Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 13, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-39392 | ||
Entity Registrant Name | TREAN INSURANCE GROUP, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 84-4512647 | ||
Entity Address, Address Line One | 150 Lake Street West | ||
Entity Address, City or Town | Wayzata | ||
Entity Address, State or Province | MN | ||
Entity Address, Postal Zip Code | 55391 | ||
City Area Code | 952 | ||
Local Phone Number | 974-2200 | ||
Title of 12(b) Security | Common Stock, $0.01 par value per share | ||
Trading Symbol | TIG | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 139,680,681 | ||
Entity Common Stock, Shares Outstanding | 51,238,218 | ||
Documents Incorporated by Reference | Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K are incorporated by reference from the registrant’s amendment to this Form 10-K to be filed on Form 10-K/A with the Securities and Exchange Commission no later than 120 days after the end of the registrant’s fiscal year covered by this report. | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001801754 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Name | Deloitte & Touche LLP |
Auditor Location | Minneapolis, Minnesota |
Auditor Firm ID | 34 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Investments [Abstract] | ||
Fixed maturities, at fair value (amortized cost of $600,398 and $465,459, respectively) | $ 552,243 | $ 471,061 |
Equity securities, at fair value (cost $39,882 and $984, respectively) | 35,041 | 969 |
Total investments | 587,284 | 472,030 |
Cash and cash equivalents | 107,991 | 129,577 |
Restricted cash | 1,083 | 407 |
Accrued investment income | 3,726 | 2,344 |
Premiums and other receivables | 160,282 | 141,920 |
Income taxes receivable | 5,841 | 460 |
Reinsurance recoverable | 408,522 | 377,241 |
Prepaid reinsurance premiums | 124,269 | 129,411 |
Deferred policy acquisition cost, net | 18,858 | 13,344 |
Property and equipment, net | 7,151 | 7,632 |
Right of use asset | 2,764 | 4,530 |
Deferred tax asset, net | 5,958 | 0 |
Goodwill | 66,294 | 142,347 |
Intangible assets, net | 67,117 | 73,114 |
Other assets | 14,799 | 8,658 |
Total assets | 1,581,939 | 1,503,015 |
Liabilities | ||
Unpaid loss and loss adjustment expenses | 632,910 | 544,320 |
Unearned premiums | 229,112 | 219,940 |
Funds held under reinsurance agreements | 241,291 | 199,410 |
Reinsurance premiums payable | 50,861 | 45,130 |
Accounts payable, accrued expenses and other liabilities | 32,609 | 29,448 |
Lease liability | 3,063 | 4,976 |
Deferred tax liability, net | 0 | 7,520 |
Debt | 77,074 | 30,362 |
Total liabilities | 1,266,920 | 1,081,106 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, $0.01 par value per share (100,000,000 authorized, zero issued and outstanding) | 0 | 0 |
Common stock, $0.01 par value per share (600,000,000 authorized, respectively; 51,222,485 and 51,176,887 issued and outstanding, respectively) | 512 | 512 |
Additional paid-in capital | 290,095 | 288,623 |
Retained earnings | 62,435 | 128,390 |
Accumulated other comprehensive income (loss) | (38,023) | 4,384 |
Total stockholders' equity | 315,019 | 421,909 |
Total liabilities and stockholders' equity | $ 1,581,939 | $ 1,503,015 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Amortized cost | $ 600,398 | $ 465,459 |
Equity securities, cost | $ 39,882 | $ 984 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock, issued (in shares) | 51,222,485 | 51,176,887 |
Common stock, outstanding (in shares) | 51,222,485 | 51,176,887 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues | |||
Gross written premiums | $ 651,303,000 | $ 634,164,000 | $ 484,249,000 |
Increase in gross unearned premiums | (9,074,000) | (61,911,000) | (52,215,000) |
Gross earned premiums | 642,229,000 | 572,253,000 | 432,034,000 |
Ceded earned premiums | (357,605,000) | (373,573,000) | (323,567,000) |
Net earned premiums | 284,624,000 | 198,680,000 | 108,467,000 |
Net investment income | 10,087,000 | 8,721,000 | 11,669,000 |
Gain on revaluation of Compstar investment | 0 | 0 | 69,846,000 |
Net realized gains | 285,000 | 49,000 | 3,365,000 |
Other revenue | 8,246,000 | 10,240,000 | 12,104,000 |
Total revenue | 303,242,000 | 217,690,000 | 205,451,000 |
Expenses | |||
Losses and loss adjustment expenses | 203,877,000 | 130,772,000 | 50,774,000 |
General and administrative expenses | 86,210,000 | 54,706,000 | 38,668,000 |
Other expenses | 3,349,000 | 845,000 | 13,427,000 |
Intangible asset amortization | 5,998,000 | 5,826,000 | 2,573,000 |
Noncash stock compensation | 1,496,000 | 1,522,000 | 506,000 |
Interest expense | 3,270,000 | 1,685,000 | 1,922,000 |
Goodwill impairment | 76,053,000 | 0 | 0 |
Total expenses | 380,253,000 | 195,356,000 | 107,870,000 |
Gains (losses) on embedded derivatives | 12,024,000 | 2,226,000 | (6,155,000) |
Other income | 106,000 | 219,000 | 1,025,000 |
Income (loss) before taxes | (64,881,000) | 24,779,000 | 92,451,000 |
Income tax expense | 1,074,000 | 5,449,000 | 6,235,000 |
Equity earnings in affiliates, net of tax | 0 | 0 | 2,333,000 |
Net income (loss) | $ (65,955,000) | $ 19,330,000 | $ 88,549,000 |
Earnings (loss) per share: | |||
Basic (in dollars per share) | $ (1.29) | $ 0.38 | $ 2.02 |
Diluted (in dollars per share) | $ (1.29) | $ 0.38 | $ 2.02 |
Weighted average shares outstanding: | |||
Weighted average number of shares outstanding - basic (in shares) | 51,203,370 | 51,162,293 | 43,744,003 |
Weighted average number of shares outstanding - diluted (in shares) | 51,203,370 | 51,173,450 | 43,744,744 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (65,955) | $ 19,330 | $ 88,549 |
Unrealized gains (losses): | |||
Unrealized investment gains (losses) arising during the period | (54,720) | (11,386) | 9,028 |
Decrease in fair value of interest rate cap | (45) | 0 | 0 |
Income tax expense (benefit) | (11,488) | (2,391) | 1,903 |
Unrealized gains (losses), net of tax | (43,277) | (8,995) | 7,125 |
Less reclassification adjustments to: | |||
Net realized investment gains (losses) included in net realized gains (losses) | (1,101) | 59 | 252 |
Income tax expense (benefit) | (231) | 12 | 53 |
Total reclassifications included in net income (loss), net of tax | (870) | 47 | 199 |
Other comprehensive income (loss) | (42,407) | (9,042) | 6,926 |
Total comprehensive income (loss) | $ (108,362) | $ 10,288 | $ 95,475 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Equity and Redeemable Preferred Stock - USD ($) $ in Thousands | Total | Compstar Holding Company LLC | Initial Public Offering | Class C - Non Voting | Series B Preferred Stock | Preferred Stock | Common Stock | Common Stock Compstar Holding Company LLC | Common Stock Initial Public Offering | Common Stock Class A - Non Voting | Common Stock Class B - Voting | Common Stock Class B - Non Voting | Common Stock Class C - Non Voting | Additional Paid in Capital | Additional Paid in Capital Compstar Holding Company LLC | Additional Paid in Capital Initial Public Offering | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Deficit) | Retained Earnings (Deficit) Series B Preferred Stock |
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 | |||||||||||||||||||
Issuance of Preferred Stock (in shares) | 7,142,857 | 196,587 | |||||||||||||||||
Issuance of preferred stock | $ 93,139 | $ 197 | $ 71 | $ 197 | $ 93,068 | ||||||||||||||
Redemption of Series B redeemable preferred stock (in shares) | (51) | ||||||||||||||||||
Redemption of Series B Redeemable Preferred Stock | $ 0 | $ (5,100) | |||||||||||||||||
Redeemable preferred stock ending balance (in shares) at Dec. 31, 2020 | 0 | ||||||||||||||||||
Redeemable preferred stock ending balance at Dec. 31, 2020 | $ 0 | ||||||||||||||||||
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 Dec. 31, 2020 | 0 | ||||||||||||||||||
Preferred stock ending balance at Dec. 31, 2020 | $ 0 | ||||||||||||||||||
Beginning balance (in shares) at Dec. 31, 2019 | 0 | 65,036,780 | 5,045,215 | 8,159,775 | 196,588 | ||||||||||||||
Members' equity beginning balance at Dec. 31, 2019 | $ 65,037 | $ 5,045 | $ 8,160 | $ 196 | |||||||||||||||
Stockholders' equity beginning balance at Dec. 31, 2019 | 141,615 | $ 0 | $ 17,995 | $ 6,500 | $ 38,682 | ||||||||||||||
Preferred Stock | |||||||||||||||||||
Issuance of shares (in shares) | 7,142,857 | 196,587 | |||||||||||||||||
Shares issued during period | $ 93,139 | $ 197 | $ 71 | $ 197 | $ 93,068 | ||||||||||||||
Distribution to members | (19,819) | (1,776) | (18,043) | ||||||||||||||||
Dividends on Series B preferred stock | (128) | $ (128) | |||||||||||||||||
Redemption of Series B Redeemable Preferred Stock | 0 | $ (5,100) | |||||||||||||||||
Corporate recapitalization (in shares) | 37,386,394 | (65,036,780) | (5,045,215) | (8,159,775) | (393,175) | ||||||||||||||
Corporate recapitalization | 0 | $ 374 | $ (65,037) | $ (5,045) | $ (8,160) | $ (393) | 78,261 | ||||||||||||
Issuance of common shares for acquisition of Compstar (in shares) | 6,613,606 | ||||||||||||||||||
Issuance of common shares for acquisition of Compstar | 99,204 | $ 99,204 | $ 66 | $ 99,138 | |||||||||||||||
Stock compensation expense | 506 | 506 | |||||||||||||||||
Common stock issuances pursuant to equity compensation awards (in shares) | 5,925 | ||||||||||||||||||
Common stock issuances pursuant to equity compensation awards | (82) | (82) | |||||||||||||||||
Other comprehensive income (loss) | 6,926 | 6,926 | |||||||||||||||||
Net income (loss) | 88,549 | 88,549 | |||||||||||||||||
Ending balance (in shares) at Dec. 31, 2020 | 51,148,782 | 0 | 0 | 0 | 0 | ||||||||||||||
Members' equity ending balance at Dec. 31, 2020 | $ 0 | $ 0 | $ 0 | $ 0 | |||||||||||||||
Stockholders' equity ending balance at Dec. 31, 2020 | $ 410,107 | $ 511 | 287,110 | 13,426 | 109,060 | ||||||||||||||
Preferred stock ending balance (in shares) at Dec. 31, 2021 | 0 | 0 | |||||||||||||||||
Preferred stock ending balance at Dec. 31, 2021 | $ 0 | ||||||||||||||||||
Preferred Stock | |||||||||||||||||||
Distribution to members | $ 0 | ||||||||||||||||||
Issuance of common shares for acquisition of Compstar | 0 | ||||||||||||||||||
Stock compensation expense | 1,522 | 1,522 | |||||||||||||||||
Common stock issuances pursuant to equity compensation awards (in shares) | 28,105 | ||||||||||||||||||
Common stock issuances pursuant to equity compensation awards | (93) | $ 1 | (94) | ||||||||||||||||
Proceeds from short swing rule | 85 | 85 | |||||||||||||||||
Other comprehensive income (loss) | (9,042) | (9,042) | |||||||||||||||||
Net income (loss) | $ 19,330 | 19,330 | |||||||||||||||||
Ending balance (in shares) at Dec. 31, 2021 | 51,176,887 | 51,176,887 | |||||||||||||||||
Stockholders' equity ending balance at Dec. 31, 2021 | $ 421,909 | $ 512 | 288,623 | 4,384 | 128,390 | ||||||||||||||
Preferred stock ending balance (in shares) at Dec. 31, 2022 | 0 | 0 | |||||||||||||||||
Preferred stock ending balance at Dec. 31, 2022 | $ 0 | ||||||||||||||||||
Preferred Stock | |||||||||||||||||||
Distribution to members | $ 0 | ||||||||||||||||||
Issuance of common shares for acquisition of Compstar | 0 | ||||||||||||||||||
Stock compensation expense | 1,496 | 1,496 | |||||||||||||||||
Common stock issuances pursuant to equity compensation awards (in shares) | 45,598 | ||||||||||||||||||
Common stock issuances pursuant to equity compensation awards | (24) | (24) | |||||||||||||||||
Other comprehensive income (loss) | (42,407) | (42,407) | |||||||||||||||||
Net income (loss) | $ (65,955) | (65,955) | |||||||||||||||||
Ending balance (in shares) at Dec. 31, 2022 | 51,222,485 | 51,222,485 | |||||||||||||||||
Stockholders' equity ending balance at Dec. 31, 2022 | $ 315,019 | $ 512 | $ 290,095 | $ (38,023) | $ 62,435 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating activities | |||
Net income (loss) | $ (65,955,000) | $ 19,330,000 | $ 88,549,000 |
Adjustments to reconcile net income to net cash from operating activities: | |||
Depreciation and amortization | 6,818,000 | 6,833,000 | 3,485,000 |
Stock compensation | 1,496,000 | 1,522,000 | 506,000 |
Net gains on investments | (285,000) | (49,000) | (5,155,000) |
Unrealized (gain) loss on embedded derivatives | (15,681,000) | (4,666,000) | 2,810,000 |
Unrealized losses on equity securities | 4,797,000 | 0 | 0 |
Forgiveness of PPP loan | 0 | 0 | (325,000) |
Gain on revaluation of Compstar investment | 0 | 0 | (69,846,000) |
Bond amortization and accretion | 1,050,000 | 2,297,000 | 1,915,000 |
Issuance of member units as compensation | 0 | 0 | 197,000 |
Equity losses (earnings) in affiliates, net of tax | 0 | 0 | (2,333,000) |
Distributions from equity method investments | 0 | 0 | 2,953,000 |
Deferred income taxes | (2,221,000) | (2,405,000) | (1,035,000) |
Amortization of debt discount, deferred financing costs and interest rate cap | 209,000 | 168,000 | 132,000 |
Goodwill impairment | 76,053,000 | 0 | 0 |
Changes in operating assets and liabilities: | |||
Accrued investment income | (1,382,000) | 114,000 | 17,000 |
Premiums and other receivables | (18,362,000) | (31,921,000) | (18,499,000) |
Reinsurance recoverable on paid and unpaid losses | (31,281,000) | (34,028,000) | (30,805,000) |
Prepaid reinsurance premiums | 5,142,000 | (21,441,000) | (26,963,000) |
Right of use asset | 1,766,000 | 1,942,000 | (5,121,000) |
Other assets | (11,553,000) | (13,776,000) | 4,459,000 |
Unpaid loss and loss adjustment expenses | 88,590,000 | 86,503,000 | 42,985,000 |
Unearned premiums | 9,172,000 | 61,953,000 | 50,367,000 |
Funds held under reinsurance agreements | 58,191,000 | 43,062,000 | 7,861,000 |
Reinsurance premiums payable | 5,731,000 | (11,939,000) | 3,449,000 |
Accounts payable, accrued expenses and other liabilities | 3,946,000 | (7,951,000) | (2,976,000) |
Lease liability | (1,913,000) | (2,051,000) | 5,371,000 |
Income taxes payable and receivable | (5,381,000) | 862,000 | (1,986,000) |
Net cash provided by operating activities | 108,947,000 | 94,359,000 | 50,012,000 |
Investing activities | |||
Payments for capital expenditures | (339,000) | (346,000) | (807,000) |
Proceeds from sale of equity method investment | 0 | 232,000 | 3,000,000 |
Return of capital on equity method investment | 0 | 0 | 115,000 |
Purchase of investments, available for sale | (293,976,000) | (197,041,000) | (129,233,000) |
Proceeds from investments sold, matured or repaid | 118,875,000 | 80,794,000 | 105,322,000 |
Acquisition of subsidiary, net of cash received | 0 | (3,795,000) | (10,534,000) |
Cash received in the acquisition of Compstar | 0 | 0 | 11,891,000 |
Net cash used in investing activities | (175,440,000) | (120,156,000) | (20,246,000) |
Financing activities | |||
Shares redeemed for payroll taxes | (23,000) | (94,000) | (82,000) |
Proceeds from initial public offering | 0 | 0 | 99,643,000 |
Deferred offering costs | 0 | 0 | (5,839,000) |
Proceeds from surplus notes | 48,455,000 | 0 | 0 |
Proceeds from credit agreement | 0 | 0 | 32,453,000 |
Principal payments on debt | (1,650,000) | (1,444,000) | (49,728,000) |
Payment for deferred financing costs | (276,000) | 0 | 0 |
Payment for interest rate cap | (173,000) | 0 | 0 |
Payment for acquisition of subsidiary | (750,000) | 0 | 0 |
Proceeds from short swing rule | 0 | 85,000 | 0 |
Buyback of preferred shares | 0 | 0 | (5,100,000) |
Distribution to members | 0 | 0 | (19,819,000) |
Dividends paid on preferred stock | 0 | 0 | (128,000) |
Net cash provided by (used in) financing activities | 45,583,000 | (1,453,000) | 51,400,000 |
Net increase (decrease) in cash, cash equivalents and restricted cash | (20,910,000) | (27,250,000) | 81,166,000 |
Cash, cash equivalents and restricted cash ‑ beginning of period | 129,984,000 | 157,234,000 | 76,068,000 |
Cash, cash equivalents and restricted cash ‑ end of period | 109,074,000 | 129,984,000 | 157,234,000 |
Disaggregation of cash and restricted cash: | |||
Cash and cash equivalents | 107,991,000 | 129,577,000 | 153,149,000 |
Restricted cash | 1,083,000 | 407,000 | 4,085,000 |
Total cash, cash equivalents and restricted cash | 109,074,000 | 129,984,000 | 157,234,000 |
Supplemental disclosure of cash flow information: | |||
Interest | 2,704,000 | 1,517,000 | 1,790,000 |
Income taxes | 8,675,000 | 6,957,000 | 9,259,000 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 307,000 | 338,000 | 8,536,000 |
Non-cash transfer of investments to settle funds held for reinsurance | 2,750,000 | 13,562,000 | 0 |
Non-cash investments received for collateral under reinsurance agreements | 2,121,000 | 0 | 0 |
Non-cash transfer of investments to settle amounts held for others in accounts payable | 0 | 26,211,000 | 0 |
Contingent consideration for the acquisition of subsidiary | 0 | 1,500,000 | 0 |
Shares issued for the acquisition of subsidiary | 0 | 0 | 99,204,000 |
Accrued purchases of property and equipment | 0 | 0 | 132,000 |
Operating cash flows from operating leases | $ 2,512,000 | $ 2,501,000 | $ 2,101,000 |
Business and Basis of Presentat
Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Basis of Presentation | Business and Basis of Presentation In July 2020, Trean Insurance Group, Inc. (together with its wholly owned subsidiaries, the Company) completed its initial public offering ("IPO") of the Company's common stock, par value $0.01 ("Common Stock"). Prior to the completion of the IPO, the Company effected the following reorganization transactions: (i) each of Trean Holdings LLC ("Trean"), an insurance services company, and BIC Holdings LLC ("BIC"), a property and casualty insurance holding company, contributed all of their respective assets and liabilities to Trean Insurance Group, Inc., a newly formed direct subsidiary of BIC, in exchange for (i) shares of Common Stock; and (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. For the purpose of financial statement disclosures, references to the consolidated financial statements for all post-IPO periods include the accounts of Trean Insurance Group, Inc., along with its wholly owned subsidiaries, after elimination of intercompany accounts and transactions. References to the consolidated financial statements for all pre-IPO periods include the combined financial statements of BIC and Trean, along with their wholly owned subsidiaries, after elimination of intercompany accounts and transactions. The Company provides 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. The Company's wholly owned subsidiaries include (a) 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, American Liberty Insurance Company, Inc. ("ALIC"), a property and casualty insurance company domiciled in the state of Utah and 7710 Insurance Company ("7710"), a property and casualty insurance company domiciled in the state of South Carolina; (b) Compstar Insurance Services LLC, a California-based general agency; and (c) 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; Western Integrated Care, LLC ("WIC"), a managed care organization; and Westcap Insurance Services, LLC ("Westcap"), a managing general agent based in California. Benchmark's wholly owned subsidiary is Benchmark Specialty Insurance Company ("BSIC"), a property and casualty insurance company domiciled in the state of Arkansas. The accompanying consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and with the instructions to Form 10-K under the Securities Exchange Act of 1934. All dollar amounts are shown in thousands, except share and per share amounts. Pending Merger As previously disclosed, on December 15, 2022, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement"), by and among the Company, Treadstone Parent Inc., a Delaware corporation ("Parent"), and Treadstone Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Parent ("Merger Sub"), providing for the acquisition of the Company by affiliates of Altaris Capital Partners, LLC, a Delaware limited liability company ("Altaris"), subject to the terms and conditions set forth in the Merger Agreement. Pursuant to the terms of the Merger Agreement and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company (the "Merger") effective as of the effective time of the Merger (the "Effective Time"). As a result of the Merger, Merger Sub will cease to exist, and the Company will survive as a wholly-owned subsidiary of Parent. As a result of the Merger, at the Effective Time, subject to any applicable withholding taxes, each share of Common Stock, issued and outstanding immediately prior to the Effective Time, other than Cancelled Shares (as defined in the Merger Agreement) and Dissenting Shares (as defined in the Merger Agreement), will be converted into the right to receive $6.15 in cash, without interest. The consummation of the Merger is subject to the satisfaction or waiver of various customary conditions set forth in the Merger Agreement, including, but not limited to: (i) the adoption of the Merger Agreement and approval of the Merger and the other transactions by (x) the holders representing a majority of the aggregate voting power of the outstanding shares of Common Stock beneficially owned by the Unaffiliated Stockholders (as defined in the Merger Agreement) entitled to vote thereon as well as (y) the holders representing a majority of the aggregate voting power of the outstanding shares of Common Stock entitled to vote thereon; (ii) all required insurance regulatory approvals (or the applicable regulatory authorities’ non-objection to requests for exemptions in respect thereof) shall have been obtained; (iii) the expiration or termination of any applicable waiting period (or any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”); (iv) the absence of any restraint or law preventing or prohibiting the consummation of the Merger; (v) the accuracy of Parent’s, Merger Sub’s, and the Company’s representations and warranties (subject to certain materiality qualifiers); (vi) Parent’s, Merger Sub’s, and the Company’s compliance in all material respects with their respective obligations under the Merger Agreement; and (vii) the absence of any Company Material Adverse Effect (as defined in the Merger Agreement) since the date of the Merger Agreement. Merger related expenses recognized during the year ended December 31, 2022 were approximately $3,081 and are included in other expenses in the consolidated statements of operations. See "Part I—Item 1A Risk Factors—Risks Related to the Proposed Merger" for a discussion of certain risks related to the Merger. Use of estimates While preparing the consolidated financial statements, the Company has made certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated 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 recoverables, investments, goodwill and intangible assets. Except for the captions on the consolidated balance sheets and consolidated statements of comprehensive income, generally, the term loss(es) is used to collectively refer to both losses and LAE. Accounting pronouncements Recently adopted policies In January 2020, the Financial Accounting Standards Board ("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 adopted this standard effective January 1, 2022. Adoption of this standard did not have a material impact on the consolidated financial statements. Pending policies The Company completed its IPO 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 on items such as (i) the application of fair value option disclosures; (ii) the accounting for fees related to modifications of debt; and (iii) aligning the contractual term of a net investment in a lease in accordance with ASC Topic 326, Financial Instruments - Credit Losses , and the lease term determined in accordance with ASC Topic 842, Leases . The Company adopted items (i) and (ii) effective January 1, 2020 and will adopt item (iii) on January 1, 2023. Adoption of this standard has not had, and is not expected to have, a material impact on the consolidated financial statements. 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. Adoption of this standard is not expected to have a material impact on the consolidated financial statements. In October 2021, the FASB issued ASU No 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08). This update requires contract assets and contract liabilities acquired in a business combination to be recognized and measured at the acquisition date in accordance with Accounting Standards Codification ("ASC") Topic 606 as if the acquirer had originated the contracts. ASU 2021-08 is effective for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2024 on a prospective basis. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Cash and cash equivalents: Cash and cash equivalents consist of all cash accounts, money market investments, and investments with maturities, at the time of acquisition, of 90 days or less. These amounts are carried at cost, which approximates fair value. Although the Company maintains its cash accounts in a limited number of commercial banks, management of the Company believes it is not exposed to any significant credit risk on cash and short-term investments. Restricted cash of $1,083 and $407 represents fiduciary funds held for other companies as of December 31, 2022 and 2021, respectively. There is a corresponding obligation to the other companies included in accounts payable, accrued expenses and other liabilities as of December 31, 2022 and 2021 (Note 11). Investments: Investment securities, consisting of fixed maturities, are classified as available-for-sale and reported at fair value. The change in unrealized gain and loss on fixed maturity investments is recorded as a component of accumulated other comprehensive income in the consolidated balance sheets, net of the related deferred tax effect, until realized. The change in unrealized gain and loss on equity securities is recorded as a component of net income and is included in net investment income on the consolidated statements of operations. Realized gains and losses from the sale of available-for-sale securities are determined on a specific-identification basis and included in net realized gains (losses) on the consolidated statement of operations on the trade date. The Company amortizes any premium or discount on fixed maturities over the remaining maturity period of the related securities and reports the amortization in net investment income. Dividend and interest income is recognized when earned. The Company regularly reviews its investment portfolio to determine if other-than-temporary impairment exists for any debt securities. An investment is impaired when the fair value of the investment declines to an amount less than the cost or amortized cost of that investment. As part of the assessment process, the Company determines whether the impairment is temporary or other-than-temporary. The assessment is based on both quantitative criteria and qualitative information, considering a number of factors including, but not limited to: how long the security has been impaired; the amount of the impairment; or whether management intends to sell the debt security or it is more likely than not that management will have to sell the security before recovery of the amortized cost; the financial condition and near-term prospects of the issuer; whether the issuer is current on contractually-obligated interest and principal payments; key corporate events pertaining to the issuer and whether the market decline was affected by macroeconomic conditions. If a debt security is impaired and management intends to sell the security or it is more likely than not that the Company will have to sell the security before the amortized cost is recovered, then the Company recognizes impairment loss in net realized gains (losses). If it is determined that an impairment of a debt security is other-than-temporary and management neither intends to sell the security nor is it more likely than not that the Company will have to sell the security before it is able to recover its cost or amortized cost, then the Company separates the impairment into (a) the amount of impairment related to credit loss and (b) the amount of impairment related to all other factors. The Company records the amount of the impairment related to the credit loss as an impairment charge in net income and the amount of the impairment related to all other factors in accumulated other comprehensive income. No other-than-temporary impairment was recorded for the years ended December 31, 2022, 2021 and 2020. A large portion of the Company’s investment portfolio consists of fixed maturities which may be adversely affected by changes in interest rates as a result of governmental monetary policies, domestic and international economic and political conditions and other factors beyond the Company’s control. Equity method investments: The Company held certain investments where the Company does not have control but has the ability to exercise significant influence are accounted for by the equity method of accounting. Under this method, the Company's investments in certain limited liability companies are recorded at cost and the investment accounts are adjusted for the Company's share of the entities' income or loss and for the distributions and contributions. The income and losses are recorded within equity earnings (losses) in affiliates, net of tax on the consolidated statements of operations. Premium revenue: Premiums are earned over the policy period and are stated after deduction for reinsurance. The portion of premiums that will be earned in the future is deferred and reported as unearned premiums on the consolidated balance sheets. Revenue from contracts with customers: Other revenue recorded by the Company includes brokerage, third-party administrative ("TPA"), management and consulting fees. The Company incurs certain costs associated with obtaining contracts with customers. Such contracts are one-year contracts and the amortization periods are one year or less. The Company has elected, as a practical expedient, to expense these contract costs as incurred. Brokerage revenue includes the fees earned on excess of loss ("XOL") and quota share reinsurance treaties. Billings for brokerage revenues generally occur monthly. Revenue for reinsurance treaties consists of a single performance obligation whereas the total amount of consideration expected to be received is recorded on the effective date of the underlying contract. For XOL treaties, revenue is estimated based on the contractually specified minimum or deposit premiums. For quota share treaties, revenue is estimated based on the projected premium income provided by the ceding insurer. Brokerage fees are received based on the performance of the specified terms of the reinsurance treaty and thus, are considered variable consideration. Therefore, revenue is estimated and constrained to the extent it is probable a significant reversal of revenue will not occur, using the expected value method. Adjustments to revenue are recorded as additional evidence is received for the ultimate amount of brokerage earned under the contract. The Company acts as a third-party claims administrator and earns TPA fees for providing such services. The fee structures vary based on the specific contract and can be dependent upon a number of factors which typically include agreed-upon fee rates, the total amount of premium written or collected under the agreement and the total time and expense incurred for processing claims. Billings for TPA fees occur on a monthly basis. TPA services consist of a single performance obligation which is recognized over time as claims are processed throughout the contract period. The volume of claims varies throughout the contract period and, therefore, the Company has elected to record revenue in an amount that reflects the total fees that the Company has a right to invoice for during the period. The Company acts as a managing general agent ("MGA") to provide certain administrative and underwriting services. The consideration received varies based on certain factors including the contractual MGA rate and the total amount of premium written or collected under the contract. Billings for management fees occur on a monthly basis. Management fees consist of a single performance obligation that are recognized by the Company over time as services are provided. The volume of premium written or collected for a single contract varies throughout the contract period and, therefore, the Company has elected to record revenue in an amount that reflects the total fees that the Company has a right to invoice for during the period. The Company provides consulting services for certain reinsurance contracts which includes services such as contract consultation and review. The compensation structure for consulting services is based on fixed periodic payments, generally monthly or quarterly. Consulting services consist of a single performance obligation which is recognized over the term of the consulting agreement. Deferred financing costs: Deferred financing costs are amortized as interest expense over the term of the underlying debt agreement by use of the effective interest method. Unamortized deferred financing costs are recorded as a reduction to long-term debt on the consolidated balance sheets. Premiums and other receivables: Premiums receivable are uncollateralized customer obligations due under normal terms requiring payment by the policy due date. Amounts outstanding that are deemed uncollectible are written off. When payments are received on amounts previously written off, the total premiums written off is reduced in the period in which the payment is received. Advanced premiums are recognized when payment is received prior to the beginning coverage date and are included within unearned premiums on the consolidated balance sheets. Premiums and other receivables consist of the following: December 31, 2022 2021 Premiums receivable $ 152,823 $ 133,200 Trade receivables 8,395 9,511 Notes receivable 14 12 Total premiums and other receivables 161,232 142,723 Less: Allowance for doubtful accounts (950) (803) Net premiums and other receivables $ 160,282 $ 141,920 The Company wrote off $1,427 and $26 to bad debt during the years ended December 31, 2022 and 2020, respectively. The Company recovered $177 of previously written off receivables during the year ended December 31, 2021. Bad debt expense is included within general and administrative expenses in the consolidated statements of operations. Deferred policy acquisition costs: The Company incurs policy acquisition costs that vary with and are directly related to the production of new and renewal business. These costs consist of underwriting costs, net commissions (including ceding commissions) paid to agents, program managers and reinsurers, and premium taxes. Proceeds from reinsurance transactions that represent recovery of acquisition costs reduce applicable unamortized acquisition costs in such a manner that net acquisition costs are capitalized and charged to expense. Amortization of such policy acquisition costs is charged to general and administrative expense in proportion to premium earned over the estimated policy term. To the extent that unearned premiums on existing policies are not adequate to cover the sum of expected losses, unamortized acquisition costs and policy maintenance costs, unamortized deferred policy acquisition costs are expensed to eliminate the premium deficiency. If the premium deficiency is greater than the unamortized policy acquisition costs, a liability is recorded. No premium deficiency exists as of December 31, 2022 or 2021. Property and equipment, net: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is based on the estimated useful lives of the various classes of property and equipment and is determined based on the straight-line method. The estimated useful lives of property and equipment range from three Asset class Depreciation period Building and building improvements 30 years Furniture and fixtures 7 years Office equipment 5 years Software and computer equipment 3 years Long-lived assets, such as property and equipment, and purchased intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset to be impaired, the Company recognizes impairment to the extent that the carrying value exceeds the asset’s fair value. Fair value is determined through various valuation techniques including, but not limited to, discounted cash flow models, quoted market values, and third-party independent appraisals. The Company recorded no impairments of property and equipment for the years ended December 31, 2022, 2021 and 2020. Reserve for unpaid loss and loss adjustment expenses: The liability for unpaid losses and LAE in the consolidated balance sheets represent the Company’s estimated losses incurred that remain unpaid as of the balance sheet date. The liability is recorded on an undiscounted basis. Reserves for unpaid losses include estimates for both claims that have been reported and those that have been incurred but not reported. The estimated losses are regularly reviewed and adjusted as necessary based on historical experience and as the Company obtains new information. The consolidated balance sheets include reserves of unpaid losses gross of the amounts related to unpaid losses recoverable from reinsurers. The consolidated statements of operations include the losses net of amounts ceded to reinsurers. Reinsurance: The Company cedes all, or a portion of, its insurance in order to limit its maximum losses and diversify its exposure. Ceding insurance does not relieve the Company of its primary liability to policyholders. The reinsurance agreements are short-term, prospective contracts, typically 12-months in duration. The Company records an asset, prepaid reinsurance premiums, and a liability, reinsurance premiums payable, for the contract amount when premium is written under the reinsurance agreements. Prepaid reinsurance premiums are amortized in the same manner in which unearned premium is recognized. The Company earns ceding commissions on certain reinsurance contracts, which reduces operating expenses. Ceding commissions are amortized over the contract period consistent with deferred policy acquisition costs. The Company records amounts recoverable from reinsurers on paid losses and estimated amounts recoverable on unpaid losses. The estimate of amounts recoverable on unpaid losses is based on unpaid losses in conjunction with the reinsured policies. The Company estimates uncollectible amounts receivable from reinsurers based on an assessment of factors including the credit worthiness of the reinsurers and the adequacy of collateral obtained, where applicable. The Company recorded no bad debt expense related to reinsurance during the years ended December 31, 2022, 2021 and 2020. Guaranty funds: State guaranty associations assess insurance companies for the estimated loss resulting from insurers encountering financial difficulty. The Company records these assessments, as well as any return assessments, upon notification of the state guaranty associations. The effect on operations or financial position relating to any estimated losses are not material for the years ended December 31, 2022, 2021 and 2020. Income taxes: The Company recognizes deferred tax assets and liabilities for the future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which it is expected to recover or settle those temporary differences. Should a change in tax rates occur, the effect on deferred tax assets and liabilities will be recognized in operations in the period that includes the enactment date. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. The Company records any income tax penalties and income tax-related interest as income tax expense in the period incurred. The Company did not incur any material tax penalties or income-tax-related interest during the years ended December 31, 2022, 2021 and 2020. Concentrations of risk: The Company had total gross written premiums of $651,303, $634,164 and $484,249 for the years ended December 31, 2022, 2021 and 2020, respectively, including: Year Ended December 31, 2022 2021 2020 California $ 162,639 $ 179,426 $ 203,421 Texas 93,165 85,154 28,909 Michigan 45,821 46,271 41,830 Tennessee 16,006 15,966 12,347 Florida 36,559 27,982 8,359 Georgia 30,996 25,619 12,869 Arizona 28,685 26,272 27,950 Alabama 23,198 20,991 17,549 Pennsylvania 17,167 20,375 10,498 Indiana 13,943 13,422 8,508 Other geographical areas 183,124 172,686 112,009 Total gross written premium $ 651,303 $ 634,164 $ 484,249 As of December 31, 2022, approximately 21% and 26% of the Company’s investment portfolio was comprised of securities issued in industrial and public utility bonds and mortgage-backed securities, respectively, compared to 22% and 29% as of December 31, 2021, respectively. All of these securities are investment grade. This portfolio is widely diversified among various issuers and industries and does not depend on the economic stability of one issuer and industry. The Company, from time to time, maintains its cash position at banks in excess of federally insured limits. The Company has not experienced any losses on such accounts. Goodwill: Goodwill represents the cost to acquire a business over the fair value of the net assets acquired. Goodwill is not amortized but is reviewed for impairment at least annually or more frequently if events occur or circumstances change that would indicate that a triggering event for a potential impairment has occurred. An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The Company recorded a goodwill impairment loss of $76,053 for the year ended December 31, 2022 (see Note 9). No impairment loss was recorded for the years ended December 31, 2021 and 2020. The Company had $66,294 and $142,347 of goodwill on the consolidated balance sheets as of December 31, 2022 and 2021, respectively. Intangible assets: Acquired intangible assets include client relationships, customer lists, non-compete agreements and trade names acquired. Intangible assets with a finite life are amortized over the estimated useful life. In valuing these assets, assumptions are made regarding useful lives and projected growth rates and significant judgment is required. The Company periodically reviews identifiable intangibles for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If the carrying amounts of the assets exceed their undiscounted cash flows, an impairment loss is recorded. For the years ended December 31, 2022, 2021 and 2020, no impairment loss was recorded. Segment reporting: Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker reviews financial information of the Company as a whole for purposes of assessing financial performance and making operating decisions. Accordingly, the Company considers itself to be operating as a single operating and reportable segment. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions Western Integrated Care Effective July 6, 2021, Trean Corp acquired 100% ownership of Western Integrated Care, LLC ("WIC") for a total purchase price of $5,500, which included $1,500 of consideration contingent on WIC's future earnings, as defined in the agreement. WIC is a managed care organization that offers services to workers' compensation insurers to enable employees who are injured on the job to access qualified medical treatment. 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: Fair value of total consideration transferred $ 5,500 Recognized amounts of identifiable assets acquired and liabilities assumed: Cash and cash equivalents 205 Premiums and other receivables 1,025 Property and equipment, net 39 Right of use asset 135 Goodwill 1,707 Intangible assets, net 3,624 Other assets 16 Accounts payable and accrued expenses (873) Lease liability (135) Debt (243) Net assets acquired $ 5,500 The assessment of fair value, the determination of deferred taxes and other payables and receivables are preliminary and are based on the information that was available at the time the consolidated financial statements were prepared. Accordingly, the allocation of purchase price to intangible assets, goodwill, deferred tax assets, and liabilities and other payables and receivables is preliminary and, therefore, subject to adjustment in future periods. The Company recorded $1,707 of goodwill associated with the business combination. The goodwill recognized is attributable to the assembled workforce, the expected growth resulting from the acquisition, and synergies gained to assist in reducing operating expenses. The Company also recorded intangible assets totaling $3,624, which are comprised of the following: Useful Life Balance Trade name 2 years $ 28 Non-compete agreements 5 years 256 Customer relationships 12 years 3,340 Total intangible assets $ 3,624 The operating results of WIC have been included in the consolidated financial statements of the Company since July 6, 2021, the date of acquisition, and were immaterial to the consolidated financial statements. The Company made an earn-out payment of $750 during the year ended December 31, 2022. 7710 Insurance Company Effective October 1, 2020, Benchmark Holding Company acquired 100% ownership of 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 $12,140. 7710 Insurance Company underwrites workers' compensation primarily for emergency services, including firefighters and emergency medical services ("EMS"). 7710 Insurance Company focuses on reducing costs and claims through the implementation of a proprietary safety preparedness and loss control program, created and staffed by experienced firefighters and EMS professionals. The Company recorded $2,873 of goodwill associated with the business combination. The goodwill recognized is attributable to the assembled workforce and the expected growth resulting from the acquisition. The Company also recorded intangible assets totaling $3,299. Compstar Holding Company LLC Effective July 15, 2020, Trean Compstar Holdings LLC purchased the remaining 55% ownership interest in Compstar Holding Company LLC ("Compstar"), a holding company along with its wholly owned subsidiary Compstar Insurance Services, a managing general agent, by issuing 6,613,606 shares of Common Stock with a market price of $15 per share on the date of acquisition. Prior to the acquisition date, the Company held a 45% ownership interest in Compstar and accounted for its investment under the equity method. As of the acquisition date, the fair value attributable to the Company’s previous equity interest was $81,167 and the carrying value was $11,321. As a result, the Company recorded a gain of $69,846 from the remeasurement of its previous equity interest, which is included in gain on revaluation of Compstar on the consolidated statement of operations. The acquisition-date fair value of the Company’s previous equity interest was revalued using the market price of the shares issued as consideration for the acquisition. The Company recorded $134,428 of goodwill associated with the business combination. The goodwill recognized is attributable to the assembled workforce, the expected growth resulting from the acquisition and synergies gained to assist in the reduction of operating expenses. The Company also recorded intangible assets totaling $73,954. LCTA Risk Services, Inc. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
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. December 31, 2022 Level 1 Level 2 Level 3 Total Fixed maturities: U.S. government and government securities $ 62,552 $ — $ — $ 62,552 Foreign governments — 395 — 395 States, territories and possessions — 15,854 — 15,854 Political subdivisions of states territories and possessions — 33,904 — 33,904 Special revenue and special assessment obligations — 103,639 — 103,639 Industrial and public utilities — 125,540 — 125,540 Commercial mortgage-backed securities — 128,105 — 128,105 Residential mortgage-backed securities — 25,112 — 25,112 Other loan-backed securities — 51,613 — 51,613 Hybrid securities — 5,529 — 5,529 Total fixed maturities 62,552 489,691 — 552,243 Equity securities 12,060 22,981 — 35,041 Total investments $ 74,612 $ 512,672 $ — $ 587,284 Embedded derivatives on funds held under reinsurance agreements $ (1,953) $ (13,458) $ — $ (15,411) Interest rate cap agreement — 102 — 102 Debt — 29,288 50,000 79,288 December 31, 2021 Level 1 Level 2 Level 3 Total Fixed maturities: U.S. government and government securities $ 2,392 $ 39,042 $ — $ 41,434 Foreign governments — 2,490 — 2,490 States, territories and possessions — 10,766 — 10,766 Political subdivisions of states, territories and possessions — 40,002 — 40,002 Special revenue and special assessment obligations — 95,991 — 95,991 Industrial and public utilities — 103,257 — 103,257 Commercial mortgage-backed securities — 118,218 — 118,218 Residential mortgage-backed securities — 17,368 — 17,368 Other loan-backed securities — 41,425 — 41,425 Hybrid securities — 110 — 110 Total fixed maturities 2,392 468,669 — 471,061 Equity securities — 969 — 969 Total investments $ 2,392 $ 469,638 $ — $ 472,030 Embedded derivatives on funds held under reinsurance agreements $ (4) $ 275 $ — $ 271 Debt — 30,938 — 30,938 Fixed maturities and equity securities: The Company, through its third-party pricing service provider, uses a variety of sources to estimate the fair value of investments such as Refinitiv (formerly Reuters), PricingDirect, ICE Data Services, and for equities, Bloomberg or S&P Capital IQ Pro. Equity securities are generally 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 indications. Values obtained from third-party pricing services can utilize several market data sources for inputs such as transaction data, yield, quality, coupon rate, maturity, issue type, trading characteristics and other market activity. To validate the reasonableness of the prices, the Company performs various qualitative and quantitative procedures such as analysis of recent trading 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. Embedded derivatives : The Company enters into funds held contracts under reinsurance agreements which create embedded derivatives on the underlying investments. These embedded derivatives are valued based upon the unrealized gain or loss position of the funds held portfolio, which is determined consistent with 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. Interest rate cap agreement: The Company entered into an interest cap agreement to hedge cash flows associated with interest rate fluctuations on variable rate debt. The fair value of the interest rate cap agreement is based on the terms of the agreement and commonly quoted data for forward interest rate curves and an implied market volatility. The Company also assessed the significance of credit valuation adjustments to appropriately reflect the respective nonperformance risk in the fair value measurement and determined the credit valuation adjustment is not significant to the overall valuation of the interest rate cap. Debt: The Company holds debt related to its secured credit agreement and surplus notes, which are carried on the consolidated balance sheets at amounts other than fair value. 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. The Company's surplus notes were issued during the year ended December 31, 2022 and are classified as Level 3. Nonrecurring fair value measurements: In addition to assets and liabilities that are recorded at fair value on a recurring basis, impairment indicators may subject goodwill and long-lived assets to nonrecurring fair value measurements. As a result of the Merger Agreement, the estimated nonrecurring fair value measurement of the Company was based on the implied equity value of the Company at the purchase price of $6.15 per common share. The measurement resulted in an impairment charge of $76,053 recognized during the year ended December 31, 2022. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Fixed income securities include bonds, asset-backed securities, and redeemable preferred securities. Fixed income securities, which may be sold prior to their contractual maturity, are designated as available-for-sale and are carried at fair value. Equity securities primarily include common stocks, mutual funds, and non-redeemable preferred stocks, which are carried at fair value. The cost or amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the Company's investments are as follows: December 31, 2022 Cost or Gross Gross Fair Value Fixed maturities: U.S. government and government securities $ 65,405 $ 11 $ (2,864) $ 62,552 Foreign governments 400 — (5) 395 States, territories and possessions 17,310 2 (1,458) 15,854 Political subdivisions of states, territories and possessions 38,167 19 (4,282) 33,904 Special revenue and special assessment obligations 115,696 55 (12,112) 103,639 Industrial and public utilities 131,769 101 (6,330) 125,540 Commercial mortgage-backed securities 145,471 52 (17,418) 128,105 Residential mortgage-backed securities 26,716 11 (1,615) 25,112 Other loan-backed securities 53,231 13 (1,631) 51,613 Hybrid securities 6,233 2 (706) 5,529 Total fixed maturities available for sale $ 600,398 $ 266 $ (48,421) $ 552,243 December 31, 2021 Cost or Gross Gross Fair Value Fixed maturities: U.S. government and government securities $ 41,490 $ 113 $ (169) $ 41,434 Foreign governments 2,500 — (10) 2,490 States, territories and possessions 10,593 189 (16) 10,766 Political subdivisions of states, territories and possessions 39,170 975 (143) 40,002 Special revenue and special assessment obligations 93,664 2,920 (593) 95,991 Industrial and public utilities 100,774 2,835 (352) 103,257 Commercial mortgage-backed securities 119,378 591 (1,751) 118,218 Residential mortgage-backed securities 16,549 843 (24) 17,368 Other loan-backed securities 41,236 248 (59) 41,425 Hybrid securities 105 5 — 110 Total fixed maturities available for sale $ 465,459 $ 8,719 $ (3,117) $ 471,061 The following table illustrates the Company’s gross unrealized losses and fair value of fixed maturities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position: December 31, 2022 Less Than 12 Months 12 Months or More Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Fixed maturities: U.S. government and government securities $ 38,172 $ (1,217) $ 19,199 $ (1,647) $ 57,371 $ (2,864) Foreign governments — — 395 (5) 395 (5) States, territories and possessions 13,882 (1,321) 822 (137) 14,704 (1,458) Political subdivisions of states, territories and possessions 21,586 (2,506) 9,375 (1,776) 30,961 (4,282) Special revenue and special assessment obligations 71,146 (6,522) 22,350 (5,590) 93,496 (12,112) Industrial and public utilities 98,018 (4,225) 18,405 (2,105) 116,423 (6,330) Commercial mortgage-backed securities 71,574 (5,737) 53,147 (11,681) 124,721 (17,418) Residential mortgage-backed securities 18,051 (1,177) 4,119 (438) 22,170 (1,615) Other loan-backed securities 38,572 (1,305) 11,303 (326) 49,875 (1,631) Hybrid securities 5,289 (706) — — 5,289 (706) Total bonds $ 376,290 $ (24,716) $ 139,115 $ (23,705) $ 515,405 $ (48,421) December 31, 2021 Less Than 12 Months 12 Months or More Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Fixed maturities: U.S. government and government securities $ 26,935 $ (168) $ 23 $ (1) $ 26,958 $ (169) Foreign governments 2,490 (10) — — 2,490 (10) States, territories and possessions 935 (16) — — 935 (16) Political subdivisions of states, territories and possessions 11,115 (143) — — 11,115 (143) Special revenue and special assessment obligations 29,917 (593) — — 29,917 (593) Industrial and public utilities 24,042 (286) 1,058 (66) 25,100 (352) Commercial mortgage-backed securities 80,126 (1,565) 6,212 (186) 86,338 (1,751) Residential mortgage-backed securities 4,539 (24) — — 4,539 (24) Other loan-backed securities 20,153 (36) 2,477 (23) 22,630 (59) Hybrid securities — — — — — — Total bonds $ 200,252 $ (2,841) $ 9,770 $ (276) $ 210,022 $ (3,117) The unrealized losses on the Company’s available for sale securities as of December 31, 2022 and December 31, 2021 were primarily attributable to an increase in interest rates, which predominantly impacted fixed maturities acquired since the second quarter of 2020. The amortized cost and estimated fair value of fixed maturities as of December 31, 2022, by contractual maturity, are as follows: Cost or Amortized Cost Fair Value Available for sale: Due in one year or less $ 35,468 $ 35,125 Due after one year but before five years 176,083 167,986 Due after five years but before ten years 93,107 83,769 Due after ten years 70,322 60,533 Commercial mortgage-backed securities 145,471 128,105 Residential mortgage-backed securities 26,716 25,112 Other loan-backed securities 53,231 51,613 Total $ 600,398 $ 552,243 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 consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 are as follows: Year Ended December 31, 2022 2021 2020 Fixed maturities: Gains $ 134 $ 153 $ 259 Losses (1,235) (94) (9) Total fixed maturities (1,101) 59 250 Funds held investments: Gains 19 112 — Losses (29) (10) — Total funds held investments (10) 102 — Equity securities and equity method investments: Gains 1,415 — 3,115 Losses (19) (112) — Total equity securities and equity method investments 1,396 (112) 3,115 Total net investment realized gains $ 285 $ 49 $ 3,365 Net investment income consists of the following for the years ended December 31, 2022, 2021, and 2020: Year Ended December 31, 2022 2021 2020 Fixed maturities $ 9,316 $ 6,331 $ 6,271 Income on funds held investments 3,668 2,338 3,345 Equity securities 1,708 48 2,028 Unrealized losses on equity securities (4,797) — — Interest earned on cash and short-term investments 192 4 25 Net investment income $ 10,087 $ 8,721 $ 11,669 Net realized and unrealized gains (losses) on equity securities recognized during the years ended December 31, 2022, 2021, and 2020 are as follows: Year Ended December 31, 2022 2021 2020 Equity securities: Net realized gains (losses) on sales of equity securities $ 1,396 $ (112) $ 3,115 Change in net unrealized gains (losses) of equity securities still held as of as of December 31, 2022, 2021 and 2020 (4,797) — — Net realized and unrealized gains (losses) on equity securities $ (3,401) $ (112) $ 3,115 Embedded derivatives The Company enters into funds held contracts under reinsurance agreements which create embedded derivatives, which are measured at fair value. The embedded derivatives within our funds held under reinsurance agreements relate to a total return swap on the underlying investments. These embedded derivatives had no impact on total operating, investing and financing activities as presented on the Company’s consolidated statements of cash flows during the years ended December 31, 2022, 2021, and 2020. Total funds held under reinsurance agreements includes the following: December 31, 2022 2021 Funds held under reinsurance agreements, at cost $ 256,702 $ 199,139 Embedded derivatives, at fair value (15,411) 271 Total funds held under reinsurance agreements $ 241,291 $ 199,410 Gains (losses) on embedded derivatives consists of the following for the years ended December 31, 2022, 2021, and 2020: Year Ended December 31, 2022 2021 2020 Change in fair value of embedded derivatives $ 15,682 $ 4,666 $ (2,810) Effect of net investment income on funds held investments (3,668) (2,338) (3,345) Effect of realized losses (gains) on funds held investments 10 (102) — Total gains (losses) on embedded derivatives $ 12,024 $ 2,226 $ (6,155) |
Equity Method Investments
Equity Method Investments | 12 Months Ended |
Dec. 31, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Equity Method Investments The Company held equity method investments in Compstar, Trean Intermediaries ("TRI") and Stop-Loss Re, LLC ("Stop-Loss"). Equity earnings and losses are reported in equity earnings in affiliates, net of tax on the consolidated statements of operations. On July 15, 2020, the Company purchased the remaining 55% ownership interest in Compstar (See Note 3) and, as a result, Compstar is no longer recorded as an equity method investment. Prior to the acquisition, the Company owned 45% of Compstar which had a carrying value of approximately $11,831 as of December 31, 2019. The Company recorded earnings for the year ended December 31, 2020 of 2,333. Distributions received from Compstar for the year ended December 31, 2020 were $2,842. On January 3, 2020, the Company sold 15% of its previous 25% ownership in TRI for cash proceeds of $3,000, resulting in a remaining ownership interest of 10%. As a result of its significant ownership reduction and its lack of 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 gains |
Nonconsolidated Variable Intere
Nonconsolidated Variable Interest Entities | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nonconsolidated Variable Interest Entities | Nonconsolidated Variable Interest Entities In 2019, the Company was engaged with certain entities that were deemed to be variable interest entities. A variable interest entity ("VIE") is an entity that has investors that lack certain essential characteristics of a controlling financial interest, such as a simple majority equity ownership or lacks sufficient funds to finance its own activities without financial support provided by other entities. The Company performs ongoing qualitative assessments of its VIEs to determine whether the Company has a controlling financial interest in the VIE and therefore is the primary beneficiary. The Company is deemed to have a controlling financial interest when it has both the ability to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Based on the Company’s assessment, if it determines it is the primary beneficiary, the Company consolidates the VIE in the consolidated financial statements. The Company had a variable interest in Trean Capital Trust I (the "Trust") that had mandatory redeemable preferred securities outstanding with a liquidation value of $7,500. The Trust was a variable interest entity under current accounting guidance because the Company had limited ability to make decisions about its activities. However, the Company was not the primary beneficiary of the Trust; and therefore, the Trust and the mandatory redeemable preferred securities issued by the Trust are not reported on the Company’s consolidated balance sheets. During 2020, the Company redeemed all of the redeemable preferred securities of the Trust. As of December 31, 2020, the Trust is no longer considered a VIE. The Company had a variable interest in Compstar Holding Company LLC ("Compstar"), a limited liability company created for the purchase of an interest in Compstar Insurance Services, LLC, a California based general agent. Compstar was a variable interest entity under current accounting guidance because Compstar did not have sufficient capital at risk, as evidenced by a loan guarantee by a member. However, the Company was not the primary beneficiary of Compstar, and therefore, was not reported in the Company’s consolidated balance sheet as of December 31, 2019. During 2020, the Company purchased the remaining ownership interest in Compstar resulting in Compstar becoming a wholly-owned subsidiary of the Company. As of December 31, 2020, Compstar is no longer considered a VIE. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consists of the following: December 31, 2022 2021 Land $ 1,780 $ 1,780 Building and building improvements 5,755 5,755 Furniture and fixtures 1,137 1,137 Office equipment 3,499 2,898 Other property, plant and equipment 101 101 Deposits on fixed assets not placed in service 15 277 Total, at cost 12,287 11,948 Less: Accumulated depreciation (5,136) (4,316) Property and equipment, net $ 7,151 $ 7,632 Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $820, $1,007 and $912, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill A change in the carrying value of goodwill resulted from the Merger Agreement entered into on December 15, 2022 (see Note 1 for additional information). The Company recognized an impairment charge of $76,053, which decreased the Company's net carrying value to equal the implied equity value of the Company based on the purchase price of $6.15 per common share. All changes in the carrying value of goodwill are as follows: 2022 2021 Balance at beginning of period $ 142,347 $ 140,640 Acquisitions — 1,707 Impairment (76,053) — Balance at end of period $ 66,294 $ 142,347 Intangible assets Intangible assets subject to amortization consist of the following: December 31, Useful Life 2022 2021 Non-compete agreement 2-5 years $ 300 $ 300 Trade name 2-15 years 3,710 3,710 Customer lists and relationships 10-14 years 77,624 77,624 Totals 81,634 81,634 Less: Accumulated amortization (14,517) (8,520) Intangible assets, net $ 67,117 $ 73,114 Amortization expense for the years ended December 31, 2022, 2021 and 2020 was $5,998, $5,826 and $2,573, respectively. The estimated future amortization of intangible assets is as follows: Trade name Customer lists Non-Compete Total 2023 $ 248 $ 5,684 $ 51 $ 5,983 2024 241 5,683 51 5,975 2025 241 5,683 51 5,975 2026 241 5,683 26 5,950 2027 241 5,668 — 5,909 Thereafter 1,824 35,501 — 37,325 Total $ 3,036 $ 63,902 $ 179 $ 67,117 |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs, Net | 12 Months Ended |
Dec. 31, 2022 | |
Insurance [Abstract] | |
Deferred Policy Acquisition Costs, Net | Deferred Policy Acquisition Costs, NetThe Company defers costs incurred which are incremental and directly related to the successful acquisition of new or renewal insurance business, net of corresponding amounts of ceded reinsurance commissions. Net deferred policy acquisition costs are amortized in proportion to premium earned over the estimated policy term. The Company anticipates that its deferred policy acquisition costs will be fully recoverable and there were no premium deficiencies for the years ended December 31, 2022, 2021 and 2020. The table below depicts the activity with regard to deferred policy acquisition costs, net: 2022 2021 2020 Balance at beginning of period $ 13,344 $ 1,332 $ 2,115 Policy acquisition costs deferred 28,362 22,853 7,593 Amortization charged to expense (22,848) (10,841) (8,376) Balance at end of period $ 18,858 $ 13,344 $ 1,332 |
Accounts Payable, Accrued Expen
Accounts Payable, Accrued Expenses, and Other Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Accounts Payable, Accrued Expenses, and Other Liabilities | Accounts Payable, Accrued Expenses and Other Liabilities Accounts payable and accrued expenses consist of the following: December 31, 2022 2021 Accrued commissions and third-party administration fees $ 9,168 $ 7,337 Trade payables 4,977 4,765 Accrued taxes, licenses and fees 4,316 6,710 Accrued wages and employee benefits 5,489 4,873 Amounts retained for the accounts of others 2,710 1,619 Other liabilities 5,949 4,144 Total $ 32,609 $ 29,448 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt consisted of the following: December 31, 2022 December 31, 2021 Face Value Unamortized Discount and Issuance Costs Carrying Value Face Value Unamortized Discount and Issuance Costs Carrying Value Secured credit facility $ 29,288 $ (408) $ 28,880 $ 30,938 $ (576) $ 30,362 Surplus notes 50,000 (1,806) 48,194 — — — Total debt $ 79,288 $ (2,214) $ 77,074 $ 30,938 $ (576) $ 30,362 Secured Credit Facility In July 2020, the Company entered into a Second Amended and Restated Credit Agreement (the "Credit Agreement") that, 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 and a revolving credit facility of $2,000 at the time of closing. The outstanding principal balance of the loan is to be repaid in quarterly installments which escalate from $206 to $825. All equity securities of the subsidiaries of Trean Insurance Group, Inc. (other than Benchmark Holding Company and its subsidiaries) have been pledged as collateral. On May 6, 2022, the Company entered into a First Amendment to the Credit Agreement to, among other things, facilitate the approval of certain internal distributions among the Company and certain of its subsidiaries as part of the Company’s overall capital management strategy. On September 28, 2022, the Company entered into a Second Amendment to the Credit Agreement that, among other things, replaced LIBOR as the benchmark rate with Term SOFR (as defined in the Credit Agreement), reduced the applicable margin under the Credit Agreement on Eurodollar loans from 4.50% to 3.50% and on ABR loans from 3.50% to 2.50%, and converted all extant Eurodollar loans under the Credit Agreement to Term SOFR loans. On December 15, 2022, the Company entered into the Third Amendment to the Credit Agreement to, among other things, modify the Credit Agreement in certain respects to permit and accommodate the Merger. The variable interest rate plus applicable margin was 7.59%, 4.64% and 4.72% as of December 31, 2022, 2021 and 2020, respectively. During the years ended December 31, 2022, 2021 and 2020, the Company recorded $2,022, $1,517 and $1,518 of interest expense, respectively, on its credit facility including amortization of debt issuance costs. The terms of the credit facility require the Company to maintain certain financial covenants and ratios. The Company was in compliance with all covenants and ratios as of December 31, 2022, 2021 and 2020. Interest Rate Cap Agreement In September 2022, the Company entered into an interest rate cap agreement that became effective September 30, 2022, to hedge cash flows associated with interest rate fluctuations on its secured credit facility, with a termination date of May 31, 2024 ("Interest Rate Cap Agreement"). The Interest Rate Cap Agreement has a notional amount of $29,700 that effectively converted the outstanding balance of the secured credit facility from variable rate debt to capped variable rate debt, resulting in a change in the applicable interest rate from an interest rate of one-month SOFR plus the applicable margin (as provided by the secured credit facility) to a one-month SOFR interest rate, capped at 5.00%, plus the applicable margin. The notional amount of the Interest Rate Cap Agreement decreases quarterly in proportion to the quarterly principal payments on the secured credit facility. The Interest Rate Cap Agreement is designated as a cash flow hedge and the change in fair value is recorded in accumulated other comprehensive income and is subsequently reclassified to interest expense in the period when the hedged forecasted interest payments affect earnings. The Company paid a fixed amount of $173 for the Interest Rate Cap Agreement. Surplus Notes On August 24, 2022, Benchmark, a subsidiary of the Company, issued $50,000 in aggregate principal amount of Benchmark’s 6.75% surplus notes due 2042 (the “Surplus Notes”) in a private placement exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). In connection with the issuance of the Surplus Notes, Benchmark entered into a fiscal agency agreement, dated as of August 24, 2022 (the “Fiscal Agency Agreement”), with The Bank of New York Mellon, as fiscal agent, paying agent, registrar and transfer agent, providing for the terms of the Surplus Notes. The Surplus Notes are unsecured, subordinated debt obligations of the Company and are reflected as debt on the consolidated balance sheets of the Company. All principal and interest payments on the Surplus Notes are subject to prior approval by the Commissioner of the Kansas Insurance Department. Interest on the Surplus Notes accrues at the rate of 6.75% per year, and is payable quarterly in arrears on February 24, May 24, August 24 and November 24 of each year, commencing on November 24, 2022. The Surplus Notes may be redeemed after 10 years, in full or in part, for 100% of the principal amount plus accrued but unpaid interest, and the Company may at any time repurchase Surplus Notes from the underlying holders thereof on the open market, after which such Surplus Notes will be cancelled and not re-issued. In addition, the Surplus Notes may be redeemed before August 24, 2032 upon the occurrence of certain changes in applicable tax laws or regulations that would require the Company to pay additional amounts necessary to reimburse the noteholders for new or changed withholding or deduction obligations. In addition, pursuant to the Fiscal Agency Agreement, the Company made certain customary representations and warranties and made certain customary covenants. The covenants, among other things, (i) prevent Benchmark from incurring indebtedness exceeding 35% of its total surplus (as set forth in its statutory financial statements, and including the Surplus Notes), and restrict Benchmark’s ability to pay dividends to the Company if such ratio were to exceed 35% or would exceed 35% as a result of such payment; (ii) limit Benchmark’s ability to engage in a merger, sale or consolidation and require it to preserve its corporate existence; and (iii) require it to provide certain financial information and insurance regulatory filings to the noteholders. All of these covenants are subject to a number of important exceptions, limitations and qualifications. Notwithstanding the foregoing, noteholders do not have the right to declare the Surplus Notes to immediately mature or otherwise become immediately payable as a result of any breach of Benchmark’s covenants or under any other circumstances. Benchmark’s obligations under the Surplus Notes will only be accelerated in the event that any state or federal agency were to obtain an order or grant approval for the rehabilitation, liquidation, conservation or dissolution of Benchmark. During the year ended December 31, 2022, the Company recorded interest expense of $1,222 on its Surplus Notes including amortization of debt issuance costs. Junior Subordinated Debt In June 2006, 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. On October 7, 2020, Trean Corp redeemed all of the Subordinated Notes for a total payoff amount of $7,807. The interest rate was a fixed rate of 9.167% until July 7, 2011, after which a variable interest rate of LIBOR plus 3.50%. The preferred capital securities issued by the Trust in turn paid 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%. During the years ended December 31, 2020, the Company recorded $271 of interest expense associated with the Subordinated Notes. Oak Street Loan In conjunction with the acquisition of Compstar (See Note 3), the Company acquired a loan from Oak Street Funding with a total principle of $19,740. In July 2020, upon completion of the acquisition, the Company paid this loan off in full. PPP Loans In conjunction with the acquisition of Compstar, the Company acquired a Federal Paycheck Protection Program ("PPP Loan") with a principal balance of $325. The PPP Loan was forgiven on November 6, 2020. In conjunction with the acquisition of 7710, the Company acquired a PPP Loan with a principal balance of $269. The PPP Loan was forgiven on November 12, 2020. In conjunction with the acquisition of WIC, the Company acquired two PPP Loans with a principal balance of $243. As of December 31, 2021, both loans had been fully forgiven. Scheduled maturities of debt, excluding deferred financing costs, are as follows: 2023 $ 2,888 2024 3,300 2025 23,100 2026 — 2027 — Thereafter 50,000 Total debt $ 79,288 |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 12 Months Ended |
Dec. 31, 2022 | |
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, consulting and other fee-based revenue. The following table presents the revenues recognized from contracts with customers included in the consolidated statements of operations. Year Ended December 31, 2022 2021 2020 Brokerage $ 5,705 $ 7,036 $ 8,994 Managing general agent fees 326 603 976 Third-party administrator fees 1,358 1,608 1,630 Consulting fees 857 993 504 Total revenue from contracts with customers $ 8,246 $ 10,240 $ 12,104 The Company did not have any contract liabilities as of December 31, 2022 or December 31, 2021. As of December 31, 2022 and December 31, 2021, the contract assets from contracts with customers were $3,077 and $3,353, respectively, and are included within other assets on the consolidated balance sheets. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense is comprised of the following: Year Ended December 31, 2022 2021 2020 Current tax expense $ 3,308 $ 7,823 $ 7,291 Deferred tax expense (2,234) (2,374) (1,056) Total income tax expense $ 1,074 $ 5,449 $ 6,235 The income tax expense differs from the expected income tax expense computed by applying the applicable federal statutory tax rates to pretax income as a result of the following: 2022 Effective Rate 2021 Effective Rate 2020 Effective Rate Income tax expense computed at statutory rate $ (13,625) 21.0 % $ 5,204 21.0 % $ 19,415 21.0 % State taxes, net of federal benefit (289) 0.4 % 47 0.2 % 577 0.6 % Tax-exempt municipal income, net of proration (240) 0.3 % (263) (1.1) % (272) (0.3) % Goodwill impairment 14,365 (22.1) % — — % — — % Potential merger and other nondeductible expenses 647 (1.0) % 10 — % 957 1.0 % Fair market value adjustment on Compstar investment — — % — — % (14,668) (15.9) % Other 216 (0.3) % 451 1.9 % 226 0.3 % Total income tax expense $ 1,074 (1.7) % $ 5,449 22.0 % $ 6,235 6.7 % As of December 31, 2022 and 2021, the Company has net operating loss ("NOL") carryforwards for federal income tax purposes of approximately $3,155 and $3,272, respectively, related to the purchases of ALIC and FCCIC. The Company has established a deferred tax asset of approximately $17 and $41 as of December 31, 2022 and 2021, respectively. The significant components of deferred tax assets and liabilities are as follows: December 31, 2022 2021 Deferred tax assets: Unpaid losses and LAE $ 6,256 $ 4,574 Unearned premiums 4,399 3,802 Unrealized losses on investments 7,692 — NOL carryforward 17 41 Lease liability 731 1,188 Accrued liabilities 1,286 926 Stock compensation 841 484 Other 299 51 Total deferred tax assets 21,521 11,066 Deferred tax liabilities: Deferred acquisition costs (4,011) (2,802) Loss reserve discounting TCJA transitional adjustment (355) (473) Unrealized gains and losses on investments — (1,131) Property and equipment (204) (191) Right-of-use asset (660) (1,082) Intangible assets (10,230) (12,715) Prepaid expenses (69) (43) Section 481(a) adjustment — (56) Other (34) (93) Total deferred tax liabilities (15,563) (18,586) Net deferred tax assets (liabilities) $ 5,958 $ (7,520) The Company completed its IRS examination related to the 2018 income tax return of Trean Corp. The results of the examination resulted in no changes to the 2018 Trean Corp tax return. The Company's tax years 2019 through 2021 remain open to examination by the IRS and various state authorities. As of December 31, 2022 and 2021, the Company has not taken any uncertain tax positions with regard to its tax returns. |
Liability for Unpaid Losses and
Liability for Unpaid Losses and Loss Adjustment Expense | 12 Months Ended |
Dec. 31, 2022 | |
Insurance [Abstract] | |
Liability for Unpaid Losses and Loss Adjustment Expense | Liability for Unpaid Losses and Loss Adjustment ExpenseThe Company establishes reserves for unpaid losses and LAE which represent the estimated ultimate cost of all losses incurred that were both reported and unreported (i.e., incurred but not reported losses, or "IBNR") and LAE incurred that remain unpaid at the balance sheet date. The Company reserves for loss after considering all information known at each reporting period. At any given point in time, loss reserves represent the best estimate of the ultimate settlement and administration cost of insured claims incurred and unpaid. Since the process of estimating loss reserves requires significant judgment due to a number of variables, such as fluctuations in inflation, judicial decisions, legislative changes and changes in claims handling procedures, the ultimate liability will likely differ from these estimates. The Company revises the reserves for unpaid losses as additional information becomes available, and reflects adjustments, if any, in earnings in the periods in which the adjustments are deemed necessary. The liability for unpaid losses is recorded on an undiscounted basis. The following table represents a reconciliation of changes in the liability for unpaid losses and LAE. Year Ended December 31, 2022 2021 2020 Unpaid losses and LAE reserves at beginning of period $ 544,320 $ 457,817 $ 406,716 Less losses ceded through reinsurance (369,008) (335,655) (304,005) Net unpaid losses and LAE at beginning of period 175,312 122,162 102,711 Acquisition of subsidiary, net of losses ceded through reinsurance — — 7,050 Incurred losses and LAE related to: Current period 198,996 136,191 65,587 Prior period 4,881 (5,419) (14,813) Total incurred losses and LAE 203,877 130,772 50,774 Paid losses and LAE, net of reinsurance, related to: Current period 61,484 42,484 15,411 Prior period 63,250 35,138 22,962 Total paid losses and LAE 124,734 77,622 38,373 Net unpaid losses and LAE at end of period 254,455 175,312 122,162 Plus losses ceded through reinsurance 378,455 369,008 335,655 Unpaid losses and LAE reserves at end of period $ 632,910 $ 544,320 $ 457,817 As a result of changes in estimates of insured events in prior years, the provision for unpaid losses and LAE increased by approximately $4,881 for the year ended December 31, 2022 and decreased by $5,419 and $14,813 for the years ended December 31, 2021 and 2020, respectively. The Company purchased annuities from life insurers under which the claimants are the payees. The purchase of these annuities allowed the Company to reduce reserves for unpaid losses by approximately $4,935 in previous years. Under the terms of settlement with the claimants, the Company remains liable for payments to the claimants of approximately $1,605 and $1,661 as of December 31, 2022 and 2021, respectively, in the event of default or insolvency of the life insurers. Loss Development Tables The following tables represent cumulative incurred loss and allocated loss adjustment expenses, net of reinsurance by accident year and cumulative paid loss and allocated loss adjustment expenses, net of reinsurance by accident year, for the years ended December 31, 2013 to 2022, as well as total IBNR and the cumulative number of reported claims for the year ended December 31, 2022, by reportable line of business and accident year (dollars in thousands). The Company’s primary lines of business are workers’ compensation and other liability. Workers' Compensation Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2022 Years Ended December 31, Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 22,746 22,879 22,650 19,772 19,528 19,426 19,814 19,964 19,968 20,139 $ 1,134 3,539 2014 22,357 20,686 19,781 19,394 17,967 18,025 18,049 17,584 17,556 1,539 3,546 2015 22,643 23,830 23,444 21,788 22,218 19,560 19,974 19,568 1,831 4,796 2016 30,710 29,261 27,674 25,430 23,063 23,076 22,381 1,965 9,835 2017 35,683 29,107 25,713 24,439 24,581 24,515 1,877 14,550 2018 40,122 34,478 34,321 31,909 31,352 2,800 12,451 2019 48,565 45,382 44,997 45,239 4,752 11,451 2020 55,960 55,531 58,033 7,914 12,148 2021 100,254 102,778 20,945 11,698 2022 136,406 52,703 10,052 $ 477,967 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Years Ended December 31, Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 6,734 12,407 15,703 17,135 18,448 18,664 18,976 18,906 19,335 19,444 2014 5,958 11,672 14,393 16,011 16,177 16,535 16,607 16,707 16,700 2015 6,089 13,313 15,814 17,002 17,638 17,984 18,143 18,238 2016 7,260 15,329 17,904 18,728 19,856 20,551 20,918 2017 7,439 15,017 17,930 19,353 20,456 21,150 2018 8,978 19,811 24,023 26,201 27,538 2019 11,201 24,472 30,650 34,434 2020 12,141 30,646 42,349 2021 26,623 58,916 2022 32,880 292,567 All outstanding liabilities before 2013, net of reinsurance 5,119 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 190,519 Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance* Years 1 2 3 4 5 6 7 8 9 10 26.2 % 32.8 % 15.8 % 7.5 % 6.3 % 2.5 % 2.6 % 0.3 % 1.6 % 1.0 % * Presented as unaudited required supplementary information Other Liability Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2022 Years Ended December 31, Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 1,914 1,876 1,617 1,580 1,804 2,068 1,651 1,667 1,703 1,703 $ 240 333 2014 2,183 1,964 1,921 2,154 3,107 3,013 2,832 2,593 2,593 374 424 2015 2,946 2,652 2,862 3,549 3,334 2,860 2,523 2,523 390 430 2016 2,689 2,794 3,135 3,180 2,735 2,423 2,423 911 303 2017 4,964 3,089 4,555 3,966 3,267 3,267 1,041 288 2018 4,256 4,278 3,010 3,679 4,052 1,679 228 2019 5,457 2,849 3,608 2,593 1,663 129 2020 2,932 3,702 4,239 2,753 215 2021 4,362 6,117 4,707 272 2022 6,362 5,911 345 $ 35,872 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Years Ended December 31, Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 65 195 281 573 798 1,048 1,153 1,215 1,282 1,391 2014 53 233 405 639 1,067 1,687 1,884 1,989 2,095 2015 123 374 600 945 1,187 1,258 1,523 1,855 2016 54 137 355 558 783 1,081 1,199 2017 52 439 676 999 1,387 1,841 2018 52 345 504 846 1,738 2019 111 170 239 387 2020 55 196 521 2021 719 977 2022 124 12,128 All outstanding liabilities before 2013, net of reinsurance 384 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 24,128 Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance* Years 1 2 3 4 5 6 7 8 9 10 3.9 % 6.5 % 4.9 % 10.5 % 16.2 % 13.2 % 7.0 % 11.9 % 4.4 % 3.0 % * Presented as unaudited required supplementary information All Other Lines Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2022 Years Ended December 31, Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 1 — 13 9 10 12 — — — — $ — 572 2014 40 127 24 23 21 16 16 6 5 — 1,051 2015 168 132 108 113 98 98 19 39 151 1,172 2016 1,882 1,617 1,745 1,555 1,542 1,051 1,054 4 1,289 2017 2,852 2,917 2,417 2,442 1,935 1,984 22 2,125 2018 2,885 2,874 2,549 2,520 2,519 49 2,025 2019 3,756 3,367 3,219 3,379 309 1,428 2020 4,842 5,129 4,691 324 1,135 2021 23,365 23,921 1,841 2,859 2022 38,396 7,932 2,200 $ 75,988 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Years Ended December 31, Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 — — — — — — — — — — 2014 — 100 16 16 16 16 16 6 6 2015 63 98 98 99 98 98 19 (111) 2016 796 1,325 1,418 1,494 1,499 1,016 1,023 2017 1,412 2,099 2,203 2,321 1,884 1,893 2018 1,309 2,123 2,325 2,432 2,459 2019 1,903 2,532 2,789 2,945 2020 2,291 3,595 3,994 2021 11,093 18,220 2022 16,704 47,133 All outstanding liabilities before 2013, net of reinsurance — Liabilities for claims and claim adjustment expenses, net of reinsurance $ 28,855 Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance* Years 1 2 3 4 5 6 7 8 9 10 46.8 % 33.2 % 13.9 % 3.0 % 2.0 % 1.0 % 0.0 % 0.0 % 0.0 % 0.0 % * Presented as unaudited required supplementary information Total Lines Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2022 Years Ended December 31, Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 24,661 24,755 24,280 21,361 21,342 21,506 21,465 21,631 21,671 21,842 $ 1,374 4,444 2014 24,580 22,777 21,726 21,571 21,095 21,054 20,897 20,183 20,154 1,913 5,021 2015 25,757 26,614 26,414 25,450 25,650 22,518 22,516 22,130 2,372 6,398 2016 35,281 33,672 32,554 30,165 27,340 26,550 25,858 2,880 11,427 2017 43,499 35,113 32,685 30,847 29,783 29,766 2,940 16,963 2018 47,263 41,630 39,880 38,108 37,923 4,528 14,704 2019 57,778 51,598 51,824 51,211 6,724 13,008 2020 63,734 64,362 66,963 10,991 13,498 2021 127,981 132,816 27,493 14,829 2022 181,164 66,546 12,597 $ 589,827 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Years Ended December 31, Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 6,799 12,602 15,984 17,708 19,246 19,712 20,129 20,121 20,617 20,835 2014 6,011 12,005 14,814 16,666 17,260 18,238 18,507 18,702 18,801 2015 6,275 13,785 16,512 18,046 18,923 19,340 19,685 19,982 2016 8,110 16,791 19,677 20,780 22,138 22,648 23,140 2017 8,903 17,555 20,809 22,673 23,727 24,884 2018 10,339 22,279 26,852 29,479 31,735 2019 13,215 27,174 33,678 37,766 2020 14,487 34,437 46,864 2021 38,435 78,113 2022 49,708 351,828 All outstanding liabilities before 2013, net of reinsurance 5,503 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 243,502 Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance* Years 1 2 3 4 5 6 7 8 9 10 27.5 % 29.9 % 13.3 % 7.3 % 6.3 % 3.2 % 3.0 % 1.2 % 2.2 % 1.5 % * Presented as unaudited required supplementary information The reconciliation of the net incurred and paid claims development tables to the liability for unpaid loss and loss adjustment expense in the consolidated balance sheets is as follows: December 31, 2022 2021 Net outstanding liabilities Workers' compensation $ 190,519 $ 133,811 Other liability 24,128 19,159 All other lines of business 28,855 14,481 Liabilities for unpaid loss and loss adjustment expense, net of reinsurance 243,502 167,451 Reinsurance recoverable on unpaid claims Workers' compensation 234,657 260,891 Other liability 52,816 50,765 All other lines of business 90,982 57,352 Total reinsurance recoverable on unpaid claims 378,455 369,008 Unallocated loss adjustment expenses 10,953 7,861 Total liability for unpaid loss and loss adjustment expenses $ 632,910 $ 544,320 |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2022 | |
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. Amounts recoverable from reinsurers are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. The Company has diversified its credit risk related to the reinsurance ceded. There were no disputes with reinsurers as of December 31, 2022 and 2021. The Company has no reinsurance recoverables deemed uncollectible during the years ended December 31, 2022, 2021 and 2020. The Company holds collateral on a funds held basis or requires collateral in a trust or as a letter of credit to secure recoverable balances from reinsurers not authorized in the insurance carriers state of domicile as follows: December 31, 2022 2021 Letters of credit $ 18,438 $ 24,979 Trust 136,370 126,404 Funds held 211,436 156,401 Total $ 366,244 $ 307,784 Funds held in the table above represents only the portion of total funds held for which we require collateral to secure recoverable balances from reinsurers that are not authorized in the respective insurance carrier's state of domicile and does not include $29,855 and $43,009 of funds held for reinsurance companies that are authorized in the respective insurance carrier's state of domicile as of December 31, 2022 and 2021, respectively. The Company has unsecured aggregate recoverable for losses, paid and unpaid, loss adjustment expenses and unearned premiums with the following individual reinsurers, authorized or unauthorized, exceeding 5 percent of stockholders’ equity: December 31, 2022 2021 Arch Reinsurance Company (U.S.) * $ 22,050 Markel Global 58,400 66,933 Munich Reinsurance America, Inc 17,255 * Swiss Reinsurance America Corp 17,199 * (*) Represents less than 5 percent of stockholders’ equity A summary of the impact of ceded reinsurance is as follows: Year Ended December 31, 2022 2021 Gross Assumed Ceded Net Gross Assumed Ceded Net Losses and LAE liabilities $ 619,453 $ 13,457 $ (378,455) $ 254,455 $ 531,598 $ 12,722 $ (369,008) $ 175,312 Unearned premiums 226,412 2,700 (124,269) 104,843 216,878 3,062 (129,411) 90,529 Written premiums 642,210 9,093 (352,365) 298,938 624,769 9,395 (394,888) 239,276 Earned premiums 632,677 9,552 (357,605) 284,624 563,337 8,916 (373,573) 198,680 Loss and loss adjustment expenses 441,274 11,857 (249,254) 203,877 343,134 14,287 (226,649) 130,772 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Leases | Leases 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 consolidated balance sheets. 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. 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. 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 54 months, some of which have options to extend the lease for up to 5 years. As of December 31, 2022, 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 years ended December 31, 2022, 2021 and 2020 was $2,458, $2,459 and $2,501, inclusive of $93, $25 and $362 in variable lease expense, respectively. The Company also sublets some of its leased office space and recorded $98, $100 and $84 of sublease income for the years ended December 31, 2022, 2021 and 2020, respectively, which is included in other income on the consolidated statements of operations. Supplemental balance sheet information, the weighted average remaining lease term and weighted average discount rate related to leases were as follows: December 31, December 31, (dollars in thousands) 2022 2021 Right of use asset $ 2,764 $ 4,530 Lease liability $ 3,063 $ 4,976 Weighted average remaining lease term 1.79 years 2.42 years Weighted average discount rate 6.07 % 6.33 % Future maturities of lease liabilities as of December 31, 2022 are as follows: Operating Leases 2023 $ 1,940 2024 1,064 2025 164 2026 44 2027 2 Total lease payments 3,214 Less: imputed interest (151) Total lease liabilities $ 3,063 |
Equity
Equity | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Equity | Equity Initial Public Offering and Reorganization On July 20, 2020, Trean Insurance Group, Inc. closed the sale of 10,714,286 shares of its Common Stock in its 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 IPO price per share was $15.00. The aggregate IPO 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 $93,139 after deducting underwriting discounts and commissions of $7,500 and offering expenses of $6,503. 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 "Item 5 — Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities" for a detailed discussion of use of proceeds associated with the IPO. In conjunction with the IPO and corporate restructuring, the Company paid a termination payment to Altaris Capital Partners, LLC in connection with the termination of the Company's consulting and advisory agreements as well as paid bonuses to employees and pre-IPO unitholders for the successful completion of the IPO. The aggregate amount of these payments totaled $11,054 and is included in other expenses on the consolidated statement of operations. Prior to the completion of the above offering, the Company effected the following reorganization transactions: (i) each of Trean and 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.; and (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. Preferred Stock The Company currently has authorized 100,000,000 shares of preferred stock with a par value of $0.01. No shares of preferred stock were issued or outstanding as of December 31, 2022, and 2021. Common Stock The Company currently has authorized 600,000,000 shares of Common Stock with a par value of $0.01. As of December 31, 2022, and 2021 there were 51,222,485 and 51,176,887, respectively, shares of common stock issued and outstanding. Members' Equity Prior to the IPO, the Company had three classes of ownership units, each with its respective rights, preferences and privileges as follows: 1) Class A Units : Received an allocation of profits and losses incurred by the Company as well as maintained 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 : Received an allocation of profits and losses incurred by the Company as well as maintained 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 maintained 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 maintained all rights, preferences and privileges allowed to Class B Voting Units with the exception of voting rights. 3) Class C Units : Received an allocation of profits and losses incurred by the Company. Participating Class C Units maintained the right to receive distributions after any Class A or Class B units based on the unit holders’ pro rata share. As part of the corporate reorganization performed in conjunction with the IPO of Trean Insurance Group, all ownership units were exchanged for a total of 37,386,394 shares of Common Stock. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per ShareBasic earnings per share ("EPS") is computed by dividing net income by the weighted average number of shares outstanding during reported periods. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock during reported periods and is calculated using the treasury stock method. The following table presents the calculation of basic and diluted EPS of Common Stock: Year Ended December 31, (in thousands, except share and per share amounts) 2022 2021 2020 Net income - basic and diluted $ (65,955) $ 19,330 $ 88,549 Weighted average number of shares outstanding - basic 51,203,370 51,162,293 43,744,003 Effect of dilutive securities: Restricted stock units — 11,157 741 Dilutive shares — 11,157 741 Weighted average number of shares outstanding - diluted 51,203,370 51,173,450 43,744,744 Earnings per share: Basic $ (1.29) $ 0.38 $ 2.02 Diluted $ (1.29) $ 0.38 $ 2.02 At December 31, 2022, 2021 and 2020, there were restricted stock units and stock options outstanding totaling 567,537, 389,905 and 179,840, respectively, excluded from the computation of diluted weighted-average shares outstanding because their inclusion would have been anti-dilutive. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table presents the changes in accumulated other comprehensive income (loss): Year Ended December 31, 2022 2021 2020 Balance at beginning of period $ 4,384 $ 13,426 $ 6,500 Other comprehensive income (loss), net of tax: Unrealized investment gains (losses): Unrealized investment gains (losses) arising during the period (54,720) (11,386) 9,028 Change in fair value of interest rate cap (45) — — Income tax expense (benefit) (11,488) (2,391) 1,903 Unrealized investment gains (losses), net of tax (43,277) (8,995) 7,125 Less: reclassification adjustments to: Net realized investment gains (losses) included in net realized gains (1,101) 59 252 Income tax expense (benefit) (231) 12 53 Total reclassifications included in net income, net of tax (870) 47 199 Other comprehensive income (loss) (42,407) (9,042) 6,926 Balance at end of period $ (38,023) $ 4,384 $ 13,426 |
Stock Compensation
Stock Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock Compensation | Stock CompensationAs of December 31, 2022, the Company has one incentive plan, the Trean Insurance Group, Inc. 2020 Omnibus Incentive Plan, (the "2020 Omnibus Plan"). The purposes of the 2020 Omnibus Plan are to provide additional incentive to selected officers, employees, non-employee directors, independent contractors and consultants of the Company whose contributions are essential to the growth and success of the business of the Company and its affiliates, in order to strengthen the commitment and motivate such individuals to faithfully and diligently perform their responsibilities and attract competent and dedicated individuals whose efforts will result in the long-term growth and profitability of the Company and its affiliates. The 2020 Omnibus Plan is administered by the Company’s board of directors and provides for the issuance of up to 5,058,085 shares of Common Stock granted in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses, other stock awards or any combination of the foregoing. As provided in the Merger Agreement, the Company will not issue or authorize any new awards during the pendency of the Merger, subject to certain exceptions. Stock Options Compensation expense is recognized for all stock compensation arrangements by the Company. Stock compensation expense related to stock option awards was $203, $164 and $61 for the years ended December 31, 2022, 2021, and 2020, respectively. Employee stock option awards granted set forth, among other things, the option exercise price, the option term, provisions regarding option exercisability and whether the option is intended to be an incentive stock option ("ISO") or a nonqualified stock option ("NQSO"). Stock options may be granted to employees at such exercise prices as the Company’s board of directors may determine but not less than 100% of the fair market value of the underlying stock as of the date of grant. Employee options vest one third annually over a period of three years and have contractual terms of 10 years from the date of grant. The fair value of each time-based vesting option award is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions noted in the following table. The Company’s expected volatility for the period was based on a weighted average expected volatility of an industry peer group of insurance companies of similar size, life cycle and lines of business. Expected term is calculated using the simplified method taking into consideration the option's contractual life and vesting terms. The Company’s stock option grants qualify as plain vanilla options and as such the Company uses the simplified method in estimating its expected option term as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its common shares have been publicly traded. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend yields were not used in the fair value computations as the Company has never declared or paid dividends on its Common Stock and currently intends to retain earnings for use in operations. 2022 2021 2020 Expected volatility 29.8% 29.8% 29.8% Expected term 6 years 6 years 6 years Risk-free interest rate 1.92% 1.32% 0.47% A summary of the status of the Company's stock option activity as of December 31, 2022 and changes during the year then ended are as follows: Stock Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contract Term Balance outstanding, December 31, 2021 120,187 $ 16.06 Granted 64,694 $ 7.04 Forfeited or cancelled (20,158) $ 14.76 Balance outstanding, December 31, 2022 164,723 $ 12.68 $ — 8.34 years Options exercisable, December 31, 2022 53,956 $ 15.68 $ — 7.73 years The weighted average grant-date fair value of options granted for the years ended December 31, 2022, 2021 and 2020 was $2.30, $5.49 and $4.43, respectively. As of December 31, 2022, total unrecognized compensation cost related to stock options was $250 and is expected to be recognized over a weighted average period of approximately 0.9 years. Restricted Stock Units Compensation expense relating to restricted stock unit grants was $1,293, $1,358 and $445 for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022 there was $2,029 of total unrecognized compensation cost related to non-vested restricted stock unit grants. That cost is expected to be recognized over a weighted average expected life of 1.5 years. The total fair value of restricted stock units vested during the years ended December 31, 2022, 2021, and 2020 was $262, $498 and $174, respectively. The Company has granted time-based restricted stock units ("RSUs"), performance stock units ("PSUs"), and market-based stock units ("MSUs") to certain key employees as part of the Company's long-term incentive program. The estimated fair value of restricted stock units is based on the grant date closing price of the Company's stock for time-based and performance-based vesting awards. A Monte Carlo valuation model is used to estimate the fair value for market-based vesting awards. RSUs generally vest in three equal annual installments beginning one year from the grant date and are amortized as compensation expense over the three-year vesting period. The Company has also granted time-based restricted stock units to non-employee directors as part of the Company's annual director compensation program. Each time-based restricted stock grant to non-employee directors vests on the day immediately preceding the next annual meeting of stockholders following the date of grant. The grants are amortized as director compensation expense over the vesting period. The Company recognizes compensation expense on PSUs ratably over the requisite performance period of the award and to the extent management views the performance goal attainment as probable. The Company recognizes compensation expense on MSUs ratably over the requisite performance period of the award. For the 2022 and 2021 fiscal years, the Company granted PSUs to certain key employees pursuant to the Company's 2020 Omnibus Plan. The number of shares earned is based on the Company’s achievement of pre-established target threshold goals for total gross written premiums over a three-year performance measurement period. The performance goals allow for a payout ranging from 0% to 200% of the target award. If performance satisfies minimum requirements to result in shares being awarded, the number of shares will be determined between 50% and 200% of target thresholds, as defined in the applicable award agreements. Any earned PSU will vest if the employee’s service has been continuous through the vesting date. Any PSU not earned because of failure to achieve the minimum performance goal at the end of the performance period will be immediately forfeited. The grant date fair value of the PSUs was determined based on the grant date closing price of the Company’s stock. For the 2022 and 2021 fiscal years, the Company granted MSUs to certain key employees pursuant to the Company's 2020 Omnibus Plan. The number of restricted stock units earned is based on the Company’s cumulative total shareholder return ("TSR"), as defined in the applicable award agreement, over a three-year performance measurement period. If TSR satisfies minimum requirements to result in shares being awarded, the number of shares will be determined between 50% and 200% shown in the table below. Any MSU not earned because of failure to achieve the minimum performance goal at the end of the performance period will be immediately forfeited. Grant date fair values were determined using a Monte Carlo valuation model based on the following assumptions: Fiscal 2022 Fiscal 2021 Total grant date fair value $391 $845 Total grant date fair value per share $6.04 $13.92 Expected volatility 40.0% 35.0% Weighted average expected life 2.81 years 2.77 years Risk-free interest rate 1.79% 0.27% The percent of the target MSU that will be earned based on the Company’s TSR is as follows: Cumulative TSR % Fiscal 2022 Fiscal 2021 Percent of Units Vested Below 29.2% Below 25.1% —% 29.2% 25.1% 50% 52.1% 47.2% 100% 74.9% and above 69.3% and above 200% A summary of the status of the Company’s non-vested restricted stock unit activity as of December 31, 2022 and changes during the year then ended is as follows: RSUs MSUs PSUs Total Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Non-vested outstanding, December 31, 2021 117,109 $ 15.53 50,861 $ 13.92 101,748 $ 17.50 269,718 $ 15.97 Granted 97,808 $ 6.67 64,709 $ 6.04 64,693 $ 7.04 227,210 $ 6.60 Vested (50,236) $ 14.89 — $ — — $ — (50,236) $ 14.89 Forfeited or cancelled (17,129) $ 13.43 (9,854) $ 11.67 (16,895) $ 15.76 (43,878) $ 13.93 Non-vested outstanding, December 31, 2022 147,552 10.12 105,716 9.31 149,546 13.17 402,814 11.04 |
Regulatory Matters
Regulatory Matters | 12 Months Ended |
Dec. 31, 2022 | |
Regulated Operations [Abstract] | |
Regulatory Matters | Regulatory Matters U.S. state insurance laws and regulations prescribe accounting practices for determining statutory net income and capital and surplus for insurance companies. In addition, state regulators may permit statutory accounting practices that differ from prescribed practices. Statutory accounting practices prescribed or permitted by regulatory authorities for the Company’s insurance company subsidiaries, Benchmark, ALIC, 7710 & BSIC differ from GAAP. The principal differences between statutory accounting practices ("SAP") and GAAP as they relate to the financial statements of Benchmark, ALIC, 7710 and BSIC are (i) policy acquisition costs are expensed as incurred under SAP, whereas they are deferred and amortized under GAAP, (ii) deferred tax assets are subject to more limitations regarding what amounts can be recorded under SAP and (iii) bonds are recorded at amortized cost under SAP and fair value under GAAP. Benchmark is domiciled in Kansas, ALIC is domiciled in Utah, 7710 is domiciled in South Carolina and BSIC is domiciled in Arkansas. As of December 31, 2022 and 2021, and during the years then ended, Benchmark, ALIC, 7710 and BSIC met all regulatory requirements of the states in which they operate. Risk-based capital ("RBC") requirements as promulgated by the National Association of Insurance Commissioners ("NAIC") require property and casualty insurers to maintain minimum capitalization levels determined based on formulas incorporating various business risks (e.g., investment risk, underwriting profitability, etc.) of the insurance company subsidiaries. As of December 31, 2022 and 2021, the insurance company subsidiaries’ adjusted capital and surplus exceeded their authorized control level as determined by the NAIC’s risk-based capital models. Summarized statutory basis information, which differs from GAAP, is shown below for Benchmark, ALIC, 7710 and BSIC. 2022 (in thousands, except percentages) Benchmark ALIC 7710 BSIC Statutory capital and surplus $ 222,340 $ 6,270 $ 6,210 $ 48,655 RBC authorized control level 31,350 436 225 315 Statutory net income (loss) (2,270) 108 (21) 695 RBC percentage 709 % 1,438 % 2,760 % 15,446 % 2021 (in thousands, except percentages) Benchmark ALIC 7710 BSIC Statutory capital and surplus $ 170,686 $ 6,321 $ 6,395 $ 19,977 RBC authorized control level 24,279 567 382 129 Statutory net income (782) 128 76 (23) RBC percentage 703 % 1,115 % 1,674 % 15,486 % The amount of dividends that our insurance subsidiaries may pay in any twelve-month period, without prior approval by their respective domestic insurance regulators, is restricted under the laws of Kansas, California, Utah, South Carolina and Arkansas. Under Kansas and California law, dividends payable from Benchmark without the prior approval of the applicable insurance commissioner must not exceed the greater of (i) 10% of Benchmark’s surplus as shown on the last statutory financial statement on file with the Kansas Insurance Department and the California Department of Insurance, respectively, or (ii) 100% of net income during the applicable twelve-month period (not including realized gains). Dividends shall not include pro rata distributions of any class of Benchmark's own securities. For the years ended December 31, 2022 and 2021 the Company could approve dividends without the approval of the state up to $17,068 and $20,474, respectively. The Kansas Insurance Department does not have any limitations on the total amount of dividends paid. Under Utah law, dividends payable from ALIC without the prior approval of the applicable insurance commissioner must not exceed the lesser of (i) 10% of ALIC’s surplus as shown on the last statutory financial statement on file with the Utah Insurance Department (ii) 100% of net income during the applicable twelve- month period (not including realized gains). Dividends shall not include pro rata distributions of any class of ALIC's own securities. For the years ended December 31, 2022 and 2021 the Company could approve dividends without the approval of the state up to $128 and $11, respectively. Under South Carolina law, dividends payable from 7710 without the prior approval of the applicable insurance commissioner are limited to the following during the preceding twelve months: (a) when paid from other than earned surplus must not exceed the lesser of: (i) 10% of 7710's surplus as regards policyholders as shown in 7710’s most recent annual statement; or (ii) the net income, not including net realized gains or losses as shown in the 7710's most recent annual statement; or (b) when paid from earned surplus must not exceed the greater of: (i) 10% of 7710's surplus as regards policyholders as shown in 7710’s most recent annual statement; or (ii) the net income, not including net realized gains or losses as shown in the 7710's most recent annual statement. Dividends shall not include pro rata distributions of any class of 7710’s own securities. For the years ended December 31, 2022 and 2021 the Company could approve dividends without the approval of the state up to $75 and $519, respectively. Under Arkansas law, dividends payable from BSIC without the prior approval of the applicable insurance commissioner must not exceed the lesser of (i) 10% of BSIC’s surplus as shown on the last statutory financial statement on file with the Arkansas Insurance Department; or (ii) 100% of net income during the applicable twelve- month period (not including realized gains). Dividends shall not include pro rata distributions of any class of BSIC's own securities. For the years ended December 31, 2022 and 2021 the Company could not approve dividends without the approval of the state. The insurance laws of Kansas require Benchmark to maintain minimum capital and surplus of $1,500. The insurance laws of Utah require ALIC to maintain minimum capital in the amount of $300. The insurance laws of South Carolina require 7710 to maintain minimum capital and surplus of $1,200. The insurance laws of Arkansas require BSIC to maintain minimum capital and surplus of $20,000. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | Employee Benefit PlanThe Company has a 401(k) Plan and Trust. This Plan covers all eligible employees of the Company. An employee becomes eligible on the first day of each calendar quarter if they are at least 21 years old. Participants may elect to contribute from 1 percent up to 15 percent of their salary annually. The Company matches 50 percent of each dollar an employee contributes on the first 5 percent of compensation. In addition, under the safe-harbor plan, the Company contributes 3 percent of each participant's gross wages regardless of the employee's contributions. The Company may also make discretionary profit sharing contributions. The employees vest 25 percent per year of service beginning in the second full year of service. The Company contributed approximately $1,444, $1,373 and $942 to the plan for the years ended December 31, 2022, 2021 and 2020, respectively. |
Commitment and Contingencies
Commitment and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesFrom time to time, the Company is subject to litigation related to its insurance business. Management does not believe that the Company is a party to any such pending litigation that would have a material adverse effect on its future operations. |
Transactions with Related Parti
Transactions with Related Parties | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Transactions with Related Parties In connection with our IPO, we entered into a director nomination agreement with the Altaris Funds, the Company's principal stockholder. So long as the Altaris Funds own 35% or more of outstanding Common Stock, the Altaris Funds will have the right (but not the obligation) to nominate three individuals to our board of directors; so long as the Altaris Funds own 20% or more but less than 35% of our outstanding Common Stock, the Altaris Funds will have the right (but not the obligation) to nominate two individuals to our board of directors; and so long as the Altaris Funds own 10% or more but less than 20% of outstanding Common Stock, the Altaris Funds will have the right (but not the obligation) to nominate one individual to our board of directors. Prior to the IPO, the Company paid a management fee to the Altaris Funds totaling $500 for the year ended December 31, 2020 which is included in general and administrative expenses on the consolidated statement of operations. In conjunction with the IPO in 2020, the Company paid a termination fee to the Altaris Funds totaling $7,639, which is included in other expenses on the consolidated statement of operations. On December 15, 2022, the Company entered into a merger agreement, providing for the acquisition of the Company by Altaris. See Note 1 for additional information. On July 6, 2021, Trean Corp purchased 100% ownership of WIC. Prior to the acquisition, WIC was partially owned by two employees of the Company. The total purchase price was $5,500, which includes $1,500 that is contingent on WIC's future earnings, as defined in the agreement. The Company made an earn-out payment of $750 during the year ended December 31, 2022. As of December 31, 2022 and December 31, 2021, $750 and $1,500, respectively, of the total purchase price is outstanding and included within accounts payable and accrued expenses on the consolidated balance sheet. The Company recorded $100, $200 and $200 of revenue for consulting services provided to TRI for the years ended December 31, 2022, 2021 and 2020, respectively. See Note 6 for information on the sale of the Company's previous ownership in TRI. Effective July 15, 2020, Trean Compstar Holdings LLC purchased the remaining ownership interest in Compstar (See Note 3). Prior to the acquisition, the Company owned a 45% interest in Compstar, a program manager that handles the underwriting, premium collection and servicing of insurance policies for the Company. The Company recorded $90,199 of gross earned premiums resulting in gross commissions of $17,709 for the year ended December 31, 2020 prior to the acquisition. The Company recorded $176,083 of gross earned premiums resulting in gross commissions of $37,034 due to Compstar for the year ended December 31, 2020. |
Schedule II. Condensed Financia
Schedule II. Condensed Financial Information of Registrant | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule II. Condensed Financial Information of Registrant | Schedule II. Condensed Financial Information of Registrant Trean Insurance Group, Inc. Condensed Balance Sheets (in thousands, except share data) December 31, 2022 2021 Assets Investment in subsidiaries $ 283,600 $ 267,643 Total investments 283,600 267,643 Cash and cash equivalents 3,066 4,242 Income taxes receivable 5,841 12,360 Intercompany receivables 22,645 135,369 Deferred tax asset 1,051 671 Other assets 1,859 1,930 Total assets $ 318,062 $ 422,215 Liabilities Accounts payable and accrued expenses $ 3,043 $ 306 Total liabilities 3,043 306 Stockholders' equity Preferred stock, $0.01 par value per share (100,000,000 authorized, zero issued and outstanding) — — Common stock, $0.01 par value per share (600,000,000 authorized; 51,222,485 and 51,176,887 issued and outstanding) 512 512 Additional paid-in capital 290,095 288,623 Retained earnings 62,435 128,390 Accumulated other comprehensive income (38,023) 4,384 Total stockholders' equity 315,019 421,909 Total liabilities and stockholders' equity $ 318,062 $ 422,215 Schedule II. Condensed Financial Information of Registrant - (Continued) Trean Insurance Group, Inc. Condensed Statements of Operations (in thousands) Year Ended December 31, 2022 2021 Revenues Net investment income $ — $ 9 Other revenue — — Total revenue — 9 Expenses General and administrative expenses 5,591 4,103 Other expenses 3,081 845 Noncash stock compensation 1,496 1,522 Total expenses 10,168 6,470 Loss before taxes (10,168) (6,461) Income tax benefit (1,650) (1,712) Loss before equity earnings of subsidiaries (8,518) (4,749) Equity earnings (loss) of subsidiaries (57,437) 24,079 Net income (loss) $ (65,955) $ 19,330 Schedule II. Condensed Financial Information of Registrant - (Continued) Trean Insurance Group, Inc. Condensed Statements of Cash Flows (in thousands) Year Ended December 31, 2022 2021 Operating activities Net income (loss) $ (65,955) $ 19,330 Adjustments to reconcile net income to net cash from operating activities: Stock compensation 1,496 1,522 Equity (earnings) losses in subsidiaries 57,437 (24,079) Dividends received from subsidiaries 1,150 — Deferred income taxes (379) (414) Changes in operating assets and liabilities: Premiums and other receivables — — Other assets 70 (1,930) Accounts payable and accrued expenses 2,737 (357) Income taxes payable and receivable 6,520 (7,781) Intercompany receivables (3,079) 17,277 Net cash provided by (used in) operating activities (3) 3,568 Investing activities Distribution from subsidiaries 8,850 — Capital contributions to subsidiaries (10,000) — Net cash used for investing activities (1,150) — Financing activities Shares redeemed for payroll taxes (23) (94) Proceeds from short swing rule — 85 Net cash provided by (used in) financing activities (23) (9) Net increase in cash, cash equivalents and restricted cash (1,176) 3,559 Cash, cash equivalents and restricted cash ‑ beginning of period 4,242 683 Cash, cash equivalents and restricted cash ‑ end of period $ 3,066 $ 4,242 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Use of estimates | Use of estimates While preparing the consolidated financial statements, the Company has made certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated 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 recoverables, investments, goodwill and intangible assets. Except for the captions on the consolidated balance sheets and consolidated statements of comprehensive income, generally, the term loss(es) is used to collectively refer to both losses and LAE. |
Accounting pronouncements | Accounting pronouncements Recently adopted policies In January 2020, the Financial Accounting Standards Board ("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 adopted this standard effective January 1, 2022. Adoption of this standard did not have a material impact on the consolidated financial statements. Pending policies The Company completed its IPO 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 on items such as (i) the application of fair value option disclosures; (ii) the accounting for fees related to modifications of debt; and (iii) aligning the contractual term of a net investment in a lease in accordance with ASC Topic 326, Financial Instruments - Credit Losses , and the lease term determined in accordance with ASC Topic 842, Leases . The Company adopted items (i) and (ii) effective January 1, 2020 and will adopt item (iii) on January 1, 2023. Adoption of this standard has not had, and is not expected to have, a material impact on the consolidated financial statements. 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. Adoption of this standard is not expected to have a material impact on the consolidated financial statements. In October 2021, the FASB issued ASU No 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08). This update requires contract assets and contract liabilities acquired in a business combination to be recognized and measured at the acquisition date in accordance with Accounting Standards Codification ("ASC") Topic 606 as if the acquirer had originated the contracts. ASU 2021-08 is effective for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. The Company will adopt this standard effective January 1, 2024 on a prospective basis. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. |
Cash and cash equivalents | Cash and cash equivalents: Cash and cash equivalents consist of all cash accounts, money market investments, and investments with maturities, at the time of acquisition, of 90 days or less. These amounts are carried at cost, which approximates fair value. Although the Company maintains its cash accounts in a limited number of commercial banks, management of the Company believes it is not exposed to any significant credit risk on cash and short-term investments. |
Investments | Investments: Investment securities, consisting of fixed maturities, are classified as available-for-sale and reported at fair value. The change in unrealized gain and loss on fixed maturity investments is recorded as a component of accumulated other comprehensive income in the consolidated balance sheets, net of the related deferred tax effect, until realized. The change in unrealized gain and loss on equity securities is recorded as a component of net income and is included in net investment income on the consolidated statements of operations. Realized gains and losses from the sale of available-for-sale securities are determined on a specific-identification basis and included in net realized gains (losses) on the consolidated statement of operations on the trade date. The Company amortizes any premium or discount on fixed maturities over the remaining maturity period of the related securities and reports the amortization in net investment income. Dividend and interest income is recognized when earned. The Company regularly reviews its investment portfolio to determine if other-than-temporary impairment exists for any debt securities. An investment is impaired when the fair value of the investment declines to an amount less than the cost or amortized cost of that investment. As part of the assessment process, the Company determines whether the impairment is temporary or other-than-temporary. The assessment is based on both quantitative criteria and qualitative information, considering a number of factors including, but not limited to: how long the security has been impaired; the amount of the impairment; or whether management intends to sell the debt security or it is more likely than not that management will have to sell the security before recovery of the amortized cost; the financial condition and near-term prospects of the issuer; whether the issuer is current on contractually-obligated interest and principal payments; key corporate events pertaining to the issuer and whether the market decline was affected by macroeconomic conditions. If a debt security is impaired and management intends to sell the security or it is more likely than not that the Company will have to sell the security before the amortized cost is recovered, then the Company recognizes impairment loss in net realized gains (losses). If it is determined that an impairment of a debt security is other-than-temporary and management neither |
Equity method investments | Equity method investments: The Company held certain investments where the Company does not have control but has the ability to exercise significant influence are accounted for by the equity method of accounting. Under this method, the Company's investments in certain limited liability companies are recorded at cost and the investment accounts are adjusted for the Company's share of the entities' income or loss and for the distributions and contributions. The income and losses are recorded within equity earnings (losses) in affiliates, net of tax on the consolidated statements of operations. |
Premium revenue | Premium revenue: Premiums are earned over the policy period and are stated after deduction for reinsurance. The portion of premiums that will be earned in the future is deferred and reported as unearned premiums on the consolidated balance sheets. |
Revenue from contracts with customers | Revenue from contracts with customers: Other revenue recorded by the Company includes brokerage, third-party administrative ("TPA"), management and consulting fees. The Company incurs certain costs associated with obtaining contracts with customers. Such contracts are one-year contracts and the amortization periods are one year or less. The Company has elected, as a practical expedient, to expense these contract costs as incurred. Brokerage revenue includes the fees earned on excess of loss ("XOL") and quota share reinsurance treaties. Billings for brokerage revenues generally occur monthly. Revenue for reinsurance treaties consists of a single performance obligation whereas the total amount of consideration expected to be received is recorded on the effective date of the underlying contract. For XOL treaties, revenue is estimated based on the contractually specified minimum or deposit premiums. For quota share treaties, revenue is estimated based on the projected premium income provided by the ceding insurer. Brokerage fees are received based on the performance of the specified terms of the reinsurance treaty and thus, are considered variable consideration. Therefore, revenue is estimated and constrained to the extent it is probable a significant reversal of revenue will not occur, using the expected value method. Adjustments to revenue are recorded as additional evidence is received for the ultimate amount of brokerage earned under the contract. The Company acts as a third-party claims administrator and earns TPA fees for providing such services. The fee structures vary based on the specific contract and can be dependent upon a number of factors which typically include agreed-upon fee rates, the total amount of premium written or collected under the agreement and the total time and expense incurred for processing claims. Billings for TPA fees occur on a monthly basis. TPA services consist of a single performance obligation which is recognized over time as claims are processed throughout the contract period. The volume of claims varies throughout the contract period and, therefore, the Company has elected to record revenue in an amount that reflects the total fees that the Company has a right to invoice for during the period. The Company acts as a managing general agent ("MGA") to provide certain administrative and underwriting services. The consideration received varies based on certain factors including the contractual MGA rate and the total amount of premium written or collected under the contract. Billings for management fees occur on a monthly basis. Management fees consist of a single performance obligation that are recognized by the Company over time as services are provided. The volume of premium written or collected for a single contract varies throughout the contract period and, therefore, the Company has elected to record revenue in an amount that reflects the total fees that the Company has a right to invoice for during the period. The Company provides consulting services for certain reinsurance contracts which includes services such as contract consultation and review. The compensation structure for consulting services is based on fixed periodic payments, generally monthly or quarterly. Consulting services consist of a single performance obligation which is recognized over the term of the consulting agreement. |
Deferred financing costs | Deferred financing costs: Deferred financing costs are amortized as interest expense over the term of the underlying debt agreement by use of the effective interest method. Unamortized deferred financing costs are recorded as a reduction to long-term debt on the consolidated balance sheets. |
Premiums and other receivables | Premiums and other receivables: Premiums receivable are uncollateralized customer obligations due under normal terms requiring payment by the policy due date. Amounts outstanding that are deemed uncollectible are written off. When payments are received on amounts previously written off, the total premiums written off is reduced in the period in which the payment is received. Advanced premiums are recognized when payment is received prior to the beginning coverage date and are included within unearned premiums on the consolidated balance sheets. |
Deferred policy acquisition costs | Deferred policy acquisition costs: The Company incurs policy acquisition costs that vary with and are directly related to the production of new and renewal business. These costs consist of underwriting costs, net commissions (including ceding commissions) paid to agents, program managers and reinsurers, and premium taxes. Proceeds from reinsurance transactions that represent recovery of acquisition costs reduce applicable unamortized acquisition costs in such a manner that net acquisition costs are capitalized and charged to expense. Amortization of such policy acquisition costs is charged to general and administrative expense in proportion to premium earned over the estimated policy term. To the extent that unearned premiums on existing policies are not adequate to cover the sum of expected losses, unamortized acquisition costs and policy maintenance costs, unamortized deferred policy acquisition costs are expensed to eliminate the premium deficiency. If the premium deficiency is greater than the unamortized policy acquisition costs, a liability is recorded. No premium deficiency exists as of December 31, 2022 or 2021. |
Property and equipment, net | Property and equipment, net: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is based on the estimated useful lives of the various classes of property and equipment and is determined based on the straight-line method. The estimated useful lives of property and equipment range from three Asset class Depreciation period Building and building improvements 30 years Furniture and fixtures 7 years Office equipment 5 years Software and computer equipment 3 years Long-lived assets, such as property and equipment, and purchased intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset to be impaired, the Company recognizes impairment to the extent that the carrying value exceeds the asset’s fair value. Fair value is determined through various valuation techniques including, but not limited to, discounted |
Reserve for unpaid loss and loss adjustment expenses | Reserve for unpaid loss and loss adjustment expenses: The liability for unpaid losses and LAE in the consolidated balance sheets represent the Company’s estimated losses incurred that remain unpaid as of the balance sheet date. The liability is recorded on an undiscounted basis. Reserves for unpaid losses include estimates for both claims that have been reported and those that have been incurred but not reported. The estimated losses are regularly reviewed and adjusted as necessary based on historical experience and as the Company obtains new information. The consolidated balance sheets include reserves of unpaid losses gross of the amounts related to unpaid losses recoverable from reinsurers. The consolidated statements of operations include the losses net of amounts ceded to reinsurers. |
Reinsurance | Reinsurance: The Company cedes all, or a portion of, its insurance in order to limit its maximum losses and diversify its exposure. Ceding insurance does not relieve the Company of its primary liability to policyholders. The reinsurance agreements are short-term, prospective contracts, typically 12-months in duration. The Company records an asset, prepaid reinsurance premiums, and a liability, reinsurance premiums payable, for the contract amount when premium is written under the reinsurance agreements. Prepaid reinsurance premiums are amortized in the same manner in which unearned premium is recognized. The Company earns ceding commissions on certain reinsurance contracts, which reduces operating expenses. Ceding commissions are amortized over the contract period consistent with deferred policy acquisition costs. The Company records amounts recoverable from reinsurers on paid losses and estimated amounts recoverable on unpaid losses. The estimate of amounts recoverable on unpaid losses is based on unpaid losses in conjunction with the reinsured policies. The Company estimates uncollectible amounts receivable from reinsurers based on an assessment of factors including the credit worthiness of the reinsurers and the adequacy of collateral obtained, where applicable. The Company recorded no bad debt expense related to reinsurance during the years ended December 31, 2022, 2021 and 2020. |
Income taxes | Income taxes: The Company recognizes deferred tax assets and liabilities for the future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which it is expected to recover or settle those temporary differences. Should a change in tax rates occur, the effect on deferred tax assets and liabilities will be recognized in operations in the period that includes the enactment date. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. The Company records any income tax penalties and income tax-related interest as income tax expense in the period incurred. The Company did not incur any material tax penalties or income-tax-related interest during the years ended December 31, 2022, 2021 and 2020. |
Concentration of risk | Concentrations of risk: The Company had total gross written premiums of $651,303, $634,164 and $484,249 for the years ended December 31, 2022, 2021 and 2020, respectively, including: Year Ended December 31, 2022 2021 2020 California $ 162,639 $ 179,426 $ 203,421 Texas 93,165 85,154 28,909 Michigan 45,821 46,271 41,830 Tennessee 16,006 15,966 12,347 Florida 36,559 27,982 8,359 Georgia 30,996 25,619 12,869 Arizona 28,685 26,272 27,950 Alabama 23,198 20,991 17,549 Pennsylvania 17,167 20,375 10,498 Indiana 13,943 13,422 8,508 Other geographical areas 183,124 172,686 112,009 Total gross written premium $ 651,303 $ 634,164 $ 484,249 As of December 31, 2022, approximately 21% and 26% of the Company’s investment portfolio was comprised of securities issued in industrial and public utility bonds and mortgage-backed securities, respectively, compared to 22% and 29% as of December 31, 2021, respectively. All of these securities are investment grade. This portfolio is widely diversified among various issuers and industries and does not depend on the economic stability of one issuer and industry. The Company, from time to time, maintains its cash position at banks in excess of federally insured limits. The Company has not experienced any losses on such accounts. |
Goodwill | Goodwill: Goodwill represents the cost to acquire a business over the fair value of the net assets acquired. Goodwill is not amortized but is reviewed for impairment at least annually or more frequently if events occur or circumstances change that would indicate that a triggering event for a potential impairment has occurred. An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The Company recorded a goodwill impairment loss of $76,053 for the year ended December 31, 2022 (see Note 9). No impairment loss was recorded for the years ended December 31, 2021 and 2020. The Company had $66,294 and $142,347 of goodwill on the consolidated balance sheets as of December 31, 2022 and 2021, respectively. |
Intangible assets | Intangible assets: Acquired intangible assets include client relationships, customer lists, non-compete agreements and trade names acquired. Intangible assets with a finite life are amortized over the estimated useful life. In valuing these assets, assumptions are made regarding useful lives and projected growth rates and significant judgment is required. The Company periodically reviews identifiable intangibles for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If the carrying amounts of the assets exceed their undiscounted cash flows, an impairment loss is recorded. For the years ended December 31, 2022, 2021 and 2020, no impairment loss was recorded. |
Segment reporting | Segment reporting: Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker reviews financial information of the Company as a whole for purposes of assessing financial performance and making operating decisions. Accordingly, the Company considers itself to be operating as a single operating and reportable segment. |
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. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Premiums and Other Receivables | Premiums and other receivables consist of the following: December 31, 2022 2021 Premiums receivable $ 152,823 $ 133,200 Trade receivables 8,395 9,511 Notes receivable 14 12 Total premiums and other receivables 161,232 142,723 Less: Allowance for doubtful accounts (950) (803) Net premiums and other receivables $ 160,282 $ 141,920 |
Summary of Property and Equipment | The depreciation periods by asset class are as follows: Asset class Depreciation period Building and building improvements 30 years Furniture and fixtures 7 years Office equipment 5 years Software and computer equipment 3 years Property and equipment consists of the following: December 31, 2022 2021 Land $ 1,780 $ 1,780 Building and building improvements 5,755 5,755 Furniture and fixtures 1,137 1,137 Office equipment 3,499 2,898 Other property, plant and equipment 101 101 Deposits on fixed assets not placed in service 15 277 Total, at cost 12,287 11,948 Less: Accumulated depreciation (5,136) (4,316) Property and equipment, net $ 7,151 $ 7,632 |
Schedules of Concentration of Risk, by Geography | The Company had total gross written premiums of $651,303, $634,164 and $484,249 for the years ended December 31, 2022, 2021 and 2020, respectively, including: Year Ended December 31, 2022 2021 2020 California $ 162,639 $ 179,426 $ 203,421 Texas 93,165 85,154 28,909 Michigan 45,821 46,271 41,830 Tennessee 16,006 15,966 12,347 Florida 36,559 27,982 8,359 Georgia 30,996 25,619 12,869 Arizona 28,685 26,272 27,950 Alabama 23,198 20,991 17,549 Pennsylvania 17,167 20,375 10,498 Indiana 13,943 13,422 8,508 Other geographical areas 183,124 172,686 112,009 Total gross written premium $ 651,303 $ 634,164 $ 484,249 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [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: Fair value of total consideration transferred $ 5,500 Recognized amounts of identifiable assets acquired and liabilities assumed: Cash and cash equivalents 205 Premiums and other receivables 1,025 Property and equipment, net 39 Right of use asset 135 Goodwill 1,707 Intangible assets, net 3,624 Other assets 16 Accounts payable and accrued expenses (873) Lease liability (135) Debt (243) Net assets acquired $ 5,500 |
Schedule of Acquired Finite-Lived Intangible Assets by Major Class | The Company also recorded intangible assets totaling $3,624, which are comprised of the following: Useful Life Balance Trade name 2 years $ 28 Non-compete agreements 5 years 256 Customer relationships 12 years 3,340 Total intangible assets $ 3,624 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value Options | The following tables present the estimated fair value of the Company’s significant financial instruments. December 31, 2022 Level 1 Level 2 Level 3 Total Fixed maturities: U.S. government and government securities $ 62,552 $ — $ — $ 62,552 Foreign governments — 395 — 395 States, territories and possessions — 15,854 — 15,854 Political subdivisions of states territories and possessions — 33,904 — 33,904 Special revenue and special assessment obligations — 103,639 — 103,639 Industrial and public utilities — 125,540 — 125,540 Commercial mortgage-backed securities — 128,105 — 128,105 Residential mortgage-backed securities — 25,112 — 25,112 Other loan-backed securities — 51,613 — 51,613 Hybrid securities — 5,529 — 5,529 Total fixed maturities 62,552 489,691 — 552,243 Equity securities 12,060 22,981 — 35,041 Total investments $ 74,612 $ 512,672 $ — $ 587,284 Embedded derivatives on funds held under reinsurance agreements $ (1,953) $ (13,458) $ — $ (15,411) Interest rate cap agreement — 102 — 102 Debt — 29,288 50,000 79,288 December 31, 2021 Level 1 Level 2 Level 3 Total Fixed maturities: U.S. government and government securities $ 2,392 $ 39,042 $ — $ 41,434 Foreign governments — 2,490 — 2,490 States, territories and possessions — 10,766 — 10,766 Political subdivisions of states, territories and possessions — 40,002 — 40,002 Special revenue and special assessment obligations — 95,991 — 95,991 Industrial and public utilities — 103,257 — 103,257 Commercial mortgage-backed securities — 118,218 — 118,218 Residential mortgage-backed securities — 17,368 — 17,368 Other loan-backed securities — 41,425 — 41,425 Hybrid securities — 110 — 110 Total fixed maturities 2,392 468,669 — 471,061 Equity securities — 969 — 969 Total investments $ 2,392 $ 469,638 $ — $ 472,030 Embedded derivatives on funds held under reinsurance agreements $ (4) $ 275 $ — $ 271 Debt — 30,938 — 30,938 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 Company's investments are as follows: December 31, 2022 Cost or Gross Gross Fair Value Fixed maturities: U.S. government and government securities $ 65,405 $ 11 $ (2,864) $ 62,552 Foreign governments 400 — (5) 395 States, territories and possessions 17,310 2 (1,458) 15,854 Political subdivisions of states, territories and possessions 38,167 19 (4,282) 33,904 Special revenue and special assessment obligations 115,696 55 (12,112) 103,639 Industrial and public utilities 131,769 101 (6,330) 125,540 Commercial mortgage-backed securities 145,471 52 (17,418) 128,105 Residential mortgage-backed securities 26,716 11 (1,615) 25,112 Other loan-backed securities 53,231 13 (1,631) 51,613 Hybrid securities 6,233 2 (706) 5,529 Total fixed maturities available for sale $ 600,398 $ 266 $ (48,421) $ 552,243 December 31, 2021 Cost or Gross Gross Fair Value Fixed maturities: U.S. government and government securities $ 41,490 $ 113 $ (169) $ 41,434 Foreign governments 2,500 — (10) 2,490 States, territories and possessions 10,593 189 (16) 10,766 Political subdivisions of states, territories and possessions 39,170 975 (143) 40,002 Special revenue and special assessment obligations 93,664 2,920 (593) 95,991 Industrial and public utilities 100,774 2,835 (352) 103,257 Commercial mortgage-backed securities 119,378 591 (1,751) 118,218 Residential mortgage-backed securities 16,549 843 (24) 17,368 Other loan-backed securities 41,236 248 (59) 41,425 Hybrid securities 105 5 — 110 Total fixed maturities available for sale $ 465,459 $ 8,719 $ (3,117) $ 471,061 |
Schedule of Continuous Unrealized Loss Position | The following table illustrates the Company’s gross unrealized losses and fair value of fixed maturities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position: December 31, 2022 Less Than 12 Months 12 Months or More Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Fixed maturities: U.S. government and government securities $ 38,172 $ (1,217) $ 19,199 $ (1,647) $ 57,371 $ (2,864) Foreign governments — — 395 (5) 395 (5) States, territories and possessions 13,882 (1,321) 822 (137) 14,704 (1,458) Political subdivisions of states, territories and possessions 21,586 (2,506) 9,375 (1,776) 30,961 (4,282) Special revenue and special assessment obligations 71,146 (6,522) 22,350 (5,590) 93,496 (12,112) Industrial and public utilities 98,018 (4,225) 18,405 (2,105) 116,423 (6,330) Commercial mortgage-backed securities 71,574 (5,737) 53,147 (11,681) 124,721 (17,418) Residential mortgage-backed securities 18,051 (1,177) 4,119 (438) 22,170 (1,615) Other loan-backed securities 38,572 (1,305) 11,303 (326) 49,875 (1,631) Hybrid securities 5,289 (706) — — 5,289 (706) Total bonds $ 376,290 $ (24,716) $ 139,115 $ (23,705) $ 515,405 $ (48,421) December 31, 2021 Less Than 12 Months 12 Months or More Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Fixed maturities: U.S. government and government securities $ 26,935 $ (168) $ 23 $ (1) $ 26,958 $ (169) Foreign governments 2,490 (10) — — 2,490 (10) States, territories and possessions 935 (16) — — 935 (16) Political subdivisions of states, territories and possessions 11,115 (143) — — 11,115 (143) Special revenue and special assessment obligations 29,917 (593) — — 29,917 (593) Industrial and public utilities 24,042 (286) 1,058 (66) 25,100 (352) Commercial mortgage-backed securities 80,126 (1,565) 6,212 (186) 86,338 (1,751) Residential mortgage-backed securities 4,539 (24) — — 4,539 (24) Other loan-backed securities 20,153 (36) 2,477 (23) 22,630 (59) Hybrid securities — — — — — — Total bonds $ 200,252 $ (2,841) $ 9,770 $ (276) $ 210,022 $ (3,117) |
Summary of Investments by Contractual Maturity | The amortized cost and estimated fair value of fixed maturities as of December 31, 2022, by contractual maturity, are as follows: Cost or Amortized Cost Fair Value Available for sale: Due in one year or less $ 35,468 $ 35,125 Due after one year but before five years 176,083 167,986 Due after five years but before ten years 93,107 83,769 Due after ten years 70,322 60,533 Commercial mortgage-backed securities 145,471 128,105 Residential mortgage-backed securities 26,716 25,112 Other loan-backed securities 53,231 51,613 Total $ 600,398 $ 552,243 |
Summary of Realized Gain (Loss) on Investments | Realized gains and losses on investments included in the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 are as follows: Year Ended December 31, 2022 2021 2020 Fixed maturities: Gains $ 134 $ 153 $ 259 Losses (1,235) (94) (9) Total fixed maturities (1,101) 59 250 Funds held investments: Gains 19 112 — Losses (29) (10) — Total funds held investments (10) 102 — Equity securities and equity method investments: Gains 1,415 — 3,115 Losses (19) (112) — Total equity securities and equity method investments 1,396 (112) 3,115 Total net investment realized gains $ 285 $ 49 $ 3,365 |
Summary of Net Investment Income | Net investment income consists of the following for the years ended December 31, 2022, 2021, and 2020: Year Ended December 31, 2022 2021 2020 Fixed maturities $ 9,316 $ 6,331 $ 6,271 Income on funds held investments 3,668 2,338 3,345 Equity securities 1,708 48 2,028 Unrealized losses on equity securities (4,797) — — Interest earned on cash and short-term investments 192 4 25 Net investment income $ 10,087 $ 8,721 $ 11,669 |
Unrealized Gain (Loss) on Investments | Net realized and unrealized gains (losses) on equity securities recognized during the years ended December 31, 2022, 2021, and 2020 are as follows: Year Ended December 31, 2022 2021 2020 Equity securities: Net realized gains (losses) on sales of equity securities $ 1,396 $ (112) $ 3,115 Change in net unrealized gains (losses) of equity securities still held as of as of December 31, 2022, 2021 and 2020 (4,797) — — Net realized and unrealized gains (losses) on equity securities $ (3,401) $ (112) $ 3,115 |
Schedule of Funds Held Under Reinsurance Agreements | Total funds held under reinsurance agreements includes the following: December 31, 2022 2021 Funds held under reinsurance agreements, at cost $ 256,702 $ 199,139 Embedded derivatives, at fair value (15,411) 271 Total funds held under reinsurance agreements $ 241,291 $ 199,410 |
Embedded Derivatives, Gain (Loss) | Gains (losses) on embedded derivatives consists of the following for the years ended December 31, 2022, 2021, and 2020: Year Ended December 31, 2022 2021 2020 Change in fair value of embedded derivatives $ 15,682 $ 4,666 $ (2,810) Effect of net investment income on funds held investments (3,668) (2,338) (3,345) Effect of realized losses (gains) on funds held investments 10 (102) — Total gains (losses) on embedded derivatives $ 12,024 $ 2,226 $ (6,155) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | The depreciation periods by asset class are as follows: Asset class Depreciation period Building and building improvements 30 years Furniture and fixtures 7 years Office equipment 5 years Software and computer equipment 3 years Property and equipment consists of the following: December 31, 2022 2021 Land $ 1,780 $ 1,780 Building and building improvements 5,755 5,755 Furniture and fixtures 1,137 1,137 Office equipment 3,499 2,898 Other property, plant and equipment 101 101 Deposits on fixed assets not placed in service 15 277 Total, at cost 12,287 11,948 Less: Accumulated depreciation (5,136) (4,316) Property and equipment, net $ 7,151 $ 7,632 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | All changes in the carrying value of goodwill are as follows: 2022 2021 Balance at beginning of period $ 142,347 $ 140,640 Acquisitions — 1,707 Impairment (76,053) — Balance at end of period $ 66,294 $ 142,347 |
Schedule of Finite-Lived Intangible Assets | Intangible assets subject to amortization consist of the following: December 31, Useful Life 2022 2021 Non-compete agreement 2-5 years $ 300 $ 300 Trade name 2-15 years 3,710 3,710 Customer lists and relationships 10-14 years 77,624 77,624 Totals 81,634 81,634 Less: Accumulated amortization (14,517) (8,520) Intangible assets, net $ 67,117 $ 73,114 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future amortization of intangible assets is as follows: Trade name Customer lists Non-Compete Total 2023 $ 248 $ 5,684 $ 51 $ 5,983 2024 241 5,683 51 5,975 2025 241 5,683 51 5,975 2026 241 5,683 26 5,950 2027 241 5,668 — 5,909 Thereafter 1,824 35,501 — 37,325 Total $ 3,036 $ 63,902 $ 179 $ 67,117 |
Deferred Policy Acquisition C_2
Deferred Policy Acquisition Costs, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Insurance [Abstract] | |
Summary of Deferred Policy Acquisition Costs | The table below depicts the activity with regard to deferred policy acquisition costs, net: 2022 2021 2020 Balance at beginning of period $ 13,344 $ 1,332 $ 2,115 Policy acquisition costs deferred 28,362 22,853 7,593 Amortization charged to expense (22,848) (10,841) (8,376) Balance at end of period $ 18,858 $ 13,344 $ 1,332 |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following: December 31, 2022 2021 Accrued commissions and third-party administration fees $ 9,168 $ 7,337 Trade payables 4,977 4,765 Accrued taxes, licenses and fees 4,316 6,710 Accrued wages and employee benefits 5,489 4,873 Amounts retained for the accounts of others 2,710 1,619 Other liabilities 5,949 4,144 Total $ 32,609 $ 29,448 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt consisted of the following: December 31, 2022 December 31, 2021 Face Value Unamortized Discount and Issuance Costs Carrying Value Face Value Unamortized Discount and Issuance Costs Carrying Value Secured credit facility $ 29,288 $ (408) $ 28,880 $ 30,938 $ (576) $ 30,362 Surplus notes 50,000 (1,806) 48,194 — — — Total debt $ 79,288 $ (2,214) $ 77,074 $ 30,938 $ (576) $ 30,362 |
Schedule of Maturities of Debt | Scheduled maturities of debt, excluding deferred financing costs, are as follows: 2023 $ 2,888 2024 3,300 2025 23,100 2026 — 2027 — Thereafter 50,000 Total debt $ 79,288 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 consolidated statements of operations. Year Ended December 31, 2022 2021 2020 Brokerage $ 5,705 $ 7,036 $ 8,994 Managing general agent fees 326 603 976 Third-party administrator fees 1,358 1,608 1,630 Consulting fees 857 993 504 Total revenue from contracts with customers $ 8,246 $ 10,240 $ 12,104 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | Income tax expense is comprised of the following: Year Ended December 31, 2022 2021 2020 Current tax expense $ 3,308 $ 7,823 $ 7,291 Deferred tax expense (2,234) (2,374) (1,056) Total income tax expense $ 1,074 $ 5,449 $ 6,235 |
Schedule of Effective Income Tax Rate Reconciliation | The income tax expense differs from the expected income tax expense computed by applying the applicable federal statutory tax rates to pretax income as a result of the following: 2022 Effective Rate 2021 Effective Rate 2020 Effective Rate Income tax expense computed at statutory rate $ (13,625) 21.0 % $ 5,204 21.0 % $ 19,415 21.0 % State taxes, net of federal benefit (289) 0.4 % 47 0.2 % 577 0.6 % Tax-exempt municipal income, net of proration (240) 0.3 % (263) (1.1) % (272) (0.3) % Goodwill impairment 14,365 (22.1) % — — % — — % Potential merger and other nondeductible expenses 647 (1.0) % 10 — % 957 1.0 % Fair market value adjustment on Compstar investment — — % — — % (14,668) (15.9) % Other 216 (0.3) % 451 1.9 % 226 0.3 % Total income tax expense $ 1,074 (1.7) % $ 5,449 22.0 % $ 6,235 6.7 % |
Schedule of Deferred Tax Assets and Liabilities | The significant components of deferred tax assets and liabilities are as follows: December 31, 2022 2021 Deferred tax assets: Unpaid losses and LAE $ 6,256 $ 4,574 Unearned premiums 4,399 3,802 Unrealized losses on investments 7,692 — NOL carryforward 17 41 Lease liability 731 1,188 Accrued liabilities 1,286 926 Stock compensation 841 484 Other 299 51 Total deferred tax assets 21,521 11,066 Deferred tax liabilities: Deferred acquisition costs (4,011) (2,802) Loss reserve discounting TCJA transitional adjustment (355) (473) Unrealized gains and losses on investments — (1,131) Property and equipment (204) (191) Right-of-use asset (660) (1,082) Intangible assets (10,230) (12,715) Prepaid expenses (69) (43) Section 481(a) adjustment — (56) Other (34) (93) Total deferred tax liabilities (15,563) (18,586) Net deferred tax assets (liabilities) $ 5,958 $ (7,520) |
Liability for Unpaid Losses a_2
Liability for Unpaid Losses and Loss Adjustment Expense (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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. Year Ended December 31, 2022 2021 2020 Unpaid losses and LAE reserves at beginning of period $ 544,320 $ 457,817 $ 406,716 Less losses ceded through reinsurance (369,008) (335,655) (304,005) Net unpaid losses and LAE at beginning of period 175,312 122,162 102,711 Acquisition of subsidiary, net of losses ceded through reinsurance — — 7,050 Incurred losses and LAE related to: Current period 198,996 136,191 65,587 Prior period 4,881 (5,419) (14,813) Total incurred losses and LAE 203,877 130,772 50,774 Paid losses and LAE, net of reinsurance, related to: Current period 61,484 42,484 15,411 Prior period 63,250 35,138 22,962 Total paid losses and LAE 124,734 77,622 38,373 Net unpaid losses and LAE at end of period 254,455 175,312 122,162 Plus losses ceded through reinsurance 378,455 369,008 335,655 Unpaid losses and LAE reserves at end of period $ 632,910 $ 544,320 $ 457,817 |
Summary of Loss Development | The following tables represent cumulative incurred loss and allocated loss adjustment expenses, net of reinsurance by accident year and cumulative paid loss and allocated loss adjustment expenses, net of reinsurance by accident year, for the years ended December 31, 2013 to 2022, as well as total IBNR and the cumulative number of reported claims for the year ended December 31, 2022, by reportable line of business and accident year (dollars in thousands). The Company’s primary lines of business are workers’ compensation and other liability. Workers' Compensation Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2022 Years Ended December 31, Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 22,746 22,879 22,650 19,772 19,528 19,426 19,814 19,964 19,968 20,139 $ 1,134 3,539 2014 22,357 20,686 19,781 19,394 17,967 18,025 18,049 17,584 17,556 1,539 3,546 2015 22,643 23,830 23,444 21,788 22,218 19,560 19,974 19,568 1,831 4,796 2016 30,710 29,261 27,674 25,430 23,063 23,076 22,381 1,965 9,835 2017 35,683 29,107 25,713 24,439 24,581 24,515 1,877 14,550 2018 40,122 34,478 34,321 31,909 31,352 2,800 12,451 2019 48,565 45,382 44,997 45,239 4,752 11,451 2020 55,960 55,531 58,033 7,914 12,148 2021 100,254 102,778 20,945 11,698 2022 136,406 52,703 10,052 $ 477,967 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Years Ended December 31, Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 6,734 12,407 15,703 17,135 18,448 18,664 18,976 18,906 19,335 19,444 2014 5,958 11,672 14,393 16,011 16,177 16,535 16,607 16,707 16,700 2015 6,089 13,313 15,814 17,002 17,638 17,984 18,143 18,238 2016 7,260 15,329 17,904 18,728 19,856 20,551 20,918 2017 7,439 15,017 17,930 19,353 20,456 21,150 2018 8,978 19,811 24,023 26,201 27,538 2019 11,201 24,472 30,650 34,434 2020 12,141 30,646 42,349 2021 26,623 58,916 2022 32,880 292,567 All outstanding liabilities before 2013, net of reinsurance 5,119 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 190,519 Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance* Years 1 2 3 4 5 6 7 8 9 10 26.2 % 32.8 % 15.8 % 7.5 % 6.3 % 2.5 % 2.6 % 0.3 % 1.6 % 1.0 % * Presented as unaudited required supplementary information Other Liability Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2022 Years Ended December 31, Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 1,914 1,876 1,617 1,580 1,804 2,068 1,651 1,667 1,703 1,703 $ 240 333 2014 2,183 1,964 1,921 2,154 3,107 3,013 2,832 2,593 2,593 374 424 2015 2,946 2,652 2,862 3,549 3,334 2,860 2,523 2,523 390 430 2016 2,689 2,794 3,135 3,180 2,735 2,423 2,423 911 303 2017 4,964 3,089 4,555 3,966 3,267 3,267 1,041 288 2018 4,256 4,278 3,010 3,679 4,052 1,679 228 2019 5,457 2,849 3,608 2,593 1,663 129 2020 2,932 3,702 4,239 2,753 215 2021 4,362 6,117 4,707 272 2022 6,362 5,911 345 $ 35,872 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Years Ended December 31, Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 65 195 281 573 798 1,048 1,153 1,215 1,282 1,391 2014 53 233 405 639 1,067 1,687 1,884 1,989 2,095 2015 123 374 600 945 1,187 1,258 1,523 1,855 2016 54 137 355 558 783 1,081 1,199 2017 52 439 676 999 1,387 1,841 2018 52 345 504 846 1,738 2019 111 170 239 387 2020 55 196 521 2021 719 977 2022 124 12,128 All outstanding liabilities before 2013, net of reinsurance 384 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 24,128 Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance* Years 1 2 3 4 5 6 7 8 9 10 3.9 % 6.5 % 4.9 % 10.5 % 16.2 % 13.2 % 7.0 % 11.9 % 4.4 % 3.0 % * Presented as unaudited required supplementary information All Other Lines Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2022 Years Ended December 31, Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 1 — 13 9 10 12 — — — — $ — 572 2014 40 127 24 23 21 16 16 6 5 — 1,051 2015 168 132 108 113 98 98 19 39 151 1,172 2016 1,882 1,617 1,745 1,555 1,542 1,051 1,054 4 1,289 2017 2,852 2,917 2,417 2,442 1,935 1,984 22 2,125 2018 2,885 2,874 2,549 2,520 2,519 49 2,025 2019 3,756 3,367 3,219 3,379 309 1,428 2020 4,842 5,129 4,691 324 1,135 2021 23,365 23,921 1,841 2,859 2022 38,396 7,932 2,200 $ 75,988 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Years Ended December 31, Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 — — — — — — — — — — 2014 — 100 16 16 16 16 16 6 6 2015 63 98 98 99 98 98 19 (111) 2016 796 1,325 1,418 1,494 1,499 1,016 1,023 2017 1,412 2,099 2,203 2,321 1,884 1,893 2018 1,309 2,123 2,325 2,432 2,459 2019 1,903 2,532 2,789 2,945 2020 2,291 3,595 3,994 2021 11,093 18,220 2022 16,704 47,133 All outstanding liabilities before 2013, net of reinsurance — Liabilities for claims and claim adjustment expenses, net of reinsurance $ 28,855 Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance* Years 1 2 3 4 5 6 7 8 9 10 46.8 % 33.2 % 13.9 % 3.0 % 2.0 % 1.0 % 0.0 % 0.0 % 0.0 % 0.0 % * Presented as unaudited required supplementary information Total Lines Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, 2022 Years Ended December 31, Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 24,661 24,755 24,280 21,361 21,342 21,506 21,465 21,631 21,671 21,842 $ 1,374 4,444 2014 24,580 22,777 21,726 21,571 21,095 21,054 20,897 20,183 20,154 1,913 5,021 2015 25,757 26,614 26,414 25,450 25,650 22,518 22,516 22,130 2,372 6,398 2016 35,281 33,672 32,554 30,165 27,340 26,550 25,858 2,880 11,427 2017 43,499 35,113 32,685 30,847 29,783 29,766 2,940 16,963 2018 47,263 41,630 39,880 38,108 37,923 4,528 14,704 2019 57,778 51,598 51,824 51,211 6,724 13,008 2020 63,734 64,362 66,963 10,991 13,498 2021 127,981 132,816 27,493 14,829 2022 181,164 66,546 12,597 $ 589,827 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Years Ended December 31, Accident 2013* 2014* 2015* 2016* 2017* 2018* 2019* 2020* 2021* 2022 2013 6,799 12,602 15,984 17,708 19,246 19,712 20,129 20,121 20,617 20,835 2014 6,011 12,005 14,814 16,666 17,260 18,238 18,507 18,702 18,801 2015 6,275 13,785 16,512 18,046 18,923 19,340 19,685 19,982 2016 8,110 16,791 19,677 20,780 22,138 22,648 23,140 2017 8,903 17,555 20,809 22,673 23,727 24,884 2018 10,339 22,279 26,852 29,479 31,735 2019 13,215 27,174 33,678 37,766 2020 14,487 34,437 46,864 2021 38,435 78,113 2022 49,708 351,828 All outstanding liabilities before 2013, net of reinsurance 5,503 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 243,502 Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance* Years 1 2 3 4 5 6 7 8 9 10 27.5 % 29.9 % 13.3 % 7.3 % 6.3 % 3.2 % 3.0 % 1.2 % 2.2 % 1.5 % * Presented as unaudited required supplementary information |
Summary of Reconciliation of Claims Development to Liability | The reconciliation of the net incurred and paid claims development tables to the liability for unpaid loss and loss adjustment expense in the consolidated balance sheets is as follows: December 31, 2022 2021 Net outstanding liabilities Workers' compensation $ 190,519 $ 133,811 Other liability 24,128 19,159 All other lines of business 28,855 14,481 Liabilities for unpaid loss and loss adjustment expense, net of reinsurance 243,502 167,451 Reinsurance recoverable on unpaid claims Workers' compensation 234,657 260,891 Other liability 52,816 50,765 All other lines of business 90,982 57,352 Total reinsurance recoverable on unpaid claims 378,455 369,008 Unallocated loss adjustment expenses 10,953 7,861 Total liability for unpaid loss and loss adjustment expenses $ 632,910 $ 544,320 |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Reinsurance Disclosures [Abstract] | |
Summary of Reinsurance Recoverable | The Company holds collateral on a funds held basis or requires collateral in a trust or as a letter of credit to secure recoverable balances from reinsurers not authorized in the insurance carriers state of domicile as follows: December 31, 2022 2021 Letters of credit $ 18,438 $ 24,979 Trust 136,370 126,404 Funds held 211,436 156,401 Total $ 366,244 $ 307,784 The Company has unsecured aggregate recoverable for losses, paid and unpaid, loss adjustment expenses and unearned premiums with the following individual reinsurers, authorized or unauthorized, exceeding 5 percent of stockholders’ equity: December 31, 2022 2021 Arch Reinsurance Company (U.S.) * $ 22,050 Markel Global 58,400 66,933 Munich Reinsurance America, Inc 17,255 * Swiss Reinsurance America Corp 17,199 * (*) Represents less than 5 percent of stockholders’ equity |
Summary of Effects of Reinsurance | A summary of the impact of ceded reinsurance is as follows: Year Ended December 31, 2022 2021 Gross Assumed Ceded Net Gross Assumed Ceded Net Losses and LAE liabilities $ 619,453 $ 13,457 $ (378,455) $ 254,455 $ 531,598 $ 12,722 $ (369,008) $ 175,312 Unearned premiums 226,412 2,700 (124,269) 104,843 216,878 3,062 (129,411) 90,529 Written premiums 642,210 9,093 (352,365) 298,938 624,769 9,395 (394,888) 239,276 Earned premiums 632,677 9,552 (357,605) 284,624 563,337 8,916 (373,573) 198,680 Loss and loss adjustment expenses 441,274 11,857 (249,254) 203,877 343,134 14,287 (226,649) 130,772 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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: December 31, December 31, (dollars in thousands) 2022 2021 Right of use asset $ 2,764 $ 4,530 Lease liability $ 3,063 $ 4,976 Weighted average remaining lease term 1.79 years 2.42 years Weighted average discount rate 6.07 % 6.33 % |
Schedule of Future Maturities of Lease Liabilities | Future maturities of lease liabilities as of December 31, 2022 are as follows: Operating Leases 2023 $ 1,940 2024 1,064 2025 164 2026 44 2027 2 Total lease payments 3,214 Less: imputed interest (151) Total lease liabilities $ 3,063 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the calculation of basic and diluted EPS of Common Stock: Year Ended December 31, (in thousands, except share and per share amounts) 2022 2021 2020 Net income - basic and diluted $ (65,955) $ 19,330 $ 88,549 Weighted average number of shares outstanding - basic 51,203,370 51,162,293 43,744,003 Effect of dilutive securities: Restricted stock units — 11,157 741 Dilutive shares — 11,157 741 Weighted average number of shares outstanding - diluted 51,203,370 51,173,450 43,744,744 Earnings per share: Basic $ (1.29) $ 0.38 $ 2.02 Diluted $ (1.29) $ 0.38 $ 2.02 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income | The following table presents the changes in accumulated other comprehensive income (loss): Year Ended December 31, 2022 2021 2020 Balance at beginning of period $ 4,384 $ 13,426 $ 6,500 Other comprehensive income (loss), net of tax: Unrealized investment gains (losses): Unrealized investment gains (losses) arising during the period (54,720) (11,386) 9,028 Change in fair value of interest rate cap (45) — — Income tax expense (benefit) (11,488) (2,391) 1,903 Unrealized investment gains (losses), net of tax (43,277) (8,995) 7,125 Less: reclassification adjustments to: Net realized investment gains (losses) included in net realized gains (1,101) 59 252 Income tax expense (benefit) (231) 12 53 Total reclassifications included in net income, net of tax (870) 47 199 Other comprehensive income (loss) (42,407) (9,042) 6,926 Balance at end of period $ (38,023) $ 4,384 $ 13,426 |
Stock Compensation (Tables)
Stock Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | 2022 2021 2020 Expected volatility 29.8% 29.8% 29.8% Expected term 6 years 6 years 6 years Risk-free interest rate 1.92% 1.32% 0.47% |
Summary of Stock Option Activity | A summary of the status of the Company's stock option activity as of December 31, 2022 and changes during the year then ended are as follows: Stock Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contract Term Balance outstanding, December 31, 2021 120,187 $ 16.06 Granted 64,694 $ 7.04 Forfeited or cancelled (20,158) $ 14.76 Balance outstanding, December 31, 2022 164,723 $ 12.68 $ — 8.34 years Options exercisable, December 31, 2022 53,956 $ 15.68 $ — 7.73 years |
Summary of Options, Vested and Expected to Vest, Outstanding | |
Schedule of Share-based Payment Award, Restricted Stock Units, Valuation Assumptions | Grant date fair values were determined using a Monte Carlo valuation model based on the following assumptions: Fiscal 2022 Fiscal 2021 Total grant date fair value $391 $845 Total grant date fair value per share $6.04 $13.92 Expected volatility 40.0% 35.0% Weighted average expected life 2.81 years 2.77 years Risk-free interest rate 1.79% 0.27% |
Summary of Share-based Payment Award, Total Shareholder Return | The percent of the target MSU that will be earned based on the Company’s TSR is as follows: Cumulative TSR % Fiscal 2022 Fiscal 2021 Percent of Units Vested Below 29.2% Below 25.1% —% 29.2% 25.1% 50% 52.1% 47.2% 100% 74.9% and above 69.3% and above 200% |
Summary of Nonvested Restricted Stock Unit Activity | A summary of the status of the Company’s non-vested restricted stock unit activity as of December 31, 2022 and changes during the year then ended is as follows: RSUs MSUs PSUs Total Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Non-vested outstanding, December 31, 2021 117,109 $ 15.53 50,861 $ 13.92 101,748 $ 17.50 269,718 $ 15.97 Granted 97,808 $ 6.67 64,709 $ 6.04 64,693 $ 7.04 227,210 $ 6.60 Vested (50,236) $ 14.89 — $ — — $ — (50,236) $ 14.89 Forfeited or cancelled (17,129) $ 13.43 (9,854) $ 11.67 (16,895) $ 15.76 (43,878) $ 13.93 Non-vested outstanding, December 31, 2022 147,552 10.12 105,716 9.31 149,546 13.17 402,814 11.04 |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Regulated Operations [Abstract] | |
Summary of Statutory Basis Information | Summarized statutory basis information, which differs from GAAP, is shown below for Benchmark, ALIC, 7710 and BSIC. 2022 (in thousands, except percentages) Benchmark ALIC 7710 BSIC Statutory capital and surplus $ 222,340 $ 6,270 $ 6,210 $ 48,655 RBC authorized control level 31,350 436 225 315 Statutory net income (loss) (2,270) 108 (21) 695 RBC percentage 709 % 1,438 % 2,760 % 15,446 % 2021 (in thousands, except percentages) Benchmark ALIC 7710 BSIC Statutory capital and surplus $ 170,686 $ 6,321 $ 6,395 $ 19,977 RBC authorized control level 24,279 567 382 129 Statutory net income (782) 128 76 (23) RBC percentage 703 % 1,115 % 1,674 % 15,486 % |
Schedule II. Condensed Financ_2
Schedule II. Condensed Financial Information of Registrant (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
Condensed Balance Sheet | Trean Insurance Group, Inc. Condensed Balance Sheets (in thousands, except share data) December 31, 2022 2021 Assets Investment in subsidiaries $ 283,600 $ 267,643 Total investments 283,600 267,643 Cash and cash equivalents 3,066 4,242 Income taxes receivable 5,841 12,360 Intercompany receivables 22,645 135,369 Deferred tax asset 1,051 671 Other assets 1,859 1,930 Total assets $ 318,062 $ 422,215 Liabilities Accounts payable and accrued expenses $ 3,043 $ 306 Total liabilities 3,043 306 Stockholders' equity Preferred stock, $0.01 par value per share (100,000,000 authorized, zero issued and outstanding) — — Common stock, $0.01 par value per share (600,000,000 authorized; 51,222,485 and 51,176,887 issued and outstanding) 512 512 Additional paid-in capital 290,095 288,623 Retained earnings 62,435 128,390 Accumulated other comprehensive income (38,023) 4,384 Total stockholders' equity 315,019 421,909 Total liabilities and stockholders' equity $ 318,062 $ 422,215 |
Condensed Statement of Operations | Trean Insurance Group, Inc. Condensed Statements of Operations (in thousands) Year Ended December 31, 2022 2021 Revenues Net investment income $ — $ 9 Other revenue — — Total revenue — 9 Expenses General and administrative expenses 5,591 4,103 Other expenses 3,081 845 Noncash stock compensation 1,496 1,522 Total expenses 10,168 6,470 Loss before taxes (10,168) (6,461) Income tax benefit (1,650) (1,712) Loss before equity earnings of subsidiaries (8,518) (4,749) Equity earnings (loss) of subsidiaries (57,437) 24,079 Net income (loss) $ (65,955) $ 19,330 |
Condensed Statement of Cash Flows | Trean Insurance Group, Inc. Condensed Statements of Cash Flows (in thousands) Year Ended December 31, 2022 2021 Operating activities Net income (loss) $ (65,955) $ 19,330 Adjustments to reconcile net income to net cash from operating activities: Stock compensation 1,496 1,522 Equity (earnings) losses in subsidiaries 57,437 (24,079) Dividends received from subsidiaries 1,150 — Deferred income taxes (379) (414) Changes in operating assets and liabilities: Premiums and other receivables — — Other assets 70 (1,930) Accounts payable and accrued expenses 2,737 (357) Income taxes payable and receivable 6,520 (7,781) Intercompany receivables (3,079) 17,277 Net cash provided by (used in) operating activities (3) 3,568 Investing activities Distribution from subsidiaries 8,850 — Capital contributions to subsidiaries (10,000) — Net cash used for investing activities (1,150) — Financing activities Shares redeemed for payroll taxes (23) (94) Proceeds from short swing rule — 85 Net cash provided by (used in) financing activities (23) (9) Net increase in cash, cash equivalents and restricted cash (1,176) 3,559 Cash, cash equivalents and restricted cash ‑ beginning of period 4,242 683 Cash, cash equivalents and restricted cash ‑ end of period $ 3,066 $ 4,242 |
Business and Basis of Present_2
Business and Basis of Presentation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Jul. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Cash portion, cash per share of common stock converted (in dollars per share) | $ 6.15 | ||
Merger related expenses | $ 3,081 |
Significant Accounting Polici_4
Significant Accounting Policies - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Accounting Policies [Abstract] | |||
Restricted cash | $ 1,083,000 | $ 407,000 | |
Other than temporary impairment losses, investments | 0 | 0 | $ 0 |
Bad debt writeoff | 1,427,000 | 26,000 | |
Receivables recovered | 177,000 | ||
Bad debt expense related to reinsurance | 0 | 0 | 0 |
Goodwill | 66,294,000 | 142,347,000 | 140,640,000 |
Goodwill impairment | 76,053,000 | 0 | 0 |
Impairment of intangible assets | $ 0 | $ 0 | $ 0 |
Number of operating segments | segment | 1 | ||
Number of reportable segments | segment | 1 |
Significant Accounting Polici_5
Significant Accounting Policies - Summary of Premiums and Other Receivables (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Total premiums and other receivables | $ 161,232 | $ 142,723 |
Less: Allowance for doubtful accounts | (950) | (803) |
Net premiums and other receivables | 160,282 | 141,920 |
Premiums receivable | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Total premiums and other receivables | 152,823 | 133,200 |
Trade receivables | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Total premiums and other receivables | 8,395 | 9,511 |
Notes receivable | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Total premiums and other receivables | $ 14 | $ 12 |
Significant Accounting Polici_6
Significant Accounting Policies - Summary of Property, Plant and Equipment (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Impairments of property and equipment | $ 0 | $ 0 | $ 0 |
Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 3 years | ||
Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 30 years | ||
Building and building improvements | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 30 years | ||
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 7 years | ||
Office equipment | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 5 years | ||
Software and computer equipment | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 3 years |
Significant Accounting Polici_7
Significant Accounting Policies - Schedules of Concentration of Risk, by Geography (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Concentration Risk [Line Items] | |||
Total gross written premium | $ 651,303 | $ 634,164 | $ 484,249 |
Geographic Concentration Risk | Revenue Benchmark | California | |||
Concentration Risk [Line Items] | |||
Total gross written premium | 162,639 | 179,426 | 203,421 |
Geographic Concentration Risk | Revenue Benchmark | Texas | |||
Concentration Risk [Line Items] | |||
Total gross written premium | 93,165 | 85,154 | 28,909 |
Geographic Concentration Risk | Revenue Benchmark | Michigan | |||
Concentration Risk [Line Items] | |||
Total gross written premium | 45,821 | 46,271 | 41,830 |
Geographic Concentration Risk | Revenue Benchmark | Tennessee | |||
Concentration Risk [Line Items] | |||
Total gross written premium | 16,006 | 15,966 | 12,347 |
Geographic Concentration Risk | Revenue Benchmark | Florida | |||
Concentration Risk [Line Items] | |||
Total gross written premium | 36,559 | 27,982 | 8,359 |
Geographic Concentration Risk | Revenue Benchmark | Georgia | |||
Concentration Risk [Line Items] | |||
Total gross written premium | 30,996 | 25,619 | 12,869 |
Geographic Concentration Risk | Revenue Benchmark | Arizona | |||
Concentration Risk [Line Items] | |||
Total gross written premium | 28,685 | 26,272 | 27,950 |
Geographic Concentration Risk | Revenue Benchmark | Alabama | |||
Concentration Risk [Line Items] | |||
Total gross written premium | 23,198 | 20,991 | 17,549 |
Geographic Concentration Risk | Revenue Benchmark | Pennsylvania | |||
Concentration Risk [Line Items] | |||
Total gross written premium | 17,167 | 20,375 | 10,498 |
Geographic Concentration Risk | Revenue Benchmark | Indiana | |||
Concentration Risk [Line Items] | |||
Total gross written premium | 13,943 | 13,422 | 8,508 |
Geographic Concentration Risk | Revenue Benchmark | Other geographical areas | |||
Concentration Risk [Line Items] | |||
Total gross written premium | $ 183,124 | $ 172,686 | $ 112,009 |
Product Concentration Risk | Revenue Benchmark | Public Utility Bonds | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 21% | 22% | |
Product Concentration Risk | Revenue Benchmark | Mortgage Backed Securities | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 26% | 29% |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||||||
Jul. 06, 2021 | Oct. 01, 2020 | Jul. 15, 2020 | Apr. 01, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jul. 14, 2020 | Dec. 31, 2019 | |
Business Acquisition [Line Items] | |||||||||
Goodwill | $ 66,294 | $ 142,347 | $ 140,640 | ||||||
Earn-out payment | 750 | 0 | 0 | ||||||
Intangible assets, net | 67,117 | 73,114 | |||||||
Gain on revaluation of Compstar investment | 0 | 0 | 69,846 | ||||||
Compstar Holding Company LLC | |||||||||
Business Acquisition [Line Items] | |||||||||
Ownership percentage | 45% | ||||||||
Equity method investments | $ 11,831 | ||||||||
Western Integrated Care, LLC | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage of voting interests acquired | 100% | ||||||||
Consideration transferred | $ 5,500 | ||||||||
Contingent consideration liability | 1,500 | ||||||||
Goodwill | 1,707 | ||||||||
Intangible assets, net | 3,624 | ||||||||
Earn-out payment | $ 750 | $ 750 | $ 1,500 | ||||||
Intangible assets, net | $ 3,624 | ||||||||
7710 Insurance Company | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage of voting interests acquired | 100% | ||||||||
Consideration transferred | $ 12,140 | ||||||||
Goodwill | 2,873 | ||||||||
Intangible assets, net | $ 3,299 | ||||||||
Compstar Holding Company LLC | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage of voting interests acquired | 55% | ||||||||
Consideration transferred | $ 99,204 | ||||||||
Goodwill | 134,428 | ||||||||
Intangible assets, net | 73,954 | ||||||||
Fair value amount of equity method investment | 81,167 | ||||||||
Equity method investments | 11,321 | ||||||||
Gain on revaluation of Compstar investment | $ 69,846 | ||||||||
Compstar Holding Company LLC | Common Stock | |||||||||
Business Acquisition [Line Items] | |||||||||
Stock issued during period (in shares) | 6,613,606 | 6,613,606 | |||||||
Stock issued, price per share (in dollars per share) | $ 15 | ||||||||
LCTA Risk Services, Inc. | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage of voting interests acquired | 100% | ||||||||
Consideration transferred | $ 1,400 | ||||||||
Goodwill | 517 | ||||||||
Intangible assets, net | $ 482 |
Acquisitions - Schedule of Asse
Acquisitions - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jul. 06, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Recognized amounts of identifiable assets acquired and liabilities assumed: | ||||
Goodwill | $ 66,294 | $ 142,347 | $ 140,640 | |
Western Integrated Care, LLC | ||||
Business Acquisition [Line Items] | ||||
Fair value of total consideration transferred | $ 5,500 | |||
Recognized amounts of identifiable assets acquired and liabilities assumed: | ||||
Cash and cash equivalents | 205 | |||
Premiums and other receivables | 1,025 | |||
Property and equipment, net | 39 | |||
Right of use asset | 135 | |||
Goodwill | 1,707 | |||
Intangible assets, net | 3,624 | |||
Other assets | 16 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract] | ||||
Accounts payable and accrued expenses | (873) | |||
Lease liability | (135) | |||
Debt | (243) | |||
Net assets acquired | $ 5,500 |
Acquisitions - Schedule of Acqu
Acquisitions - Schedule of Acquired Finite-Lived Intangible Assets by Major Class (Details) - USD ($) $ in Thousands | Jul. 06, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 15, 2020 |
Business Acquisition [Line Items] | ||||
Intangible assets, net | $ 67,117 | $ 73,114 | ||
Trade name | ||||
Business Acquisition [Line Items] | ||||
Intangible assets, net | 3,036 | |||
Non-compete agreement | ||||
Business Acquisition [Line Items] | ||||
Intangible assets, net | 179 | |||
Customer lists and relationships | ||||
Business Acquisition [Line Items] | ||||
Intangible assets, net | $ 63,902 | |||
Western Integrated Care, LLC | ||||
Business Acquisition [Line Items] | ||||
Intangible assets, net | $ 3,624 | |||
Western Integrated Care, LLC | Trade name | ||||
Business Acquisition [Line Items] | ||||
Useful Life | 2 years | |||
Intangible assets, net | $ 28 | |||
Western Integrated Care, LLC | Non-compete agreement | ||||
Business Acquisition [Line Items] | ||||
Useful Life | 5 years | |||
Intangible assets, net | $ 256 | |||
Western Integrated Care, LLC | Customer lists and relationships | ||||
Business Acquisition [Line Items] | ||||
Useful Life | 12 years | |||
Intangible assets, net | $ 3,340 | |||
Compstar Holding Company LLC | ||||
Business Acquisition [Line Items] | ||||
Intangible assets, net | $ 73,954 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Value Options (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | $ 552,243 | $ 471,061 |
Equity securities | 35,041 | 969 |
Total investments | 587,284 | 472,030 |
Embedded derivatives on funds held under reinsurance agreements | (15,411) | 271 |
Interest rate cap agreement | 102 | |
Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt | 79,288 | 30,938 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 62,552 | 2,392 |
Embedded derivatives on funds held under reinsurance agreements | (1,953) | (4) |
Interest rate cap agreement | 0 | |
Level 1 | Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 489,691 | 468,669 |
Embedded derivatives on funds held under reinsurance agreements | (13,458) | 275 |
Interest rate cap agreement | 102 | |
Level 2 | Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt | 29,288 | 30,938 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Embedded derivatives on funds held under reinsurance agreements | 0 | 0 |
Interest rate cap agreement | 0 | |
Level 3 | Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt | 50,000 | 0 |
Available-For-Sale and Equity Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 587,284 | 472,030 |
Available-For-Sale and Equity Securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 74,612 | 2,392 |
Available-For-Sale and Equity Securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 512,672 | 469,638 |
Available-For-Sale and Equity Securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total investments | 0 | 0 |
U.S. government and government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 62,552 | 41,434 |
U.S. government and government securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 62,552 | 2,392 |
U.S. government and government securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 39,042 |
U.S. government and government securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Foreign governments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 395 | 2,490 |
Foreign governments | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Foreign governments | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 395 | 2,490 |
Foreign governments | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
States, territories and possessions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 15,854 | 10,766 |
States, territories and possessions | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
States, territories and possessions | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 15,854 | 10,766 |
States, territories and possessions | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Political subdivisions of states territories and possessions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 33,904 | 40,002 |
Political subdivisions of states territories and possessions | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Political subdivisions of states territories and possessions | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 33,904 | 40,002 |
Political subdivisions of states territories and possessions | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Special revenue and special assessment obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 103,639 | 95,991 |
Special revenue and special assessment obligations | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Special revenue and special assessment obligations | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 103,639 | 95,991 |
Special revenue and special assessment obligations | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Industrial and public utilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 125,540 | 103,257 |
Industrial and public utilities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Industrial and public utilities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 125,540 | 103,257 |
Industrial and public utilities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Commercial mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 128,105 | 118,218 |
Commercial mortgage-backed securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Commercial mortgage-backed securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 128,105 | 118,218 |
Commercial mortgage-backed securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Residential mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 25,112 | 17,368 |
Residential mortgage-backed securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Residential mortgage-backed securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 25,112 | 17,368 |
Residential mortgage-backed securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Other loan-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 51,613 | 41,425 |
Other loan-backed securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Other loan-backed securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 51,613 | 41,425 |
Other loan-backed securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Hybrid securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 5,529 | 110 |
Hybrid securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Hybrid securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 5,529 | 110 |
Hybrid securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities | 0 | 0 |
Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 35,041 | 969 |
Equity securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 12,060 | 0 |
Equity securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 22,981 | 969 |
Equity securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |||
Cash portion, cash per share of common stock converted (in dollars per share) | $ 6.15 | ||
Goodwill impairment | $ 76,053,000 | $ 0 | $ 0 |
Investments - Schedule of Debt
Investments - Schedule of Debt Securities, Available-for-sale (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fixed maturities: | ||
Cost or Amortized Cost | $ 600,398 | $ 465,459 |
Gross Unrealized Gains | 266 | 8,719 |
Gross Unrealized Losses | (48,421) | (3,117) |
Fair Value | 552,243 | 471,061 |
U.S. government and government securities | ||
Fixed maturities: | ||
Cost or Amortized Cost | 65,405 | 41,490 |
Gross Unrealized Gains | 11 | 113 |
Gross Unrealized Losses | (2,864) | (169) |
Fair Value | 62,552 | 41,434 |
Foreign governments | ||
Fixed maturities: | ||
Cost or Amortized Cost | 400 | 2,500 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (5) | (10) |
Fair Value | 395 | 2,490 |
States, territories and possessions | ||
Fixed maturities: | ||
Cost or Amortized Cost | 17,310 | 10,593 |
Gross Unrealized Gains | 2 | 189 |
Gross Unrealized Losses | (1,458) | (16) |
Fair Value | 15,854 | 10,766 |
Political subdivisions of states territories and possessions | ||
Fixed maturities: | ||
Cost or Amortized Cost | 38,167 | 39,170 |
Gross Unrealized Gains | 19 | 975 |
Gross Unrealized Losses | (4,282) | (143) |
Fair Value | 33,904 | 40,002 |
Special revenue and special assessment obligations | ||
Fixed maturities: | ||
Cost or Amortized Cost | 115,696 | 93,664 |
Gross Unrealized Gains | 55 | 2,920 |
Gross Unrealized Losses | (12,112) | (593) |
Fair Value | 103,639 | 95,991 |
Industrial and public utilities | ||
Fixed maturities: | ||
Cost or Amortized Cost | 131,769 | 100,774 |
Gross Unrealized Gains | 101 | 2,835 |
Gross Unrealized Losses | (6,330) | (352) |
Fair Value | 125,540 | 103,257 |
Commercial mortgage-backed securities | ||
Fixed maturities: | ||
Cost or Amortized Cost | 145,471 | 119,378 |
Gross Unrealized Gains | 52 | 591 |
Gross Unrealized Losses | (17,418) | (1,751) |
Fair Value | 128,105 | 118,218 |
Residential mortgage-backed securities | ||
Fixed maturities: | ||
Cost or Amortized Cost | 26,716 | 16,549 |
Gross Unrealized Gains | 11 | 843 |
Gross Unrealized Losses | (1,615) | (24) |
Fair Value | 25,112 | 17,368 |
Other loan-backed securities | ||
Fixed maturities: | ||
Cost or Amortized Cost | 53,231 | 41,236 |
Gross Unrealized Gains | 13 | 248 |
Gross Unrealized Losses | (1,631) | (59) |
Fair Value | 51,613 | 41,425 |
Hybrid securities | ||
Fixed maturities: | ||
Cost or Amortized Cost | 6,233 | 105 |
Gross Unrealized Gains | 2 | 5 |
Gross Unrealized Losses | (706) | 0 |
Fair Value | $ 5,529 | $ 110 |
Investments - Schedule of Conti
Investments - Schedule of Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | $ 376,290 | $ 200,252 |
Unrealized Loss, less than 12 months | (24,716) | (2,841) |
Fair Value, 12 months or more | 139,115 | 9,770 |
Unrealized Loss, 12 months or more | (23,705) | (276) |
Fair Value | 515,405 | 210,022 |
Unrealized Loss | (48,421) | (3,117) |
U.S. government and government securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 38,172 | 26,935 |
Unrealized Loss, less than 12 months | (1,217) | (168) |
Fair Value, 12 months or more | 19,199 | 23 |
Unrealized Loss, 12 months or more | (1,647) | (1) |
Fair Value | 57,371 | 26,958 |
Unrealized Loss | (2,864) | (169) |
Foreign governments | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 0 | 2,490 |
Unrealized Loss, less than 12 months | 0 | (10) |
Fair Value, 12 months or more | 395 | 0 |
Unrealized Loss, 12 months or more | (5) | 0 |
Fair Value | 395 | 2,490 |
Unrealized Loss | (5) | (10) |
States, territories and possessions | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 13,882 | 935 |
Unrealized Loss, less than 12 months | (1,321) | (16) |
Fair Value, 12 months or more | 822 | 0 |
Unrealized Loss, 12 months or more | (137) | 0 |
Fair Value | 14,704 | 935 |
Unrealized Loss | (1,458) | (16) |
Political subdivisions of states territories and possessions | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 21,586 | 11,115 |
Unrealized Loss, less than 12 months | (2,506) | (143) |
Fair Value, 12 months or more | 9,375 | 0 |
Unrealized Loss, 12 months or more | (1,776) | 0 |
Fair Value | 30,961 | 11,115 |
Unrealized Loss | (4,282) | (143) |
Special revenue and special assessment obligations | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 71,146 | 29,917 |
Unrealized Loss, less than 12 months | (6,522) | (593) |
Fair Value, 12 months or more | 22,350 | 0 |
Unrealized Loss, 12 months or more | (5,590) | 0 |
Fair Value | 93,496 | 29,917 |
Unrealized Loss | (12,112) | (593) |
Industrial and public utilities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 98,018 | 24,042 |
Unrealized Loss, less than 12 months | (4,225) | (286) |
Fair Value, 12 months or more | 18,405 | 1,058 |
Unrealized Loss, 12 months or more | (2,105) | (66) |
Fair Value | 116,423 | 25,100 |
Unrealized Loss | (6,330) | (352) |
Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 71,574 | 80,126 |
Unrealized Loss, less than 12 months | (5,737) | (1,565) |
Fair Value, 12 months or more | 53,147 | 6,212 |
Unrealized Loss, 12 months or more | (11,681) | (186) |
Fair Value | 124,721 | 86,338 |
Unrealized Loss | (17,418) | (1,751) |
Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 18,051 | 4,539 |
Unrealized Loss, less than 12 months | (1,177) | (24) |
Fair Value, 12 months or more | 4,119 | 0 |
Unrealized Loss, 12 months or more | (438) | 0 |
Fair Value | 22,170 | 4,539 |
Unrealized Loss | (1,615) | (24) |
Other loan-backed securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 38,572 | 20,153 |
Unrealized Loss, less than 12 months | (1,305) | (36) |
Fair Value, 12 months or more | 11,303 | 2,477 |
Unrealized Loss, 12 months or more | (326) | (23) |
Fair Value | 49,875 | 22,630 |
Unrealized Loss | (1,631) | (59) |
Hybrid securities | ||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | ||
Fair Value, less than 12 months | 5,289 | 0 |
Unrealized Loss, less than 12 months | (706) | 0 |
Fair Value, 12 months or more | 0 | 0 |
Unrealized Loss, 12 months or more | 0 | 0 |
Fair Value | 5,289 | 0 |
Unrealized Loss | $ (706) | $ 0 |
Investments - Summary of Invest
Investments - Summary of Investments by Contractual Maturity (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Cost or Amortized Cost | ||
Due in one year or less | $ 35,468 | |
Due after one year but before five years | 176,083 | |
Due after five years but before ten years | 93,107 | |
Due after ten years | 70,322 | |
Cost or Amortized Cost | 600,398 | $ 465,459 |
Fair Value | ||
Due in one year or less | 35,125 | |
Due after one year but before five years | 167,986 | |
Due after five years but before ten years | 83,769 | |
Due after ten years | 60,533 | |
Fair Value | 552,243 | 471,061 |
Commercial mortgage-backed securities | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 145,471 | 119,378 |
Fair Value | ||
Fair Value | 128,105 | 118,218 |
Residential mortgage-backed securities | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 26,716 | 16,549 |
Fair Value | ||
Fair Value | 25,112 | 17,368 |
Other loan-backed securities | ||
Cost or Amortized Cost | ||
Cost or Amortized Cost | 53,231 | 41,236 |
Fair Value | ||
Fair Value | $ 51,613 | $ 41,425 |
Investments - Summary of Realiz
Investments - Summary of Realized Gain (Loss) on Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fixed maturities: | |||
Gains | $ 134 | $ 153 | $ 259 |
Losses | (1,235) | (94) | (9) |
Total fixed maturities | (1,101) | 59 | 250 |
Funds held investments: | |||
Gains | 19 | 112 | 0 |
Losses | (29) | (10) | 0 |
Total funds held investments | (10) | 102 | 0 |
Funds held investments: | |||
Gains | 1,415 | 0 | 3,115 |
Losses | (19) | (112) | 0 |
Total equity securities and equity method investments | 1,396 | (112) | 3,115 |
Total net investment realized gains | $ 285 | $ 49 | $ 3,365 |
Investments - Summary of Net In
Investments - Summary of Net Investment Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net Investment Income [Line Items] | |||
Net investment income | $ 10,087 | $ 8,721 | $ 11,669 |
Fixed maturities | |||
Net Investment Income [Line Items] | |||
Net investment income | 9,316 | 6,331 | 6,271 |
Interest earned on cash and short-term investments | |||
Net Investment Income [Line Items] | |||
Net investment income | 192 | 4 | 25 |
Equity securities | |||
Net Investment Income [Line Items] | |||
Net investment income | 1,708 | 48 | 2,028 |
Unrealized losses on equity securities | |||
Net Investment Income [Line Items] | |||
Net investment income | (4,797) | 0 | 0 |
Income on funds held investments | |||
Net Investment Income [Line Items] | |||
Net investment income | $ 3,668 | $ 2,338 | $ 3,345 |
Investments - Unrealized Gain (
Investments - Unrealized Gain (Loss) on Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |||
Net realized gains (losses) on sales of equity securities | $ 1,396 | $ (112) | $ 3,115 |
Change in net unrealized gains (losses) of equity securities still held as of as of December 31, 2022, 2021 and 2020 | (4,797) | 0 | 0 |
Net realized and unrealized gains (losses) on equity securities | $ (3,401) | $ (112) | $ 3,115 |
Investments- Schedule of Funds
Investments- Schedule of Funds Held Under Reinsurance Agreements (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Investments, Debt and Equity Securities [Abstract] | ||
Funds held under reinsurance agreements, at cost | $ 256,702 | $ 199,139 |
Embedded derivatives, at fair value | (15,411) | 271 |
Total funds held under reinsurance agreements | $ 241,291 | $ 199,410 |
Investments- Embedded Derivativ
Investments- Embedded Derivatives, Gain (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net Investment Income [Line Items] | |||
Change in fair value of embedded derivatives | $ 15,682 | $ 4,666 | $ (2,810) |
Effect of realized losses (gains) on funds held investments | 10 | (102) | 0 |
Total gains (losses) on embedded derivatives | 12,024 | 2,226 | (6,155) |
Income on funds held investments | |||
Net Investment Income [Line Items] | |||
Effect of net investment income on funds held investments | $ (3,668) | $ (2,338) | $ (3,345) |
Equity Method Investments (Deta
Equity Method Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||||
Jan. 03, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jul. 15, 2020 | Jul. 14, 2020 | Jan. 02, 2020 | Dec. 31, 2019 | |
Schedule of Equity Method Investments [Line Items] | ||||||||
Equity earnings in affiliates, net of tax | $ 0 | $ 0 | $ 2,333 | |||||
Distributions from equity method investments | 0 | 0 | 2,953 | |||||
Proceeds from sale of equity method investment | 0 | 232 | 3,000 | |||||
Unrealized gain on sale of equity method investment | 10,087 | 8,721 | 11,669 | |||||
Earn-out payment | 750 | 0 | 0 | |||||
Compstar Holding Company LLC | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Percentage of voting interests acquired | 55% | |||||||
Carrying value of equity method investments | $ 11,321 | |||||||
Compstar Holding Company LLC | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Ownership percentage | 45% | |||||||
Carrying value of equity method investments | $ 11,831 | |||||||
Equity earnings in affiliates, net of tax | 2,333 | |||||||
Distributions from equity method investments | 2,842 | |||||||
Trean Intermediaries | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Ownership percentage | 25% | |||||||
Distributions from equity method investments | $ 225 | |||||||
Ownership percentage sold | 15% | |||||||
Proceeds from sale of equity method investment | $ 3,000 | 1,888 | ||||||
Cumulative percentage ownership after all transactions | 10% | |||||||
Realized gain (loss) on sale | $ 3,115 | $ (112) | ||||||
Unrealized gain on sale of equity method investment | $ 2,000 | |||||||
Earn-out payment | $ 1,415 |
Nonconsolidated Variable Inte_2
Nonconsolidated Variable Interest Entities (Details) $ in Thousands | Dec. 31, 2019 USD ($) |
Trean Capital Trust I | |
Variable Interest Entity [Line Items] | |
Liquidation value | $ 7,500 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Total, at cost | $ 12,287 | $ 11,948 | |
Less: Accumulated depreciation | (5,136) | (4,316) | |
Property and equipment, net | 7,151 | 7,632 | |
Depreciation | 820 | 1,007 | $ 912 |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Total, at cost | 1,780 | 1,780 | |
Building and building improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total, at cost | 5,755 | 5,755 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Total, at cost | 1,137 | 1,137 | |
Office equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total, at cost | 3,499 | 2,898 | |
Other property, plant and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total, at cost | 101 | 101 | |
Deposits on fixed assets not placed in service | |||
Property, Plant and Equipment [Line Items] | |||
Total, at cost | $ 15 | $ 277 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | $ 142,347,000 | $ 140,640,000 | |
Acquisitions | 0 | 1,707,000 | |
Impairment | 76,053,000 | 0 | $ 0 |
Goodwill, ending balance | $ 66,294,000 | $ 142,347,000 | $ 140,640,000 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | |||
Totals | $ 81,634 | $ 81,634 | |
Less: Accumulated amortization | (14,517) | (8,520) | |
Total | 67,117 | 73,114 | |
Intangible asset amortization | 5,998 | 5,826 | $ 2,573 |
Non-compete agreement | |||
Finite-Lived Intangible Assets [Line Items] | |||
Totals | 300 | 300 | |
Total | $ 179 | ||
Non-compete agreement | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 2 years | ||
Non-compete agreement | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 5 years | ||
Trade name | |||
Finite-Lived Intangible Assets [Line Items] | |||
Totals | $ 3,710 | 3,710 | |
Total | $ 3,036 | ||
Trade name | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 2 years | ||
Trade name | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 15 years | ||
Customer lists and relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Totals | $ 77,624 | $ 77,624 | |
Total | $ 63,902 | ||
Customer lists and relationships | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 10 years | ||
Customer lists and relationships | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 14 years |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
2023 | $ 5,983 | |
2024 | 5,975 | |
2025 | 5,975 | |
2026 | 5,950 | |
2027 | 5,909 | |
Thereafter | 37,325 | |
Total | 67,117 | $ 73,114 |
Trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
2023 | 248 | |
2024 | 241 | |
2025 | 241 | |
2026 | 241 | |
2027 | 241 | |
Thereafter | 1,824 | |
Total | 3,036 | |
Customer lists and relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
2023 | 5,684 | |
2024 | 5,683 | |
2025 | 5,683 | |
2026 | 5,683 | |
2027 | 5,668 | |
Thereafter | 35,501 | |
Total | 63,902 | |
Non-compete agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
2023 | 51 | |
2024 | 51 | |
2025 | 51 | |
2026 | 26 | |
2027 | 0 | |
Thereafter | 0 | |
Total | $ 179 |
Deferred Policy Acquisition C_3
Deferred Policy Acquisition Costs, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Insurance [Abstract] | |||
Premium deficiency | $ 0 | $ 0 | $ 0 |
Movement Analysis of Deferred Policy Acquisition Costs and Present Value of Future Profits [Roll Forward] | |||
Deferred policy acquisition cost, beginning balance | 13,344 | 1,332 | 2,115 |
Policy acquisition costs deferred | 28,362 | 22,853 | 7,593 |
Amortization charged to expense | (22,848) | (10,841) | (8,376) |
Deferred policy acquisition cost, ending balance | $ 18,858 | $ 13,344 | $ 1,332 |
Accounts Payable, Accrued Exp_2
Accounts Payable, Accrued Expenses, and Other Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued commissions and third-party administration fees | $ 9,168 | $ 7,337 |
Trade payables | 4,977 | 4,765 |
Accrued taxes, licenses and fees | 4,316 | 6,710 |
Accrued wages and employee benefits | 5,489 | 4,873 |
Amounts retained for the accounts of others | 2,710 | 1,619 |
Other liabilities | 5,949 | 4,144 |
Total | $ 32,609 | $ 29,448 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Face Value | $ 79,288 | $ 30,938 |
Unamortized Discount and Issuance Costs | (2,214) | (576) |
Carrying Value | 77,074 | 30,362 |
Secured credit facility | ||
Debt Instrument [Line Items] | ||
Face Value | 29,288 | 30,938 |
Unamortized Discount and Issuance Costs | (408) | (576) |
Carrying Value | 28,880 | 30,362 |
Surplus notes | ||
Debt Instrument [Line Items] | ||
Face Value | 50,000 | 0 |
Unamortized Discount and Issuance Costs | (1,806) | 0 |
Carrying Value | $ 48,194 | $ 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | 138 Months Ended | |||||||||||
Sep. 28, 2022 | Aug. 24, 2022 USD ($) | Jul. 06, 2021 USD ($) loan | Oct. 07, 2020 USD ($) | Jul. 16, 2020 USD ($) | Jul. 07, 2011 | Jun. 21, 2006 USD ($) shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) $ / shares | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2022 USD ($) $ / shares | Oct. 01, 2020 USD ($) | Jul. 15, 2020 USD ($) | |
Debt Instrument [Line Items] | ||||||||||||||
Long-term debt, gross | $ 79,288 | $ 30,938 | $ 79,288 | |||||||||||
Interest Rate Cap | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Notional amount | $ 29,700 | |||||||||||||
Derivative, capped interest rate | 5% | |||||||||||||
Fixed payment relating to agreement | $ 173 | |||||||||||||
Secured credit facility | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Long-term debt, gross | 29,288 | $ 30,938 | $ 29,288 | |||||||||||
Secured credit facility | Second Amended And Restated Credit Agreement | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Extension term | 5 years | |||||||||||||
Increase to term loan debt amount | $ 11,707 | |||||||||||||
Maximum borrowing capacity | 33,000 | |||||||||||||
Secured credit facility | Second Amended And Restated Credit Agreement | Minimum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Quarterly installment payments | 206 | |||||||||||||
Secured credit facility | Second Amended And Restated Credit Agreement | Maximum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Quarterly installment payments | $ 825 | |||||||||||||
Secured credit facility | Second Amended And Restated Credit Agreement | London Interbank Offered Rate (LIBOR) | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 7.59% | 4.64% | 4.72% | |||||||||||
Secured credit facility | Eurodollar | London Interbank Offered Rate (LIBOR) | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 4.50% | |||||||||||||
Secured credit facility | Eurodollar | Secured Overnight Financing Rate (SOFR) | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 3.50% | |||||||||||||
Secured credit facility | ABR Loans | London Interbank Offered Rate (LIBOR) | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 3.50% | |||||||||||||
Secured credit facility | ABR Loans | Secured Overnight Financing Rate (SOFR) | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 2.50% | |||||||||||||
Junior subordinated debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt interest expense | $ 271 | |||||||||||||
Long-term debt, gross | $ 7,732 | |||||||||||||
Proceeds from subordinated debt | $ 7,807 | |||||||||||||
Junior subordinated debt | London Interbank Offered Rate (LIBOR) | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 3.50% | |||||||||||||
Oak Street Loan | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Long-term debt, gross | $ 19,740 | $ 19,740 | ||||||||||||
Federal Paycheck Protection Program Loan (PPP Loan) | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Number of loans acquired | loan | 2 | |||||||||||||
Federal Paycheck Protection Program Loan (PPP Loan) | Compstar Holding Company LLC | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Long-term debt, gross | $ 325 | |||||||||||||
Federal Paycheck Protection Program Loan (PPP Loan) | 7710 Insurance Company | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Long-term debt, gross | $ 269 | |||||||||||||
Federal Paycheck Protection Program Loan (PPP Loan) | Western Integrated Care, LLC | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Long-term debt, gross | $ 243 | |||||||||||||
Notes Payable, Other Payables | 6.75% Surplus Notes Due 2042 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt interest expense | $ 1,222 | |||||||||||||
Aggregate principal amount | $ 50,000 | |||||||||||||
Interest rate, stated percentage | 6.75% | |||||||||||||
Notes, term | 10 years | |||||||||||||
Redemption price, percentage | 100% | |||||||||||||
Maximum indebtedness percentage of total surplus | 35% | |||||||||||||
Preferred Capital Securities | Junior subordinated debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Shares issued during period (in shares) | shares | 7,500 | |||||||||||||
Preferred capital securities interest rate | 9.167% | |||||||||||||
Liquidation preference per share (in dollars per share) | $ / shares | $ 1,000 | $ 1,000 | ||||||||||||
Common Securities | Junior subordinated debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Shares issued during period (in shares) | shares | 232 | |||||||||||||
Debt | Secured credit facility | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt interest expense | $ 2,022 | $ 1,517 | $ 1,518 | |||||||||||
Debt | Secured credit facility | Second Amended And Restated Credit Agreement | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Maximum borrowing capacity | $ 2,000 |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
2023 | $ 2,888 | |
2024 | 3,300 | |
2025 | 23,100 | |
2026 | 0 | |
2027 | 0 | |
Thereafter | 50,000 | |
Total debt | $ 79,288 | $ 30,938 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Summary of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Total revenue from contracts with customers | $ 8,246 | $ 10,240 | $ 12,104 |
Brokerage | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue from contracts with customers | 5,705 | 7,036 | 8,994 |
Managing general agent fees | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue from contracts with customers | 326 | 603 | 976 |
Third-party administrator fees | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue from contracts with customers | 1,358 | 1,608 | 1,630 |
Consulting fees | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue from contracts with customers | $ 857 | $ 993 | $ 504 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Schedule of Contract with Customer, Contract Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Contract with customer, contract assets | $ 3,077 | $ 3,353 |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Current tax expense | $ 3,308 | $ 7,823 | $ 7,291 |
Deferred tax expense | (2,234) | (2,374) | (1,056) |
Total income tax expense | $ 1,074 | $ 5,449 | $ 6,235 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||
Income tax expense computed at statutory rate | $ (13,625) | $ 5,204 | $ 19,415 |
State taxes, net of federal benefit | (289) | 47 | 577 |
Tax-exempt municipal income, net of proration | (240) | (263) | (272) |
Goodwill impairment | 14,365 | 0 | 0 |
Potential merger and other nondeductible expenses | 647 | 10 | 957 |
Fair market value adjustment on Compstar investment | 0 | 0 | (14,668) |
Other | 216 | 451 | 226 |
Total income tax expense | $ 1,074 | $ 5,449 | $ 6,235 |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Income tax expense computed at statutory rate, percent | 21% | 21% | 21% |
State taxes, net of federal benefit, percent | 0.40% | 0.20% | 0.60% |
Tax-exempt municipal income, net of proration, percent | 0.30% | (1.10%) | (0.30%) |
Goodwill impairment, percent | (22.10%) | 0% | 0% |
Potential merger and other nondeductible expenses, percent | (1.00%) | 0% | 1% |
Fair market value adjustment on Compstar investment, percent | 0% | 0% | (15.90%) |
Other, percent | (0.30%) | 1.90% | 0.30% |
Effective income tax rate, percent | (1.70%) | 22% | 6.70% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Income Tax Examination [Line Items] | ||
Deferred tax assets | $ 17 | $ 41 |
Federal Income Tax | ||
Income Tax Examination [Line Items] | ||
Operating loss carryforwards | $ 3,155 | $ 3,272 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Unpaid losses and LAE | $ 6,256 | $ 4,574 |
Unearned premiums | 4,399 | 3,802 |
Unrealized losses on investments | 7,692 | 0 |
NOL carryforward | 17 | 41 |
Lease liability | 731 | 1,188 |
Accrued liabilities | 1,286 | 926 |
Stock compensation | 841 | 484 |
Other | 299 | 51 |
Total deferred tax assets | 21,521 | 11,066 |
Deferred tax liabilities: | ||
Deferred acquisition costs | (4,011) | (2,802) |
Loss reserve discounting TCJA transitional adjustment | (355) | (473) |
Unrealized gains and losses on investments | 0 | (1,131) |
Property and equipment | (204) | (191) |
Right-of-use asset | (660) | (1,082) |
Intangible assets | (10,230) | (12,715) |
Prepaid expenses | (69) | (43) |
Section 481(a) adjustment | 0 | (56) |
Other | (34) | (93) |
Total deferred tax liabilities | (15,563) | (18,586) |
Net deferred tax assets | $ 5,958 | |
Net deferred tax (liabilities) | $ (7,520) |
Liability for Unpaid Losses a_3
Liability for Unpaid Losses and Loss Adjustment Expense - Schedule of Liability for Unpaid Losses and Loss Adjustment Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Unpaid losses and LAE reserves at beginning of period | $ 544,320 | $ 457,817 | $ 406,716 | |
Less losses ceded through reinsurance | (369,008) | (335,655) | (304,005) | |
Net unpaid losses and LAE at beginning of period | 254,455 | 175,312 | 122,162 | $ 102,711 |
Acquisition of subsidiary, net of losses ceded through reinsurance | 0 | 0 | 7,050 | |
Incurred losses and LAE related to: | ||||
Current period | 198,996 | 136,191 | 65,587 | |
Prior period | 4,881 | (5,419) | (14,813) | |
Total incurred losses and LAE | 203,877 | 130,772 | 50,774 | |
Paid losses and LAE, net of reinsurance, related to: | ||||
Current period | 61,484 | 42,484 | 15,411 | |
Prior period | 63,250 | 35,138 | 22,962 | |
Total paid losses and LAE | 124,734 | 77,622 | 38,373 | |
Net unpaid losses and LAE at end of period | 254,455 | 175,312 | 122,162 | |
Plus losses ceded through reinsurance | 378,455 | 369,008 | 335,655 | |
Unpaid losses and LAE reserves at end of period | 632,910 | 544,320 | 457,817 | |
Incurred losses and LAE related to prior years | 4,881 | (5,419) | $ (14,813) | |
Unallocated loss adjustment expenses | (10,953) | (7,861) | ||
Total liability for unpaid loss and loss adjustment expenses | 1,605 | $ 1,661 | ||
Life and Annuity Insurance Product Line | ||||
Paid losses and LAE, net of reinsurance, related to: | ||||
Unallocated loss adjustment expenses | $ 4,935 |
Liability for Unpaid Losses a_4
Liability for Unpaid Losses and Loss Adjustment Expense - Summary of Loss Development (Details) $ in Thousands | Dec. 31, 2022 USD ($) claim | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2019 USD ($) | Dec. 31, 2018 USD ($) | Dec. 31, 2017 USD ($) | Dec. 31, 2016 USD ($) | Dec. 31, 2015 USD ($) | Dec. 31, 2014 USD ($) | Dec. 31, 2013 USD ($) |
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 589,827 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 351,828 | |||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance | $ 243,502 | $ 167,451 | ||||||||
Short-duration Insurance Contracts, Historical Claims Duration | ||||||||||
1 | 27.50% | |||||||||
2 | 29.90% | |||||||||
3 | 13.30% | |||||||||
4 | 7.30% | |||||||||
5 | 6.30% | |||||||||
6 | 3.20% | |||||||||
7 | 3% | |||||||||
8 | 1.20% | |||||||||
9 | 2.20% | |||||||||
10 | 1.50% | |||||||||
Workers' Compensation | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 477,967 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 292,567 | |||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance | $ 190,519 | 133,811 | ||||||||
Short-duration Insurance Contracts, Historical Claims Duration | ||||||||||
1 | 26.20% | |||||||||
2 | 32.80% | |||||||||
3 | 15.80% | |||||||||
4 | 7.50% | |||||||||
5 | 6.30% | |||||||||
6 | 2.50% | |||||||||
7 | 2.60% | |||||||||
8 | 0.30% | |||||||||
9 | 1.60% | |||||||||
10 | 1% | |||||||||
Other liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 35,872 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 12,128 | |||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance | $ 24,128 | 19,159 | ||||||||
Short-duration Insurance Contracts, Historical Claims Duration | ||||||||||
1 | 3.90% | |||||||||
2 | 6.50% | |||||||||
3 | 4.90% | |||||||||
4 | 10.50% | |||||||||
5 | 16.20% | |||||||||
6 | 13.20% | |||||||||
7 | 7% | |||||||||
8 | 11.90% | |||||||||
9 | 4.40% | |||||||||
10 | 3% | |||||||||
All other lines of business | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 75,988 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 47,133 | |||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance | $ 28,855 | 14,481 | ||||||||
Short-duration Insurance Contracts, Historical Claims Duration | ||||||||||
1 | 46.80% | |||||||||
2 | 33.20% | |||||||||
3 | 13.90% | |||||||||
4 | 3% | |||||||||
5 | 2% | |||||||||
6 | 1% | |||||||||
7 | 0% | |||||||||
8 | 0% | |||||||||
9 | 0% | |||||||||
10 | 0% | |||||||||
2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 21,842 | 21,671 | $ 21,631 | $ 21,465 | $ 21,506 | $ 21,342 | $ 21,361 | $ 24,280 | $ 24,755 | $ 24,661 |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 20,835 | 20,617 | 20,121 | 20,129 | 19,712 | 19,246 | 17,708 | 15,984 | 12,602 | 6,799 |
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,374 | |||||||||
Cumulative Number of Reported Claims | claim | 4,444 | |||||||||
2013 | Workers' Compensation | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 20,139 | 19,968 | 19,964 | 19,814 | 19,426 | 19,528 | 19,772 | 22,650 | 22,879 | 22,746 |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 19,444 | 19,335 | 18,906 | 18,976 | 18,664 | 18,448 | 17,135 | 15,703 | 12,407 | 6,734 |
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,134 | |||||||||
Cumulative Number of Reported Claims | claim | 3,539 | |||||||||
2013 | Other liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 1,703 | 1,703 | 1,667 | 1,651 | 2,068 | 1,804 | 1,580 | 1,617 | 1,876 | 1,914 |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 1,391 | 1,282 | 1,215 | 1,153 | 1,048 | 798 | 573 | 281 | 195 | 65 |
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 240 | |||||||||
Cumulative Number of Reported Claims | claim | 333 | |||||||||
2013 | All other lines of business | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 0 | 0 | 0 | 0 | 12 | 10 | 9 | 13 | 0 | 1 |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | $ 0 |
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 0 | |||||||||
Cumulative Number of Reported Claims | claim | 572 | |||||||||
2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 20,154 | 20,183 | 20,897 | 21,054 | 21,095 | 21,571 | 21,726 | 22,777 | 24,580 | |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 18,801 | 18,702 | 18,507 | 18,238 | 17,260 | 16,666 | 14,814 | 12,005 | 6,011 | |
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,913 | |||||||||
Cumulative Number of Reported Claims | claim | 5,021 | |||||||||
2014 | Workers' Compensation | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 17,556 | 17,584 | 18,049 | 18,025 | 17,967 | 19,394 | 19,781 | 20,686 | 22,357 | |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 16,700 | 16,707 | 16,607 | 16,535 | 16,177 | 16,011 | 14,393 | 11,672 | 5,958 | |
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,539 | |||||||||
Cumulative Number of Reported Claims | claim | 3,546 | |||||||||
2014 | Other liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 2,593 | 2,593 | 2,832 | 3,013 | 3,107 | 2,154 | 1,921 | 1,964 | 2,183 | |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 2,095 | 1,989 | 1,884 | 1,687 | 1,067 | 639 | 405 | 233 | 53 | |
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 374 | |||||||||
Cumulative Number of Reported Claims | claim | 424 | |||||||||
2014 | All other lines of business | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 5 | 6 | 16 | 16 | 21 | 23 | 24 | 127 | 40 | |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 6 | 6 | 16 | 16 | 16 | 16 | 16 | 100 | $ 0 | |
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 0 | |||||||||
Cumulative Number of Reported Claims | claim | 1,051 | |||||||||
2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 22,130 | 22,516 | 22,518 | 25,650 | 25,450 | 26,414 | 26,614 | 25,757 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 19,982 | 19,685 | 19,340 | 18,923 | 18,046 | 16,512 | 13,785 | 6,275 | ||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 2,372 | |||||||||
Cumulative Number of Reported Claims | claim | 6,398 | |||||||||
2015 | Workers' Compensation | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 19,568 | 19,974 | 19,560 | 22,218 | 21,788 | 23,444 | 23,830 | 22,643 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 18,238 | 18,143 | 17,984 | 17,638 | 17,002 | 15,814 | 13,313 | 6,089 | ||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,831 | |||||||||
Cumulative Number of Reported Claims | claim | 4,796 | |||||||||
2015 | Other liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 2,523 | 2,523 | 2,860 | 3,334 | 3,549 | 2,862 | 2,652 | 2,946 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 1,855 | 1,523 | 1,258 | 1,187 | 945 | 600 | 374 | 123 | ||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 390 | |||||||||
Cumulative Number of Reported Claims | claim | 430 | |||||||||
2015 | All other lines of business | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 39 | 19 | 98 | 98 | 113 | 108 | 132 | 168 | ||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | (111) | 19 | 98 | 98 | 99 | 98 | 98 | $ 63 | ||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 151 | |||||||||
Cumulative Number of Reported Claims | claim | 1,172 | |||||||||
2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 25,858 | 26,550 | 27,340 | 30,165 | 32,554 | 33,672 | 35,281 | |||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 23,140 | 22,648 | 22,138 | 20,780 | 19,677 | 16,791 | 8,110 | |||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 2,880 | |||||||||
Cumulative Number of Reported Claims | claim | 11,427 | |||||||||
2016 | Workers' Compensation | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 22,381 | 23,076 | 23,063 | 25,430 | 27,674 | 29,261 | 30,710 | |||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 20,918 | 20,551 | 19,856 | 18,728 | 17,904 | 15,329 | 7,260 | |||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,965 | |||||||||
Cumulative Number of Reported Claims | claim | 9,835 | |||||||||
2016 | Other liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 2,423 | 2,423 | 2,735 | 3,180 | 3,135 | 2,794 | 2,689 | |||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 1,199 | 1,081 | 783 | 558 | 355 | 137 | 54 | |||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 911 | |||||||||
Cumulative Number of Reported Claims | claim | 303 | |||||||||
2016 | All other lines of business | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 1,054 | 1,051 | 1,542 | 1,555 | 1,745 | 1,617 | 1,882 | |||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 1,023 | 1,016 | 1,499 | 1,494 | 1,418 | 1,325 | $ 796 | |||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 4 | |||||||||
Cumulative Number of Reported Claims | claim | 1,289 | |||||||||
2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 29,766 | 29,783 | 30,847 | 32,685 | 35,113 | 43,499 | ||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 24,884 | 23,727 | 22,673 | 20,809 | 17,555 | 8,903 | ||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 2,940 | |||||||||
Cumulative Number of Reported Claims | claim | 16,963 | |||||||||
2017 | Workers' Compensation | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 24,515 | 24,581 | 24,439 | 25,713 | 29,107 | 35,683 | ||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 21,150 | 20,456 | 19,353 | 17,930 | 15,017 | 7,439 | ||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,877 | |||||||||
Cumulative Number of Reported Claims | claim | 14,550 | |||||||||
2017 | Other liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 3,267 | 3,267 | 3,966 | 4,555 | 3,089 | 4,964 | ||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 1,841 | 1,387 | 999 | 676 | 439 | 52 | ||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,041 | |||||||||
Cumulative Number of Reported Claims | claim | 288 | |||||||||
2017 | All other lines of business | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 1,984 | 1,935 | 2,442 | 2,417 | 2,917 | 2,852 | ||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 1,893 | 1,884 | 2,321 | 2,203 | 2,099 | $ 1,412 | ||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 22 | |||||||||
Cumulative Number of Reported Claims | claim | 2,125 | |||||||||
2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 37,923 | 38,108 | 39,880 | 41,630 | 47,263 | |||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 31,735 | 29,479 | 26,852 | 22,279 | 10,339 | |||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 4,528 | |||||||||
Cumulative Number of Reported Claims | claim | 14,704 | |||||||||
2018 | Workers' Compensation | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 31,352 | 31,909 | 34,321 | 34,478 | 40,122 | |||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 27,538 | 26,201 | 24,023 | 19,811 | 8,978 | |||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 2,800 | |||||||||
Cumulative Number of Reported Claims | claim | 12,451 | |||||||||
2018 | Other liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 4,052 | 3,679 | 3,010 | 4,278 | 4,256 | |||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 1,738 | 846 | 504 | 345 | 52 | |||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,679 | |||||||||
Cumulative Number of Reported Claims | claim | 228 | |||||||||
2018 | All other lines of business | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 2,519 | 2,520 | 2,549 | 2,874 | 2,885 | |||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 2,459 | 2,432 | 2,325 | 2,123 | $ 1,309 | |||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 49 | |||||||||
Cumulative Number of Reported Claims | claim | 2,025 | |||||||||
2019 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 51,211 | 51,824 | 51,598 | 57,778 | ||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 37,766 | 33,678 | 27,174 | 13,215 | ||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 6,724 | |||||||||
Cumulative Number of Reported Claims | claim | 13,008 | |||||||||
2019 | Workers' Compensation | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 45,239 | 44,997 | 45,382 | 48,565 | ||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 34,434 | 30,650 | 24,472 | 11,201 | ||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 4,752 | |||||||||
Cumulative Number of Reported Claims | claim | 11,451 | |||||||||
2019 | Other liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 2,593 | 3,608 | 2,849 | 5,457 | ||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 387 | 239 | 170 | 111 | ||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,663 | |||||||||
Cumulative Number of Reported Claims | claim | 129 | |||||||||
2019 | All other lines of business | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 3,379 | 3,219 | 3,367 | 3,756 | ||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 2,945 | 2,789 | 2,532 | $ 1,903 | ||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 309 | |||||||||
Cumulative Number of Reported Claims | claim | 1,428 | |||||||||
2020 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 66,963 | 64,362 | 63,734 | |||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 46,864 | 34,437 | 14,487 | |||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 10,991 | |||||||||
Cumulative Number of Reported Claims | claim | 13,498 | |||||||||
2020 | Workers' Compensation | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 58,033 | 55,531 | 55,960 | |||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 42,349 | 30,646 | 12,141 | |||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 7,914 | |||||||||
Cumulative Number of Reported Claims | claim | 12,148 | |||||||||
2020 | Other liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 4,239 | 3,702 | 2,932 | |||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 521 | 196 | 55 | |||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 2,753 | |||||||||
Cumulative Number of Reported Claims | claim | 215 | |||||||||
2020 | All other lines of business | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 4,691 | 5,129 | 4,842 | |||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 3,994 | 3,595 | $ 2,291 | |||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 324 | |||||||||
Cumulative Number of Reported Claims | claim | 1,135 | |||||||||
2021 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 132,816 | 127,981 | ||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 78,113 | 38,435 | ||||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 27,493 | |||||||||
Cumulative Number of Reported Claims | claim | 14,829 | |||||||||
2021 | Workers' Compensation | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 102,778 | 100,254 | ||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 58,916 | 26,623 | ||||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 20,945 | |||||||||
Cumulative Number of Reported Claims | claim | 11,698 | |||||||||
2021 | Other liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 6,117 | 4,362 | ||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 977 | 719 | ||||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 4,707 | |||||||||
Cumulative Number of Reported Claims | claim | 272 | |||||||||
2021 | All other lines of business | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 23,921 | 23,365 | ||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 18,220 | $ 11,093 | ||||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 1,841 | |||||||||
Cumulative Number of Reported Claims | claim | 2,859 | |||||||||
2022 | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 181,164 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 49,708 | |||||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 66,546 | |||||||||
Cumulative Number of Reported Claims | claim | 12,597 | |||||||||
2022 | Workers' Compensation | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 136,406 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 32,880 | |||||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 52,703 | |||||||||
Cumulative Number of Reported Claims | claim | 10,052 | |||||||||
2022 | Other liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 6,362 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 124 | |||||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 5,911 | |||||||||
Cumulative Number of Reported Claims | claim | 345 | |||||||||
2022 | All other lines of business | ||||||||||
Claims Development [Line Items] | ||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 38,396 | |||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 16,704 | |||||||||
Total of IBNR Liabilities Plus Expected Development on Reported Claims | $ 7,932 | |||||||||
Cumulative Number of Reported Claims | claim | 2,200 | |||||||||
All outstanding liabilities before 2013, net of reinsurance | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 5,503 | |||||||||
All outstanding liabilities before 2013, net of reinsurance | Workers' Compensation | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 5,119 | |||||||||
All outstanding liabilities before 2013, net of reinsurance | Other liability | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | 384 | |||||||||
All outstanding liabilities before 2013, net of reinsurance | All other lines of business | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance | $ 0 |
Liability for Unpaid Losses a_5
Liability for Unpaid Losses and Loss Adjustment Expense - Summary of Reconciliation of Claims Development to Liability (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Liabilities for unpaid loss and loss adjustment expense, net of reinsurance | $ 243,502 | $ 167,451 | ||
Total reinsurance recoverable on unpaid claims | 378,455 | 369,008 | $ 335,655 | $ 304,005 |
Unallocated loss adjustment expenses | 10,953 | 7,861 | ||
Total liability for unpaid loss and loss adjustment expenses | 632,910 | 544,320 | $ 457,817 | $ 406,716 |
Workers' Compensation | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Liabilities for unpaid loss and loss adjustment expense, net of reinsurance | 190,519 | 133,811 | ||
Total reinsurance recoverable on unpaid claims | 234,657 | 260,891 | ||
Other liability | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Liabilities for unpaid loss and loss adjustment expense, net of reinsurance | 24,128 | 19,159 | ||
Total reinsurance recoverable on unpaid claims | 52,816 | 50,765 | ||
All other lines of business | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Liabilities for unpaid loss and loss adjustment expense, net of reinsurance | 28,855 | 14,481 | ||
Total reinsurance recoverable on unpaid claims | $ 90,982 | $ 57,352 |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Effects of Reinsurance [Line Items] | |||
Bad debt expense related to reinsurance | $ 0 | $ 0 | $ 0 |
Reinsurance recoverable | $ 408,522 | 377,241 | |
Ceded Credit Risk, Unsecured | Reinsurance Recoverable Including Reinsurance Premium Paid | Reinsurer Concentration Risk | |||
Effects of Reinsurance [Line Items] | |||
Concentration risk, percentage (exceeding) | 5% | ||
Reinsurers Authorized in Respective Insurance Carrier's State of Domicile | |||
Effects of Reinsurance [Line Items] | |||
Reinsurance recoverable | $ 29,855 | $ 43,009 |
Reinsurance - Summary of Reinsu
Reinsurance - Summary of Reinsurance Recoverable (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable | $ 408,522 | $ 377,241 |
Ceded Credit Risk, Secured | Reinsurance Recoverable for Paid and Unpaid Claims and Claims Adjustments | Reinsurers Not Authorized in Respective Insurance Carrier's State of Domicile | ||
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable | 366,244 | 307,784 |
Ceded Credit Risk, Secured | Reinsurance Recoverable for Paid and Unpaid Claims and Claims Adjustments | Reinsurers Not Authorized in Respective Insurance Carrier's State of Domicile | Letters of credit | ||
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable | 18,438 | 24,979 |
Ceded Credit Risk, Secured | Reinsurance Recoverable for Paid and Unpaid Claims and Claims Adjustments | Reinsurers Not Authorized in Respective Insurance Carrier's State of Domicile | Trust | ||
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable | 136,370 | 126,404 |
Ceded Credit Risk, Secured | Reinsurance Recoverable for Paid and Unpaid Claims and Claims Adjustments | Reinsurers Not Authorized in Respective Insurance Carrier's State of Domicile | Funds held | ||
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable | 211,436 | 156,401 |
Ceded Credit Risk, Unsecured | Reinsurance Recoverable Including Reinsurance Premium Paid | Arch Reinsurance Company (U.S.) | ||
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable | 22,050 | |
Ceded Credit Risk, Unsecured | Reinsurance Recoverable Including Reinsurance Premium Paid | Markel Global | ||
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable | 58,400 | $ 66,933 |
Ceded Credit Risk, Unsecured | Reinsurance Recoverable Including Reinsurance Premium Paid | Munich Reinsurance America, Inc | ||
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable | 17,255 | |
Ceded Credit Risk, Unsecured | Reinsurance Recoverable Including Reinsurance Premium Paid | Swiss Reinsurance America Corp | ||
Effects of Reinsurance [Line Items] | ||
Reinsurance recoverable | $ 17,199 |
Reinsurance - Summary of Effect
Reinsurance - Summary of Effects of Reinsurance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Losses and LAE liabilities | |||
Gross | $ 619,453 | $ 531,598 | |
Assumed | 13,457 | 12,722 | |
Ceded | (378,455) | (369,008) | |
Net unpaid losses and LAE at beginning of period | 254,455 | 175,312 | |
Unearned premiums | |||
Gross | 226,412 | 216,878 | |
Assumed | 2,700 | 3,062 | |
Ceded | (124,269) | (129,411) | |
Net | 104,843 | 90,529 | |
Written premiums | |||
Gross | 642,210 | 624,769 | |
Assumed | 9,093 | 9,395 | |
Ceded | (352,365) | (394,888) | |
Net | 298,938 | 239,276 | |
Earned premiums | |||
Gross | 632,677 | 563,337 | |
Assumed | 9,552 | 8,916 | |
Ceded | (357,605) | (373,573) | $ (323,567) |
Net earned premiums | 284,624 | 198,680 | 108,467 |
Loss and loss adjustment expenses | |||
Gross | 441,274 | 343,134 | |
Assumed | 11,857 | 14,287 | |
Ceded | (249,254) | (226,649) | |
Net | $ 203,877 | $ 130,772 | $ 50,774 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lessee, Lease, Description [Line Items] | |||
Renewal term | 5 years | ||
Lease expense | $ 2,458 | $ 2,459 | $ 2,501 |
Variable lease expense | 93 | 25 | 362 |
Sublease income, post-adoption | $ 98 | $ 100 | |
Sublease income, pre-adoption | $ 84 | ||
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Term of contract | 1 month | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Term of contract | 54 months |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Right of use asset | $ 2,764 | $ 4,530 |
Lease liability | $ 3,063 | $ 4,976 |
Weighted average remaining lease term | 1 year 9 months 14 days | 2 years 5 months 1 day |
Weighted average discount rate | 6.07% | 6.33% |
Leases - Schedule of Future Mat
Leases - Schedule of Future Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
2023 | $ 1,940 | |
2024 | 1,064 | |
2025 | 164 | |
2026 | 44 | |
2027 | 2 | |
Total lease payments | 3,214 | |
Less: imputed interest | (151) | |
Total lease liabilities | $ 3,063 | $ 4,976 |
Equity - Narrative (Details)
Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||||||
Jul. 22, 2020 | Jul. 20, 2020 | Jul. 15, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jul. 31, 2020 | Dec. 31, 2019 | |
Class of Stock [Line Items] | ||||||||
Proceeds from initial public offering | $ 93,139 | $ 0 | $ 0 | $ 99,643 | ||||
Payments for underwriting discounts and commissions | 7,500 | |||||||
Payments of offering expenses | 6,503 | |||||||
Preferred stock, authorized (in shares) | 100,000,000 | 100,000,000 | ||||||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||||
Preferred stock, issued (in shares) | 0 | 0 | ||||||
Preferred stock, outstanding (in shares) | 0 | 0 | ||||||
Common stock, authorized (in shares) | 600,000,000 | 600,000,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |||||
Common stock, issued (in shares) | 51,222,485 | 51,176,887 | ||||||
Common stock, outstanding (in shares) | 51,222,485 | 51,176,887 | ||||||
Other Expense | Altaris Capital Partners | ||||||||
Class of Stock [Line Items] | ||||||||
Initial public offering bonuses, contract buyout fee, and executive severance | $ 11,054 | |||||||
Initial Public Offering | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock, number of shares issued in transaction (in shares) | 10,714,286 | |||||||
Sale of stock, price per share (in dollars per share) | $ 15 | |||||||
IPO - Shares Issued and Sold By Trean Corporation | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock, number of shares issued in transaction (in shares) | 7,142,857 | |||||||
Consideration received on IPO | $ 107,142 | |||||||
IPO - Shares Sold by Selling Stockholders | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock, number of shares issued in transaction (in shares) | 1,207,142 | 3,571,429 | ||||||
Consideration received on IPO | $ 71,678 | |||||||
Compstar Holding Company LLC | ||||||||
Class of Stock [Line Items] | ||||||||
Consideration transferred | $ 99,204 | |||||||
Percentage of voting interests acquired | 55% | |||||||
Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock, outstanding (in shares) | 51,222,485 | 51,176,887 | 51,148,782 | 0 | ||||
Corporate recapitalization shares exchanged (in shares) | 37,386,394 | |||||||
Common Stock | Compstar Holding Company LLC | ||||||||
Class of Stock [Line Items] | ||||||||
Stock issued during period (in shares) | 6,613,606 | 6,613,606 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Net Income (Loss) Attributable to Parent | $ (65,955) | $ 19,330 | $ 88,549 |
Weighted average number of shares outstanding - basic | |||
Weighted average number of shares outstanding - basic (in shares) | 51,203,370 | 51,162,293 | 43,744,003 |
Effect of dilutive securities: | |||
Dilutive securities (in shares) | 0 | 11,157 | 741 |
Weighted average number of shares outstanding - diluted | |||
Weighted average number of shares outstanding - diluted (in shares) | 51,203,370 | 51,173,450 | 43,744,744 |
Excluded: Antidilutive common stock equivalents (in shares) | 567,537 | 389,905 | 179,840 |
Earnings per share: | |||
Basic (in dollars per share) | $ (1.29) | $ 0.38 | $ 2.02 |
Diluted (in dollars per share) | $ (1.29) | $ 0.38 | $ 2.02 |
Restricted Stock Units (RSUs) | |||
Effect of dilutive securities: | |||
Dilutive securities (in shares) | 0 | 11,157 | 741 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Stockholders' equity beginning balance | $ 421,909 | $ 410,107 | $ 141,615 |
Unrealized gains (losses): | |||
Decrease in fair value of interest rate cap | (45) | 0 | 0 |
Less reclassification adjustments to: | |||
Other comprehensive income (loss) | (42,407) | (9,042) | 6,926 |
Stockholders' equity ending balance | 315,019 | 421,909 | 410,107 |
Accumulated Other Comprehensive Income (Loss) | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Stockholders' equity beginning balance | 4,384 | 13,426 | 6,500 |
Less reclassification adjustments to: | |||
Other comprehensive income (loss) | (42,407) | (9,042) | 6,926 |
Stockholders' equity ending balance | (38,023) | 4,384 | 13,426 |
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-sale, Parent | |||
Unrealized gains (losses): | |||
Unrealized investment gains (losses) arising during the period | (54,720) | (11,386) | 9,028 |
Decrease in fair value of interest rate cap | (45) | 0 | 0 |
Income tax expense (benefit) | (11,488) | (2,391) | 1,903 |
Unrealized investment gains (losses), net of tax | (43,277) | (8,995) | 7,125 |
Less reclassification adjustments to: | |||
Net realized investment gains (losses) included in net realized gains | (1,101) | 59 | 252 |
Income tax expense (benefit) | (231) | 12 | 53 |
Total reclassifications included in net income, net of tax | (870) | 47 | 199 |
Other comprehensive income (loss) | $ (42,407) | $ (9,042) | $ 6,926 |
Stock Compensation - Narrative
Stock Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock compensation expense | $ 1,496 | $ 1,522 | $ 506 |
Cost not yet recognized, weighted average period for recognition | 8 years 4 months 2 days | ||
2020 Omnibus Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares authorized (in shares) | 5,058,085 | ||
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock compensation expense | $ 203 | $ 164 | $ 61 |
Weighted average grant-date fair value of options granted (in dollars per share) | $ 2.30 | $ 5.49 | $ 4.43 |
Unrecognized compensation cost related to stock options | $ 250 | ||
Cost not yet recognized, weighted average period for recognition | 10 months 24 days | ||
Stock Options | Share-based Payment Arrangement, Employee | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 3 years | ||
Contractual term from date of grant (in years) | 10 years | ||
Stock Options | Share-based Payment Arrangement, Employee | Share-based Payment Arrangement, Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Annual vesting percentage | 33% | ||
Stock Options | Share-based Payment Arrangement, Employee | Share-based Payment Arrangement, Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Annual vesting percentage | 33% | ||
Stock Options | Share-based Payment Arrangement, Employee | Share-based Payment Arrangement, Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Annual vesting percentage | 33% | ||
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock compensation expense | $ 1,293 | $ 1,358 | $ 445 |
Vesting period (in years) | 3 years | ||
Cost not yet recognized, weighted average period for recognition | 1 year 6 months | ||
Non-vested non-option stock-based compensation expense | $ 2,029 | ||
Fair value of restricted stock units vested | $ 262 | $ 498 | $ 174 |
Restricted Stock Units (RSUs) | Share-based Payment Arrangement, Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Annual vesting percentage | 33% | ||
Restricted Stock Units (RSUs) | Share-based Payment Arrangement, Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Annual vesting percentage | 33% | ||
Restricted Stock Units (RSUs) | Share-based Payment Arrangement, Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Annual vesting percentage | 33% | ||
Performance Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 3 years | ||
Performance Stock Units | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Payout rate (percentage) | 0% | ||
Performance Stock Units | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Payout rate (percentage) | 200% | ||
Performance Stock Units | 25.1% | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Payout rate (percentage) | 50% | ||
Performance Stock Units | 69.3% and above | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Payout rate (percentage) | 200% | ||
Market-Based Stock Units (MSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Performance period (in years) | 3 years | ||
Market-Based Stock Units (MSUs) | 25.1% | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Annual vesting percentage | 50% | ||
Market-Based Stock Units (MSUs) | 69.3% and above | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Annual vesting percentage | 200% |
Stock Compensation - Schedule o
Stock Compensation - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Payment Arrangement [Abstract] | |||
Expected volatility | 29.80% | 29.80% | 29.80% |
Expected term | 6 years | 6 years | 6 years |
Risk-free interest rate | 1.92% | 1.32% | 0.47% |
Stock Compensation - Summary of
Stock Compensation - Summary of Stock Option Activity (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Stock Options | |
Forfeited or cancelled (in shares) | shares | (20,158) |
Weighted Average Exercise Price | |
Forfeited or cancelled, weighted average exercise price (in dollars per share) | $ / shares | $ 14.76 |
Options outstanding, aggregate intrinsic value | $ | $ 0 |
Options vested or expected to vest, aggregate intrinsic value | $ | $ 0 |
Options outstanding, weighted average outstanding (in years) | 8 years 4 months 2 days |
Options vested or expected to vest, weighted average remaining (in years) | 7 years 8 months 23 days |
Stock Options | |
Stock Options | |
Options outstanding, beginning balance (in shares) | shares | 120,187 |
Granted (in shares) | shares | 64,694 |
Options outstanding, ending balance (in shares) | shares | 164,723 |
Options exercisable (in shares) | shares | 53,956 |
Weighted Average Exercise Price | |
Options outstanding, weighted average exercise price, beginning balance (in dollars per share) | $ / shares | $ 16.06 |
Grants in period, weighted average exercise price (in dollars per share) | $ / shares | 7.04 |
Options outstanding, weighted average exercise price, ending balance (in dollars per share) | $ / shares | 12.68 |
Options exercisable, weighted average exercise price (in dollars per share) | $ / shares | $ 15.68 |
Options outstanding, weighted average outstanding (in years) | 10 months 24 days |
Stock Compensation - Schedule_2
Stock Compensation - Schedule of Share-based Payment Award, Restricted Stock Units, Valuation Assumptions (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 29.80% | 29.80% | 29.80% |
Weighted average expected life | 6 years | 6 years | 6 years |
Risk-free interest rate | 1.92% | 1.32% | 0.47% |
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total grant date fair value | $ 391 | $ 845 | |
Total grant date fair value per share (in dollars per share) | $ 6.04 | $ 13.92 | |
Expected volatility | 40% | 35% | |
Weighted average expected life | 2 years 9 months 21 days | 2 years 9 months 7 days | |
Risk-free interest rate | 1.79% | 0.27% |
Stock Compensation - Summary _2
Stock Compensation - Summary of Share-based Payment Award, Total Shareholder Return (Details) - Market-Based Stock Units (MSUs) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Below 25.1% | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cumulative TSR % | 29.20% | 25.10% |
Annual vesting percentage | 0% | |
25.1% | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cumulative TSR % | 29.20% | 25.10% |
Annual vesting percentage | 50% | |
47.2% | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cumulative TSR % | 52.10% | 47.20% |
Annual vesting percentage | 100% | |
69.3% and above | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cumulative TSR % | 74.90% | 69.30% |
Annual vesting percentage | 200% |
Stock Compensation - Summary _3
Stock Compensation - Summary of Nonvested Restricted Stock Unit Activity (Details) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Shares | |
Non-vested outstanding, beginning balance (in shares) | shares | 269,718 |
Granted (in shares) | shares | 227,210 |
Vested (in shares) | shares | (50,236) |
Forfeited or cancelled (in shares) | shares | (43,878) |
Non-vested outstanding, ending balance (in shares) | shares | 402,814 |
Weighted Average Grant Date Fair Value | |
Non-vested outstanding, weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares | $ 15.97 |
Grants in period, weighted average exercise price (in dollars per share) | $ / shares | 6.60 |
Vested in period, weighted average exercise price (in dollars per share) | $ / shares | 14.89 |
Forfeited or cancelled in period, weighted average exercise price (in dollars per share) | $ / shares | 13.93 |
Non-vested outstanding, weighted average grant date fair value, ending balance (in dollars per share) | $ / shares | $ 11.04 |
Restricted Stock Units (RSUs) | |
Shares | |
Non-vested outstanding, beginning balance (in shares) | shares | 117,109 |
Granted (in shares) | shares | 97,808 |
Vested (in shares) | shares | (50,236) |
Forfeited or cancelled (in shares) | shares | (17,129) |
Non-vested outstanding, ending balance (in shares) | shares | 147,552 |
Weighted Average Grant Date Fair Value | |
Non-vested outstanding, weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares | $ 15.53 |
Grants in period, weighted average exercise price (in dollars per share) | $ / shares | 6.67 |
Vested in period, weighted average exercise price (in dollars per share) | $ / shares | 14.89 |
Forfeited or cancelled in period, weighted average exercise price (in dollars per share) | $ / shares | 13.43 |
Non-vested outstanding, weighted average grant date fair value, ending balance (in dollars per share) | $ / shares | $ 10.12 |
Market-Based Stock Units (MSUs) | |
Shares | |
Non-vested outstanding, beginning balance (in shares) | shares | 50,861 |
Granted (in shares) | shares | 64,709 |
Vested (in shares) | shares | 0 |
Forfeited or cancelled (in shares) | shares | (9,854) |
Non-vested outstanding, ending balance (in shares) | shares | 105,716 |
Weighted Average Grant Date Fair Value | |
Non-vested outstanding, weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares | $ 13.92 |
Grants in period, weighted average exercise price (in dollars per share) | $ / shares | 6.04 |
Vested in period, weighted average exercise price (in dollars per share) | $ / shares | 0 |
Forfeited or cancelled in period, weighted average exercise price (in dollars per share) | $ / shares | 11.67 |
Non-vested outstanding, weighted average grant date fair value, ending balance (in dollars per share) | $ / shares | $ 9.31 |
Performance Stock Units (PSUs) | |
Shares | |
Non-vested outstanding, beginning balance (in shares) | shares | 101,748 |
Granted (in shares) | shares | 64,693 |
Vested (in shares) | shares | 0 |
Forfeited or cancelled (in shares) | shares | (16,895) |
Non-vested outstanding, ending balance (in shares) | shares | 149,546 |
Weighted Average Grant Date Fair Value | |
Non-vested outstanding, weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares | $ 17.50 |
Grants in period, weighted average exercise price (in dollars per share) | $ / shares | 7.04 |
Vested in period, weighted average exercise price (in dollars per share) | $ / shares | 0 |
Forfeited or cancelled in period, weighted average exercise price (in dollars per share) | $ / shares | 15.76 |
Non-vested outstanding, weighted average grant date fair value, ending balance (in dollars per share) | $ / shares | $ 13.17 |
Regulatory Matters - Summary of
Regulatory Matters - Summary of Statutory Basis Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Benchmark | ||
Statutory Accounting Practices [Line Items] | ||
Statutory capital and surplus | $ 222,340 | $ 170,686 |
RBC authorized control level | 31,350 | 24,279 |
Statutory net income (loss) | $ (2,270) | $ (782) |
RBC percentage | 709% | 703% |
ALIC | ||
Statutory Accounting Practices [Line Items] | ||
Statutory capital and surplus | $ 6,270 | $ 6,321 |
RBC authorized control level | 436 | 567 |
Statutory net income (loss) | $ 108 | $ 128 |
RBC percentage | 1,438% | 1,115% |
7710 | ||
Statutory Accounting Practices [Line Items] | ||
Statutory capital and surplus | $ 6,210 | $ 6,395 |
RBC authorized control level | 225 | 382 |
Statutory net income (loss) | $ (21) | $ 76 |
RBC percentage | 2,760% | 1,674% |
BSIC | ||
Statutory Accounting Practices [Line Items] | ||
Statutory capital and surplus | $ 48,655 | $ 19,977 |
RBC authorized control level | 315 | 129 |
Statutory net income (loss) | $ 695 | $ (23) |
RBC percentage | 15,446% | 15,486% |
Regulatory Matters - Narrative
Regulatory Matters - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Benchmark | ||
Statutory Accounting Practices [Line Items] | ||
Statutory capital and surplus | $ 222,340 | $ 170,686 |
Benchmark | KANSAS | ||
Statutory Accounting Practices [Line Items] | ||
Future dividend payments percentage | 10% | |
Statutory amount available for dividend payments without regulatory approval | $ 17,068 | 20,474 |
Statutory capital and surplus | 1,500 | |
ALIC | ||
Statutory Accounting Practices [Line Items] | ||
Statutory capital and surplus | $ 6,270 | 6,321 |
ALIC | UTAH | ||
Statutory Accounting Practices [Line Items] | ||
Future dividend payments percentage | 10% | |
Statutory amount available for dividend payments without regulatory approval | $ 128 | 11 |
Statutory capital and surplus | 300 | |
7710 | ||
Statutory Accounting Practices [Line Items] | ||
Statutory capital and surplus | $ 6,210 | 6,395 |
7710 | SOUTH CAROLINA | ||
Statutory Accounting Practices [Line Items] | ||
Future dividend payments percentage | 10% | |
Statutory amount available for dividend payments without regulatory approval | $ 75 | 519 |
Statutory capital and surplus | 1,200 | |
BSIC | ||
Statutory Accounting Practices [Line Items] | ||
Statutory capital and surplus | $ 48,655 | $ 19,977 |
BSIC | ARKANSAS | ||
Statutory Accounting Practices [Line Items] | ||
Future dividend payments percentage | 10% | |
Statutory capital and surplus | $ 20,000 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Minimum annual contributions per employee, percent | 100% | ||
Maximum annual contributions per employee, percent | 15% | ||
Vesting percentage | 25% | ||
Contributions by employer | $ 1,444 | $ 1,373 | $ 942 |
First 5% of Compensation | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Maximum annual contributions per employee, percent | 5% | ||
Employer matching contribution, percent of match | 50% | ||
Safe-Harbor Plan | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of match | 3% |
Transactions with Related Par_2
Transactions with Related Parties (Details) $ in Thousands | 12 Months Ended | ||||||
Jul. 06, 2021 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Jul. 15, 2020 individual | Jul. 14, 2020 | Jan. 02, 2020 | |
Related Party Transaction [Line Items] | |||||||
Earn-out payment | $ 750 | $ 0 | $ 0 | ||||
Gross earned premiums | 642,229 | 572,253 | 432,034 | ||||
Western Integrated Care, LLC | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of voting interests acquired | 100% | ||||||
Consideration transferred | $ 5,500 | ||||||
Contingent consideration liability | $ 1,500 | ||||||
Earn-out payment | 750 | 750 | 1,500 | ||||
Affiliated Entity | Program Manager Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Gross earned premiums | 90,199 | ||||||
Gross commissions | 17,709 | ||||||
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 35% Or More | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of outstanding common stock owned | 35% | ||||||
Number of individuals that can be nominated | individual | 3 | ||||||
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 20% Or More But Less Than 35% | |||||||
Related Party Transaction [Line Items] | |||||||
Number of individuals that can be nominated | individual | 2 | ||||||
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 20% Or More But Less Than 35% | Minimum | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of outstanding common stock owned | 20% | ||||||
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 20% Or More But Less Than 35% | Maximum | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of outstanding common stock owned | 35% | ||||||
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 10% Or More But Less Than 20% | |||||||
Related Party Transaction [Line Items] | |||||||
Number of individuals that can be nominated | individual | 1 | ||||||
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 10% Or More But Less Than 20% | Minimum | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of outstanding common stock owned | 10% | ||||||
Altaris Capital Partners | Affiliated Entity | Outstanding Common Stock Owned, 10% Or More But Less Than 20% | Maximum | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of outstanding common stock owned | 20% | ||||||
Altaris Capital Partners | Affiliated Entity | Management Fees | |||||||
Related Party Transaction [Line Items] | |||||||
Payment for management fee | 500 | ||||||
Altaris Capital Partners | Affiliated Entity | Termination Fee | |||||||
Related Party Transaction [Line Items] | |||||||
Payment of termination fee | 7,639 | ||||||
Trean Intermediaries | |||||||
Related Party Transaction [Line Items] | |||||||
Earn-out payment | 1,415 | ||||||
Ownership percentage | 25% | ||||||
Trean Intermediaries | Affiliated Entity | |||||||
Related Party Transaction [Line Items] | |||||||
Revenue from related parties | $ 100 | $ 200 | 200 | ||||
Compstar Holding Company LLC | |||||||
Related Party Transaction [Line Items] | |||||||
Ownership percentage | 45% | ||||||
Compstar Holding Company LLC | Affiliated Entity | Program Manager Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Gross earned premiums | 176,083 | ||||||
Gross commissions | $ 37,034 |
Schedule II. Condensed Financ_3
Schedule II. Condensed Financial Information of Registrant - Condensed Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Assets | ||||
Total investments | $ 587,284 | $ 472,030 | ||
Cash and cash equivalents | 107,991 | 129,577 | $ 153,149 | |
Income taxes receivable | 5,841 | 460 | ||
Deferred tax asset | 5,958 | 0 | ||
Other assets | 14,799 | 8,658 | ||
Total assets | 1,581,939 | 1,503,015 | ||
Liabilities | ||||
Accounts payable and accrued expenses | 32,609 | 29,448 | ||
Total liabilities | 1,266,920 | 1,081,106 | ||
Stockholders' equity | ||||
Preferred stock, $0.01 par value per share (100,000,000 authorized, zero issued and outstanding) | 0 | 0 | ||
Common stock, $0.01 par value per share (600,000,000 authorized; 51,222,485 and 51,176,887 issued and outstanding) | 512 | 512 | ||
Additional paid-in capital | 290,095 | 288,623 | ||
Retained earnings | 62,435 | 128,390 | ||
Accumulated other comprehensive income (loss) | (38,023) | 4,384 | ||
Total stockholders' equity | 315,019 | 421,909 | $ 410,107 | $ 141,615 |
Total liabilities and stockholders' equity | 1,581,939 | 1,503,015 | ||
Parent Company | ||||
Assets | ||||
Investment in subsidiaries | 283,600 | 267,643 | ||
Total investments | 283,600 | 267,643 | ||
Cash and cash equivalents | 3,066 | 4,242 | ||
Income taxes receivable | 5,841 | 12,360 | ||
Intercompany receivables | 22,645 | 135,369 | ||
Deferred tax asset | 1,051 | 671 | ||
Other assets | 1,859 | 1,930 | ||
Total assets | 318,062 | 422,215 | ||
Liabilities | ||||
Accounts payable and accrued expenses | 3,043 | 306 | ||
Total liabilities | 3,043 | 306 | ||
Stockholders' equity | ||||
Common stock, $0.01 par value per share (600,000,000 authorized; 51,222,485 and 51,176,887 issued and outstanding) | 512 | 512 | ||
Additional paid-in capital | 290,095 | 288,623 | ||
Retained earnings | 62,435 | 128,390 | ||
Accumulated other comprehensive income (loss) | (38,023) | 4,384 | ||
Total stockholders' equity | 315,019 | 421,909 | ||
Total liabilities and stockholders' equity | $ 318,062 | $ 422,215 |
Schedule II. Condensed Financ_4
Schedule II. Condensed Financial Information of Registrant - Condensed Balance Sheets Parenthetical (Details) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 31, 2020 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Preferred stock, authorized (in shares) | 100,000,000 | 100,000,000 | |
Preferred stock, issued (in shares) | 0 | 0 | |
Preferred stock, outstanding (in shares) | 0 | 0 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 600,000,000 | 600,000,000 | |
Common stock, issued (in shares) | 51,222,485 | 51,176,887 | |
Common stock, outstanding (in shares) | 51,222,485 | 51,176,887 | |
Parent Company | |||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Preferred stock, authorized (in shares) | 100,000,000 | 100,000,000 | |
Preferred stock, issued (in shares) | 0 | 0 | |
Preferred stock, outstanding (in shares) | 0 | 0 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, authorized (in shares) | 600,000,000 | 600,000,000 | |
Common stock, issued (in shares) | 51,222,485 | 51,176,887 | |
Common stock, outstanding (in shares) | 51,222,485 | 51,176,887 |
Schedule II. Condensed Financ_5
Schedule II. Condensed Financial Information of Registrant - Condensed Statements of Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues | |||
Net investment income | $ 10,087 | $ 8,721 | $ 11,669 |
Other revenue | 8,246 | 10,240 | 12,104 |
Total revenue | 303,242 | 217,690 | 205,451 |
Expenses | |||
General and administrative expenses | 86,210 | 54,706 | 38,668 |
Noncash stock compensation | 1,496 | 1,522 | 506 |
Total expenses | 380,253 | 195,356 | 107,870 |
Loss before taxes | (64,881) | 24,779 | 92,451 |
Income tax benefit | 1,074 | 5,449 | 6,235 |
Equity earnings (loss) of subsidiaries | 0 | 0 | 2,333 |
Net income (loss) | (65,955) | 19,330 | $ 88,549 |
Parent Company | |||
Revenues | |||
Net investment income | 0 | 9 | |
Other revenue | 0 | 0 | |
Total revenue | 0 | 9 | |
Expenses | |||
General and administrative expenses | 5,591 | 4,103 | |
Other expenses | 3,081 | 845 | |
Noncash stock compensation | 1,496 | 1,522 | |
Total expenses | 10,168 | 6,470 | |
Loss before taxes | (10,168) | (6,461) | |
Income tax benefit | (1,650) | (1,712) | |
Loss before equity earnings of subsidiaries | (8,518) | (4,749) | |
Equity earnings (loss) of subsidiaries | (57,437) | 24,079 | |
Net income (loss) | $ (65,955) | $ 19,330 |
Schedule II. Condensed Financ_6
Schedule II. Condensed Financial Information of Registrant - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating activities | |||
Net income (loss) | $ (65,955) | $ 19,330 | $ 88,549 |
Adjustments to reconcile net income to net cash from operating activities: | |||
Stock compensation | 1,496 | 1,522 | 506 |
Equity (earnings) losses in subsidiaries | 0 | 0 | (2,333) |
Deferred income taxes | (2,221) | (2,405) | (1,035) |
Changes in operating assets and liabilities: | |||
Premiums and other receivables | (18,362) | (31,921) | (18,499) |
Other assets | (11,553) | (13,776) | 4,459 |
Accounts payable, accrued expenses and other liabilities | 3,946 | (7,951) | (2,976) |
Net cash provided by operating activities | 108,947 | 94,359 | 50,012 |
Investing activities | |||
Net cash used in investing activities | (175,440) | (120,156) | (20,246) |
Financing activities | |||
Shares redeemed for payroll taxes | 23 | 94 | 82 |
Proceeds from short swing rule | 0 | 85 | 0 |
Net cash provided by (used in) financing activities | 45,583 | (1,453) | 51,400 |
Net increase (decrease) in cash, cash equivalents and restricted cash | (20,910) | (27,250) | 81,166 |
Cash, cash equivalents and restricted cash ‑ beginning of period | 129,984 | 157,234 | 76,068 |
Cash, cash equivalents and restricted cash ‑ end of period | 109,074 | 129,984 | 157,234 |
Parent Company | |||
Operating activities | |||
Net income (loss) | (65,955) | 19,330 | |
Adjustments to reconcile net income to net cash from operating activities: | |||
Stock compensation | 1,496 | 1,522 | |
Equity (earnings) losses in subsidiaries | 57,437 | (24,079) | |
Dividends received from subsidiaries | 1,150 | 0 | |
Deferred income taxes | (379) | (414) | |
Changes in operating assets and liabilities: | |||
Premiums and other receivables | 0 | 0 | |
Other assets | 70 | (1,930) | |
Accounts payable, accrued expenses and other liabilities | 2,737 | (357) | |
Income taxes payable and receivable | 6,520 | (7,781) | |
Intercompany receivables | (3,079) | 17,277 | |
Net cash provided by operating activities | (3) | 3,568 | |
Investing activities | |||
Distribution from subsidiaries | 8,850 | 0 | |
Capital contributions to subsidiaries | (10,000) | 0 | |
Net cash used in investing activities | (1,150) | 0 | |
Financing activities | |||
Shares redeemed for payroll taxes | (23) | (94) | |
Proceeds from short swing rule | 0 | 85 | |
Net cash provided by (used in) financing activities | (23) | (9) | |
Net increase (decrease) in cash, cash equivalents and restricted cash | (1,176) | 3,559 | |
Cash, cash equivalents and restricted cash ‑ beginning of period | 4,242 | 683 | |
Cash, cash equivalents and restricted cash ‑ end of period | $ 3,066 | $ 4,242 | $ 683 |