Holding Company LLC | Affiliated Entity | Program Manager Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Gross earned premiums | 43,917 | 45,668 | 90,199 | 79,691 | ||
Gross commissions | $ 7,737 | $ 9,191 | $ 17,709 | $ 16,554 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event - USD ($) $ / shares in Units, $ in Thousands | Jul. 22, 2020 | Jul. 20, 2020 | Jul. 16, 2020 |
Subsequent Event [Line Items] | |||
Sale of stock, price per share | $ 15 | ||
Proceeds from issuance initial public offering | $ 94,906 | ||
Payments of stock issuance costs | 7,500 | ||
Payments of offering expenses | $ 4,737 | ||
Stock issued during period (in shares) | 6,613,606 | ||
Purchase price of stock issued during period | $ 99,204 | ||
Initial Public Offering | |||
Subsequent Event [Line Items] | |||
Sale of stock, number of shares issued in transaction | 10,714,286 | ||
IPO - Shares issued and sold by Trean Corporation | |||
Subsequent Event [Line Items] | |||
Sale of stock, number of shares issued in transaction | 7,142,857 | ||
Consideration received on transaction | $ 107,142 | ||
IPO - Shares sold by selling stockholders | |||
Subsequent Event [Line Items] | |||
Sale of stock, number of shares issued in transaction | 1,207,142 | 3,571,429 | |
Consideration received on transaction | $ 71,678 | ||
Compstar Holding Company LLC | |||
Subsequent Event [Line Items] | |||
Percentage of voting interests acquired | 55.00% | ||
7710 Holdings, LLC | |||
Subsequent Event [Line Items] | |||
Purchase price | $ 12,000 |