Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | May 15, 2023 | |
Cover [Abstract] | ||
Entity Registrant Name | KINGSTONE COMPANIES, INC. | |
Entity Central Index Key | 0000033992 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Mar. 31, 2023 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 | |
Entity Common Stock Shares Outstanding | 10,760,579 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 0-1665 | |
Entity Incorporation State Country Code | DE | |
Entity Tax Identification Number | 36-2476480 | |
Entity Interactive Data Current | Yes | |
Entity Address Address Line 1 | 15 Joys Lane | |
Entity Address City Or Town | Kingston | |
Entity Address State Or Province | NY | |
Entity Address Postal Zip Code | 12401 | |
City Area Code | 845 | |
Local Phone Number | 802-7900 | |
Security 12b Title | Common Stock, $0.01 par value per share | |
Trading Symbol | KINS | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Assets | ||
Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $6,825,609 at March 31, 2023 and $6,600,388 at December 31, 2022) | $ 7,765,096 | $ 7,766,140 |
Fixed-maturity securities, available-for-sale, at fair value (amortized cost of $172,374,518 at March 31, 2023 and $174,918,427 at December 31, 2022) | 154,641,319 | 154,715,163 |
Equity securities, at fair value (cost of $18,011,146 at March 31, 2023 and $18,086,700 at December 31, 2022) | 14,622,549 | 13,834,390 |
Other investments | 3,135,449 | 2,771,652 |
Total investments | 180,164,413 | 179,087,345 |
Cash and cash equivalents | 10,500,753 | 11,958,228 |
Premiums receivable, net | 13,339,037 | 13,880,504 |
Reinsurance receivables, net | 78,018,606 | 66,465,061 |
Deferred policy acquisition costs | 22,692,044 | 23,819,453 |
Intangible assets | 500,000 | 500,000 |
Property and equipment, net | 10,199,878 | 10,541,935 |
Deferred income taxes, net | 11,061,418 | 10,331,158 |
Other assets | 3,921,334 | 3,748,847 |
Total assets | 330,397,483 | 320,332,531 |
Liabilities | ||
Loss and loss adjustment expense reserves | 124,121,818 | 118,339,513 |
Unearned premiums | 105,159,893 | 107,492,777 |
Advance premiums | 5,660,391 | 2,839,028 |
Reinsurance balances payable | 20,110,212 | 13,061,966 |
Deferred ceding commission revenue | 10,739,429 | 10,619,569 |
Accounts payable, accrued expenses and other liabilities | 6,147,717 | 6,651,723 |
Debt, net | 25,176,019 | 25,158,523 |
Total liabilities | 297,115,479 | 284,163,099 |
Stockholders' Equity | ||
Preferred stock, $0.01 par value; authorized 2,500,000 shares | 0 | 0 |
Common stock, $0.01 par value; authorized 20,000,000 shares; issued 12,231,965 shares at March 31, 2023 and 12,171,512 shares at December 31, 2022; outstanding 10,760,559 shares at March 31, 2023 and 10,700,106 shares at December 31, 2022 | 122,320 | 121,715 |
Capital in excess of par | 74,734,915 | 74,519,590 |
Accumulated other comprehensive loss | (14,007,076) | (15,958,428) |
Accumulated deficit | (22,000,674) | (16,945,964) |
Stockholders' Equity before Treasury Stock | 38,849,485 | 41,736,913 |
Treasury stock, at cost, 1,471,406 shares at March 31, 2023 and December 31, 2022 | (5,567,481) | (5,567,481) |
Total stockholders' equity | 33,282,004 | 36,169,432 |
Total liabilities and stockholders' equity | $ 330,397,483 | $ 320,332,531 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Condensed Consolidated Balance Sheets | ||
Fixed-maturity Securities, Held-to-maturity, Fair Value | $ 6,825,609 | $ 6,600,388 |
Fixed-maturity Securities, Available-for-sale, Amortized Cost | 172,374,518 | 174,918,427 |
Equity Securities, at fair value | $ 18,011,146 | $ 18,086,700 |
Stockholders' Equity | ||
Preferred Stock, Par Value | $ 0.01 | $ 0.01 |
Preferred Stock, Authorized Shares | 2,500,000 | 2,500,000 |
Common Stock, Par Value | $ 0.01 | $ 0.01 |
Common Stock, Authorized Shares | 20,000,000 | 20,000,000 |
Common Stock, Issued Shares | 12,231,965 | 12,171,512 |
Common Stock, Outstanding Shares | 10,760,559 | 10,700,106 |
Treasury Stock, Shares | 1,471,406 | 1,471,406 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues | ||
Net premiums earned | $ 28,254,953 | $ 26,673,380 |
Ceding commission revenue | 5,445,407 | 4,681,396 |
Net investment income | 1,541,492 | 1,359,100 |
Net gains (losses) on investments | 1,224,871 | (4,398,405) |
Other income | 161,040 | 235,824 |
Total revenues | 36,627,763 | 28,551,295 |
Expenses | ||
Loss and loss adjustment expenses | 25,039,410 | 22,941,198 |
Commission expense | 8,539,762 | 8,351,086 |
Other underwriting expenses | 6,871,619 | 6,815,949 |
Other operating expenses | 662,634 | 881,955 |
Depreciation and amortization | 808,130 | 770,110 |
Interest expense | 1,009,891 | 456,545 |
Total expenses | 42,931,446 | 40,216,843 |
Loss from operations before taxes | (6,303,683) | (11,665,548) |
Income tax benefit | (1,248,973) | (2,468,016) |
Net loss | (5,054,710) | (9,197,532) |
Other comprehensive income (loss), net of tax | ||
Gross change in unrealized gains (losses) on available-for-sale-securities | 2,467,426 | (9,865,777) |
Reclassification adjustment for losses included in net loss | 2,639 | 41,324 |
Net change in unrealized gains (losses), on available-for-sale-securities | 2,470,065 | (9,824,453) |
Income tax (expense) benefit related to items of other comprehensive income (loss) | (518,713) | 2,063,136 |
Other comprehensive income, net of tax | 1,951,352 | (7,761,317) |
Comprehensive loss | $ (3,103,358) | $ (16,958,849) |
Loss per common share: | ||
Basic | $ (0.47) | $ (0.87) |
Diluted | $ (0.47) | $ (0.87) |
Weighted average common shares outstanding | ||
Basic | 10,756,913 | 10,630,450 |
Diluted | 10,756,913 | 10,630,450 |
Dividends declared and paid per common share | $ 0 | $ 0.04 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Total | Common Stock | Preferred Stock | Capital in Excess of Par | Accumulated other comprehensive loss | Retained Earnings (Accumulated Deficit) | Treasury Stock |
Balance, shares at Dec. 31, 2021 | 11,955,660 | 1,471,406 | |||||
Balance, amount at Dec. 31, 2021 | $ 75,672,194 | $ 119,557 | $ 0 | $ 72,467,483 | $ 1,796,739 | $ 6,855,896 | $ (5,567,481) |
Stock-based compensation | 530,414 | $ 0 | 0 | 530,414 | 0 | 0 | 0 |
Vesting of restricted stock awards, shares | 222,070 | ||||||
Vesting of restricted stock awards, amount | 0 | $ 2,221 | 0 | (2,221) | 0 | 0 | 0 |
Shares deducted from restricted stockawards for payment of withholding taxes, shares | (68,423) | ||||||
Shares deducted from restricted stockawards for payment of withholding taxes, amount | (358,075) | $ (685) | 0 | (357,390) | 0 | 0 | 0 |
Dividends | (425,490) | 0 | 0 | 0 | 0 | (425,490) | 0 |
Net loss | (9,197,532) | 0 | 0 | 0 | 0 | (9,197,532) | 0 |
Change in unrealized losses on available-for-sale securities, net of tax | (7,761,317) | $ 0 | 0 | 0 | (7,761,317) | 0 | $ 0 |
Balance, shares at Mar. 31, 2022 | 12,109,307 | 1,471,406 | |||||
Balance, amount at Mar. 31, 2022 | 58,460,194 | $ 121,093 | 0 | 72,638,286 | (5,964,578) | (2,767,126) | $ (5,567,481) |
Balance, shares at Dec. 31, 2022 | 12,171,512 | 1,471,406 | |||||
Balance, amount at Dec. 31, 2022 | 36,169,432 | $ 121,715 | 0 | 74,519,590 | (15,958,428) | (16,945,964) | $ (5,567,481) |
Stock-based compensation | 216,767 | $ 0 | 0 | 216,767 | 0 | 0 | 0 |
Vesting of restricted stock awards, shares | 60,951 | ||||||
Vesting of restricted stock awards, amount | 0 | $ 610 | 0 | (610) | 0 | 0 | 0 |
Net loss | (5,054,710) | 0 | 0 | 0 | 0 | (5,054,710) | 0 |
Change in unrealized losses on available-for-sale securities, net of tax | 1,951,352 | $ 0 | 0 | 0 | 1,951,352 | 0 | 0 |
Shares deducted from restricted stockawards for payment of withholding taxes, shares | (498) | ||||||
Shares deducted from restricted stockawards for payment of withholding taxes, amount | (837) | $ (5) | 0 | (832) | 0 | 0 | $ 0 |
Balance, shares at Mar. 31, 2023 | 12,231,965 | 1,471,406 | |||||
Balance, amount at Mar. 31, 2023 | $ 33,282,004 | $ 122,320 | $ 0 | $ 74,734,915 | $ (14,007,076) | $ (22,000,674) | $ (5,567,481) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (5,054,710) | $ (9,197,532) |
Adjustments to reconcile net loss to net cash flows used in operating activities: | ||
Net losses (gains) on investments | 2,639 | (77,761) |
Net unrealized (gains) losses on equity investments | (863,713) | 3,560,634 |
Net unrealized (gains) losses on other investments | (363,797) | 915,532 |
Depreciation and amortization | 808,130 | 770,110 |
Bad debt expense | 19,504 | 38,817 |
Amortization of bond premium, net | (37,795) | 46,777 |
Amortization of discount and issuance costs on debt | 296,919 | 44,045 |
Stock-based compensation | 216,767 | 530,414 |
Deferred income tax benefit | (1,248,973) | (2,112,244) |
Decrease (increase) in operating assets: | ||
Premiums receivable, net | 521,963 | 1,250,311 |
Reinsurance receivables, net | (11,553,545) | (9,049,252) |
Deferred policy acquisition costs | 1,127,409 | 582,406 |
Other assets | (172,487) | 1,555,843 |
Increase (decrease) in operating liabilities: | ||
Loss and loss adjustment expense reserves | 5,782,305 | 3,968,253 |
Unearned premiums | (2,332,884) | (2,392,728) |
Advance premiums | 2,821,363 | 2,539,061 |
Reinsurance balances payable | 7,048,246 | (7,870,498) |
Deferred ceding commission revenue | 119,860 | (268,996) |
Accounts payable, accrued expenses and other liabilities | (504,006) | (2,221,270) |
Net cash flows used in operating activities | (3,366,805) | (17,388,078) |
Cash flows from investing activities: | ||
Purchase - fixed-maturity securities available-for-sale | (10,974,819) | (13,890,402) |
Purchase - equity securities | 0 | (506,081) |
Redemption - fixed-maturity securities held-to-maturity | 0 | 500,000 |
Sale and maturity - fixed-maturity securities available-for-sale | 13,554,928 | 10,181,658 |
Sale - equity securities | 75,554 | 4,994,884 |
Acquisition of property and equipment | (466,073) | (1,565,128) |
Net cash flows provided by (used in) investing activities | 2,189,590 | (285,069) |
Cash flows from financing activities: | ||
Principal payments on equipment financing | (266,160) | 0 |
Issue costs on 2022 Notes | (13,263) | 0 |
Withholding taxes paid on vested retricted stock awards | (837) | (358,075) |
Dividends paid | 0 | (425,490) |
Net cash flows used in financing activities | (280,260) | (783,565) |
Decrease in cash and cash equivalents | (1,457,475) | (18,456,712) |
Cash and cash equivalents, beginning of period | 11,958,228 | 24,290,598 |
Cash and cash equivalents, end of period | 10,500,753 | 5,833,886 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 0 | 0 |
Cash paid for interest | 434,155 | 0 |
Supplemental schedule of non-cash investing and financing activities: | ||
Other comprehensive income (loss), net of tax | $ 1,951,352 | $ (7,761,317) |
Nature of Business and Basis of
Nature of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2023 | |
Nature of Business and Basis of Presentation | |
Nature of Business and Basis of Presentation | Note 1 - Nature of Business and Basis of Presentation Kingstone Companies, Inc. (referred to herein as "Kingstone" or the “Company” or, on a standalone basis for the parent company only, the “Holding Company”), through its wholly-owned subsidiary, Kingstone Insurance Company (“KICO”), underwrites property and casualty insurance exclusively through retail and wholesale agents and brokers. KICO is a licensed insurance company in the States of New York, New Jersey, Rhode Island, Massachusetts, Pennsylvania, Connecticut, Maine and New Hampshire. KICO is currently offering its property and casualty insurance products in New York, New Jersey, Rhode Island, Massachusetts, and Connecticut. For the three months ended March 31, 2023 and 2022, 87.0% and 80.6%, respectively, of KICO’s direct written premiums came from the New York policies. Kingstone, through its wholly owned subsidiary, Cosi Agency, Inc. (“Cosi”), a multi-state licensed general agency, receives commission revenue from KICO for the policies it places with others and pays commissions to these agencies. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The principles for condensed interim financial information do not require the inclusion of all the information and footnotes required by GAAP for complete financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 31, 2022 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2023. The accompanying condensed consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with standards of the Public Company Accounting Oversight Board (United States) but, in the opinion of management, such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position and results of operations. The results of operations for the three months ended March 31, 2023 may not be indicative of the results that may be expected for the year ending December 31, 2023. Certain prior year balances were reclassified to conform with the current year presentation. The reclassification had no effect on the Company’s previously reported financial condition, results of operations or cash flows. |
Accounting Policies
Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies | |
Accounting Policies | Note 2 – Accounting Policies Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and assumptions, which include the reserves for losses and LAE, which are subject to estimation errors due to the inherent uncertainty in projecting ultimate claim amounts that will be reported and settled over a period of many years. In addition, estimates and assumptions associated with receivables under reinsurance contracts related to contingent ceding commission revenue require judgments by management. On an ongoing basis, management reevaluates its assumptions and the methods for calculating these estimates. Actual results may differ significantly from the estimates used in preparing the condensed consolidated financial statements. Principles of Consolidation The condensed consolidated financial statements include the accounts of Kingstone and its wholly-owned subsidiaries: (1) KICO and its wholly-owned subsidiaries, CMIC Properties, Inc. (“Properties”) and 15 Joys Lane, LLC (“15 Joys Lane”), which together own the land and building from which KICO operates, and (2) Cosi. All significant inter-company account balances and transactions have been eliminated in consolidation. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This new guidance applies to reinsurance and insurance receivables and other financing receivables. For available-for-sale fixed maturity securities carried at fair value, estimated credit losses will continue to be measured at the present value of expected cash flows, however, the other than temporary impairment (“OTTI”) concept has been eliminated. Under the previous guidance, estimated credit impairments resulted in a write-down of amortized cost. Under the new guidance, estimated credit losses are recognized through an allowance and reversals of the allowance are permitted if the estimate of credit losses declines. For available-for-sale fixed maturity securities where the Company has an intent to sell, impairment will continue to result in a write-down of amortized cost. ASU 2016-13 was effective for the Company on January 1, 2023. The Company determined as of the date of adoption that the updated guidance did not have an impact on its consolidated financial statements. Below is a summary of the significant accounting policies impacted by the adoption of ASU 2016-13. The allowance for credit losses is a valuation account that is reported as a reduction of a financial asset’s cost basis and is measured on a pool basis when similar risk characteristics exist. Management estimates the allowance using relevant available information from both internal and external sources. Historical credit loss experience provides the basis for the estimation of expected credit losses and adjustments may be made to reflect current conditions and reasonable and supportable forecasts. Adjustments to historical loss information are made for any additional factors that come to the Company’s attention. This could include significant shifts in counterparty financial strength ratings, aging of past due receivables, amounts sent to collection agencies, or other underlying portfolio changes. Amounts are considered past due when payments have not been received according to contractual terms. The Company also considers current and forecasted economic conditions, using a variety of economic metrics and forecast indices. The sensitivity of expected credit losses relative to changes to these forecasted economic conditions can vary by financial asset class. The Company considers a reasonable and supportable forecast period to be up to 24 months from the balance sheet date. After the forecast period, the Company reverts to historical credit experience. The Company uses collateral arrangements such as letters of credit and amounts held in beneficiary trusts to mitigate credit risk, which are considered in the estimate of net amount expected to be collected. The Company has made a policy election to present accrued interest balances separately from the amortized cost basis of assets and has elected the practical expedient to exclude the accrued interest from the tabular disclosures for available-for-sale and held-to-maturity securities. The Company has elected not to estimate an allowance for credit losses on accrued interest receivable. The accrual of interest income is discontinued and the asset is placed on nonaccrual status in the quarter that payment becomes delinquent. Interest accrued but not received for assets on nonaccrual status is reversed through investment income. Interest received for assets that are on nonaccrual status is recognized as payment is received. The asset is returned to accrual status when the principal and interest amounts contractually due are brought current and future payments are expected. Interest receivable is presented as a component of other assets on the condensed consolidated balance sheet. See Note 3 and Note 6 to the condensed consolidated financial statements for additional information regarding credit losses. The Company has determined that all other recently issued accounting pronouncements will not have a material impact on its consolidated financial position, results of operations and cash flows, or do not apply to its operations. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2023 | |
Investments | |
Investments | Note 3 - Investments Fixed-Maturity Securities The amortized cost, estimated fair value, and gross unrealized gains and losses on investments in fixed-maturity securities classified as available-for-sale for which an allowance for credit loss has not been recorded, as of March 31, 2023 and December 31, 2022 are summarized as follows: March 31, 2023 Net Cost or Gross Gross Unrealized Losses Estimated Unrealized Amortized Unrealized Less than 12 More than 12 Fair Gains Category Cost Gains Months Months Value (Losses) Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies (1) $ 21,988,099 $ 36,038 $ (674 ) $ - $ 22,023,463 $ 35,364 Political subdivisions of States, Territories and Possessions 17,098,969 - (5,153 ) (3,338,913 ) 13,754,903 (3,344,066 ) Corporate and other bonds Industrial and miscellaneous 80,264,856 - (777,717 ) (6,479,111 ) 73,008,028 (7,256,828 ) Residential mortgage and other asset backed securities (2) 53,022,594 67,556 (496,219 ) (6,739,006 ) 45,854,925 (7,167,669 ) Total fixed-maturity securities $ 172,374,518 $ 103,594 $ (1,279,763 ) $ (16,557,030 ) $ 154,641,319 $ (17,733,199 ) December 31, 2022 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Category Cost Gains Months Months Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies (1) $ 23,874,545 $ 1,479 $ (6,928 ) $ - $ 23,869,096 $ (5,449 ) Political subdivisions of States, Territories and Possessions 17,108,154 - (2,195,273 ) (1,771,494 ) 13,141,387 (3,966,767 ) Corporate and other bonds Industrial and miscellaneous 80,338,464 - (5,796,994 ) (2,458,985 ) 72,082,485 (8,255,979 ) Residential mortgage and other asset backed securities (2) 53,597,264 58,398 (882,664 ) (7,150,803 ) 45,622,195 (7,975,069 ) Total fixed-maturity securities $ 174,918,427 $ 59,877 $ (8,881,859 ) $ (11,381,282 ) $ 154,715,163 $ (20,203,264 ) (1) In October 2022, KICO placed certain U.S. Treasury securities to fulfill the required collateral for a sale leaseback transaction in a designated custodian account (see Note 7 – Debt - “Equipment Financing”). As of March 31, 2023 and December 31, 2022, the amount of required collateral was approximately $8,268,000 and $8,691,000, respectively. As of March 31, 2023 and December 31, 2022, the estimated fair value of the eligible collateral was approximately $11,475,000 and $8,691,000, respectively. (2) KICO has placed certain residential mortgage backed securities as eligible collateral in a designated custodian account related to its membership in the Federal Home Loan Bank of New York (“FHLBNY”) (see Note 7 – Debt – “Federal Home Loan Bank”). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of December 31, 2022, the estimated fair value of the eligible investments was approximately $12,199,000. KICO will retain all rights regarding all securities if pledged as collateral. As of March 31, 2023 and December 31, 2022 there was no outstanding balance on the FHLBNY credit line. A summary of the amortized cost and estimated fair value of the Company’s investments in available-for-sale fixed-maturity securities by contractual maturity as of March 31, 2023 and December 31, 2022 is shown below: March 31, 2023 December 31, 2022 Amortized Estimated Amortized Estimated Remaining Time to Maturity Cost Fair Value Cost Fair Value Less than one year $ 15,731,448 $ 15,650,264 $ 16,359,100 $ 16,307,991 One to five years 55,396,930 53,174,343 18,605,987 14,085,113 Five to ten years 30,202,432 25,759,376 54,559,158 52,230,283 More than 10 years 18,021,114 14,202,411 31,796,918 26,469,581 Residential mortgage and other asset backed securities 53,022,594 45,854,925 53,597,264 45,622,195 Total $ 172,374,518 $ 154,641,319 $ 174,918,427 $ 154,715,163 The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties. Equity Securities The cost and estimated fair value of, and gross unrealized gains and losses on, investments in equity securities as of March 31, 2023 and December 31, 2022 are as follows: March 31, 2023 Gross Gross Estimated Category Cost Gains Losses Fair Value Equity Securities: Preferred stocks $ 13,583,942 $ - $ (2,906,623 ) $ 10,677,319 Common stocks, mutual funds, and exchange traded funds 4,427,204 199,258 (681,232 ) 3,945,230 Total $ 18,011,146 $ 199,258 $ (3,587,855 ) $ 14,622,549 December 31, 2022 Gross Gross Estimated Category Cost Gains Losses Fair Value Equity Securities: Preferred stocks $ 13,583,942 $ - $ (3,589,313 ) $ 9,994,629 Common stocks, mutual funds, and exchange traded funds 4,502,758 158,635 (821,632 ) 3,839,761 Total $ 18,086,700 $ 158,635 $ (4,410,945 ) $ 13,834,390 Other Investments The cost and estimated fair value of, and gross gains on, the Company’s other investments as of March 31, 2023 and December 31, 2022 are as follows: March 31, 2023 December 31, 2022 Gross Estimated Gross Estimated Category Cost Gains Fair Value Cost Gains Fair Value Other Investments: Hedge fund $ 1,987,040 $ 1,148,409 $ 3,135,449 $ 1,987,040 $ 784,612 $ 2,771,652 Held-to-Maturity Securities The cost or amortized cost and estimated fair value of, and unrealized gross gains and losses on, investments in held-to-maturity fixed-maturity securities as of March 31, 2023 and December 31, 2022 are summarized as follows: March 31, 2023 Net Cost or Gross Gross Unrealized Losses Estimated Unrealized Amortized Unrealized Less than 12 More than 12 Fair Gains/ Category Cost Gains Months Months Value (Losses) Held-to-Maturity Securities: U.S. Treasury securities $ 1,228,634 $ 47,886 $ (24,108 ) $ - $ 1,252,412 $ 23,778 Political subdivisions of States, Territories and Possessions 498,769 1,661 - - 500,430 1,661 Exchange traded debt 304,111 - (56,461 ) - 247,650 (56,461 ) Corporate and other bonds Industrial and miscellaneous 5,733,582 40,048 (57,910 ) (890,603 ) 4,825,117 (908,465 ) Total $ 7,765,096 $ 89,595 $ (138,479 ) $ (890,603 ) $ 6,825,609 $ (939,487 ) December 31, 2022 Net Cost or Gross Gross Unrealized Losses Estimated Unrealized Amortized Unrealized Less than 12 More than 12 Fair Gains/ Category Cost Gains Months Months Value (Losses) Held-to-Maturity Securities: U.S. Treasury securities $ 1,228,560 $ 28,400 $ (34,077 ) $ - $ 1,222,883 $ (5,677 ) Political subdivisions of States, Territories and Possessions 498,638 2,092 - - 500,730 2,092 Exchange traded debt 304,111 - (29,111 ) - 275,000 (29,111 ) Corporate and other bonds Industrial and miscellaneous 5,734,831 36,968 (809,746 ) (360,278 ) 4,601,775 (1,133,056 ) Total $ 7,766,140 $ 67,460 $ (872,934 ) $ (360,278 ) $ 6,600,388 $ (1,165,752 ) Held-to-maturity U.S. Treasury securities are held in trust pursuant to various states’ minimum funds requirements. A summary of the amortized cost and estimated fair value of the Company’s investments in held-to-maturity securities by contractual maturity as of March 31, 2023 and December 31, 2022 is shown below: March 31, 2023 December 31, 2022 Amortized Estimated Amortized Estimated Remaining Time to Maturity Cost Fair Value Cost Fair Value Less than one year $ 708,744 $ 747,483 $ 708,535 $ 743,575 One to five years 1,120,700 1,098,253 1,120,507 1,088,522 Five to ten years 1,405,680 1,215,945 1,402,704 1,200,720 More than 10 years 4,529,972 3,763,928 4,534,394 3,567,571 Total $ 7,765,096 $ 6,825,609 $ 7,766,140 $ 6,600,388 The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties. Investment Income Major categories of the Company’s net investment income are summarized as follows: Three months ended March 31, 2023 2022 Income: Fixed-maturity securities $ 1,417,709 $ 1,140,189 Equity securities 176,877 345,168 Cash and cash equivalents 32,858 183 Total 1,627,444 1,485,540 Expenses: Investment expenses 85,952 126,440 Net investment income $ 1,541,492 $ 1,359,100 Proceeds from the redemption of fixed-maturity securities held-to-maturity were $-0- and $500,000 for the three months ended March 31, 2023 and 2022, respectively. Proceeds from the sale or maturity of fixed-maturity securities available-for-sale were $13,554,928 and $10,181,658 for the three months ended March 31, 2023 and 2022, respectively. Proceeds from the sale of equity securities were $75,554 and $4,994,884 for the three months ended March 31, 2023 and 2022, respectively. Three months ended March 31, 2023 2022 Realized Gains (Losses) Fixed-maturity securities: Gross realized gains $ 418 $ 85,100 Gross realized losses (3,057 ) (126,424 ) (2,639 ) (41,324 ) Equity securities: Gross realized gains - 448,306 Gross realized losses - (329,221 ) - 119,085 Other Investments: Gross realized gains - - Gross realized losses - - - - Net realized (losses) gains (2,639 ) 77,761 Unrealized Gains (Losses) Equity Securities: Gross gains 863,713 - Gross losses - (3,560,634 ) 863,713 (3,560,634 ) Other Investments: Gross gains 363,797 - Gross losses - (915,532 ) 363,797 (915,532 ) Net unrealized gains (losses) 1,227,510 (4,476,166 ) Net gains (losses) on investments $ 1,224,871 $ (4,398,405 ) Allowance for Credit Loss For available-for-sale fixed maturity securities, a credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis. The allowance for credit loss related to available-for-sale fixed maturity securities is the difference between present value of cash flows expected to be collected and the amortized cost basis, limited by the amount that the fair value is less than the amortized cost basis. The Company considers all available evidence when determining whether an investment requires a credit loss write-down or allowance to be recorded. Changes in the allowance are presented as a component of net gains (losses) on investments on the accompanying condensed consolidated statements of operations and comprehensive income (loss). At March 31, 2023 and December 31, 2022, there were 152 and 155 fixed-maturity securities, respectively, that accounted for the gross unrealized losses. The Company determined that none of the unrealized losses were deemed to be credit losses for its portfolio of investments for the three months ended March 31, 2023 and 2022. Significant factors influencing the Company’s determination that unrealized losses were temporary included credit quality considerations, the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and interest rate environment factors, and management’s intent and ability to hold the investment for a period of time sufficient to allow for an anticipated recovery of estimated fair value to the Company’s cost basis. The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at March 31, 2023 as follows: March 31, 2023 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 5,542,768 $ (674 ) 1 $ - - - $ 5,542,768 $ (674 ) Political subdivisions of States, Territories and Possessions 549,276 (5,153 ) 2 13,205,628 (3,338,913 ) 12 13,754,904 (3,344,066 ) Corporate and other bonds industrial and miscellaneous 24,592,198 (777,717 ) 33 48,415,831 (6,479,111 ) 57 73,008,029 (7,256,828 ) Residential mortgage and other asset backed securities 8,454,568 (496,219 ) 15 36,667,595 (6,739,006 ) 32 45,122,163 (7,235,225 ) Total fixed-maturity securities $ 39,138,810 $ (1,279,763 ) 51 $ 98,289,054 $ (16,557,030 ) 101 $ 137,427,864 $ (17,836,793 ) The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at December 31, 2022 as follows: December 31, 2022 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 18,918,196 $ (6,928 ) 3 $ - - - $ 18,918,196 $ (6,928 ) Political subdivisions of States, Territories and Possessions 7,970,633 (2,195,273 ) 9 5,170,753 (1,771,494 ) 5 13,141,386 (3,966,767 ) Corporate and other bonds industrial and miscellaneous 56,910,104 (5,796,994 ) 75 15,172,381 (2,458,985 ) 15 72,082,485 (8,255,979 ) Residential mortgage and other asset backed securities 10,145,880 (882,664 ) 22 34,753,178 (7,150,803 ) 26 44,899,058 (8,033,467 ) Total fixed-maturity securities $ 93,944,813 $ (8,881,859 ) 109 $ 55,096,312 $ (11,381,282 ) 46 $ 149,041,125 $ (20,263,141 ) |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | Note 4 - Fair Value Measurements The following table presents information about the Company’s investments that are measured at fair value on a recurring basis at March 31, 2023 and December 31, 2022 indicating the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: March 31, 2023 Level 1 Level 2 Level 3 Total Fixed-maturity securities available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 22,023,463 $ - $ - $ 22,023,463 Political subdivisions of States, Territories and Possessions - 13,754,903 - 13,754,903 Corporate and other bonds industrial and miscellaneous 73,008,028 - - 73,008,028 Residential mortgage and other asset backed securities - 45,854,925 - 45,854,925 Total fixed maturities 95,031,491 59,609,828 - 154,641,319 Equity securities 14,622,549 - - 14,622,549 Total investments $ 109,654,040 $ 59,609,828 $ - $ 169,263,868 December 31, 2022 Level 1 Level 2 Level 3 Total Fixed-maturity securities available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 23,869,096 $ - $ - $ 23,869,096 Political subdivisions of States, Territories and Possessions - 13,141,387 - 13,141,387 Corporate and other bonds industrial and miscellaneous 71,585,115 497,370 - 72,082,485 Residential mortgage and other asset backed securities - 45,622,195 - 45,622,195 Total fixed maturities 95,454,211 59,260,952 - 154,715,163 Equity securities 13,834,390 - - 13,834,390 Total investments $ 109,288,601 $ 59,260,952 $ - $ 168,549,553 The following table sets forth the Company’s investment in a hedge fund measured at Net Asset Value (“NAV”) per share as of March 31, 2023 and December 31, 2022. The Company measures this investment at fair value on a recurring basis. Fair value using NAV per share is as follows as of the dates indicated: Category March 31, 2023 December 31, 2022 Other Investments Hedge fund $ 3,135,449 $ 2,771,652 The hedge fund investment is generally redeemable with at least 45 days prior written notice. The hedge fund investment is accounted for as a limited partnership by the Company. Income is earned based upon the Company’s allocated share of the partnership’s changes in unrealized gains and losses to its partners. Such amounts have been recorded in the condensed consolidated statements of operations and comprehensive income (loss) within net gains (losses) on investments. The estimated fair value and the level of the fair value hierarchy of the Company’s long-term debt as of March 31, 2023 and December 31, 2022 not measured at fair value is as follows: March 31, 2023 Level 1 Level 2 Level 3 Total Debt Senior Notes due 2024 $ - $ 16,361,057 $ - $ 16,361,057 December 31, 2022 Level 1 Level 2 Level 3 Total Debt Senior Notes due 2024 $ - $ 15,829,096 $ - $ 15,829,096 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments and Real Estate | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value of Financial Instruments and Real Estate | |
Fair Value of Financial Instruments and Real Estate | Note 5 - Fair Value of Financial Instruments and Real Estate The estimated fair values of the Company’s financial instruments and real estate, including their fair value level as of March 31, 2023 and December 31, 2022 are as follows: March 31, 2023 December 31, 2022 Carrying Value Fair Value Carrying Value Fair Value Fixed-maturity securities-held-to maturity, Level 1 $ 7,765,096 $ 6,825,609 $ 7,766,140 $ 6,600,388 Cash and cash equivalents, Level 1 $ 10,500,753 $ 10,500,753 $ 11,958,228 $ 11,958,228 Premiums receivable, net, Level 1 $ 13,339,037 $ 13,339,037 $ 13,880,504 $ 13,880,504 Reinsurance receivables, net, Level 3 $ 78,018,606 $ 78,018,606 $ 66,465,061 $ 66,465,061 Real estate, net of accumulated depreciation, Level 3 $ 2,052,283 $ 2,800,000 $ 2,050,644 $ 2,800,000 Reinsurance balances payable, Level 3 $ 20,110,212 $ 20,110,212 $ 13,061,966 $ 13,061,966 |
Property and Casualty Insurance
Property and Casualty Insurance Activity | 3 Months Ended |
Mar. 31, 2023 | |
Property and Casualty Insurance Activity | |
Property and Casualty Insurance Activity | Note 6 – Property and Casualty Insurance Activity Premiums Earned Premiums written, ceded and earned are as follows: Direct Assumed Ceded Net Three months ended March 31, 2023 Premiums written $ 47,597,446 $ - $ (23,628,699 ) $ 23,968,747 Change in unearned premiums 2,332,884 - 1,953,322 4,286,206 Premiums earned $ 49,930,330 $ - $ (21,675,377 ) $ 28,254,953 Three months ended March 31, 2022 Premiums written $ 42,983,897 $ - $ (18,065,709 ) $ 24,918,188 Change in unearned premiums 2,392,727 - (637,535 ) 1,755,192 Premiums earned $ 45,376,624 $ - $ (18,703,244 ) $ 26,673,380 Premium receipts in advance of the policy effective date are recorded as advance premiums. The balance of advance premiums as of March 31, 2023 and December 31, 2022 was $5,660,391 and $2,839,028, respectively. Loss and Loss Adjustment Expense Reserves The following table provides a reconciliation of the beginning and ending balances for unpaid losses and loss adjustment expense (“LAE”) reserves: Three months ended March 31, 2023 2022 Balance at beginning of period $ 118,339,513 $ 94,948,745 Less reinsurance recoverables (27,659,500 ) (10,637,679 ) Net balance, beginning of period 90,680,013 84,311,066 Incurred related to: Current year 25,042,531 22,944,869 Prior years (3,121 ) (3,671 ) Total incurred 25,039,410 22,941,198 Paid related to: Current year 5,886,288 9,283,972 Prior years 16,116,681 14,918,035 Total paid 22,002,969 24,202,007 Net balance at end of period 93,716,454 83,050,257 Add reinsurance recoverables 30,405,364 15,866,741 Balance at end of period $ 124,121,818 $ 98,916,998 Incurred losses and LAE are net of reinsurance recoveries under reinsurance contracts of $12,256,426 and $10,404,866 for the three months ended March 31, 2023 and 2022, respectively. Prior year incurred loss and LAE development is based upon estimates by line of business and accident year. Prior year loss and LAE development incurred during the three months ended March 31, 2023 and 2022 was $3,121 favorable and $3,671 favorable, respectively. Management, on a quarterly basis, performs a review of open liability claims to assess carried case and incurred but not reported (“IBNR”) reserve levels, giving consideration to both Company and industry trends. Loss and LAE reserves The reserving process for loss and LAE reserves provides for the Company’s best estimate at a particular point in time of the ultimate unpaid cost of all losses and LAE incurred, including settlement and administration of losses, and is based on facts and circumstances then known including losses that have occurred but that have not yet been reported. The process relies on standard actuarial reserving methodologies, judgments relative to estimates of ultimate claim severity and frequency, the length of time before losses will develop to their ultimate level (‘tail’ factors), and the likelihood of changes in the law or other external factors that are beyond the Company’s control. Several actuarial reserving methodologies are used to estimate required loss reserves. The process produces carried reserves set by management based upon the actuaries’ best estimate and is the cumulative combination of the best estimates made by line of business, accident year, and loss and LAE. The amount of loss and LAE reserves for individual reported claims (the “case reserve”) is determined by the claims department and changes over time as new information is gathered. Such information is critical to the review of appropriate IBNR reserves and includes a review of coverage applicability, comparative liability on the part of the insured, injury severity, property damage, replacement cost estimates, and any other information considered pertinent to estimating the exposure presented by the claim. The amounts of loss and LAE reserves for unreported claims and development on known claims (IBNR reserves) are determined using historical information aggregated by line of insurance as adjusted to current conditions. Since this process produces loss reserves set by management based upon the actuaries’ best estimate, there is no explicit or implicit provision for uncertainty in the carried loss reserves. Due to the inherent uncertainty associated with the reserving process, the ultimate liability may differ, perhaps substantially, from the original estimate. Such estimates are regularly reviewed and updated and any resulting adjustments are included in the current period’s results. Reserves are closely monitored and are recomputed periodically using the most recent information on reported claims and a variety of statistical techniques. On at least a quarterly basis, the Company reviews by line of business existing reserves, new claims, changes to existing case reserves, and paid losses with respect to the current and prior periods. Several methods are used, varying by line of business and accident year, in order to select the estimated period-end loss reserves. These methods include the following: Paid Loss Development Incurred Loss Development Paid Bornhuetter-Ferguson (“BF”) Incurred Bornhuetter-Ferguson (“BF”) Incremental Claim-Based Methods Frequency / Severity Based Methods Management’s best estimate of required reserves is generally based on an average of the methods above, with appropriate weighting of methods based on the line of business and accident year being projected. In some cases, additional methods or historical data from industry sources are employed to supplement the projections derived from the methods listed above. Three key assumptions that materially affect the estimate of loss reserves are the loss ratio estimate for the current accident year used in the BF methods, the loss development factor selections used in the loss development methods, and the loss severity assumptions used in the frequency / severity method described above. The loss ratio estimates used in the BF methods are selected after reviewing historical accident year loss ratios adjusted for rate changes, trend, and mix of business. The severity assumptions used in the frequency / severity method are determined by reviewing historical average claim severity for older more mature accident periods, trended forward to less mature accident periods. COVID-19 has introduced additional uncertainty to recent claim trends. The Company reviews the carried reserves levels on a regular basis as additional information becomes available and makes adjustments in the periods in which such adjustments are determined to be necessary. The Company is not aware of any other claim trends that have emerged or that would cause future adverse development that have not already been contemplated in setting current carried reserves levels. In New York State, lawsuits for negligence are subject to certain limitations and must be commenced within three years from the date of the accident or are otherwise barred. Accordingly, the Company’s exposure to unreported claims (“pure” IBNR) for accident dates of March 31, 2020 and prior is limited, although there remains the possibility of adverse development on reported claims (“case development” IBNR). In certain rare circumstances states have retroactively revised a statute of limitations. The Company is not aware of any such effort that would have a material impact on the Company’s results. The following is information about incurred and paid claims development as of March 31, 2023, net of reinsurance, as well as the cumulative reported claims by accident year and total IBNR reserves as of March 31, 2023 included in the net incurred loss and allocated expense amounts. The historical information regarding incurred and paid claims development for the years ended December 31, 2014 to December 31, 2022 is presented as supplementary unaudited information. All Lines of Business (in thousands, except reported claims data) As of Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance March 31, 2023 Cumulative Three Number of Months Reported Ended Claims by Accident For the Years Ended December 31, March 31, Accident Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 IBNR Year (Unaudited 2014 - 2022) (Unaudited) 2014 $ 14,193 $ 14,260 $ 14,218 $ 14,564 $ 15,023 $ 16,381 $ 16,428 $ 16,434 $ 16,486 $ 16,486 $ 24 2,138 2015 22,340 21,994 22,148 22,491 23,386 23,291 23,528 23,533 23,553 240 2,559 2016 26,062 24,941 24,789 27,887 27,966 27,417 27,352 27,246 183 2,881 2017 31,605 32,169 35,304 36,160 36,532 36,502 36,456 301 3,399 2018 54,455 56,351 58,441 59,404 61,237 61,231 1,247 4,231 2019 75,092 72,368 71,544 71,964 72,295 2,180 4,499 2020 63,083 62,833 63,217 63,266 2,074 5,873 2021 96,425 96,673 96,305 6,733 5,794 2022 79,835 79,966 11,460 4,606 2023 23,738 8,184 876 Total $ 500,541 All Lines of Business (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident For the Years Ended December 31, Three Months Ended March 31, Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Unaudited 2014 - 2022) (Unaudited) 2014 $ 5,710 $ 9,429 $ 10,738 $ 11,770 $ 13,819 $ 14,901 $ 15,491 $ 15,770 $ 16,120 $ 16,127 2015 12,295 16,181 18,266 19,984 21,067 22,104 22,318 22,473 22,487 2016 15,364 19,001 21,106 23,974 25,234 25,750 26,382 26,557 2017 16,704 24,820 28,693 31,393 32,529 33,522 33,911 2018 32,383 44,516 50,553 52,025 54,424 54,906 2019 40,933 54,897 58,055 60,374 60,993 2020 39,045 50,719 53,432 54,379 2021 56,282 77,756 78,247 2022 45,856 58,175 2023 5,301 Total $ 411,083 Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented $ 89,459 All outstanding liabilities before 2014, net of reinsurance 273 Liabilities for loss and allocated loss adjustment expenses, net of reinsurance $ 89,731 Reported claim counts are measured on an occurrence or per event basis. A single claim occurrence could result in more than one loss type or claimant; however, the Company counts claims at the occurrence level as a single claim regardless of the number of claimants or claim features involved. The reconciliation of the net incurred and paid loss development tables to the loss and LAE reserves in the consolidated balance sheet is as follows: Reconciliation of the Disclosure of Incurred and Paid Loss Development to the Liability for Loss and LAE Reserves As of (in thousands) March 31, 2023 Liabilities for allocated loss and loss adjustment expenses, net of reinsurance $ 89,731 Total reinsurance recoverable on unpaid losses 30,405 Unallocated loss adjustment expenses 3,985 Total gross liability for loss and LAE reserves $ 124,122 (Components may not sum to totals due to rounding) Reinsurance Effective December 31, 2021, the Company entered into a quota share reinsurance treaty for its personal lines business, which primarily consists of homeowners’ and dwelling fire policies, covering the period from December 31, 2021 through January 1, 2023 (“2021/2023 Treaty”). Upon the expiration of the 2021/2023 Treaty on January 1, 2023, the Company entered into a new quota share reinsurance treaty for its personal lines business, covering the period from January 1, 2023 through January 1, 2024 (“2023/2024 Treaty”). The Company’s excess of loss and catastrophe reinsurance treaties expired on June 30, 2022 and the Company entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2022. Effective January 1, 2022, the Company entered into an underlying excess of loss reinsurance treaty (“Underlying XOL Treaty”) covering the period from January 1, 2022 through January 1, 2023. The treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the treaty. Effective January 1, 2023, the Underlying XOL Treaty was renewed covering the period from January 1, 2023 through January 1, 2024. Material terms for reinsurance treaties in effect for the treaty years shown below are as follows: Treaty Period 2023/2024 Treaty 2021/2023 Treaty July 1, January 1, July 1, December 31, 2023 2023 2022 2021 to to to to January 1, June 30, January 1, June 30, Line of Business 2024 2023 2023 2022 Personal Lines: Homeowners, dwelling fire and and canine legal liability Quota share treaty: Percent ceded (8) 30 % 30 % 30 % 30 % Risk retained on intial $1,000,000 of losses (6) (7) (8) $ 700,000 $ 700,000 $ 700,000 $ 700,000 Losses per occurrence subject to quota share reinsurance coverage $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 Expiration date January 1, 2024 January 1, 2024 January 1, 2023 January 1, 2023 Excess of loss coverage and facultative facility coverage (1) (6) (7 ) $ 8,400,000 $ 8,400,000 $ 8,400,000 in excess of in excess of in excess of $ 600,000 $ 600,000 $ 600,000 Total reinsurance coverage per occurrence (6) (7) $ 500,000 $ 8,500,000 $ 8,500,000 $ 8,500,000 Losses per occurrence subject to reinsurance coverage (7 ) $ 8,000,000 $ 9,000,000 $ 9,000,000 Expiration date (7 ) June 30, 2023 June 30, 2023 June 30, 2022 Catastrophe Reinsurance: Initial loss subject to personal lines quota share treaty (7) $ 10,000,000 $ 10,000,000 $ 10,000,000 $ 10,000,000 Risk retained per catastrophe occurrence (8) (9) (7 ) $ 8,750,000 $ 7,400,000 $ 7,400,000 Catastrophe loss coverage in excess of quota share coverage (2) (7 ) $ 335,000,000 $ 335,000,000 $ 490,000,000 Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 (5) NA NA NA NA Reinstatement premium protection (3) (4) (7 ) Yes Yes Yes (1) For personal lines, includes the addition of an automatic facultative facility allowing KICO to obtain homeowners single risk coverage up to $9,000,000 in total insured value, which covers direct losses from $3,500,000 to $9,000,000 through June 30, 2023. (2) Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts. Duration of 168 consecutive hours for a catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone. (3) For the period December 31, 2021 through June 30, 2022, reinstatement premium protection for $70,000,000 of catastrophe coverage in excess of $10,000,000. (4) For the period July 1, 2022 through June 30, 2023, reinstatement premium protection for $9,800,000 of catastrophe coverage in excess of $10,000,000. (5) Excludes freeze and freeze related claims. (6) For the period January 1, 2022 through January 1, 2024, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty and 2022/2023 Treaty. Excludes losses from named storms. (7) Excess of loss and facultative facility, and catastrophe treaties will expire on June 30, 2023; reinsurance coverage in effect from July 1, 2023 through January 1, 2024 is only for Personal lines quota share (homeowners, dwelling fire and canine liability) and underlying excess of loss reinsurance. (8) For the 2021/2023 Treaty, 4% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2023/2024 Treaty, 17.5% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. (9) Plus losses in excess of catastrophe coverage Treaty Year July 1, 2022 July 1, 2021 to to Line of Business June 30, 2023 June 30, 2022 Personal Lines: Personal Umbrella Quota share treaty: Percent ceded - first $1,000,000 of coverage 90 % 90 % Percent ceded - excess of $1,000,000 dollars of coverage 95 % 95 % Risk retained $ 300,000 $ 300,000 Total reinsurance coverage per occurrence $ 4,700,000 $ 4,700,000 Losses per occurrence subject to quota share reinsurance coverage $ 5,000,000 $ 5,000,000 Expiration date June 30, 2023 June 30, 2022 Commercial Lines (1) ________________ (1) Coverage on all commercial lines policies expired in September 2020; reinsurance coverage is based on treaties in effect on the date of loss. The Company’s reinsurance program has been structured to enable the Company to grow its premium volume while maintaining regulatory capital and other financial ratios generally within or below the expected ranges used for regulatory oversight purposes. The reinsurance program also provides income as a result of ceding commissions earned pursuant to the quota share reinsurance contracts. The Company’s participation in reinsurance arrangements does not relieve the Company of its obligations to policyholders. Ceding Commission Revenue The Company earned ceding commission revenue under the 2023/2024 Treaty for the three months ended March 31, 2023, and under the 2021/2023 Treaty for the three months ended March 31, 2022, based on a fixed provisional commission rate at which provisional ceding commissions are earned. The Company earned ceding commission revenue under its expired quota share reinsurance agreements based on: (i) a fixed provisional commission rate at which provisional ceding commissions were earned, and (ii) a continuing sliding scale of commission rates and ultimate treaty year loss ratios on the policies reinsured under each of these agreements based upon which contingent ceding commissions are earned. The sliding scale includes minimum and maximum commission rates in relation to specified ultimate loss ratios. The commission rate and contingent ceding commissions earned increase when the estimated ultimate loss ratio decreases and, conversely, the commission rate and contingent ceding commissions earned decrease when the estimated ultimate loss ratio increases. Ceding commission revenue consists of the following: Three months ended March 31, 2023 2022 Provisional ceding commissions earned $ 5,446,808 $ 4,541,533 Contingent ceding commissions earned (1,401 ) 139,863 $ 5,445,407 $ 4,681,396 Provisional ceding commissions are settled monthly. Balances due from reinsurers for contingent ceding commissions on quota share treaties are settled periodically based on the Loss Ratio of each treaty year that ends on June 30, for the expired treaties that were subject to contingent commissions. As discussed above, the Loss Ratios from prior years’ treaties are subject to change as incurred losses from those periods develop, resulting in an increase or decrease in the commission rate and contingent ceding commissions earned. As of March 31, 2023 and December 31, 2022, net contingent ceding commissions payable to reinsurers under all treaties was approximately $ $2,669,000 and $2,881,000, respectively, which is recorded in reinsurance balances payable on the accompanying consolidated balance sheets. Expected Credit Losses – Uncollectible Reinsurance The Company reviews reinsurance receivables which relate to both amounts already billed on ceded paid losses as well as ceded reserves that will be billed when losses are paid in the future. The Company has not recorded an allowance for uncollectible reinsurance as there is no perceived credit risk. The principal credit quality indicator used in the valuation of the allowance on reinsurance receivables is the financial strength rating of the reinsurer sourced from major rating agencies. Changes in the allowance are presented as a component of other underwriting expenses on the condensed consolidated statements of operations and comprehensive income (loss). |
Debt
Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt | |
Debt | Note 7 – Debt Federal Home Loan Bank In July 2017, KICO became a member of, and invested in, the Federal Home Loan Bank of New York (“FHLBNY”). KICO is required to maintain an investment in capital stock of FHLBNY. Based on redemption provisions of FHLBNY, the stock has no quoted market value and is carried at cost. At its discretion, FHLBNY may declare dividends on the stock. Management reviews for impairment based on the ultimate recoverability of the cost basis in the stock. At March 31, 2023 and December 31, 2022, no impairment has been recognized. FHLBNY members have access to a variety of flexible, low cost funding through FHLBNY’s credit products, enabling members to customize advances, which are to be fully collateralized. Eligible collateral to pledge to FHLBNY includes residential and commercial mortgage-backed securities, along with U.S. Treasury and agency securities. See Note 3 – Investments for eligible collateral held in a designated custodian account available for future advances. Advances are limited to 5% of KICO’s net admitted assets as of the previous quarter and are due and payable within one year of borrowing. KICO is currently able to borrow on an overnight basis. If KICO has collateral, based on KICO’s net admitted assets, the maximum allowable advance as of March 31, 2023 and December 31, 2022 was approximately $13,059,000 and $13,192,000, respectively. Available collateral as of March 31, 2023 and December 31, 2022 was approximately $12,199,000 and $12,228,000, respectively. Advances are limited to 85% of the amount of available collateral. There were no borrowings under this facility during the three months ended March 31, 2023 and 2022. Debt Debt as of March 31, 2023 and December 31, 2022 consists of the following: March 31, December 31, 2023 2022 2022 Notes, net $ 17,536,524 $ 17,252,868 Equipment financing 7,639,495 7,905,655 Balance at end of period $ 25,176,019 $ 25,158,523 Note and Warrant Exchange On December 9, 2022, the Company entered into a Note and Warrant Exchange Agreement (the “Exchange Agreement”) with several holders (the “Exchanging Noteholders”) of the Company’s outstanding 5.50% Senior Notes due 2022 (the “2017 Notes”). On the date of the Exchange Agreement, the Exchanging Noteholders held 2017 Notes in the aggregate principal amount of $21,545,000 of the $30,000,000 aggregate principal amount of the 2017 Notes then outstanding. Pursuant to the Exchange Agreement, on December 15, 2022, the Exchanging Noteholders exchanged their respective 2017 Notes for the following: (i) new 12.0% Senior Notes due December 30, 2024 of the Company in the aggregate approximate principal amount of $19,950,000 (the “2022 Notes”); (ii) cash in the aggregate approximate amount of $1,595,000, together with accrued interest on the 2017 Notes; and (iii) three-year warrants for the purchase of an aggregate of 969,525 shares of Common Stock of the Company, exercisable at an exercise price of $1.00 per share (the “Warrants”). The remaining $8,455,000 principal amount of the 2017 Notes, together with accrued interest thereon, was paid on the maturity date of the 2017 Notes of December 30, 2022. 2022 Notes On December 15, 2022, the Company issued $19,950,000 of its 2022 Notes pursuant to the Exchange Agreement. Interest is payable semi-annually in arrears on June 30 and December 30 of each year, which will begin on June 30, 2023 at the rate of 12.0% per annum. Warrants were issued with a fair value of $993,200 (see Note 8 – Stockholders’ Equity) and transaction costs were $1,758,112, for an effective yield of 13.92% per annum. The balance of the 2022 Notes as of March 31, 2023 and December 31, 2022 is as follows: March 31, December 31, 2023 2022 12.0% Senior Unsecured Notes $ 19,950,000 $ 19,950,000 Warrants (898,044 ) (979,684 ) Issuance costs (1,515,432 ) (1,717,448 ) 2022 Notes, net $ 17,536,524 $ 17,252,868 The Company is required to make a mandatory redemption of the 2022 Notes on December 30, 2023, in an amount such that the aggregate principal amount of the 2022 Notes to be redeemed plus accrued and unpaid interest thereon shall be equal to the amount by which the maximum Ordinary Dividend Paying Capacity of KICO (as defined below) measured as of December 15, 2023 exceeds the Company’s Holding Company Expenses (as defined below) for the calendar year ended December 31, 2023. “Ordinary Dividend Paying Capacity” means the sum, as measured on December 15, 2023, of (i) the maximum allowable amount of dividends that KICO is permitted to pay without seeking any regulatory approval in accordance with New York insurance regulations based on its statutory annual and quarterly financial statements filed with the National Association of Insurance Commissioners as of and for the thirty-six (36) month period ended September 30, 2023 plus (ii) any dividends paid by KICO to the Company during the period beginning January 1, 2023 and ending September 30, 2023. “Holding Company Expenses” means the sum of (i) cash interest expense paid or to be paid during the calendar year ended December 31, 2023 on the 2022 Notes, intercompany loans and any other indebtedness of the holding company on a stand-alone basis and (ii) other cash operating expenses, including taxes, paid or to be paid by the holding company during the calendar year ended December 31, 2023. The amount of other operating expenses paid in cash in the preceding clause (ii) shall not exceed $2.5 million. Holding Company Expenses will be determined based on the actual Holding Company Expenses for the nine months ending September 30, 2023, and an estimate of Holding Company Expenses for the three months ending December 30, 2023. The 2022 Notes are unsecured obligations of the Company and are not the obligations of or guaranteed by any of the Company’s subsidiaries. The 2022 Notes rank senior in right of payment to any of the Company’s existing and future indebtedness that is by its terms expressly subordinated or junior in right of payment to the 2022 Notes. The Notes rank equally in right of payment to all of the Company’s existing and future senior indebtedness, but are effectively subordinated to any secured indebtedness to the extent of the value of the collateral securing such secured indebtedness. In addition, the 2022 Notes are structurally subordinated to the indebtedness and other obligations of the Company’s subsidiaries. The 2022 Notes are redeemable, at the Company’s option, in whole or in part, at any time or in part from time to time, upon not less than fifteen (15) nor more than sixty (60) days’ notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the respective period set forth below, plus, in each case, accrued and unpaid interest, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date): Period: Percentage December 30, 2022 to December 29, 2023 102.00 % December 30, 2023 to September 29, 2024 101.00 % September 30, 2024 to December 29, 2024 100.00 % As of the end of each calendar quarter, commencing with the calendar quarter ending December 31, 2022, the Company is subject to a leverage maintenance test (“Leverage Maintenance Test”), which requires that the Total Consolidated Indebtedness (as defined below) of the Company not be greater than 30% of Total Consolidated Capitalization (as defined below). As of March 31, 2023 and December 31, 2022, the ratio as defined under the Leverage Maintenance Test was 29.7% and 26.7%, respectively. “Total Consolidated Indebtedness” is the aggregate principal amount (or accreted value in the case of any Indebtedness issued with more than de minimis original issue discount) of all outstanding long-term of the Company except for the sale leaseback transaction described below under “Equipment Financing”, any refinancing or any future sale leaseback transaction. “Total Consolidated Capitalization” is the amount equal to the sum of (x) Total Consolidated Indebtedness outstanding as of such date and (y) the total consolidated shareholders’ equity of the Company, excluding accumulated other comprehensive (loss) income, as recorded on the Company’s condensed consolidated balance sheet. Equipment Financing On October 27, 2022, KICO entered into a sale leaseback transaction, whereby KICO sold $8,096,824 of fixed assets to a bank. Under GAAP, the sale leaseback transaction is recorded as equipment financing (“Financing”). The provisions of the Financing require KICO to pay a monthly payment of principal and interest at the rate of 5.86% per annum totaling $126,877 for a term of 60 months, which commenced on October 27, 2022. The terms of the Financing provide buyout options to KICO at the end of the 60 month term, which are as follows: · At the end of the lease, KICO may purchase the fixed assets for a purchase price of $2,024,206, which is 25% of the original fixed asset cost of $8,096,824; or · KICO may renew the lease for 16 months at the same rental rate, which totals $2,030,036. A provision of the Financing requires KICO to pledge collateral for the lease obligation. As of March 31, 2023 and December 31, 2022, the amount of required collateral was approximately $8,268,000 and $8,691,000, respectively. As of March 31, 2023 and December 31, 2022, the fair value of KICO’s pledged collateral was approximately $11,475,000 and $8,691,000, respectively, in United States Treasury securities. Future contractual payment obligations under the Financing as of March 31, 2023 are as follows: For the Year Ending December 31, Total Remainder of 2023 $ 822,212 2024 1,153,862 2025 1,223,293 2026 1,296,901 2027 1,119,021 5,615,289 2027 purchase price 2,024,206 Total $ 7,639,495 |
Stockholders Equity
Stockholders Equity | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders Equity | |
Stockholders' Equity | Note 8 – Stockholders’ Equity Dividends Declared and Paid Dividends declared and paid on Common Stock were $-0- and $425,490 for the three months ended March 31, 2023 and 2022, respectively. On November 11, 2022, the Company’s Board of Directors determined to suspend regular quarterly dividends. Future dividend policy will be subject to the discretion of the Company’s Board of Directors. Stock Options Effective August 12, 2014, the Company adopted the 2014 Equity Participation Plan (the “2014 Plan”) pursuant to which a maximum of 700,000 shares of Common Stock of the Company were initially authorized to be issued pursuant to the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and stock bonuses. Incentive stock options granted under the 2014 Plan expire no later than ten years from the date of grant (except no later than five years for a grant to a 10% stockholder). Non-statutory stock options granted under the 2014 Plan expire no later than ten years from the date of grant. The Board of Directors or the Compensation Committee determines the vesting provisions for stock awards granted under the 2014 Plan, subject to the provisions of the 2014 Plan. On August 5, 2020, the Company’s stockholders approved amendments to the 2014 Plan, including an increase in the maximum number of shares of Common Stock of the Company that are authorized to be issued pursuant to the 2014 Plan to 1,400,000. On May 10, 2023, the Company’s Board of Directors approved an amendment to the 2014 Plan, subject to shareholder approval, to increase the maximum shares of Common Stock of the Company that are authorized to be issued pursuant to the 2014 Plan to 1,900,000. The results of operations for the three months ended March 31, 2023 and 2022 include stock-based compensation expense for stock options totaling approximately $-0- and $6,000, respectively. Stock-based compensation expense related to stock options for the three months ended March 31, 2022 is net of estimated forfeitures of approximately 18%. Such amounts have been included in the condensed consolidated statements of operations and comprehensive income (loss) within other operating expenses. No options were granted during the three months ended March 31, 2023 and 2022. The fair value of stock options at the grant date are estimated using the Black-Scholes option-pricing model. The Black-Scholes option - pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options. A summary of stock option activity under the Company’s 2014 Plan for the three months ended March 31, 2023 is as follows: Stock Options Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 1, 2023 107,201 $ 8.31 1.92 $ - Granted - $ - - $ - Exercised - $ - - $ - Expired/Forfeited - $ - - $ - Outstanding at March 31, 2023 107,201 $ 8.31 1.66 $ - Vested and Exercisable at March 31, 2023 107,201 $ 8.31 1.66 $ - The aggregate intrinsic value of options outstanding and options exercisable at March 31, 2023 is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s Common Stock for the options that had exercise prices that were lower than the $1.34 closing price of the Company’s Common Stock on March 31, 2023. No options were exercised, forfeited or expired during the three months ended March 31, 2023. The total intrinsic value of options when forfeited are determined as of the date of forfeiture. The total intrinsic value of options when expired are determined as of the date of expiration. Participants in the 2014 Plan may exercise their outstanding vested options, in whole or in part, by having the Company reduce the number of shares otherwise issuable by a number of shares having a fair market value equal to the exercise price of the option being exercised, or by exchanging a number of shares owned for a period of greater than one year having a fair market value equal to the exercise price of the option being exercised. As of March 31, 2023, there were no unvested options. As of March 31, 2023, there were 204,399 shares reserved for grants under the 2014 Plan. Restricted Stock Awards A summary of the restricted Common Stock activity under the Company’s 2014 Plan for three months ended March 31, 2023 is as follows: Restricted Stock Awards Shares Weighted Average Grant Date Fair Value per Share Aggregate Fair Value Balance at January 1, 2023 366,597 $ 6.97 $ 2,555,181 Granted 272,682 $ 1.37 $ 373,499 Vested (60,951 ) $ 6.51 $ (396,868 ) Forfeited (600 ) $ 1.52 $ (912 ) Balance at March 31, 2023 577,728 $ 3.77 $ 2,178,035 Fair value was calculated using the closing price of the Company’s Common Stock on the grant date. For the three months ended March 31, 2023 and 2022, stock-based compensation for these grants was approximately $217,000 and $518,000, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). These amounts reflect the Company’s accounting expense and do not correspond to the actual value that will be recognized by the directors, executives and employees. Employee Stock Purchase Plan On June 19, 2021, the Company’s Board of Directors adopted the Kingstone Companies, Inc. Employee Stock Purchase Plan (the “ESPP”), subject to stockholder approval. Such approval was obtained on August 10, 2021. The purpose of the ESPP is to provide eligible employees of the Company with an opportunity to use payroll deductions to purchase shares of Common Stock of the Company. The maximum number of shares of Common Stock that may be purchased under the ESPP is 750,000, subject to adjustment as provided for in the ESPP. The ESPP was effective August 10, 2021 and expires on August 10, 2031. A maximum of 5,000 shares of Common Stock may be purchased by an employee during any offering period. The initial offering period under the ESPP was from November 1, 2021 through October 31, 2022 (“2021/2022 Offering”). There is currently no offering pursuant to the ESPP subsequent to October 31, 2022. For the three months ended March 31, 2022, stock-based compensation under the 2021/2022 Offering was approximately $6,000, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). At the end of the 2021/2022 Offering period, 33,222 shares of Common Stock were issued at $1.82 per share to participating employees for a total purchase of $60,464. Warrants In connection with the Exchange Agreement (see Note 7 – Debt – “Note and Warrant Exchange”), as additional consideration, on December 15, 2022, the Company issued warrants to the Exchanging Noteholders to purchase 969,525 shares of Common Stock. The fair value of the warrants, using the Black-Scholes valuation formula, was $993,200, which has been capitalized as a deferred financing cost of the 2022 Notes. The fair value of the warrants is being amortized over the life of the warrants, which is 36.5 months. The warrants are exercisable through December 30, 2025 at an exercise price of $1.00 per share. Holders of the warrants may exercise their outstanding warrants in cash, or, in whole or in part, by having the Company reduce the number of shares otherwise issuable by a number of shares having a fair market value equal to the exercise price of the warrants being exercised. As of March 31, 2023, all warrants for the purchase of an aggregate of 969,525 shares of Common Stock were outstanding. No warrants were granted during the three months ended March 31, 2023 and 2022. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Income Taxes | Note 9 – Income Taxes The Company files a consolidated U.S. federal income tax return that includes all wholly-owned subsidiaries. State tax returns are filed on a consolidated or separate return basis depending on applicable laws. The Company records adjustments related to prior years’ taxes during the period when they are identified, generally when the tax returns are filed. The effect of these adjustments on the current and prior periods (during which the differences originated) is evaluated based upon quantitative and qualitative factors and are considered in relation to the consolidated financial statements taken as a whole for the respective periods. Deferred tax assets and liabilities are determined using the enacted tax rates applicable to the period the temporary differences are expected to be recovered. Accordingly, the current period income tax provision can be affected by the enactment of new tax rates. The net deferred income taxes on the balance sheets reflect temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and income tax purposes, tax effected at various rates depending on whether the temporary differences are subject to federal taxes, state taxes, or both. Significant components of the Company’s deferred tax assets and liabilities are as follows: March 31, December 31, 2023 2022 Deferred tax asset: Net operating loss carryovers (1) $ 5,284,865 $ 3,828,947 Claims reserve discount 1,280,017 1,238,544 Unearned premium 3,513,318 3,574,840 Deferred ceding commission revenue 2,255,280 2,230,109 Net unrealized losses on securities 4,006,763 4,920,837 Other 478,495 503,692 Total deferred tax assets 16,818,738 16,296,969 Deferred tax liability: Investment in KICO (2) 759,543 759,543 Deferred acquisition costs 4,765,329 5,002,085 Intangibles 105,000 105,000 Depreciation and amortization 127,448 99,183 Total deferred tax liabilities 5,757,320 5,965,811 Net deferred income tax asset $ 11,061,418 $ 10,331,158 (1) The deferred tax assets from net operating loss carryovers (“NOL”) are as follows: March 31, December 31, Type of NOL 2023 2022 Expiration Federal only, NOL from 2021 - 2023 $ 5,284,865 $ 3,828,947 None State only (A) 2,375,669 2,276,595 December 2027 - December 2043 Valuation allowance (2,375,669 ) (2,276,595 ) State only, net of valuation allowance - - Total deferred tax asset from net operating loss carryovers $ 5,284,865 $ 3,828,947 (A) Kingstone generates operating losses for state purposes and has prior year NOLs available. The state NOL as of March 31, 2023 and December 31, 2022 was approximately $36,549,000 and $35,025,000, respectively. KICO, the Company’s insurance underwriting subsidiary, is not subject to state income taxes. KICO’s state tax obligations are paid through a gross premiums tax, which is included in the condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses. Kingstone has recorded a valuation allowance due to the uncertainty of generating enough state taxable income to utilize 100% of the available state NOLs over their remaining lives, which expire between 2027 and 2043. (2) Deferred tax liability – Investment in KICO On July 1, 2009, the Company completed the acquisition of 100% of the issued and outstanding common stock of KICO (formerly known as Commercial Mutual Insurance Company (“CMIC”)) pursuant to the conversion of CMIC from an advance premium cooperative to a stock property and casualty insurance company. Pursuant to the plan of conversion, the Company acquired a 100% equity interest in KICO, in consideration for the exchange of $3,750,000 principal amount of surplus notes of CMIC. In addition, the Company forgave all accrued and unpaid interest on the surplus notes as of the date of conversion. As of the date of acquisition, unpaid accrued interest on the surplus notes along with the accretion of the discount on the original purchase of the surplus notes totaled $2,921,319 (together “Untaxed Interest”). As of the date of acquisition, the deferred tax liability on the Untaxed Interest was $1,169,000. A temporary difference with an indefinite life exists when the parent has a lower carrying value of its subsidiary for income tax purposes. The deferred tax liability was reduced to $759,543 upon the reduction of federal income tax rates as of December 31, 2017. The Company is required to maintain its deferred tax liability of $759,543 related to this temporary difference until the stock of KICO is sold, or the assets of KICO are sold or KICO and the parent are merged. In assessing the valuation of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. No valuation allowance against deferred tax assets has been established, except for NOL limitations, as the Company believes it is more likely than not the deferred tax assets will be realized based on the historical taxable income of KICO, or by offset to deferred tax liabilities. The Company had no material unrecognized tax benefit and no adjustments to liabilities or operations were required. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the three months ended March 31, 2023 and 2022. If any had been recognized these would have been reported in income tax expense. Generally, taxing authorities may examine the Company’s tax returns for the three years from the date of filing. The Company’s tax returns for the years ended December 31, 2019 through December 31, 2021 remain subject to examination. |
Loss Per Common Share
Loss Per Common Share | 3 Months Ended |
Mar. 31, 2023 | |
Loss Per Common Share | |
Loss Per Common Share | Note 10 – Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted-average number of shares of Common Stock outstanding. Diluted loss per common share reflects, in periods in which it has a dilutive effect, the impact of common shares issuable upon exercise of stock options and warrants as well as non-vested restricted stock awards. The computation of diluted loss per common share excludes those options and warrants with an exercise price in excess of the average market price of the Company’s Common Stock during the periods presented. The computation of diluted loss per common share excludes outstanding options, warrants and non-vested restricted stock awards in periods where the exercise of such options and warrants or vesting of such restricted stock awards would be anti-dilutive. For the three months ended March 31, 2023 and 2022, no options, warrants or restricted stock awards were included in the computation of diluted loss per common share as they would have been anti-dilutive for the relevant periods and, as a result, the weighted average number of shares of Common Stock used in the calculation of diluted loss per common share has not been adjusted for the effect of such options, warrants and non-vested restricted stock awards. The reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted loss per common share follows: Three months ended March 31, 2023 2022 Weighted average number of shares outstanding 10,756,913 10,630,450 Effect of dilutive securities, common share equivalents: Stock options - - Warrants - - Restricted stock awards - - Weighted average number of shares outstanding, used for computing diluted loss per share 10,756,913 10,630,450 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies (Note 11) | |
Commitments and Contingencies | Note 11 - Commitments and Contingencies Litigation From time to time, the Company is involved in various legal proceedings in the ordinary course of business. For example, to the extent a claim is asserted by a third party in a lawsuit against one of the Company’s insureds covered by a particular policy, the Company may have a duty to defend the insured party against the claim. These claims may relate to bodily injury, property damage or other compensable injuries as set forth in the policy. Such proceedings are considered in estimating the liability for loss and LAE expenses. Office Lease The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. The Company is a party to a non-cancellable operating lease, dated March 27, 2015, for its office facility for KICO located in Valley Stream, New York expiring March 31, 2024. On July 8, 2019, the Company entered into a lease agreement for an additional office facility for Cosi located in Valley Stream, New York under a non-cancelable operating lease. The lease had a term of seven years and two months expiring December 31, 2026. During January 2022, pursuant to a mutual agreement with the landlord at a cost of $40,000, the Cosi lease was terminated effective as of January 31, 2022. Additional information regarding the Company’s office operating leases is as follows: Three months ended Three months ended Lease cost March 31, 2023 March 31, 2022 Operating lease (1) (2) $ 40,815 $ 46,938 Other information on operating leases Cash payments included in the measurement of lease liability reported in operating cash flows $ 47,483 $ 53,003 Discount rate 5.50 % 5.50 % Remaining lease term in years KICO 1.00 2.00 (1) KICO rent expense is included in the condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses. (2) Cosi rent expense is included in the condensed consolidated statements of operations and comprehensive income (loss) within other operating expenses. The following table presents the contractual maturities of the Company’s lease liabilities as of March 31, 2023: For the Three Months Ending March 31, Total Remainder of 2023 $ 147,436 2024 49,145 Total undiscounted lease payments 196,581 Less: present value adjustment 15,595 Operating lease liability (1) $ 180,986 (1) The operating lease liability is recorded in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets. Rent expense for the three months ended March 31, 2023 and 2022 amounted to $40,815 and $46,938, respectively, and is included in the accompanying condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses. Employment Agreements Barry Goldstein, President, Chief Executive Officer and Executive Chairman of the Board Employment Agreement effective as of January 1, 2020 On October 14, 2019, the Company and Barry B. Goldstein, the Company’s President, Chief Executive Officer and Executive Chairman of the Board, entered into a Second Amended and Restated Employment Agreement (the “Second Amended Goldstein Employment Agreement”). The Second Amended Goldstein Employment Agreement became effective as of January 1, 2020 and expired on December 31, 2022. The Second Amended Goldstein Employment Agreement extended the expiration date of the employment agreement in effect for Mr. Goldstein from December 31, 2021 to December 31, 2022. Pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein was entitled to receive an annual base salary of $500,000 and an annual bonus equal to 6% of the Company’s consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 2.5 times his base salary. In addition, pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein was entitled to receive a long-term compensation (“LTC”) award of between $945,000 and $2,835,000 based on a specified minimum increase in the Company’s adjusted book value per share (as defined in the Second Amended Goldstein Employment Agreement) as of December 31, 2022 as compared to December 31, 2019 (with the maximum LTC payment being due if the average per annum increase was at least 14%). Pursuant to the Third Amended Goldstein Employment Agreement (discussed below), Mr. Goldstein relinquished the right to receive the LTC. Pursuant to the Second Amended Goldstein Employment Agreement, in the event that Mr. Goldstein’s employment was terminated by the Company without cause or he resigned for good reason (each as defined in the Second Amended Goldstein Employment Agreement), Mr. Goldstein would have been entitled to receive his base salary and the 6% bonus for the remainder of the term. In addition, in the event of Mr. Goldstein’s death, his estate would have been entitled to receive his base salary and accrued bonus through the date of death. Further, in the event that Mr. Goldstein’s employment was terminated by the Company without cause or he resigned for good reason, or, in the event of the termination of Mr. Goldstein’s employment due to disability or death, Mr. Goldstein’s granted but unvested restricted stock awards would have vested. Mr. Goldstein would have been entitled, under certain circumstances, to a payment equal to 3.82 times his then annual salary and his accrued 6% bonus in the event of the termination of his employment within eighteen months following a change of control of the Company. Pursuant to the Second Amended Goldstein Employment Agreement, in January 2020, Mr. Goldstein received a grant of 157,431 shares of restricted stock under the terms of the Company’s 2014 Plan determined by dividing $1,250,000 by the fair market value of the Company’s Common Stock on the date of grant. This 2020 grant vested with respect to one-third of the award on each of the first and second anniversaries of the grant date and will vest with respect to one-sixth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates. Also pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein received a grant, under the terms of the 2014 Plan, during January 2021, of 230,769 shares of restricted stock determined by dividing $1,500,000 by the fair market value of the Company’s Common Stock on the date of grant. This 2021 grant vested with respect to one-half of the award on the first anniversary of the grant date and will vest with respect to one-fourth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates. Further, pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein received in 2020, 2021, and 2022 a grant, under the terms of the 2014 Plan of a number of shares of restricted stock determined by dividing $136,500 by the fair market value of the Company’s Common Stock on the date of grant. In January 2020, Mr. Goldstein was granted 17,191 shares of restricted stock pursuant to this provision. This grant vested with respect to one-third of the award on each of the first and second anniversaries of the grant date and will vest with respect to one-sixth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates. In January 2021, Mr. Goldstein was granted 21,000 shares of restricted stock pursuant to this provision. This grant vested with respect to one-half of the award on the first anniversary of the grant date and will vest with respect to one-fourth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates. In January 2022, Mr. Goldstein was granted 27,300 shares of restricted stock pursuant to this provision. This grant will vest with respect to one-half of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates. Pursuant to the 2014 Plan, Mr. Goldstein’s unvested restricted stock awards will vest in the event of a change in control of the Company. In addition, in the event of the termination of Mr. Goldstein’s employment with the Company for any reason, his unvested restricted stock will vest. Employment Agreement effective as of January 1, 2023 On June 27, 2022, the Company and Mr. Goldstein entered into a third amended and restated employment agreement which took effect as of January 1, 2023, and expires on December 31, 2024 (the “Third Amended Goldstein Employment Agreement”). Pursuant to the Third Amended Goldstein Employment Agreement, Mr. Goldstein is entitled to receive an annual base salary of $500,000 and an annual bonus equal to 3% of the Company’s consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 1.25 times his base salary. Pursuant to the Third Amended Goldstein Employment Agreement, Mr. Goldstein would be entitled to receive, under certain circumstances, a payment equal to 1.5 times his then annual base salary and his accrued bonus in the event of the termination of his employment within eighteen months following a change of control of the Company. Meryl Golden, Chief Operating Officer Employment Agreement effective as of January 1, 2021 On September 16, 2019, the Company and Meryl Golden entered into an employment agreement (the “Golden Employment Agreement”) pursuant to which Ms. Golden serves as the Company’s Chief Operating Officer. Ms. Golden also serves as KICO’s President and Chief Operating Officer. The Golden Employment Agreement became effective as of September 25, 2019 (amended on December 24, 2020) and expired on December 31, 2022. Pursuant to the Golden Employment Agreement, Ms. Golden was entitled to receive an annual salary of $500,000. The Golden Employment Agreement also provided for the grant on the effective date of a five year option for the purchase of 50,000 shares of the Company’s Common Stock pursuant to the 2014 Plan. The options granted vested in four equal installments, with the first installment vesting on the grant date, and the remaining installments vesting on the first, second, and third anniversaries of the grant date. Pursuant to the Golden Employment Agreement, as amended, in each of January 2021 and January 2022, Ms. Golden was granted 30,000 shares of restricted Common Stock pursuant to the 2014 Plan. Each such grant will vest in three equal installments on each of the first, second and third anniversaries of the grant date. Pursuant to the 2014 Plan, Ms. Golden’s outstanding stock options and restricted stock awards will vest in the event of a change in control of the Company. Employment Agreement effective as of January 1, 2023 On June 27, 2022, the Company and Ms. Golden entered into a second amended and restated employment agreement which took effect as of January 1, 2023, and expires on December 31, 2024 (the “Second Amended Golden Employment Agreement”). Pursuant to the Second Amended Golden Employment Agreement, Ms. Golden is entitled to receive an annual base salary of $500,000 and an annual bonus equal to 3% of the Company’s consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 1.25 times her base salary. In addition, pursuant to the Second Amended Golden Employment Agreement, Ms. Golden is entitled to receive a grant, under the terms of the 2014 Plan, during each of January 2023 and January 2024, under certain circumstances, of a number of shares of restricted stock determined by dividing $136,500 by the fair market value of the Company’s Common Stock on the date of grant. In January 2023, Ms. Golden was granted 101,111 shares of restricted stock pursuant to this provision. The 2023 grant will vest with respect to one-half of the award on the first anniversary of the grant date and one-half of the award on December 31, 2024, based on the continued provision of services through such dates. The 2024 grant will vest on December 31, 2024, based on the continued provision of services through such date. In the event that the Company is precluded from making a grant in 2024, then instead Ms. Golden shall be entitled to receive a cash bonus of $136,500 for such year. Further, pursuant to the Second Amended Golden Employment Agreement, Ms. Golden would be entitled to receive, under certain circumstances, a payment equal to 1.5 times her then annual base salary and her accrued bonus in the event of the termination of her employment within eighteen months following a change of control of the Company. |
Employee Benefit Plans
Employee Benefit Plans | 3 Months Ended |
Mar. 31, 2023 | |
Employee Benefit Plans | |
Employee Benefit Plans | Note 12 – Employee Benefit Plans Employee Bonus Plan For the three months ended March 31, 2023 and 2022 the Company did not accrue for, or pay, bonuses related to an employee bonus plan. 401 (k) Plan The Company maintains a salary reduction plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) for its qualified employees. The Company matches 100% of each participant’s contribution up to 4% of the participant’s eligible contribution. The Company incurred approximately $85,000 and $62,000, respectively, of expense for the three months ended March 31, 2023 and 2022, related to the 401(k) Plan, which is recorded in other underwriting expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). Deferred Compensation Plan On June 18, 2018, the Company adopted the Kingstone Companies, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”). Effective December 22, 2022, the Company terminated the Deferred Compensation Plan. The assets of the Deferred Compensation Plan will be liquidated by making payments to Participants in full satisfaction of their interest in the Deferred Compensation Plan (“Termination Payments”), which Termination Payments will be made no earlier than December 22, 2023 and will be completed no later than December 22, 2024. The deferred compensation liability as of March 31, 2023 and December 31, 2022 amounted to $855,580 and $1,155,860, respectively, and is recorded in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events | |
Subsequent Events | Note 13 – Subsequent Events The Company has evaluated events that occurred subsequent to March 31, 2023 through the date these condensed consolidated financial statements were issued for matters that required disclosure or adjustment in these condensed consolidated financial statements. A.M. Best On May 4, 2023, KICO’s A.M. Best financial strength rating was downgraded from B (Fair) to B- (Fair) and its long-term issuer credit rating was downgraded from “bb” (Fair) to “bb-” (Fair). The outlook of the credit ratings remained at negative. Equity Participation Plan On May 10, 2023, the Company’s Board of Directors approved an amendment to the 2014 Plan, subject to shareholder approval, to increase the maximum shares of Common Stock of the Company that are authorized to be issued pursuant to the 2014 Plan to 1,900,000 (see Note 8 – Stockholders’ Equity). |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies | |
Use Of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and assumptions, which include the reserves for losses and LAE, which are subject to estimation errors due to the inherent uncertainty in projecting ultimate claim amounts that will be reported and settled over a period of many years. In addition, estimates and assumptions associated with receivables under reinsurance contracts related to contingent ceding commission revenue require judgments by management. On an ongoing basis, management reevaluates its assumptions and the methods for calculating these estimates. Actual results may differ significantly from the estimates used in preparing the condensed consolidated financial statements. |
Principles of Consolidation | The condensed consolidated financial statements include the accounts of Kingstone and its wholly-owned subsidiaries: (1) KICO and its wholly-owned subsidiaries, CMIC Properties, Inc. (“Properties”) and 15 Joys Lane, LLC (“15 Joys Lane”), which together own the land and building from which KICO operates, and (2) Cosi. All significant inter-company account balances and transactions have been eliminated in consolidation. |
Recent Accounting Pronouncements | In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This new guidance applies to reinsurance and insurance receivables and other financing receivables. For available-for-sale fixed maturity securities carried at fair value, estimated credit losses will continue to be measured at the present value of expected cash flows, however, the other than temporary impairment (“OTTI”) concept has been eliminated. Under the previous guidance, estimated credit impairments resulted in a write-down of amortized cost. Under the new guidance, estimated credit losses are recognized through an allowance and reversals of the allowance are permitted if the estimate of credit losses declines. For available-for-sale fixed maturity securities where the Company has an intent to sell, impairment will continue to result in a write-down of amortized cost. ASU 2016-13 was effective for the Company on January 1, 2023. The Company determined as of the date of adoption that the updated guidance did not have an impact on its consolidated financial statements. Below is a summary of the significant accounting policies impacted by the adoption of ASU 2016-13. The allowance for credit losses is a valuation account that is reported as a reduction of a financial asset’s cost basis and is measured on a pool basis when similar risk characteristics exist. Management estimates the allowance using relevant available information from both internal and external sources. Historical credit loss experience provides the basis for the estimation of expected credit losses and adjustments may be made to reflect current conditions and reasonable and supportable forecasts. Adjustments to historical loss information are made for any additional factors that come to the Company’s attention. This could include significant shifts in counterparty financial strength ratings, aging of past due receivables, amounts sent to collection agencies, or other underlying portfolio changes. Amounts are considered past due when payments have not been received according to contractual terms. The Company also considers current and forecasted economic conditions, using a variety of economic metrics and forecast indices. The sensitivity of expected credit losses relative to changes to these forecasted economic conditions can vary by financial asset class. The Company considers a reasonable and supportable forecast period to be up to 24 months from the balance sheet date. After the forecast period, the Company reverts to historical credit experience. The Company uses collateral arrangements such as letters of credit and amounts held in beneficiary trusts to mitigate credit risk, which are considered in the estimate of net amount expected to be collected. The Company has made a policy election to present accrued interest balances separately from the amortized cost basis of assets and has elected the practical expedient to exclude the accrued interest from the tabular disclosures for available-for-sale and held-to-maturity securities. The Company has elected not to estimate an allowance for credit losses on accrued interest receivable. The accrual of interest income is discontinued and the asset is placed on nonaccrual status in the quarter that payment becomes delinquent. Interest accrued but not received for assets on nonaccrual status is reversed through investment income. Interest received for assets that are on nonaccrual status is recognized as payment is received. The asset is returned to accrual status when the principal and interest amounts contractually due are brought current and future payments are expected. Interest receivable is presented as a component of other assets on the condensed consolidated balance sheet. See Note 3 and Note 6 to the condensed consolidated financial statements for additional information regarding credit losses. The Company has determined that all other recently issued accounting pronouncements will not have a material impact on its consolidated financial position, results of operations and cash flows, or do not apply to its operations. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Investments | |
Schedule of Available for Sale Securities | March 31, 2023 Net Cost or Gross Gross Unrealized Losses Estimated Unrealized Amortized Unrealized Less than 12 More than 12 Fair Gains Category Cost Gains Months Months Value (Losses) Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies (1) $ 21,988,099 $ 36,038 $ (674 ) $ - $ 22,023,463 $ 35,364 Political subdivisions of States, Territories and Possessions 17,098,969 - (5,153 ) (3,338,913 ) 13,754,903 (3,344,066 ) Corporate and other bonds Industrial and miscellaneous 80,264,856 - (777,717 ) (6,479,111 ) 73,008,028 (7,256,828 ) Residential mortgage and other asset backed securities (2) 53,022,594 67,556 (496,219 ) (6,739,006 ) 45,854,925 (7,167,669 ) Total fixed-maturity securities $ 172,374,518 $ 103,594 $ (1,279,763 ) $ (16,557,030 ) $ 154,641,319 $ (17,733,199 ) December 31, 2022 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Category Cost Gains Months Months Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies (1) $ 23,874,545 $ 1,479 $ (6,928 ) $ - $ 23,869,096 $ (5,449 ) Political subdivisions of States, Territories and Possessions 17,108,154 - (2,195,273 ) (1,771,494 ) 13,141,387 (3,966,767 ) Corporate and other bonds Industrial and miscellaneous 80,338,464 - (5,796,994 ) (2,458,985 ) 72,082,485 (8,255,979 ) Residential mortgage and other asset backed securities (2) 53,597,264 58,398 (882,664 ) (7,150,803 ) 45,622,195 (7,975,069 ) Total fixed-maturity securities $ 174,918,427 $ 59,877 $ (8,881,859 ) $ (11,381,282 ) $ 154,715,163 $ (20,203,264 ) |
Schedule of available for sale fixed maturity securities contractual maturity | March 31, 2023 December 31, 2022 Amortized Estimated Amortized Estimated Remaining Time to Maturity Cost Fair Value Cost Fair Value Less than one year $ 15,731,448 $ 15,650,264 $ 16,359,100 $ 16,307,991 One to five years 55,396,930 53,174,343 18,605,987 14,085,113 Five to ten years 30,202,432 25,759,376 54,559,158 52,230,283 More than 10 years 18,021,114 14,202,411 31,796,918 26,469,581 Residential mortgage and other asset backed securities 53,022,594 45,854,925 53,597,264 45,622,195 Total $ 172,374,518 $ 154,641,319 $ 174,918,427 $ 154,715,163 |
Schedule of equity securities | March 31, 2023 Gross Gross Estimated Category Cost Gains Losses Fair Value Equity Securities: Preferred stocks $ 13,583,942 $ - $ (2,906,623 ) $ 10,677,319 Common stocks, mutual funds, and exchange traded funds 4,427,204 199,258 (681,232 ) 3,945,230 Total $ 18,011,146 $ 199,258 $ (3,587,855 ) $ 14,622,549 December 31, 2022 Gross Gross Estimated Category Cost Gains Losses Fair Value Equity Securities: Preferred stocks $ 13,583,942 $ - $ (3,589,313 ) $ 9,994,629 Common stocks, mutual funds, and exchange traded funds 4,502,758 158,635 (821,632 ) 3,839,761 Total $ 18,086,700 $ 158,635 $ (4,410,945 ) $ 13,834,390 March 31, 2023 December 31, 2022 Gross Estimated Gross Estimated Category Cost Gains Fair Value Cost Gains Fair Value Other Investments: Hedge fund $ 1,987,040 $ 1,148,409 $ 3,135,449 $ 1,987,040 $ 784,612 $ 2,771,652 |
Schedule of Held to Maturity Securities | March 31, 2023 Net Cost or Gross Gross Unrealized Losses Estimated Unrealized Amortized Unrealized Less than 12 More than 12 Fair Gains/ Category Cost Gains Months Months Value (Losses) Held-to-Maturity Securities: U.S. Treasury securities $ 1,228,634 $ 47,886 $ (24,108 ) $ - $ 1,252,412 $ 23,778 Political subdivisions of States, Territories and Possessions 498,769 1,661 - - 500,430 1,661 Exchange traded debt 304,111 - (56,461 ) - 247,650 (56,461 ) Corporate and other bonds Industrial and miscellaneous 5,733,582 40,048 (57,910 ) (890,603 ) 4,825,117 (908,465 ) Total $ 7,765,096 $ 89,595 $ (138,479 ) $ (890,603 ) $ 6,825,609 $ (939,487 ) December 31, 2022 Net Cost or Gross Gross Unrealized Losses Estimated Unrealized Amortized Unrealized Less than 12 More than 12 Fair Gains/ Category Cost Gains Months Months Value (Losses) Held-to-Maturity Securities: U.S. Treasury securities $ 1,228,560 $ 28,400 $ (34,077 ) $ - $ 1,222,883 $ (5,677 ) Political subdivisions of States, Territories and Possessions 498,638 2,092 - - 500,730 2,092 Exchange traded debt 304,111 - (29,111 ) - 275,000 (29,111 ) Corporate and other bonds Industrial and miscellaneous 5,734,831 36,968 (809,746 ) (360,278 ) 4,601,775 (1,133,056 ) Total $ 7,766,140 $ 67,460 $ (872,934 ) $ (360,278 ) $ 6,600,388 $ (1,165,752 ) |
Schedule of Held to Maturity Securities by contractual maturity | March 31, 2023 December 31, 2022 Amortized Estimated Amortized Estimated Remaining Time to Maturity Cost Fair Value Cost Fair Value Less than one year $ 708,744 $ 747,483 $ 708,535 $ 743,575 One to five years 1,120,700 1,098,253 1,120,507 1,088,522 Five to ten years 1,405,680 1,215,945 1,402,704 1,200,720 More than 10 years 4,529,972 3,763,928 4,534,394 3,567,571 Total $ 7,765,096 $ 6,825,609 $ 7,766,140 $ 6,600,388 |
Schedule of Investment Income | Three months ended March 31, 2023 2022 Income: Fixed-maturity securities $ 1,417,709 $ 1,140,189 Equity securities 176,877 345,168 Cash and cash equivalents 32,858 183 Total 1,627,444 1,485,540 Expenses: Investment expenses 85,952 126,440 Net investment income $ 1,541,492 $ 1,359,100 |
Schedule of Securities with realized gains and losses on investments | Three months ended March 31, 2023 2022 Realized Gains (Losses) Fixed-maturity securities: Gross realized gains $ 418 $ 85,100 Gross realized losses (3,057 ) (126,424 ) (2,639 ) (41,324 ) Equity securities: Gross realized gains - 448,306 Gross realized losses - (329,221 ) - 119,085 Other Investments: Gross realized gains - - Gross realized losses - - - - Net realized (losses) gains (2,639 ) 77,761 Unrealized Gains (Losses) Equity Securities: Gross gains 863,713 - Gross losses - (3,560,634 ) 863,713 (3,560,634 ) Other Investments: Gross gains 363,797 - Gross losses - (915,532 ) 363,797 (915,532 ) Net unrealized gains (losses) 1,227,510 (4,476,166 ) Net gains (losses) on investments $ 1,224,871 $ (4,398,405 ) |
Schedule of Securities with Unrealized Losses | March 31, 2023 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 5,542,768 $ (674 ) 1 $ - - - $ 5,542,768 $ (674 ) Political subdivisions of States, Territories and Possessions 549,276 (5,153 ) 2 13,205,628 (3,338,913 ) 12 13,754,904 (3,344,066 ) Corporate and other bonds industrial and miscellaneous 24,592,198 (777,717 ) 33 48,415,831 (6,479,111 ) 57 73,008,029 (7,256,828 ) Residential mortgage and other asset backed securities 8,454,568 (496,219 ) 15 36,667,595 (6,739,006 ) 32 45,122,163 (7,235,225 ) Total fixed-maturity securities $ 39,138,810 $ (1,279,763 ) 51 $ 98,289,054 $ (16,557,030 ) 101 $ 137,427,864 $ (17,836,793 ) December 31, 2022 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 18,918,196 $ (6,928 ) 3 $ - - - $ 18,918,196 $ (6,928 ) Political subdivisions of States, Territories and Possessions 7,970,633 (2,195,273 ) 9 5,170,753 (1,771,494 ) 5 13,141,386 (3,966,767 ) Corporate and other bonds industrial and miscellaneous 56,910,104 (5,796,994 ) 75 15,172,381 (2,458,985 ) 15 72,082,485 (8,255,979 ) Residential mortgage and other asset backed securities 10,145,880 (882,664 ) 22 34,753,178 (7,150,803 ) 26 44,899,058 (8,033,467 ) Total fixed-maturity securities $ 93,944,813 $ (8,881,859 ) 109 $ 55,096,312 $ (11,381,282 ) 46 $ 149,041,125 $ (20,263,141 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Measurements | |
Schedule of Fair Value Measurements | March 31, 2023 Level 1 Level 2 Level 3 Total Fixed-maturity securities available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 22,023,463 $ - $ - $ 22,023,463 Political subdivisions of States, Territories and Possessions - 13,754,903 - 13,754,903 Corporate and other bonds industrial and miscellaneous 73,008,028 - - 73,008,028 Residential mortgage and other asset backed securities - 45,854,925 - 45,854,925 Total fixed maturities 95,031,491 59,609,828 - 154,641,319 Equity securities 14,622,549 - - 14,622,549 Total investments $ 109,654,040 $ 59,609,828 $ - $ 169,263,868 December 31, 2022 Level 1 Level 2 Level 3 Total Fixed-maturity securities available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 23,869,096 $ - $ - $ 23,869,096 Political subdivisions of States, Territories and Possessions - 13,141,387 - 13,141,387 Corporate and other bonds industrial and miscellaneous 71,585,115 497,370 - 72,082,485 Residential mortgage and other asset backed securities - 45,622,195 - 45,622,195 Total fixed maturities 95,454,211 59,260,952 - 154,715,163 Equity securities 13,834,390 - - 13,834,390 Total investments $ 109,288,601 $ 59,260,952 $ - $ 168,549,553 |
Schedule of Hedge Fund Investments | Category March 31, 2023 December 31, 2022 Other Investments Hedge fund $ 3,135,449 $ 2,771,652 |
Fair value hierarchy of long-term debt | March 31, 2023 Level 1 Level 2 Level 3 Total Debt Senior Notes due 2024 $ - $ 16,361,057 $ - $ 16,361,057 December 31, 2022 Level 1 Level 2 Level 3 Total Debt Senior Notes due 2024 $ - $ 15,829,096 $ - $ 15,829,096 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments and Real Estate (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value of Financial Instruments and Real Estate | |
Schedule of Fair Value of Financial Instruments | March 31, 2023 December 31, 2022 Carrying Value Fair Value Carrying Value Fair Value Fixed-maturity securities-held-to maturity, Level 1 $ 7,765,096 $ 6,825,609 $ 7,766,140 $ 6,600,388 Cash and cash equivalents, Level 1 $ 10,500,753 $ 10,500,753 $ 11,958,228 $ 11,958,228 Premiums receivable, net, Level 1 $ 13,339,037 $ 13,339,037 $ 13,880,504 $ 13,880,504 Reinsurance receivables, net, Level 3 $ 78,018,606 $ 78,018,606 $ 66,465,061 $ 66,465,061 Real estate, net of accumulated depreciation, Level 3 $ 2,052,283 $ 2,800,000 $ 2,050,644 $ 2,800,000 Reinsurance balances payable, Level 3 $ 20,110,212 $ 20,110,212 $ 13,061,966 $ 13,061,966 |
Property and Casualty Insuran_2
Property and Casualty Insurance Activity (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property and Casualty Insurance Activity | |
Schedule of Earned Premiums | Direct Assumed Ceded Net Three months ended March 31, 2023 Premiums written $ 47,597,446 $ - $ (23,628,699 ) $ 23,968,747 Change in unearned premiums 2,332,884 - 1,953,322 4,286,206 Premiums earned $ 49,930,330 $ - $ (21,675,377 ) $ 28,254,953 Three months ended March 31, 2022 Premiums written $ 42,983,897 $ - $ (18,065,709 ) $ 24,918,188 Change in unearned premiums 2,392,727 - (637,535 ) 1,755,192 Premiums earned $ 45,376,624 $ - $ (18,703,244 ) $ 26,673,380 |
Schedule of Line of Business | Treaty Year July 1, 2022 July 1, 2021 to to Line of Business June 30, 2023 June 30, 2022 Personal Lines: Personal Umbrella Quota share treaty: Percent ceded - first $1,000,000 of coverage 90 % 90 % Percent ceded - excess of $1,000,000 dollars of coverage 95 % 95 % Risk retained $ 300,000 $ 300,000 Total reinsurance coverage per occurrence $ 4,700,000 $ 4,700,000 Losses per occurrence subject to quota share reinsurance coverage $ 5,000,000 $ 5,000,000 Expiration date June 30, 2023 June 30, 2022 Commercial Lines (1) |
Schedule of unpaid losses and LAE | Three months ended March 31, 2023 2022 Balance at beginning of period $ 118,339,513 $ 94,948,745 Less reinsurance recoverables (27,659,500 ) (10,637,679 ) Net balance, beginning of period 90,680,013 84,311,066 Incurred related to: Current year 25,042,531 22,944,869 Prior years (3,121 ) (3,671 ) Total incurred 25,039,410 22,941,198 Paid related to: Current year 5,886,288 9,283,972 Prior years 16,116,681 14,918,035 Total paid 22,002,969 24,202,007 Net balance at end of period 93,716,454 83,050,257 Add reinsurance recoverables 30,405,364 15,866,741 Balance at end of period $ 124,121,818 $ 98,916,998 |
Incurred Claims and Allocated Claim Adjustment Expenses | As of Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance March 31, 2023 Cumulative Three Number of Months Reported Ended Claims by Accident For the Years Ended December 31, March 31, Accident Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 IBNR Year (Unaudited 2014 - 2022) (Unaudited) 2014 $ 14,193 $ 14,260 $ 14,218 $ 14,564 $ 15,023 $ 16,381 $ 16,428 $ 16,434 $ 16,486 $ 16,486 $ 24 2,138 2015 22,340 21,994 22,148 22,491 23,386 23,291 23,528 23,533 23,553 240 2,559 2016 26,062 24,941 24,789 27,887 27,966 27,417 27,352 27,246 183 2,881 2017 31,605 32,169 35,304 36,160 36,532 36,502 36,456 301 3,399 2018 54,455 56,351 58,441 59,404 61,237 61,231 1,247 4,231 2019 75,092 72,368 71,544 71,964 72,295 2,180 4,499 2020 63,083 62,833 63,217 63,266 2,074 5,873 2021 96,425 96,673 96,305 6,733 5,794 2022 79,835 79,966 11,460 4,606 2023 23,738 8,184 876 Total $ 500,541 |
Cumulative Paid Claims and Allocated Claim Adjustment Expenses | Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident For the Years Ended December 31, Three Months Ended March 31, Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Unaudited 2014 - 2022) (Unaudited) 2014 $ 5,710 $ 9,429 $ 10,738 $ 11,770 $ 13,819 $ 14,901 $ 15,491 $ 15,770 $ 16,120 $ 16,127 2015 12,295 16,181 18,266 19,984 21,067 22,104 22,318 22,473 22,487 2016 15,364 19,001 21,106 23,974 25,234 25,750 26,382 26,557 2017 16,704 24,820 28,693 31,393 32,529 33,522 33,911 2018 32,383 44,516 50,553 52,025 54,424 54,906 2019 40,933 54,897 58,055 60,374 60,993 2020 39,045 50,719 53,432 54,379 2021 56,282 77,756 78,247 2022 45,856 58,175 2023 5,301 Total $ 411,083 Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented $ 89,459 All outstanding liabilities before 2014, net of reinsurance 273 Liabilities for loss and allocated loss adjustment expenses, net of reinsurance $ 89,731 |
Reconciliation of the net incurred and paid claims | As of (in thousands) March 31, 2023 Liabilities for allocated loss and loss adjustment expenses, net of reinsurance $ 89,731 Total reinsurance recoverable on unpaid losses 30,405 Unallocated loss adjustment expenses 3,985 Total gross liability for loss and LAE reserves $ 124,122 |
Supplementary unaudited information about average historical claims duration | Treaty Period 2023/2024 Treaty 2021/2023 Treaty July 1, January 1, July 1, December 31, 2023 2023 2022 2021 to to to to January 1, June 30, January 1, June 30, Line of Business 2024 2023 2023 2022 Personal Lines: Homeowners, dwelling fire and and canine legal liability Quota share treaty: Percent ceded (8) 30 % 30 % 30 % 30 % Risk retained on intial $1,000,000 of losses (6) (7) (8) $ 700,000 $ 700,000 $ 700,000 $ 700,000 Losses per occurrence subject to quota share reinsurance coverage $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 Expiration date January 1, 2024 January 1, 2024 January 1, 2023 January 1, 2023 Excess of loss coverage and facultative facility coverage (1) (6) (7 ) $ 8,400,000 $ 8,400,000 $ 8,400,000 in excess of in excess of in excess of $ 600,000 $ 600,000 $ 600,000 Total reinsurance coverage per occurrence (6) (7) $ 500,000 $ 8,500,000 $ 8,500,000 $ 8,500,000 Losses per occurrence subject to reinsurance coverage (7 ) $ 8,000,000 $ 9,000,000 $ 9,000,000 Expiration date (7 ) June 30, 2023 June 30, 2023 June 30, 2022 Catastrophe Reinsurance: Initial loss subject to personal lines quota share treaty (7) $ 10,000,000 $ 10,000,000 $ 10,000,000 $ 10,000,000 Risk retained per catastrophe occurrence (8) (9) (7 ) $ 8,750,000 $ 7,400,000 $ 7,400,000 Catastrophe loss coverage in excess of quota share coverage (2) (7 ) $ 335,000,000 $ 335,000,000 $ 490,000,000 Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 (5) NA NA NA NA Reinstatement premium protection (3) (4) (7 ) Yes Yes Yes |
Schedule of Ceding commission revenue | Three months ended March 31, 2023 2022 Provisional ceding commissions earned $ 5,446,808 $ 4,541,533 Contingent ceding commissions earned (1,401 ) 139,863 $ 5,445,407 $ 4,681,396 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt | |
Long-term debt | March 31, December 31, 2023 2022 2022 Notes, net $ 17,536,524 $ 17,252,868 Equipment financing 7,639,495 7,905,655 Balance at end of period $ 25,176,019 $ 25,158,523 |
Schedule of Note and Warrant Exchange | March 31, December 31, 2023 2022 12.0% Senior Unsecured Notes $ 19,950,000 $ 19,950,000 Warrants (898,044 ) (979,684 ) Issuance costs (1,515,432 ) (1,717,448 ) 2022 Notes, net $ 17,536,524 $ 17,252,868 |
Schedule of percentages of the principal amount | Period: Percentage December 30, 2022 to December 29, 2023 102.00 % December 30, 2023 to September 29, 2024 101.00 % September 30, 2024 to December 29, 2024 100.00 % |
Schedule of Future contractual payment obligations | For the Year Ending December 31, Total Remainder of 2023 $ 822,212 2024 1,153,862 2025 1,223,293 2026 1,296,901 2027 1,119,021 5,615,289 2027 purchase price 2,024,206 Total $ 7,639,495 |
Stockholders Equity (Tables)
Stockholders Equity (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders Equity | |
Schedule of Stock Options Activity | Stock Options Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 1, 2023 107,201 $ 8.31 1.92 $ - Granted - $ - - $ - Exercised - $ - - $ - Expired/Forfeited - $ - - $ - Outstanding at March 31, 2023 107,201 $ 8.31 1.66 $ - Vested and Exercisable at March 31, 2023 107,201 $ 8.31 1.66 $ - |
Schedule of the restricted Common Stock activity | Restricted Stock Awards Shares Weighted Average Grant Date Fair Value per Share Aggregate Fair Value Balance at January 1, 2023 366,597 $ 6.97 $ 2,555,181 Granted 272,682 $ 1.37 $ 373,499 Vested (60,951 ) $ 6.51 $ (396,868 ) Forfeited (600 ) $ 1.52 $ (912 ) Balance at March 31, 2023 577,728 $ 3.77 $ 2,178,035 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Schedule of Deferrred Tax Assets and Liabilities | March 31, December 31, 2023 2022 Deferred tax asset: Net operating loss carryovers (1) $ 5,284,865 $ 3,828,947 Claims reserve discount 1,280,017 1,238,544 Unearned premium 3,513,318 3,574,840 Deferred ceding commission revenue 2,255,280 2,230,109 Net unrealized losses on securities 4,006,763 4,920,837 Other 478,495 503,692 Total deferred tax assets 16,818,738 16,296,969 Deferred tax liability: Investment in KICO (2) 759,543 759,543 Deferred acquisition costs 4,765,329 5,002,085 Intangibles 105,000 105,000 Depreciation and amortization 127,448 99,183 Total deferred tax liabilities 5,757,320 5,965,811 Net deferred income tax asset $ 11,061,418 $ 10,331,158 |
Schedule of net operating loss carryovers | March 31, December 31, Type of NOL 2023 2022 Expiration Federal only, NOL from 2021 - 2023 $ 5,284,865 $ 3,828,947 None State only (A) 2,375,669 2,276,595 December 2027 - December 2043 Valuation allowance (2,375,669 ) (2,276,595 ) State only, net of valuation allowance - - Total deferred tax asset from net operating loss carryovers $ 5,284,865 $ 3,828,947 |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Loss Per Common Share | |
Reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted earnings per common share | Three months ended March 31, 2023 2022 Weighted average number of shares outstanding 10,756,913 10,630,450 Effect of dilutive securities, common share equivalents: Stock options - - Warrants - - Restricted stock awards - - Weighted average number of shares outstanding, used for computing diluted loss per share 10,756,913 10,630,450 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies (Note 11) | |
Lease cost | Three months ended Three months ended Lease cost March 31, 2023 March 31, 2022 Operating lease (1) (2) $ 40,815 $ 46,938 Other information on operating leases Cash payments included in the measurement of lease liability reported in operating cash flows $ 47,483 $ 53,003 Discount rate 5.50 % 5.50 % Remaining lease term in years KICO 1.00 2.00 |
Schedule of lease liability maturities | For the Three Months Ending March 31, Total Remainder of 2023 $ 147,436 2024 49,145 Total undiscounted lease payments 196,581 Less: present value adjustment 15,595 Operating lease liability (1) $ 180,986 |
Nature of Business (Details Nar
Nature of Business (Details Narrative) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Nature of Business (Details Narrative) | ||
Direct written premiums, percentage | 87% | 80.60% |
Investments (Details)
Investments (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
US Treasury and Government One [Member] | ||
Cost or amortized cost | $ 21,988,099 | $ 23,874,545 |
Gross unrealized gains | 36,038 | 1,479 |
Gross unrealized losses - less than 12 months | (674) | (6,928) |
Gross unrealized loss - more than 12 months | 0 | 0 |
Estimated fair value | 22,023,463 | 23,869,096 |
Net unrealized gains | (5,449) | |
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member] | ||
Cost or amortized cost | 17,098,969 | 17,108,154 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses - less than 12 months | (5,153) | (2,195,273) |
Gross unrealized loss - more than 12 months | (3,338,913) | (1,771,494) |
Estimated fair value | 13,754,903 | 13,141,387 |
Net unrealized gains | (3,344,066) | (3,966,767) |
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member] | ||
Cost or amortized cost | 80,264,856 | 80,338,464 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses - less than 12 months | (777,717) | (5,796,994) |
Gross unrealized loss - more than 12 months | (6,479,111) | (2,458,985) |
Estimated fair value | 73,008,028 | 72,082,485 |
Net unrealized gains | (7,256,828) | (8,255,979) |
Fixed Maturity Securities Residential Mortgage and other asset backed securities [Member] | ||
Cost or amortized cost | 53,022,594 | 53,597,264 |
Gross unrealized gains | 67,556 | 58,398 |
Gross unrealized losses - less than 12 months | (496,219) | (882,664) |
Gross unrealized loss - more than 12 months | (6,739,006) | (7,150,803) |
Estimated fair value | 45,854,925 | 45,622,195 |
Net unrealized gains | (7,167,669) | (7,975,069) |
Fixed Maturity Securities Total Fixed Maturity Securities [Member] | ||
Cost or amortized cost | 172,374,518 | 174,918,427 |
Gross unrealized gains | 103,594 | 59,877 |
Gross unrealized losses - less than 12 months | (1,279,763) | (8,881,859) |
Gross unrealized loss - more than 12 months | (16,557,030) | (11,381,282) |
Estimated fair value | 154,641,319 | 154,715,163 |
Net unrealized gains | $ (17,733,199) | $ (20,203,264) |
Investments (Details 1)
Investments (Details 1) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Amortized cost | $ 172,374,518 | $ 174,918,427 |
Estimated fair value | 154,641,319 | 154,715,163 |
Residential mortgage and other asset backed securities [Member] | ||
Amortized cost | 53,022,594 | 53,597,264 |
Estimated fair value | 45,854,925 | 45,622,195 |
Less Than One Year [Member] | ||
Amortized cost | 15,731,448 | 16,359,100 |
Estimated fair value | 15,650,264 | 16,307,991 |
One To Five Years [Member] | ||
Amortized cost | 55,396,930 | 18,605,987 |
Estimated fair value | 53,174,343 | 14,085,113 |
Five To Ten Years [Member] | ||
Amortized cost | 30,202,432 | 54,559,158 |
Estimated fair value | 25,759,376 | 52,230,283 |
More Than 10 Years [Member] | ||
Amortized cost | 18,021,114 | 31,796,918 |
Estimated fair value | $ 14,202,411 | $ 26,469,581 |
Investments (Details 2)
Investments (Details 2) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Estimated fair value | $ 3,135,449 | $ 2,771,652 |
Total [Member] | ||
Cost | 18,011,146 | 18,086,700 |
Gross gains | 199,258 | 158,635 |
Gross losses | (3,587,855) | (4,410,945) |
Estimated fair value | 14,622,549 | 13,834,390 |
Hedge Funds [Member] | ||
Cost | 1,987,040 | 1,987,040 |
Gross gains | 1,148,409 | 784,612 |
Estimated fair value | 3,135,449 | 2,771,652 |
Equity Securities [Member] | ||
Cost | 13,583,942 | 13,583,942 |
Gross gains | 0 | 0 |
Gross losses | (2,906,623) | (3,589,313) |
Estimated fair value | 10,677,319 | 9,994,629 |
Preferred Stock [Member] | ||
Cost | 13,583,942 | 13,583,942 |
Gross gains | 0 | 0 |
Gross losses | (2,906,623) | (3,589,313) |
Estimated fair value | 10,677,319 | 9,994,629 |
Common stock, mutual fund and exchange traded funds [Member] | ||
Cost | 4,427,204 | 4,502,758 |
Gross gains | 199,258 | 158,635 |
Gross losses | (681,232) | (821,632) |
Estimated fair value | $ 3,945,230 | $ 3,839,761 |
Investments (Details 3)
Investments (Details 3) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Net unrealized gains | $ (939,487) | $ (1,165,752) |
Estimated fair value | 6,825,609 | 6,600,388 |
Gross unrealized loss - more than 12 months | (890,603) | (360,278) |
Gross unrealized losses - less than 12 months | (138,479) | (872,934) |
Gross unrealized gains | 89,595 | 67,460 |
Cost or amortized cost | 7,765,096 | 7,766,140 |
Exchange Traded Debt [Member] | ||
Net unrealized gains | (56,461) | (29,111) |
Estimated fair value | 247,650 | 275,000 |
Gross unrealized loss - more than 12 months | 0 | 0 |
Gross unrealized losses - less than 12 months | (56,461) | (29,111) |
Gross unrealized gains | 0 | 0 |
Cost or amortized cost | 304,111 | 304,111 |
Held-to-Maturity Securities US Treasury Securities [Member] | ||
Net unrealized gains | 23,778 | (5,677) |
Estimated fair value | 1,252,412 | 1,222,883 |
Gross unrealized loss - more than 12 months | 0 | 0 |
Gross unrealized losses - less than 12 months | (24,108) | (34,077) |
Gross unrealized gains | 47,886 | 28,400 |
Cost or amortized cost | 1,228,634 | 1,228,560 |
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member] | ||
Net unrealized gains | 1,661 | 2,092 |
Estimated fair value | 500,430 | 500,730 |
Gross unrealized loss - more than 12 months | 0 | 0 |
Gross unrealized losses - less than 12 months | 0 | 0 |
Gross unrealized gains | 1,661 | 2,092 |
Cost or amortized cost | 498,769 | 498,638 |
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member] | ||
Net unrealized gains | (908,465) | (1,133,056) |
Estimated fair value | 4,825,117 | 4,601,775 |
Gross unrealized loss - more than 12 months | (890,603) | (360,278) |
Gross unrealized losses - less than 12 months | (57,910) | (809,746) |
Gross unrealized gains | 40,048 | 36,968 |
Cost or amortized cost | $ 5,733,582 | $ 5,734,831 |
Investments (Details 4)
Investments (Details 4) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Amortized cost | $ 7,765,096 | $ 7,766,140 |
Estimated fair value | 6,825,609 | 6,600,388 |
Less Than One Year [Member] | ||
Amortized cost | 708,744 | 708,535 |
Estimated fair value | 747,483 | 743,575 |
One To Five Years [Member] | ||
Amortized cost | 1,120,700 | 1,120,507 |
Estimated fair value | 1,098,253 | 1,088,522 |
Five To Ten Years [Member] | ||
Amortized cost | 1,405,680 | 1,402,704 |
Estimated fair value | 1,215,945 | 1,200,720 |
More Than 10 Years [Member] | ||
Amortized cost | 4,529,972 | 4,534,394 |
Estimated fair value | $ 3,763,928 | $ 3,567,571 |
Investments (Details 5)
Investments (Details 5) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Investments | ||
Fixed-maturity securities | $ 1,417,709 | $ 1,140,189 |
Equity securities | 176,877 | 345,168 |
Cash and cash equivalents | 32,858 | 183 |
Total | 1,627,444 | 1,485,540 |
Investment expenses | 85,952 | 126,440 |
Net investment income | $ 1,541,492 | $ 1,359,100 |
Investments (Details 6)
Investments (Details 6) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Net realized gains | $ (2,639) | $ 77,761 |
Net unrealized gains (losses) | 1,227,510 | (4,476,166) |
Net gains (losses) on investments | 1,224,871 | (4,398,405) |
Realized Gains Losses Fixed-maturity securities [Member] | ||
Gross realized gains | 418 | 85,100 |
Gross realized losses | (3,057) | (126,424) |
Total fixed-maturity securities | (2,639) | (41,324) |
Realized Gains Losses Equity securities [Member] | ||
Gross realized gains | 0 | 448,306 |
Gross realized losses | 0 | (329,221) |
Total equity securities | 0 | 119,085 |
Realized Gains Losses Other Investments [Member] | ||
Gross realized gains | 0 | 0 |
Gross realized losses | 0 | 0 |
Total other investments | 0 | 0 |
Unrealized Losses Gains Equity securities [Member] | ||
Gross realized gains | 863,713 | 0 |
Gross losses | 0 | 3,560,634 |
Total equity securities | 863,713 | (3,560,634) |
Unrealized Losses Gains Other Investments [Member] | ||
Gross realized gains | 363,797 | 0 |
Total other investments | 363,797 | (915,532) |
Gross losses | $ 0 | $ 915,532 |
Investments (Details 7)
Investments (Details 7) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
US Treasury and Government [Member] | ||
Estimated fair value - less than 12 months | $ 5,542,768 | $ 18,918,196 |
Unrealized losses - less than 12 months | (674) | (6,928) |
Number of positions held - less than 12 months | 1 | 3 |
Estimated fair value - 12 months or more | 0 | 0 |
Estimated fair value - 12 months or more | 0 | 0 |
Unrealized losses - 12 months or more | 0 | 0 |
Number of positions held - 12 months or more | 0 | 0 |
Estimated fair value - total | 5,542,768 | 18,918,196 |
Unrealized losses - total | (674) | (6,928) |
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member] | ||
Estimated fair value - less than 12 months | 549,276 | 7,970,633 |
Unrealized losses - less than 12 months | (5,153) | (2,195,273) |
Number of positions held - less than 12 months | 2 | 9 |
Estimated fair value - 12 months or more | 13,205,628 | 5,170,753 |
Estimated fair value - 12 months or more | 13,205,628 | 5,170,753 |
Unrealized losses - 12 months or more | (3,338,913) | (1,771,494) |
Number of positions held - 12 months or more | 12 | 5 |
Estimated fair value - total | 13,754,904 | 13,141,386 |
Unrealized losses - total | (3,344,066) | (3,966,767) |
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member] | ||
Estimated fair value - less than 12 months | 24,592,198 | 56,910,104 |
Unrealized losses - less than 12 months | (777,717) | (5,796,994) |
Number of positions held - less than 12 months | 33 | 75 |
Estimated fair value - 12 months or more | 48,415,831 | 15,172,381 |
Estimated fair value - 12 months or more | 48,415,831 | 15,172,381 |
Unrealized losses - 12 months or more | (6,479,111) | (2,458,985) |
Number of positions held - 12 months or more | 57 | 15 |
Estimated fair value - total | 73,008,029 | 72,082,485 |
Unrealized losses - total | (7,256,828) | (8,255,979) |
Fixed Maturity Securities Residential Mortgage and other asset backed securities [Member] | ||
Estimated fair value - less than 12 months | 8,454,568 | 10,145,880 |
Unrealized losses - less than 12 months | (496,219) | (882,664) |
Number of positions held - less than 12 months | 15 | 22 |
Estimated fair value - 12 months or more | 36,667,595 | 34,753,178 |
Estimated fair value - 12 months or more | 36,667,595 | 34,753,178 |
Unrealized losses - 12 months or more | (6,739,006) | (7,150,803) |
Number of positions held - 12 months or more | 32 | 26 |
Estimated fair value - total | 45,122,163 | 44,899,058 |
Unrealized losses - total | (7,235,225) | (8,033,467) |
Fixed Maturity Securities Total Fixed Maturity Securities [Member] | ||
Estimated fair value - less than 12 months | 39,138,810 | 93,944,813 |
Unrealized losses - less than 12 months | (1,279,763) | (8,881,859) |
Number of positions held - less than 12 months | 51 | 109 |
Estimated fair value - 12 months or more | 98,289,054 | 55,096,312 |
Estimated fair value - 12 months or more | 98,289,054 | 55,096,312 |
Unrealized losses - 12 months or more | (16,557,030) | (11,381,282) |
Number of positions held - 12 months or more | 101 | 46 |
Estimated fair value - total | 137,427,864 | $ 149,041,125 |
Unrealized losses - total | $ (17,836,793) |
Investments (Details Narrativee
Investments (Details Narrativee) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Investments | |||
Proceeds from the sale and redemption of fixed-maturity securities held-to-maturity | $ 0 | $ 500,000 | |
Proceeds from the sale or maturity of fixed-maturity securities available-for-sale | 13,554,928 | 10,181,658 | |
Sale - equity securities | 75,554 | $ 4,994,884 | |
Amount of required collateral | 8,268,000 | $ 8,691,000 | |
Fair value of the eligible investments | 12,199,000 | ||
Estimated fair value | $ 11,475,000 | $ 8,691,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ 22,023,463 | $ 23,869,096 |
Political subdivisions of states, territories and possessions | 13,754,903 | 13,141,387 |
Corporate and other bonds industrial and miscellaneous | 73,008,028 | 72,082,485 |
Residential mortgage and other asset backed securities | 45,854,925 | 45,622,195 |
Total fixed maturities | 154,641,319 | 154,715,163 |
Equity securities | 14,622,549 | 13,834,390 |
Total investments | 169,263,868 | 168,549,553 |
Level 1 [Member] | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 22,023,463 | 23,869,096 |
Political subdivisions of states, territories and possessions | 0 | 0 |
Corporate and other bonds industrial and miscellaneous | 73,008,028 | 71,585,115 |
Residential mortgage and other asset backed securities | 0 | 0 |
Total fixed maturities | 95,031,491 | 95,454,211 |
Equity securities | 14,622,549 | 13,834,390 |
Total investments | 109,654,040 | 109,288,601 |
Level 2 [Member] | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Political subdivisions of states, territories and possessions | 13,754,903 | 13,141,387 |
Corporate and other bonds industrial and miscellaneous | 0 | 497,370 |
Residential mortgage and other asset backed securities | 45,854,925 | 45,622,195 |
Total fixed maturities | 59,609,828 | 59,260,952 |
Equity securities | 0 | 0 |
Total investments | 59,609,828 | 59,260,952 |
Level 3 [Member] | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Political subdivisions of states, territories and possessions | 0 | 0 |
Corporate and other bonds industrial and miscellaneous | 0 | 0 |
Residential mortgage and other asset backed securities | 0 | 0 |
Total fixed maturities | 0 | 0 |
Equity securities | 0 | 0 |
Total investments | $ 0 | $ 0 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 1) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Hedge Funds [Member] | ||
Hedge fund investments | $ 3,135,449 | $ 2,771,652 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details 2) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Senior Notes due 2024 | $ 16,361,057 | $ 15,829,096 |
Level 1 [Member] | ||
Senior Notes due 2024 | 0 | 0 |
Level 2 [Member] | ||
Senior Notes due 2024 | 16,361,057 | 15,829,096 |
Level 3 [Member] | ||
Senior Notes due 2024 | $ 0 | $ 0 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments and Real Estate (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Reinsurance balances payable | $ 20,110,212 | $ 13,061,966 |
Carrying Value [Member] | ||
Fixed-maturity securities held-to-maturity | 7,765,096 | 7,766,140 |
Cash and cash equivalents | 10,500,753 | 11,958,228 |
Reinsurance receivables, net | 78,018,606 | 66,465,061 |
Premiums receivable, net | 13,339,037 | 13,880,504 |
Real estate, net of accumulated depreciation | 2,052,283 | 2,050,644 |
Reinsurance balances payable | 20,110,212 | 13,061,966 |
Fair Value [Member] | ||
Fixed-maturity securities held-to-maturity | 6,825,609 | 6,600,388 |
Cash and cash equivalents | 10,500,753 | 11,958,228 |
Reinsurance receivables, net | 78,018,606 | 66,465,061 |
Premiums receivable, net | 13,339,037 | 13,880,504 |
Real estate, net of accumulated depreciation | 2,800,000 | 2,800,000 |
Reinsurance balances payable | $ 20,110,212 | $ 13,061,966 |
Property and Casualty Insuran_3
Property and Casualty Insurance Activity (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Change in unearned premiums [Member] | ||
Assumed | $ 0 | $ 0 |
Ceeded | 1,953,322 | (637,535) |
Net | 4,286,206 | 1,755,192 |
Direct | 2,332,884 | 2,392,727 |
Premiums earned [Member] | ||
Assumed | 0 | 0 |
Ceeded | (21,675,377) | (18,703,244) |
Net | 28,254,953 | 26,673,380 |
Direct | 49,930,330 | 45,376,624 |
Premiums written Member | ||
Assumed | 0 | 0 |
Ceeded | (23,628,699) | (18,065,709) |
Net | 23,968,747 | 24,918,188 |
Direct | $ 47,597,446 | $ 42,983,897 |
Property and Casualty Insuran_4
Property and Casualty Insurance Activity (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Property and Casualty Insurance Activity | ||
Balance at beginning of period | $ 118,339,513 | $ 94,948,745 |
Less reinsurance recoverables | (27,659,500) | (10,637,679) |
Net balance, beginning of period | 90,680,013 | 84,311,066 |
Current year | 25,042,531 | 22,944,869 |
Prior years | (3,121) | (3,671) |
Total incurred | 25,039,410 | 22,941,198 |
Current year | 5,886,288 | 9,283,972 |
Prior years | 16,116,681 | 14,918,035 |
Total paid | 22,002,969 | 24,202,007 |
Net balance at end of period | 93,716,454 | 83,050,257 |
Add reinsurance recoverables | 30,405,364 | 15,866,741 |
Balance at end of period | $ 124,121,818 | $ 98,916,998 |
Property and Casualty Insuran_5
Property and Casualty Insurance Activity (Details 2) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) integer | |
Total incurred claims | $ 500,541 |
2014 | |
2014 incurred claims | 14,193 |
IBNR | $ 24 |
Cumulative Number of Reported Claims | integer | 2,138 |
2015 | |
2014 incurred claims | $ 14,260 |
IBNR | $ 240 |
Cumulative Number of Reported Claims | integer | 2,559 |
2015 incurred claims | $ 22,340 |
2016 | |
2014 incurred claims | 14,218 |
IBNR | $ 183 |
Cumulative Number of Reported Claims | integer | 2,881 |
2015 incurred claims | $ 21,994 |
2016 incurred claims | 26,062 |
2017 | |
2014 incurred claims | 14,564 |
IBNR | $ 301 |
Cumulative Number of Reported Claims | integer | 3,399 |
2015 incurred claims | $ 22,148 |
2016 incurred claims | 24,941 |
2017 incurred claims | 31,605 |
2018 | |
2014 incurred claims | 15,023 |
IBNR | $ 1,247 |
Cumulative Number of Reported Claims | integer | 4,231 |
2015 incurred claims | $ 22,491 |
2016 incurred claims | 24,789 |
2017 incurred claims | 32,169 |
2018 incurred claims | 54,455 |
2019 | |
2014 incurred claims | 16,381 |
IBNR | $ 2,180 |
Cumulative Number of Reported Claims | integer | 4,499 |
2015 incurred claims | $ 23,386 |
2016 incurred claims | 27,887 |
2017 incurred claims | 35,304 |
2018 incurred claims | 56,351 |
2019 incurred claims | 75,092 |
2020 | |
2014 incurred claims | 16,428 |
IBNR | $ 2,074 |
Cumulative Number of Reported Claims | integer | 5,873 |
2015 incurred claims | $ 23,291 |
2016 incurred claims | 27,966 |
2017 incurred claims | 36,160 |
2018 incurred claims | 58,441 |
2019 incurred claims | 72,368 |
2020 incurred claims | 63,083 |
2021 | |
2014 incurred claims | 16,434 |
IBNR | $ 6,733 |
Cumulative Number of Reported Claims | integer | 5,794 |
2015 incurred claims | $ 23,528 |
2016 incurred claims | 27,417 |
2017 incurred claims | 36,532 |
2018 incurred claims | 59,404 |
2019 incurred claims | 71,544 |
2020 incurred claims | 62,833 |
2021 incurred claims | 96,425 |
2022 | |
2014 incurred claims | 16,486 |
IBNR | $ 11,460 |
Cumulative Number of Reported Claims | integer | 4,606 |
2015 incurred claims | $ 23,533 |
2016 incurred claims | 27,352 |
2017 incurred claims | 36,502 |
2018 incurred claims | 61,237 |
2019 incurred claims | 71,964 |
2020 incurred claims | 63,217 |
2021 incurred claims | 96,673 |
2022 incurred claims | 79,835 |
2023 [Member] | |
2014 incurred claims | 16,486 |
IBNR | $ 8,184 |
Cumulative Number of Reported Claims | integer | 876 |
2015 incurred claims | $ 23,553 |
2016 incurred claims | 27,246 |
2017 incurred claims | 36,456 |
2018 incurred claims | 61,231 |
2019 incurred claims | 72,295 |
2020 incurred claims | 63,266 |
2021 incurred claims | 96,305 |
2023 incurred claims | 23,738 |
2022 incurred claims | $ 79,966 |
Property and Casualty Insuran_6
Property and Casualty Insurance Activity (Details 3) | Mar. 31, 2023 USD ($) |
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented | $ 89,459,000 |
All outstanding liabilities before 2014, net of reinsurance | 273,000 |
Liabilities for claims and claim adjustment expenses, net of reinsurance | 89,731,000 |
Total | 411,083,000 |
2014 | |
2014 | 5,710,000 |
2015 | |
2014 | 9,429,000 |
2015 | 12,295,000 |
2016 | |
2014 | 10,738,000 |
2015 | 16,181,000 |
2016 | 15,364,000 |
2017 | |
2013 | 8,407,000 |
2014 | 11,770,000 |
2015 | 18,266,000 |
2016 | 19,001,000 |
2017 | 16,704,000 |
2018 | |
2014 | 13,819,000 |
2015 | 19,984,000 |
2016 | 21,106,000 |
2017 | 24,820,000 |
2018 | 32,383,000 |
2019 | |
2014 | 14,901,000 |
2015 | 21,067,000 |
2016 | 23,974,000 |
2017 | 28,693,000 |
2018 | 44,516,000 |
2019 | 40,933,000 |
2020 | |
2014 | 15,491,000 |
2015 | 22,104,000 |
2016 | 25,234,000 |
2017 | 31,393,000 |
2018 | 50,553,000 |
2019 | 54,897,000 |
2020 | 39,045,000 |
2021 | |
2014 | 15,770,000 |
2015 | 22,318,000 |
2016 | 25,750,000 |
2017 | 32,529,000 |
2018 | 52,025,000 |
2019 | 58,055,000 |
2020 | 50,719,000 |
2021 | 56,282,000 |
2022 | |
2014 | 16,120,000 |
2015 | 22,473,000 |
2016 | 26,382,000 |
2017 | 33,522,000 |
2018 | 54,424,000 |
2019 | 60,374,000 |
2020 | 53,432,000 |
2021 | 77,756,000 |
2022 | 45,856 |
2023 [Member] | |
2014 | 16,127,000 |
2015 | 22,487,000 |
2016 | 26,557,000 |
2017 | 33,911,000 |
2018 | 54,906,000 |
2019 | 60,993,000 |
2020 | 54,379,000 |
2021 | 78,247,000 |
2022 | 58,175 |
2023 | $ 5,301 |
Property and Casualty Insuran_7
Property and Casualty Insurance Activity (Details 4) $ in Thousands | Mar. 31, 2023 USD ($) |
Property and Casualty Insurance Activity | |
Liabilities for loss and loss adjustment expenses, net of reinsurance | $ 89,731 |
Total reinsurance recoverable on unpaid losses | 30,405 |
Unallocated loss adjustment expenses | 3,985 |
Total gross liability for loss and LAE reserves | $ 124,122 |
Property and Casualty Insuran_8
Property and Casualty Insurance Activity (Details 5) - USD ($) | 6 Months Ended | ||||
Jan. 01, 2024 | Jun. 30, 2023 | Jan. 02, 2023 | Jun. 30, 2022 | Dec. 30, 2021 | |
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 | $ 5,000,000 | ||||
in excess of 1 | $ 5,000,000 | ||||
Catastrophe [Member] | |||||
Initial loss subject to personal lines quota share treaty | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 | |
Risk retained per catastrophe occurrence | 8,750,000 | 7,400,000 | 7,400,000 | ||
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 | 8,750,000 | 7,400,000 | 7,400,000 | ||
in excess of 1 | 5,000,000 | ||||
Catastrophe loss coverage in excess of quota share coverage | $ 335,000,000 | $ 335,000,000 | $ 490,000,000 | ||
Reinstatement premium protection | Yes | Yes | Yes | ||
Property And Casualty Personal Insurance Product Line [Member] | |||||
Quota share treaty percent ceded | 30% | 30% | 30% | 30% | |
Risk retained on initial $1,000,000 of losses | $ 700,000 | $ 700,000 | $ 700,000 | $ 700,000 | |
Losses per occurrence subject to quota share reinsurance coverage | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | |
Expiration | Jan. 01, 2024 | Jan. 01, 2024 | Jan. 01, 2023 | Jan. 01, 2023 | |
Excess of loss coverage and facultative facility coverage | $ 8,400,000 | $ 8,400,000 | $ 8,400,000 | ||
In excess of | in excess of | in excess of | in excess of | ||
Total reinsurance coverage per occurrence | $ 500,000 | $ 8,500,000 | $ 8,500,000 | $ 8,500,000 | |
Losses per occurrence subject to reinsurance coverage | $ 8,000,000 | $ 9,000,000 | $ 9,000,000 | ||
Expiration Date | Jun. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | ||
in excess of 1 | $ 600,000 | $ 600,000 | $ 600,000 |
Property and Casualty Insuran_9
Property and Casualty Insurance Activity (Details 6) - Personal Umbrella - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Percent ceded - first $1000000 of coverage | 90% | 90% |
Percent ceded - excess of $1,000,000 dollars of coverage | 95% | 95% |
Risk retained | $ 300,000 | $ 300,000 |
Total reinsurance coverage per occurrence | 4,700,000 | 4,700,000 |
Losses per occurrence subject to quota share reinsurance coverage | $ 5,000,000 | $ 5,000,000 |
Expiration date | Jun. 30, 2023 | Jun. 30, 2022 |
Property and Casualty Insura_10
Property and Casualty Insurance Activity (Details 7) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Property and Casualty Insurance Activity | ||
Provisional ceding commissions earned | $ 5,446,808 | $ 4,541,533 |
Contingent ceding commissions earned | (1,401) | 139,863 |
Total commissions earned | $ 5,445,407 | $ 4,681,396 |
Property and Casualty Insura_11
Property and Casualty Insurance Activity (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jul. 02, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 30, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Reinsurance description | Effective January 1, 2022, the Company entered into an underlying excess of loss reinsurance treaty (“Underlying XOL Treaty”) covering the period from January 1, 2022 through January 1, 2023. The treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the treaty | ||||||
Net contingent ceding commissions payable | $ 2,669,000 | $ 2,881,000 | |||||
Incurred losses and loss adjustment expenses are net of reinsurance recoveries under reinsurance contracts | 12,256,426 | $ 10,404,866 | |||||
Prior year loss development | $ 3,121 | $ 3,671 | |||||
in excess of 1 | $ 5,000,000 | ||||||
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 | $ 5,000,000 | ||||||
Personal Lines | |||||||
Loss in excess coverage description | For the period January 1, 2022 through January 1, 2024, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty and 2022/2023 Treaty | ||||||
Single risk coverage | $ 9,000,000 | ||||||
Personal Lines | Minimum [Member] | |||||||
Direct loss | 3,500,000 | ||||||
Personal Lines | Maximum [Member] | |||||||
Direct loss | $ 9,000,000 | ||||||
Reinstatement Premium Protection [Member] | |||||||
Excess of catastrophe coverage | $ 9,800,000 | $ 10,000,000 | |||||
Reinstatement of premium protection, amount | $ 10,000,000 | $ 70,000,000 |
Debt (Details)
Debt (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Debt | $ 25,176,019 | $ 25,158,523 |
2022 [Member] | ||
Debt | 17,536,524 | 17,252,868 |
Equipment Financing [Member] | ||
Debt | $ 7,639,495 | $ 7,905,655 |
Debt (Details 1)
Debt (Details 1) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Long-term debt, net | $ 25,176,019 | $ 25,158,523 |
Long-term debt, net | (25,176,019) | (25,158,523) |
Long Term Debt [Member] | ||
Long-term debt, net | 17,536,524 | 17,252,868 |
Long-term debt, net | (17,536,524) | (17,252,868) |
Warrants [Member] | ||
Long-term debt, net | 898,044 | 979,684 |
Long-term debt, net | (898,044) | (979,684) |
Senior Unsecured Notes [Member] | ||
Long-term debt, net | 19,950,000 | 19,950,000 |
Long-term debt, net | (19,950,000) | (19,950,000) |
Issuance costs [Member] | ||
Long-term debt, net | 1,515,432 | 1,717,448 |
Long-term debt, net | $ (1,515,432) | $ (1,717,448) |
Debt (Details 3)
Debt (Details 3) | 3 Months Ended |
Mar. 31, 2023 | |
December 30, 2022 to December 29, 2023 | |
Accrued and unpaid interest | 102% |
December 30, 2023 to September 29, 2024 | |
Accrued and unpaid interest | 101% |
September 30, 2024 to December 29, 2024 | |
Accrued and unpaid interest | 100% |
Debt (Details 4)
Debt (Details 4) | Mar. 31, 2023 USD ($) |
Debt | |
2023 | $ 822,212 |
2024 | 1,153,862 |
2025 | 1,223,293 |
2026 | 1,296,901 |
2027 | 1,119,021 |
Total | 5,615,289 |
2027 purchase price | 2,024,206 |
Total purchase price | $ 7,639,495 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Dec. 15, 2022 | Oct. 27, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Operating expenses | $ 42,931,446 | $ 40,216,843 | ||||
Collateral amount | $ 12,199,000 | $ 12,228,000 | ||||
Description of noteholder exchange | new 12.0% Senior Notes due December 30, 2024 of the Company in the aggregate approximate principal amount of $19,950,000 (the “2022 Notes”); (ii) cash in the aggregate approximate amount of $1,595,000, together with accrued interest on the 2017 Notes; and (iii) three-year warrants for the purchase of an aggregate of 969,525 shares of Common Stock of the Company, exercisable at an exercise price of $1.00 per share (the “Warrants”). The remaining $8,455,000 principal amount of the 2017 Notes, together with accrued interest thereon, was paid on the maturity date of the 2017 Notes of December 30, 2022 | |||||
Treasury bill | $ 5,567,481 | 5,567,481 | $ 5,567,481 | |||
2022 Notes [Member] | ||||||
Operating expenses | $ 250,000 | |||||
Equipment [Financing] | ||||||
Total Treasury Bills | 11,475,000 | 8,691,000 | ||||
Total Rental Rate | 2,030,036 | |||||
Sale of fixed assets | $ 8,096,824 | |||||
Interest rate | 5.86% | |||||
Finance amount principal | $ 126,877 | |||||
Purchase of fixed assets | $ 2,024,206 | |||||
Treasury bill | $ 8,096,824 | |||||
Collateral for the lease obligation | 8,691,000 | |||||
Federal Home Loan Bank of New York [Member] | ||||||
Advances limit, description | Advances are limited to 85% of the amount of available collateral | |||||
Maximum allowable advances | $ 13,059,000 | $ 13,192,000 | ||||
Senior Notes [Member] | ||||||
Debt instrument, face amount | $ 19,950,000 | |||||
Debt instrument, interest rate | 12% | |||||
Proceeds from issuance of unsecured notes | $ 993,200 | |||||
Debt instrument, transaction cost | $ 1,758,112 | |||||
Debt instrument, yield percentage | 13.92% |
Stockholders Equity (Details)
Stockholders Equity (Details) - Exchange Traded Debt [Member] | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Number of options outstanding, ending | shares | 107,201 |
Number of options outstanding, vested and exercisable | shares | 107,201 |
Weighted Average Remaining Contractual, Beginning balance | 1 year 11 months 1 day |
Weighted Average Remaining Contractual term, Ending balance | 1 year 7 months 28 days |
Weighted Average Remaining Contractual life, vested and exercisable | 1 year 7 months 28 days |
Weighted average exercise price, Beginning balance | $ 8.31 |
Weighted average exercise price, granted | 0 |
Weighted average exercise price, Exercised | 0 |
Weighted average exercise price, Forfeited | 0 |
Weighted average exercise price, Ending balance | 8.31 |
Weighted Average Price per share outstanding, vested and exercisable | 8.31 |
Aggregate Intrinsic Value , vested and exercisable | $ 0 |
Stockholders Equity (Details 1)
Stockholders Equity (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Number of options outstanding, ending | shares | 577,728 | |
Restricted Stock [Member] | ||
Granted shares | 272,682 | |
Number of options outstanding, beginning | shares | 366,597 | |
Vested shares | (60,951) | |
Weighted Average Grant Date Fair Value per Share, beginning balance | $ 6.97 | |
Weighted Average Grant Date Fair Value per Share, granted | $ 1.37 | |
Weighted Average Grant Date Fair Value per Share, vested | 6.51 | |
Weighted Average Grant Date Fair Value per Share, forfeited | 1.52 | |
Weighted Average Grant Date Fair Value per Share, ending balance | $ 3.77 | |
Aggregate Fair Value, beginning balance | $ 2,555,181 | |
Aggregate Fair Value, granted | 373,499 | |
Aggregate Fair Value, vested | (396,868) | |
Aggregate Fair Value, ending balance | $ 2,178,035 |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) | 3 Months Ended | ||||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 25, 2025 | Dec. 31, 2022 | Aug. 05, 2020 | |
Dividends declared | $ 0 | $ 425,490 | |||
Stock based compensation for stock options | 0 | $ 6,000 | |||
Net of estimated forfeitures of approximately | 18% | ||||
Share-based compensation under offering | 6,000 | ||||
Stock based compensation for grants | $ 217,000 | $ 518,000 | |||
Weighted-average vesting period | 36 months 15 days | ||||
Exercise price | $ 1 | ||||
Closing price of common stock | $ 1.34 | ||||
warrants issued to purchase common stock | 969,525 | ||||
Fair value of unamortized compensation cost | $ 993,200 | ||||
Maximum share purchase under ESPP | 750,000 | ||||
Maximum share purchased by employee | 5,000 | ||||
Price per share | $ 1.82 | ||||
Total purchase | $ 60,464 | ||||
Purchase Of Warrants | 969,525 | ||||
Common stock shares authorized | 33,222 | ||||
Common stock shares authorized | 20,000,000 | 20,000,000 | |||
10 May 2023 [Member] | |||||
Common stock shares authorized | 1,900,000 | 1,400,000 | |||
Held-to-Maturity Securities US Treasury Securities [Member] | |||||
Common stock shares authorized | 700,000 | 1,400,000 | |||
Shares reserved | 204,399 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Deferred tax asset: | ||
Net operating loss carryovers (1) | $ 5,284,865 | $ 3,828,947 |
Claims reserve discount | 1,280,017 | 1,238,544 |
Unearned premium | 3,513,318 | 3,574,840 |
Deferred ceding commission revenues | 2,255,280 | 2,230,109 |
Net unrealized losses on securities | 4,006,763 | 4,920,837 |
Other | 478,495 | 503,692 |
Total deferred tax assets | 16,818,738 | 16,296,969 |
Deferred tax liability: | ||
Investment in KICO (2) | 759,543 | 759,543 |
Deferred acquisition costs | 4,765,329 | 5,002,085 |
Intangibles | 105,000 | 105,000 |
Depreciation and amortization | 127,448 | 99,183 |
Total deferred tax liabilities | 5,757,320 | 5,965,811 |
Net deferred income tax (liability) asset | $ 11,061,418 | $ 10,331,158 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Income Taxes | ||
Federal only, NOL | $ 5,284,865 | $ 3,828,947 |
State only (A) | $ 2,375,669 | 2,276,595 |
State only A | December 2027 - December 2043 | |
Valuation allowance | $ (2,375,669) | (2,276,595) |
State only, net of valuation allowance | 0 | 0 |
Total deferred tax asset from net operating loss carryovers | $ 5,284,865 | $ 3,828,947 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2017 |
Net operating loss carryover | $ 35,025,000 | ||
Computer Equipment [Member] | |||
Consideration exchange principal amount | $ 3,750,000 | ||
Acquired equity interest rate | 100% | ||
Original purchase surplus notes | 2,921,319 | ||
Untaxed interest | 1,169,000 | ||
Deferred tax liability reduced | $ 759,543 | ||
Deferred tax liability | $ 759,543 |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Loss Per Common Share | ||
Weighted average number of shares outstanding | 10,756,913 | 10,630,450 |
Effect of dilutive securities, common share equivalents: Stock options | $ 0 | $ 0 |
Effect of dilutive securities, common share equivalents: Warrants | 0 | 0 |
Effect of dilutive securities, common share equivalents: Restricted stock awards | $ 0 | $ 0 |
Weighted average number of shares outstanding, used for computing diluted earnings per share | 10,756,913 | 10,630,450 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Commitments and Contingencies (Note 11) | ||
Operating leases | $ 40,815 | $ 46,938 |
Cash payments included in the measurement of lease liability in operating cash flows | $ 47,483 | $ 53,003 |
Discount rate | 5.50% | 5.50% |
Remaining lease term in years in KICO | 1 year | 2 years |
Commitments and Contingencies_3
Commitments and Contingencies (Details 1) | Mar. 31, 2023 USD ($) |
Commitments and Contingencies (Note 11) | |
2023 | $ 147,436 |
2024 | 49,145 |
Total undiscounted lease payments | 196,581 |
Less: present value adjustment | 15,595 |
Operating lease liability | $ 180,986 |
Commitments and Contingencies_4
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |||||
Jan. 31, 2021 | Dec. 31, 2020 | Jan. 31, 2020 | Sep. 16, 2019 | Mar. 31, 2023 | Mar. 31, 2022 | Jul. 08, 2019 | |
Rent expenses | $ 40,815 | $ 46,938 | |||||
Stock-based compensation | $ 216,767 | $ 530,414 | |||||
Amended Employment Agreement [Member] | January 2020 [Member] | |||||||
Restricted stock issued | 230,769 | 17,191 | 157,431 | ||||
Restricted stock value | $ 1,500,000 | $ 136,500 | $ 1,250,000 | ||||
Mery Golden Chief Operating Officer [Member] | Golden Emloyment Agreement [Member] | |||||||
Annual base salary | $ 500,000 | $ 500,000 | |||||
Percent of average per annum | 14% | ||||||
Option purchase | 50,000 | ||||||
Percent of annual bonus | 6% | ||||||
Mery Golden Chief Operating Officer [Member] | Golden Emloyment Agreement [Member] | Minimum [Member] | |||||||
Stock-based compensation | $ 945,000 | ||||||
Mery Golden Chief Operating Officer [Member] | Golden Emloyment Agreement [Member] | Maximum [Member] | |||||||
Stock-based compensation | $ 2,835,000 | ||||||
Cosi Lease [Member] | |||||||
Lease costs | $ 40,000 | ||||||
Employment Agreement [Member] | Barry Goldstein, President, Chief Executive Officer and Executive Chairman of the Board [Member] | |||||||
Restricted stock issued | 30,000 | 30,000 | |||||
Employment Agreement [Member] | Barry GoldsteinMr. Goldstein [Member] | |||||||
Restricted stock issued | 21,000 | ||||||
January 2023 [Member] | Amended Employment Agreement [Member] | |||||||
Restricted stock value | 136,500 | ||||||
Annual base salary | $ 500,000 | ||||||
Percent of average per annum | 3% |
Employee Benefit Plans (Details
Employee Benefit Plans (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Employee Benefit Plans | |||
Contribution expense | $ 85,000 | $ 62,000 | |
Deferred compensation liability | $ 855,580 | $ 1,155,860 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - shares | May 10, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Common stock shares authorized | 20,000,000 | 20,000,000 | |
Subsequent Event [Member] | |||
Common stock shares authorized | 1,900,000 |