Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 05, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | HALLMARK FINANCIAL SERVICES INC | |
Entity Central Index Key | 819,913 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Trading Symbol | hall | |
Entity Common Stock, Shares Outstanding | 18,891,377 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Debt securities, available-for-sale, at fair value (cost: $570,080 in 2016 and $538,629 in 2015) | $ 564,758 | $ 531,325 |
Equity securities, available-for-sale, at fair value (cost: $27,460 in 2016 and $24,951 in 2015) | 49,328 | 47,504 |
Total investments | 614,086 | 578,829 |
Cash and cash equivalents | 87,477 | 114,446 |
Restricted cash | 8,733 | 8,522 |
Ceded unearned premiums | 66,934 | 65,094 |
Premiums receivable | 90,244 | 83,376 |
Accounts receivable | 2,402 | 2,005 |
Receivable for securities | 938 | 10,424 |
Reinsurance recoverable | 120,161 | 114,287 |
Deferred policy acquisition costs | 20,737 | 20,366 |
Goodwill | 44,695 | 44,695 |
Intangible assets, net | 14,342 | 14,959 |
Deferred federal income taxes, net | 2,615 | 3,360 |
Federal income tax recoverable | 328 | 1,779 |
Prepaid expenses | 4,181 | 3,213 |
Other assets | 12,176 | 11,245 |
Total assets | 1,090,049 | 1,076,600 |
LIABILITIES | ||
Revolving credit facility payable | 30,000 | 30,000 |
Subordinated debt securities | 56,702 | 56,702 |
Reserves for unpaid losses and loss adjustment expenses | 449,129 | 450,878 |
Unearned premiums | 221,546 | 216,407 |
Reinsurance balances payable | 37,929 | 33,741 |
Pension liability | 2,463 | 2,496 |
Payable for securities | 2,910 | 1,097 |
Accounts payable and other accrued expenses | 23,563 | 23,253 |
Total liabilities | $ 824,242 | $ 814,574 |
Commitments and Contingencies (Note 17) | ||
Stockholders' equity: | ||
Common stock, $.18 par value, authorized 33,333,333; issued 20,872,831 shares in 2016 and 2015 | $ 3,757 | $ 3,757 |
Additional paid-in capital | 123,619 | 123,480 |
Retained earnings | 145,575 | 141,501 |
Accumulated other comprehensive income | 8,279 | 7,418 |
Treasury stock (1,893,291 shares in 2016 and 1,775,512 in 2015), at cost | (15,423) | (14,130) |
Total stockholders' equity | 265,807 | 262,026 |
Liabilities and equity, total | $ 1,090,049 | $ 1,076,600 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Consolidated Balance Sheets [Abstract] | ||
Debt securities, available-for-sale, cost (in dollars) | $ 570,080 | $ 538,629 |
Equity securities, available for sale, cost (in dollars) | $ 27,460 | $ 24,951 |
Common stock, par value (in dollars per share) | $ 0.18 | $ 0.18 |
Common stock, authorized shares | 33,333,333 | 33,333,333 |
Common stock, issued shares | 20,872,831 | 20,872,831 |
Treasury stock, shares | 1,893,291 | 1,775,512 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Consolidated Statements of Operations [Abstract] | ||
Gross premiums written | $ 128,447 | $ 125,059 |
Ceded premiums written | (40,821) | (34,685) |
Net premiums written | 87,626 | 90,374 |
Change in unearned premiums | (3,299) | (3,678) |
Net premiums earned | 84,327 | 86,696 |
Investment income, net of expenses | 3,879 | 2,845 |
Net realized gains (losses) | (227) | 584 |
Finance charges | 1,441 | 1,299 |
Commisions and fees, expense | 577 | 9 |
Other income | 31 | 17 |
Total revenues | 90,028 | 91,450 |
Losses and loss adjustment expenses | 55,395 | 56,090 |
Other operating expenses | 26,896 | 25,914 |
Interest expense | 1,131 | 1,140 |
Amortization of intangible assets | 617 | 617 |
Total expenses | 84,039 | 83,761 |
Income before tax | 5,989 | 7,689 |
Income tax expense | 1,915 | 2,346 |
Net income | $ 4,074 | $ 5,343 |
Net income per share: | ||
Basic | $ 0.21 | $ 0.28 |
Diluted | $ 0.21 | $ 0.28 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Consolidated Statements of Comprehensive Income [Abstract] | ||
Net income | $ 4,074 | $ 5,343 |
Other comprehensive income (loss): | ||
Change in net actuarial gain | 28 | 26 |
Tax effect on change in net actuarial gain | (10) | (9) |
Unrealized holding (losses) gains arising during the period | 1,371 | 7,069 |
Tax effect on unrealized holding (losses) gains arising during the period | (480) | (2,474) |
Reclassification adjustment for gains included in net income | (74) | (861) |
Tax effect on reclassification adjustment for gains (losses) included in net income | 26 | 301 |
Other comprehensive (loss) income, net of tax | 861 | 4,052 |
Comprehensive (loss) income | $ 4,935 | $ 9,395 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income [Member] | Treasury Stock [Member] | Total |
Balance at Dec. 31, 2014 | $ 3,757 | $ 123,194 | $ 119,638 | $ 17,801 | $ (12,353) | |
Acquisition of treasury stock | (287) | |||||
Shares issued under employee benefit plans | 212 | |||||
Equity based compensation | 371 | |||||
Shares issued under employee benefit plans (value) | (10) | |||||
Net income | 5,343 | $ 5,343 | ||||
Additional minimum pension liability, net of tax | 17 | |||||
Unrealized holding (losses) gains arising during period, net of tax | 4,595 | |||||
Reclassification adjustment for (gains) losses included in net income, net of tax | (560) | |||||
Balance at Mar. 31, 2015 | 3,757 | 123,555 | 124,981 | 21,853 | (12,428) | 261,718 |
Balance at Dec. 31, 2015 | 3,757 | 123,480 | 141,501 | 7,418 | (14,130) | 262,026 |
Acquisition of treasury stock | (1,293) | |||||
Equity based compensation | 139 | |||||
Net income | 4,074 | 4,074 | ||||
Additional minimum pension liability, net of tax | 18 | |||||
Unrealized holding (losses) gains arising during period, net of tax | 891 | |||||
Reclassification adjustment for (gains) losses included in net income, net of tax | (48) | |||||
Balance at Mar. 31, 2016 | $ 3,757 | $ 123,619 | $ 145,575 | $ 8,279 | $ (15,423) | $ 265,807 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 4,074 | $ 5,343 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization expense | 948 | 1,136 |
Deferred federal income taxes | 280 | (819) |
Net realized (gains) losses | 227 | (584) |
Share-based payments expense | 139 | 371 |
Change in ceded unearned premiums | (1,840) | (1,747) |
Change in premiums receivable | (6,868) | (11,121) |
Change in accounts receivable | (397) | 1,302 |
Change in deferred policy acquisition costs | (371) | (384) |
Change in unpaid losses and loss adjustment expenses | (1,749) | 7,470 |
Change in unearned premiums | 5,139 | 5,425 |
Change in reinsurance recoverable | (5,874) | (579) |
Change in reinsurance balances payable | 4,188 | 3,528 |
Change in current federal income tax payable | 1,451 | 2,445 |
Change in all other liabilities | 277 | (6,430) |
Change in all other assets | (935) | (1,647) |
Net cash (used in) provided by operating activities | (1,311) | 3,709 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (225) | (456) |
Net transfers (into) from restricted cash | (211) | 2,111 |
Purchases of investment securities | (58,384) | (26,735) |
Maturities, sales and redemptions of investment securities | 34,455 | 20,923 |
Net cash used in investing activities | (24,365) | (4,157) |
Cash flows from financing activities: | ||
Proceeds from exercise of employee stock options | 202 | |
Purchase of treasury shares | (1,293) | (288) |
Net cash used in financing activities | (1,293) | (86) |
Decrease in cash and cash equivalents | (26,969) | (534) |
Cash and cash equivalents at beginning of period | 114,446 | 130,985 |
Cash and cash equivalents at end of period | 87,477 | 130,451 |
Supplemental cash flow information: | ||
Interest paid | 1,131 | 1,140 |
Income taxes paid | 184 | 720 |
Supplemental schedule of non-cash investing activities: | ||
Change in receivable for securities related to investment disposals that settled after the balance sheet date | 9,486 | (359) |
Change in payable for securities related to investment purchases that settled after the balance sheet date | $ 1,813 | $ 13,203 |
General
General | 3 Months Ended |
Mar. 31, 2016 | |
General [Abstract] | |
General | 1. General Hallmark Financial Services, Inc. (“Hallmark” and, together with subsidiaries, “we,” “us” or “our”) is an insurance holding company engaged in the sale of property/casualty insurance products to businesses and individuals. Our business involves marketing, distributing, underwriting and servicing our insurance products, as well as providing other insurance related services. We pursue our business activities primarily through subsidiaries whose operations are organized into product-specific operating units that are supported by our insurance company subsidiaries. Our MGA Commercial Products operating unit offers commercial insurance products and services in the excess and surplus lines market. Our Specialty Commercial operating unit offers general aviation and satellite launch insurance products and services, low and middle market commercial umbrella and primary/excess liability insurance, medical professional liability insurance products and services, and primary/excess commercial property coverages for both catastrophe and non-catastrophe exposures. Our Standard Commercial P&C operating unit offers industry-specific commercial insurance products and services in the standard market. Our Workers Compensation operating unit specializes in small and middle market workers compensation business. Effective July 1, 2015, this operating unit no longer markets or retains any risk on new or renewal policies. Our Specialty Personal Lines operating unit offers non-standard personal automobile and renters insurance products and services. Our insurance company subsidiaries supporting these operating units are American Hallmark Insurance Company of Texas, Hallmark Insurance Company, Hallmark Specialty Insurance Company, Hallmark County Mutual Insurance Company, Hallmark National Insurance Company and Texas Builders Insurance Company. These operating units are segregated into three reportable industry segments for financial accounting purposes. The Specialty Commercial Segment includes our MGA Commercial Products operating unit and our Specialty Commercial operating unit. The Standard Commercial Segment includes our Standard Commercial P&C operating unit and our Workers Compensation operating unit. The Personal Segment consists solely of our Personal Lines operating unit. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | 2. Basis of Presentation Our unaudited consolidated financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include our accounts and the accounts of our subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2015 included in our Annual Report on Form 10-K filed with the SEC. The interim financial data as of March 31, 2016 and 2015 is unaudited. However, in the opinion of management, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The results of operations for the period ended March 31, 2016 are not necessarily indicative of the operating results to be expected for the full year. Business Combinations We account for business combinations using the acquisition method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, “Business Combinations.” The base cash purchase price plus the estimated fair value of any non-cash or contingent consideration given for an acquired business is allocated to the assets acquired (including identified intangible assets) and liabilities assumed based on the estimated fair values of such assets and liabilities. The excess of the fair value of the total consideration given for an acquired business over the aggregate net fair values assigned to the assets acquired and liabilities assumed is recorded as goodwill. Contingent consideration is recognized as a liability at fair value as of the acquisition date with subsequent fair value adjustments recorded in the consolidated statements of operations. The valuation of contingent consideration requires assumptions regarding anticipated cash flows, probabilities of cash flows, discount rates and other factors. Significant judgment is employed in determining the propriety of these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions, can materially impact the amount of contingent consideration expense we record in any given period. Indirect and general expenses related to business combinations are expensed as incurred. Income Taxes We file a consolidated federal income tax return. Deferred federal income taxes reflect the future tax consequences of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year end. Deferred taxes are recognized using the liability method, whereby tax rates are applied to cumulative temporary differences based on when and how they are expected to affect the tax return. Deferred tax assets and liabilities are adjusted for tax rate changes in effect for the year in which these temporary differences are expected to be recovered or settled. Use of Estimates in the Preparation of the Financial Statements Our preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the date of our consolidated financial statements, as well as our reported amounts of revenues and expenses during the reporting period. Refer to “Critical Accounting Estimates and Judgments” under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2015 for information on accounting policies that we consider critical in preparing our consolidated financial statements. Actual results could differ materially from those estimates. Fair Value of Financial Instruments Fair value estimates are made at a point in time based on relevant market data as well as the best information available about the financial instruments. Fair value estimates for financial instruments for which no or limited observable market data is available are based on judgments regarding current economic conditions, credit and interest rate risk. These estimates involve significant uncertainties and judgments and cannot be determined with precision. As a result, such calculated fair value estimates may not be realizable in a current sale or immediate settlement of the instrument. In addition, changes in the underlying assumptions used in the fair value measurement technique, including discount rate and estimates of future cash flows, could significantly affect these fair value estimates. Cash and Cash Equivalents : The carrying amounts reported in the balance sheet for these instruments approximate their fair values. Restricted Cash : The carrying amount for restricted cash reported in the balance sheet approximates the fair value. Revolving Credit Facility Payable : A revolving credit facility with The Frost National Bank had a carried value of $ 30.0 million and a fair value of $ 30.1 million as of March 31, 2016 . The fair value is based on discounted cash flows using a discount rate derived from LIBOR spot rates plus a market spread resulting in discount rates ranging between 3.6% to 4.3% for each future payment date. This revolving credit facility would be included in Level 3 of the fair value hierarchy if it was reported at fair value. Subordinated Debt Securities : Our trust preferred securities have a carried value of $56.7 million and a fair value of $ 42.6 million as of March 31, 2016. The fair value of our trust preferred securities is based on discounted cash flows using a current yield to maturity of 8.0% , which is based on similar issues to discount future cash flows. Our trust preferred securities would be included in Level 3 of the fair value hierarchy if they were reported at fair value. For reinsurance balances, premiums receivable, federal income tax payable, other assets and other liabilities, the carrying amounts approximate fair value because of the short maturity of such financial instruments. Variable Interest Entities On June 21, 2005, we formed Hallmark Statutory Trust I (“Trust I”), an unconsolidated trust subsidiary, for the sole purpose of issuing $30.0 million in trust preferred securities. Trust I used the proceeds from the sale of these securities and our initial capital contribution to purchase $30.9 million of subordinated debt securities from Hallmark. The debt securities are the sole assets of Trust I, and the payments under the debt securities are the sole revenues of Trust I. On August 23, 2007, we formed Hallmark Statutory Trust II (“Trust II”), an unconsolidated trust subsidiary, for the sole purpose of issuing $25.0 million in trust preferred securities. Trust II used the proceeds from the sale of these securities and our initial capital contribution to purchase $25.8 million of subordinated debt securities from Hallmark. The debt securities are the sole assets of Trust II, and the payments under the debt securities are the sole revenues of Trust II. We evaluate on an ongoing basis our investments in Trust I and Trust II (collectively the “Trusts”) and have determined that we do not have a variable interest in the Trusts. Therefore, the Trusts are not included in our consolidated financial statements. We are also involved in the normal course of business with variable interest entities (“VIE’s”) primarily as a passive investor in mortgage-backed securities and certain collateralized corporate bank loans issued by third party VIE’s. The maximum exposure to loss with respect to these investments is the investment carrying values included in the consolidated balance sheets. New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“ FASB ”) issued guidance which revises the criteria for revenue recognition. Insurance contracts are excluded from the scope of the new guidance. Under the guidance, the transaction price is attributed to underlying performance obligations in the contract and revenue is recognized as the entity satisfies the performance obligations and transfers control of a good or service to the customer. Incremental costs of obtaining a contract may be capitalized to the extent the entity expects to recover those costs. The guidance is effective for reporting periods beginning after December 15, 2017 and is to be applied retrospectively. We are in the process of evaluating the impact of adoption, which is not expected to be material to our results of operations or financial position. In February 2015, the FASB issued ASU 2015-02, "Amendments to the Consolidation Analysis" (Topic 810). ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether entities should be consolidated if they are deemed variable interest entities. It is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2015. We have adopted this standard as of the effective date, and the adoption did not impact our financial statements. In May 2015, the FASB issued guidance which requires additional disclosures about short-duration contracts for products in effect for typically a year or less. The disclosures will focus on the liability for unpaid claims and claim adjustment expenses. This guidance is effective for annual periods beginning after December 15, 2015 and interim periods within annual periods beginning after December 15, 2016. We are in the process of evaluating the impact of the adoption, which is not expected to be material to our results of operations or financial position. |
Acquisitions, Dispositions and
Acquisitions, Dispositions and Business Combinations | 3 Months Ended |
Mar. 31, 2016 | |
Acquisitions, Dispositions and Business Combinations [Abstract] | |
Acquisitions and Business Combinations | 3. Acquisitions , Dispositions and Business Combinations On June 30, 2015, Redpoint Comp Holdings LLC (“Purchaser”) acquired exclusive renewal rights to our current in-force Texas workers compensation policies, together with certain physical assets associated with the administration of such in-force policies. In consideration for such renewal rights and physical assets, Purchaser assumed certain office lease obligations and offered employment to certain of our employees associated with the Workers Compensation operating unit. Purchaser also agreed to administer the run-off of all of our current workers compensation policies and claims for a period of three years. In connection with the transaction, we made a one-time payment to the Purchaser of $83,000 . We also agreed not to compete in the workers compensation line of insurance in the State of Texas (with certain exceptions) until after the assumed office lease obligations expire on October 31, 2017. We recorded a gain of $0.2 million during the second quarter of 2015 . On September 15, 2015, we executed Amendment No. 1 to the sale agreement with the Purchaser. Pursuant to the Amendment, the Purchaser has agreed to pay us $115,000 and administer the run-off of all of our workers compensation policies and claims in perpetuity or through final conclusion (rather than for three years as contemplated by the original agreement) in consideration of us assigning to Purchaser the commission on all unearned premiums on such policies as of July 1, 2015. We recorded an additional gain of $0.4 million during the third quarter of 2015 as a result of this Amendment No.1. |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value [Abstract] | |
Fair Value | 4. Fair Value ASC 820 defines fair value, establishes a consistent framework for measuring fair value and expands disclosure requirements about fair value measurements. ASC 820, among other things, requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In addition, ASC 820 precludes the use of block discounts when measuring the fair value of instruments traded in an active market, which were previously applied to large holdings of publicly traded equity securities. We determine the fair value of our financial instruments based on the fair value hierarchy established in ASC 820. In accordance with ASC 820, we utilize the following fair value hierarchy: · Level 1: quoted prices in active markets for identical assets; · Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, inputs of identical assets for less active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument; and · Level 3: inputs to the valuation methodology that are unobservable for the asset or liability. This hierarchy requires the use of observable market data when available. Under ASC 820, we determine fair value based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy described above. Fair value measurements for assets and liabilities where there exists limited or no observable market data are calculated based upon our pricing policy, the economic and competitive environment, the characteristics of the asset or liability and other factors as appropriate. These estimated fair values may not be realized upon actual sale or immediate settlement of the asset or liability. Where quoted prices are available on active exchanges for identical instruments, investment securities are classified within Level 1 of the valuation hierarchy. Level 1 investment securities include common and preferred stock. Level 2 investment securities include corporate bonds, collateralized corporate bank loans, municipal bonds, and U.S. Treasury securities for which quoted prices are not available on active exchanges for identical instruments. We use third party pricing services to determine fair values for each Level 2 investment security in all asset classes. Since quoted prices in active markets for identical assets are not available, these prices are determined using observable market information such as quotes from less active markets and/or quoted prices of securities with similar characteristics, among other things. We have reviewed the processes used by the pricing services and have determined that they result in fair values consistent with the requirements of ASC 820 for Level 2 investment securities. We have not adjusted any prices received from the third party pricing services. In cases where there is limited activity or less transparency around inputs to the valuation, investment securities are classified within Level 3 of the valuation hierarchy. Level 3 investments are valued based on the best available data in order to approximate fair value. This data may be internally developed and consider risk premiums that a market participant would require. Investment securities classified within Level 3 include other less liquid investment securities. There were no transfers between Level 1 and Level 2 securities during the periods presented. The following table presents for each of the fair value hierarchy levels, our assets that are measured at fair value on a recurring basis at March 31, 2016 and December 31, 2015 (in thousands): As of March 31, 2016 Quoted Prices in Other Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total U.S. Treasury securities and obligations of U.S. Government $ - $ 74,569 $ - $ 74,569 Corporate bonds - 160,695 - 160,695 Collateralized corporate bank loans - 80,391 - 80,391 Municipal bonds - 178,564 14,116 192,680 Mortgage-backed - 56,423 - 56,423 Total debt securities - 550,642 14,116 564,758 Total equity securities 48,706 - 622 49,328 Total debt and equity securities $ 48,706 $ 550,642 $ 14,738 $ 614,086 As of December 31, 2015 Quoted Prices in Other Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total U.S. Treasury securities and obligations of U.S. Government $ - $ 76,269 $ - $ 76,269 Corporate bonds - 121,709 - 121,709 Collateralized corporate bank loans - 81,596 - 81,596 Municipal bonds - 178,281 14,087 192,368 Mortgage-backed - 59,383 - 59,383 Total debt securities - 517,238 14,087 531,325 Total equity securities 47,504 - - 47,504 Total debt and equity securities $ 47,504 $ 517,238 $ 14,087 $ 578,829 Due to significant unobservable inputs into the valuation model for certain municipal bonds and one equity security in illiquid markets, as of March 31, 2016, we classified these investments as Level 3 in the fair value hierarchy. We used an income approach in order to derive an estimated fair value of the municipal bonds classified as Level 3, which included inputs such as expected holding period, benchmark swap rate, benchmark discount rate and a discount rate premium for illiquidity. Significant changes in the unobservable inputs in the fair value measurement of these municipal bonds or equity security could result in a significant change in the fair value measurement. The following table summarizes the changes in fair value for all financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2016 and 2015 (in thousands): Beginning balance as of January 1, 2016 $ 14,087 Sales - Settlements - Purchases - Issuances - Total realized/unrealized gains included in net income - Net gains included in other comprehensive income 29 Transfers into Level 3 622 Transfers out of Level 3 - Ending balance as of March 31, 2016 $ 14,738 Beginning balance as of January 1, 2015 $ 14,598 Sales - Settlements (59) Purchases - Issuances - Total realized/unrealized gains included in net income - Net losses included in other comprehensive income (105) Transfers into Level 3 - Transfers out of Level 3 - Ending balance as of March 31, 2015 $ 14,434 |
Investments
Investments | 3 Months Ended |
Mar. 31, 2016 | |
Investments [Abstract] | |
Investments | 5. Investments The amortized cost and estimated fair value of investments in debt and equity securities by category is as follows (in thousands): Gross Gross Amortized Unrealized Unrealized Fair As of March 31, 2016 Cost Gains Losses Value U.S. Treasury securities and obligations of U.S. Government $ 74,338 $ 231 $ - $ 74,569 Corporate bonds 161,211 956 (1,472) 160,695 Collateralized corporate bank loans 81,062 116 (787) 80,391 Municipal bonds 196,870 2,194 (6,384) 192,680 Mortgage-backed 56,599 387 (563) 56,423 Total debt securities 570,080 3,884 (9,206) 564,758 Total equity securities 27,460 22,998 (1,130) 49,328 Total debt and equity securities $ 597,540 $ 26,882 $ (10,336) $ 614,086 As of December 31, 2015 U.S. Treasury securities and obligations of U.S. Government $ 76,323 $ 7 $ (61) $ 76,269 Corporate bonds 122,894 637 (1,822) 121,709 Collateralized corporate bank loans 83,434 44 (1,882) 81,596 Municipal bonds 196,446 1,888 (5,966) 192,368 Mortgage-backed 59,532 155 (304) 59,383 Total debt securities 538,629 2,731 (10,035) 531,325 Total equity securities 24,951 23,391 (838) 47,504 Total debt and equity securities $ 563,580 $ 26,122 $ (10,873) $ 578,829 Major categories of net realized gains (losses) on investments are summarized as follows (in thousands): Three Months Ended March 31, 2016 2015 U.S. Treasury securities and obligations of U.S. Government $ - $ - Corporate bonds 80 - Collateralized corporate bank loans 18 18 Municipal bonds (24) (26) Mortgage-backed - 187 Equity securities - 682 Gain on investments 74 861 Other-than-temporary impairments (301) (277) Net realized (losses) gains $ (227) $ 584 We realized gross gains on investments of $0.1 million and $0.9 million during the three months ended March 31, 2016 and 2015, respectively. We realized gross losses on investments of $23 thousand and $28 thousand for the three months ended March 31, 2016 and 2015, respectively . We recorded proceeds from the sale of investment securities of $4.8 million and $1.6 million during the three months ended March 31, 2016 and 2015, respectively. Realized investment gains and losses are recognized in operations on the specific identification method. The following schedules summarize the gross unrealized losses showing the length of time that investments have been continuously in an unrealized loss position as of March 31, 2016 and December 31, 2015 (in thousands): As of March 31, 2016 12 months or less Longer than 12 months Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses U.S. Treasury securities and obligations of U.S. Government $ - $ - $ - $ - $ - $ - Corporate bonds 72,123 (1,472) - - 72,123 (1,472) Collateralized corporate bank loans 45,414 (691) 5,314 (96) 50,728 (787) Municipal bonds 16,565 (279) 20,798 (6,105) 37,363 (6,384) Mortgage-backed 29,780 (561) 44 (2) 29,824 (563) Total debt securities 163,882 (3,003) 26,156 (6,203) 190,038 (9,206) Total equity securities 2,796 (474) 1,689 (656) 4,485 (1,130) Total debt and equity securities $ 166,678 $ (3,477) $ 27,845 $ (6,859) $ 194,523 $ (10,336) As of December 31, 2015 12 months or less Longer than 12 months Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses U.S. Treasury securities and obligations of U.S. Government $ 41,428 $ (61) $ - $ - $ 41,428 $ (61) Corporate bonds 96,475 (1,822) - - 96,475 (1,822) Collateralized corporate bank loans 65,868 (1,758) 3,532 (124) 69,400 (1,882) Municipal bonds 44,525 (488) 25,310 (5,478) 69,835 (5,966) Mortgage-backed 36,251 (302) 48 (2) 36,299 (304) Total debt securities 284,547 (4,431) 28,890 (5,604) 313,437 (10,035) Total equity securities 6,584 (838) - - 6,584 (838) Total debt and equity securities $ 291,131 $ (5,269) $ 28,890 $ (5,604) $ 320,021 $ (10,873) At March 31, 2016, the gross unrealized losses more than twelve months old were attributable to 33 debt security positions. At December 31, 2015, the gross unrealized losses more than twelve months old were attributable to 39 debt security positions. We consider these losses as a temporary decline in value as they are predominately on bonds that we do not intend to sell and do not believe we will be required to sell prior to recovery of our amortized cost basis. We see no other indications that the decline in values of these securities is other-than-temporary. We complete a detailed analysis each quarter to assess whether any decline in the fair value of any investment below cost is deemed other-than-temporary. All securities with an unrealized loss are reviewed. We recognize an impairment loss when an investment's value declines below cost, adjusted for accretion, amortization and previous other-than-temporary impairments, and it is determined that the decline is other-than-temporary. Debt Investments : We assess whether we intend to sell, or it is more likely than not that we will be required to sell, a fixed maturity investment before recovery of its amortized cost basis less any current period credit losses. For fixed maturity investments that are considered other-than-temporarily impaired and that we do not intend to sell and will not be required to sell, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the investment’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the investment’s fair value and the present value of future expected cash flows is recognized in other comprehensive income. Equity Investments : Some of the factors considered in evaluating whether a decline in fair value for an equity investment is other-than-temporary include: (1) our ability and intent to retain the investment for a period of time sufficient to allow for an anticipated recovery in value; (2) the recoverability of cost; (3) the length of time and extent to which the fair value has been less than cost; and (4) the financial condition and near-term and long-term prospects for the issuer, including the relevant industry conditions and trends, and implications of rating agency actions and offering prices. When it is determined that an equity investment is other-than-temporarily impaired, the security is written down to fair value, and the amount of the impairment is included in earnings as a realized investment loss. The fair value then becomes the new cost basis of the investment, and any subsequent recoveries in fair value are recognized at disposition. We recognize a realized loss when impairment is deemed to be other-than-temporary even if a decision to sell an equity investment has not been made. When we decide to sell a temporarily impaired available-for-sale equity investment and we do not expect the fair value of the equity investment to fully recover prior to the expected time of sale, the investment is deemed to be other-than-temporarily impaired in the period in which the decision to sell is made. The amortized cost and estimated fair value of debt securities at March 31, 2016 by contractual maturity are as follows. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties. Amortized Fair Cost Value (in thousands) Due in one year or less $ 76,399 $ 76,378 Due after one year through five years 275,361 274,245 Due after five years through ten years 100,146 96,120 Due after ten years 61,575 61,592 Mortgage-backed 56,599 56,423 $ 570,080 $ 564,758 |
Pledged Investments
Pledged Investments | 3 Months Ended |
Mar. 31, 2016 | |
Pledged Investments [Abstract] | |
Pledged Investments | 6. Pledged Investments We have pledged certain of our securities for the benefit of various state insurance departments and reinsurers. These securities are included with our available-for-sale debt securities because we have the ability to trade these securities. We retain the interest earned on these securities. These securities had a carrying value of $17.6 million at both March 31, 2016 and December 31, 2015. |
Reserves for Unpaid Losses and
Reserves for Unpaid Losses and Loss Adjustment Expenses | 3 Months Ended |
Mar. 31, 2016 | |
Reserves for Unpaid Losses and Loss Adjustment Expenses [Abstract] | |
Reserves for Unpaid Losses and Loss Adjustment Expenses | 7. Reserves for Unpaid Losses and Loss Adjustment Expenses We recorded $1.7 million of net favorable development in reserve estimates during the three months ended March 31, 2016. The $1.7 million of net favorable development recognized during the first quarter of 2016 was attributable to $3.6 million net favorable development on claims incurred in the 2015 accident years, $0.2 million of net favorable development in the 2014 accident year and $0.7 million in the 2011 and prior accident years, partially offset by $1.7 million net unfavorable development in the 2013 accident year and $1.1 million net unfavorable development in the 2012 accident year. Our MGA Commercial Products operating unit, Standard Commercial P&C operating unit, Workers Compensation operating unit and Specialty Commercial operating unit accounted for $2.2 million, $0.2 million, $0.2 million and $0.1 million, respectively, of the decrease in reserves recognized during the first quarter of 2016. These favorable developments were offset by $1.0 million of net unfavorable development in our Personal Lines Segment. The net favorable development of $2.2 million for our MGA Commercial Products operating unit in the first quarter of 2016 was primarily driven by favorable claims development in both our general liability and commercial auto liability lines of business in the 2015, 2014 and 2011 and prior accident years, partially offset by net unfavorable development in the 2013 and 2012 accident years in both our general liability and commercial auto liability lines of business. The net favorable development of $0.2 million in our Standard Commercial P&C operating unit consisted of $0.8 million net favorable development in our commercial property and general liability lines of business, partially offset by $0.6 million of net unfavorable development in our occupational accident line of business. The net favorable development of $0.2 million in our Workers Compensation operating unit was primarily attributable to the 2015 accident year. The net favorable development of $0.1 million in our Specialty Commercial operating unit was primarily attributable to our primary/excess & umbrella line of business. These net favorable developments were partially offset by net unfavorable development of $1.0 million in our Specialty Personal Lines operating unit attributable to the 2015 and prior accident years. We recorded $1.1 million of net favorable development in reserve estimates during the three months ended March 31, 2015. The $1.1 million of net favorable development recognized during the first quarter of 2015 was attributable to $2.4 million net favorable development on claims incurred in the 2014 accident year and $0.4 million of net favorable development in the 2011 accident year, partially offset by $0.1 million of net unfavorable development in the 2013 accident year, $0.2 million of net unfavorable development in the 2012 accident year and $1.4 million of net unfavorable development in the 2010 and prior accident years. Our Standard Commercial P&C operating unit accounted for $1.4 million of the net favorable development recognized during the first quarter of 2015. Our Specialty Commercial operating unit accounted for $0.5 million of the net favorable development. These net favorable developments were offset by $0.5 million of net unfavorable development in our Personal Lines Segment and $0.3 million of net unfavorable development in our MGA Commercial Products operating unit. The net favorable development of $1.4 million for our Standard Commercial P&C operating unit in the first quarter of 2015 was primarily driven by net favorable claims development in our commercial property and general liability lines of business in the 2014 and 2013 accident years. The net favorable development of $0.5 million in our Specialty Commercial operating unit was attributable to $0.2 million in our general aviation line of business and $0.3 million in our commercial excess liability line of business. The net unfavorable development of $0.5 million in our Personal Lines Segment was primarily attributable to the 2014 accident year. The net unfavorable development of $0.3 million in our MGA Commercial Products operating unit was attributable to the 2013, 2012 and the 2010 and prior accident years in both commercial auto liability and general liability lines of business, partially offset by net favorable development in the 2014 and 2011 accident years in the commercial auto liability line of business. |
Share-Based Payment Arrangement
Share-Based Payment Arrangements | 3 Months Ended |
Mar. 31, 2016 | |
Share-Based Payment Arrangements [Abstract] | |
Share-Based Payment Arrangements | 8. Share-Based Payment Arrangements Our 2005 Long Term Incentive Plan (“2005 LTIP”) is a stock compensation plan for key employees and non-employee directors that was initially approved by the shareholders on May 26, 2005 and expired by its terms on May 27, 2015. As of March 31, 2016, there were outstanding incentive stock options to purchase 539,240 shares of our common stock, non-qualified stock options to purchase 304,157 shares of our common stock and restricted stock units representing the right to receive up to 177,755 shares of our common stock. The exercise price of all such outstanding stock options is equal to the fair market value of our common stock on the date of grant. A new equity compensation plan for our key employees and non-employee directors, the 2015 Long Term Incentive Plan (“2015 LTIP”), was approved by shareholders on May 29, 2015. There are 2,000,000 shares authorized for issuance under the 2015 LTIP. As of March 31, 2016, restricted stock units representing the right to receive up to 149,196 shares of our common stock were outstanding under the 2015 LTIP. There were no stock option awards granted under the 2015 LTIP as of March 31, 2016. Stock Options: Incentive stock options granted under the 2005 LTIP prior to 2009 vest 10% , 20% , 30% and 40% on the first, second, third and fourth anniversary dates of the grant, respectively, and terminate five to ten years from the date of grant. Incentive stock options granted in 2009 vest in equal annual increments on each of the first seven anniversary dates and terminate ten years from the date of grant. One grant of 25,000 incentive stock options in 2010 vests in equal annual increments on each of the first three anniversary dates and terminates ten years from the date of grant. Non-qualified stock options granted under the 2005 LTIP generally vest 100% six months after the date of grant and terminate ten years from the date of grant. One grant of 200,000 non-qualified stock options in 2009 vests in equal annual increments on each of the first seven anniversary dates and terminates ten years from the date of grant. A summary of the status of our stock options as of March 31, 2016 and changes during the three months then ended is presented below: Average Weighted Remaining Aggregate Average Contractual Intrinsic Number of Exercise Term Value Shares Price (Years) ($000) Outstanding at January 1, 2016 869,113 $ 9.51 Granted - $ - Exercised - $ - Forfeited or expired (25,716) $ 11.93 Outstanding at March 31, 2016 843,397 $ 9.43 2.3 $ 2,002 Exercisable at March 31, 2016 792,326 $ 9.61 2.2 $ 1,752 The following table details the intrinsic value of options exercised, total cost of share-based payments charged against income before income tax benefit and the amount of related income tax benefit recognized in income for the periods indicated (in thousands): Three Months Ended March 31, 2016 2015 Intrinsic value of options exercised $ - $ 114 Cost of share-based payments (non-cash) $ 38 $ 39 Income tax benefit of share-based payments recognized in income $ 8 $ 8 As of March 31, 2016, there was no unrecognized compensation cost related to non-vested stock options granted under our plans which is expected to be recognized in the future. The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option pricing model. Expected volatilities are based on the historical volatility of Hallmark’s and similar companies’ common stock for a period equal to the expected term. The risk-free interest rates for periods within the contractual term of the options are based on rates for U.S. Treasury Notes with maturity dates corresponding to the options’ expected lives on the dates of grant. Expected term is determined based on the simplified method as we do not have sufficient historical exercise data to provide a basis for estimating the expected term. There were no stock options granted during the first three months of 2016 or 2015. Restricted Stock Units: The 2005 LTIP was amended by the stockholders on May 30, 2013 to authorize the grant of restricted stock units, in addition to the other types of awards available thereunder. Restricted stock units awarded under the 2005 LTIP represent the right to receive shares of common stock upon the satisfaction of vesting requirements, performance criteria and other terms and conditions. On July 27, 2012 and April 10, 2013, an aggregate of 129,463 and 122,823 restricted stock units, respectively, were conditionally granted to certain of our employees subject to shareholder approval of the amendments to the 2005 LTIP at the May 30, 2013 shareholder meeting. One conditional grant of 9,280 restricted stock units was forfeited prior to approval at the shareholder meeting. Subsequently on September 8, 2014, an aggregate of 175,983 restricted stock units were granted to certain employees. On May 29, 2015, an aggregate of 103,351 restricted stock units were granted to certain employees under the 2015 LTIP. The performance criteria for all restricted stock units require that we achieve certain compound average annual growth rates in book value per share over the vesting period in order to receive shares of common stock in amounts ranging from 50% to 150% of the number of restricted stock units granted. In addition, certain restricted stock units contain an additional performance criteria related to the attainment of an average combined ratio percentage over the vesting period. Grantees of restricted stock units do not have any rights of a stockholder, and do not participate in any distributions to our common stockholders, until the award fully vests upon satisfaction of the vesting schedule, performance criteria and other conditions set forth in their award agreement. Therefore, unvested restricted stock units are not considered participating securities under ASC 260, “Earnings Per Share,” and are not included in the calculation of basic or diluted earnings per share. On April 1, 2016, 7,144 shares of common stock were issued with respect to 7,144 restricted stock units which were granted on April 10, 2013 and vested on March 31, 2016. On April 1, 2015, 8,616 shares of common stock were issued with respect to 8,616 restricted stock units which were granted on July 27, 2012 and vested on March 31, 2015. If and to the extent specified performance criteria have been achieved, the restricted stock units granted on September 8, 2014 (except for one grant) will vest on March 31, 2017, one grant of restricted stock units granted on September 8, 2014 will vest on March 31, 2018 and the restricted stock units granted on May 29, 2015 under the 2015 LTIP will vest on March 31, 2018. Compensation cost is measured as an amount equal to the fair value of the restricted stock units on the date of grant and is expensed over the vesting period if achievement of the performance criteria is deemed probable, with the amount of the expense recognized based on our best estimate of the ultimate achievement level. The grant date fair value of the restricted stock units granted in 2012 and 2013 is $9.20 per unit. The grant date fair value of the restricted stock units granted in 2014 is $9.66 per unit. The grant date fair value of the restricted stock units granted in 2015 is $11.10 per unit. We incurred compensation expense of $101 thousand and $332 thousand related to restricted stock units during the three months ended March 31, 2016 and 2015, respectively. We recorded an income tax benefit of $35 thousand and $116 thousand related to restricted stock units during the three months ended March 31, 2016 and 2015, respectively. A summary of the status of our restricted stock units as of March 31, 2016 and changes during the three months then ended is presented below: Number of Restricted Stock Units Non-vested at January 1, 2016 296,571 Granted - Vested (7,144) Forfeited (71,460) Non-vested at March 31, 2016 217,967 As of March 31, 2016, there was $0.7 million of total unrecognized compensation cost related to unvested restricted stock units granted under our 2005 LTIP and 2015 LTIP, of which $0.3 million is expected to be recognized during the remainder of 2016, $0.3 million is expected to be recognized in 2017 and $0.1 million is expected to be recognized in 2018. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2016 | |
Segment Information [Abstract] | |
Segment Information | 9. Segment Information The following is business segment information for the three months ended March 31, 2016 and 2015 (in thousands): Three Months Ended March 31, 2016 2015 Revenues: Specialty Commercial Segment $ 60,583 $ 62,257 Standard Commercial Segment 17,992 20,381 Personal Segment 12,090 8,653 Corporate (637) 159 Consolidated $ 90,028 $ 91,450 Pre-tax income (loss): Specialty Commercial Segment $ 10,312 $ 9,721 Standard Commercial Segment 1,416 1,886 Personal Segment (1,083) (296) Corporate (4,656) (3,622) Consolidated $ 5,989 $ 7,689 The following is additional business segment information as of the dates indicated (in thousands): March 31, December 31, 2016 2015 Assets Specialty Commercial Segment $ 673,102 $ 660,263 Standard Commercial Segment 160,005 156,722 Personal Segment 236,025 239,632 Corporate 20,917 19,983 $ 1,090,049 $ 1,076,600 |
Reinsurance
Reinsurance | 3 Months Ended |
Mar. 31, 2016 | |
Reinsurance [Abstract] | |
Reinsurance | 10. Reinsurance We reinsure a portion of the risk we underwrite in order to control the exposure to losses and to protect capital resources. We cede to reinsurers a portion of these risks and pay premiums based upon the risk and exposure of the policies subject to such reinsurance. Ceded reinsurance involves credit risk and is generally subject to aggregate loss limits. Although the reinsurer is liable to us to the extent of the reinsurance ceded, we are ultimately liable as the direct insurer on all risks reinsured. Reinsurance recoverables are reported after allowances for uncollectible amounts. We monitor the financial condition of reinsurers on an ongoing basis and review our reinsurance arrangements periodically. Reinsurers are selected based on their financial condition, business practices and the price of their product offerings. In order to mitigate credit risk to reinsurance companies, most of our reinsurance recoverable balance as of March 31, 2016 was with reinsurers that had an A.M. Best rating of “A–” or better. The following table shows earned premiums ceded and reinsurance loss recoveries by period (in thousands): Three Months Ended March 31, 2016 2015 Ceded earned premiums $ 38,980 $ 32,939 Reinsurance recoveries $ 23,949 $ 19,358 |
Revolving Credit Facility
Revolving Credit Facility | 3 Months Ended |
Mar. 31, 2016 | |
Revolving Credit Facility [Abstract] | |
Revolving Credit Facility | 11. Revolving Credit Facility Our Second Restated Credit Agreement with The Frost National Bank (“Frost”) dated June 30, 2015, reinstate d the credit facility with Frost which expired by its terms on April 30, 2015. The Second Restated Credit Agreement also amend ed certain provisions of the credit facility and restate d the agreement with Frost in its entirety. The Second Restated Credit Agreement provides a $15.0 million revolving credit facility, with a $5.0 million letter of credit sub-facility. The outstanding balance of the revolving credit facility bears interest at a rate equal to the prime rate or LIBOR plus 2.5 % , at our election. We pay an annual fee of 0.25% of the average daily unused balance of the credit facility and letter of credit fees at the rate of 1.00% per annum. The revolving credit facility contains covenants that, among other things, require us to maintain certain financial and operating ratios and restrict certain distributions, transactions and organizational changes. As of March 31, 2016 we were in compliance with all of our covenants and had no outstanding borrowings under this revolving credit facility. On December 17, 2015, we entered into a First Amendment to Second Restated Credit Agreement (the “First Amendment”) and a Revolving Facility B Agreement (the “Facility B Agreement”) with Frost. The First Amendment amended the existing Second Restated Credit Agreement with Frost to incorporate the additional credit facility reflected by the Facility B Agreement. The Facility B Agreement provides a new $30.0 million revolving credit facility (“Facility B”), in addition to the existing $15.0 million revolving credit facility with Frost. We may use Facility B loan proceeds solely for the purpose of making capital contributions to AHIC and HIC. We may borrow, repay and reborrow under the Facility B until December 17, 2017, at which time all amounts outstanding under the Facility B are converted to a term loan. In connection with Facility B, we paid Frost a one-time commitment fee of $75,000 and will pay Frost an additional quarterly fee through December 17, 2017 of 0.25% per annum of the average daily unused balance of Facility B. Facility B bears interest at a rate equal to the prime rate or LIBOR plus 3.00 % , at our election. Until December 17, 2017, interest only on amounts from time to time outstanding under Facility B are payable quarterly. Any amounts outstanding on Facility B as of December 17, 2017 are converted to a term loan payable in quarterly installments over five years based on a seven year amortization of principal plus accrued interest. All remaining principal and accrued interest become due and payable on December 17, 2022. The obligations under Facility B are secured by the same collateral as the existing credit facility, being a security interest in the capital stock of AHIC and HIC. Facility B is subject to the same covenants as the existing credit facility. As of March 31, 2016, we had $30.0 million outstanding under Facility B. |
Subordinated Debt Securities
Subordinated Debt Securities | 3 Months Ended |
Mar. 31, 2016 | |
Subordinated Debt Securities [Abstract] | |
Subordinated Debt Securities | 12. Subordinated Debt Securities On June 21, 2005, we entered into a trust preferred securities transaction pursuant to which we issued $30.9 million aggregate principal amount of subordinated debt securities due in 2035 . To effect the transaction, we formed Trust I as a Delaware statutory trust. Trust I issued $30.0 million of preferred securities to investors and $0.9 million of common securities to us. Trust I used the proceeds from these issuances to purchase the subordinated debt securities. The initial interest rate on our Trust I subordinated debt securities was 7. 7 25 % until June 15, 2015 , after which interest adjusts quarterly to the three-month LIBOR rate plus 3.25 percentage points . Trust I pays dividends on its preferred securities at the same rate. Under the terms of our Trust I subordinated debt securities, we pay interest only each quarter and the principal of the note at maturity. The subordinated debt securities are uncollaterized and do not require maintenance of minimum financial covenants. As of March 31, 2016, the balance of our Trust I subordinated debt was $30.9 million and the interest rate was 3. 88 % per annum. On August 23, 2007, we entered into a trust preferred securities transaction pursuant to which we issued $25.8 million aggregate principal amount of subordinated debt securities due in 2037 . To effect the transaction, we formed Trust II as a Delaware statutory trust. Trust II issued $25.0 million of preferred securities to investors and $0.8 million of common securities to us. Trust II used the proceeds from these issuances to purchase the subordinated debt securities. Our Trust II subordinated debt securities bear an initial interest rate of 8.28 % until September 15, 2017 , at which time interest will adjust quarterly to the three-month LIBOR rate plus 2.90 percentage points. Trust II pays dividends on its preferred securities at the same rate. Under the terms of our Trust II subordinated debt securities, we pay interest only each quarter and the principal of the note at maturity. The subordinated debt securities are uncollaterized and do not require maintenance of minimum financial covenants. As of March 31, 2016, the balance of our Trust II subordinated debt was $25.8 million. |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs | 3 Months Ended |
Mar. 31, 2016 | |
Deferred Policy Acquisition Costs [Abstract] | |
Deferred Policy Acquisition Costs | 13. Deferred Policy Acquisition Costs The following table shows total deferred and amortized policy acquisition cost activity by period (in thousands): Three Months Ended March 31, 2016 2015 Deferred $ (13,738) $ (3,718) Amortized 13,367 3,334 Net $ (371) $ (384) |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings per Share [Abstract] | |
Earnings per Share | 14. Earnings per Share The following table sets forth basic and diluted weighted average shares outstanding for the periods indicated (in thousands): Three Months Ended March 31, 2016 2015 Weighted average shares - basic 19,013 19,227 Effect of dilutive securities 175 202 Weighted average shares - assuming dilution 19,188 19,429 For the three months ended March 31, 2016, 421,666 shares of common stock potentially issuable upon the exercise of employee stock options were excluded from the weighted average number of shares outstanding on a diluted basis because the effect of such options would be anti-dilutive. For the three months ended March 31, 2015, 504,999 shares of common stock potentially issuable upon the exercise of employee stock options were excluded from the weighted average number of shares outstanding on a diluted basis because the effect of such options would be anti-dilutive. |
Net Periodic Pension Cost
Net Periodic Pension Cost | 3 Months Ended |
Mar. 31, 2016 | |
Net Periodic Pension Cost [Abstract] | |
Net Periodic Pension Cost | 15. Net Periodic Pension Cost The following table details the net periodic pension cost incurred by period (in thousands): Three Months Ended March 31, 2016 2015 Interest cost $ 128 $ 129 Amortization of net loss 28 26 Expected return on plan assets (161) (175) Net periodic pension cost $ (5) $ (20) Contributed amount $ - $ - Refer to Note 14 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2015 for more discussion of our retirement plans. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | 16. Income Taxes Our effective income tax rate for the first three months ended March 31, 2016 and 2015 was 32.0 % and 30.5 %, respectively. The rates varied from the statutory tax rate primarily due to the amount of tax exempt income in relation to pre-tax income. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 17. Commitments and Contingencies We are engaged in various legal proceedings in the ordinary course of business, none of which, either individually or in the aggregate, are believed likely to have a material adverse effect on our consolidated financial position or results of operations, in the opinion of management. The various legal proceedings to which we are a party are routine in nature and incidental to our business. During the third quarter of 2015 we paid $1.2 million to the sellers of the subsidiaries comprising our Workers Compensation operating unit in fulfillment of the contingent purchase price. The sellers have disputed the calculation of the amount paid and assert that an additional $1.8 million is due. We disagree with this assertion and believe that our calculation of the contingent purchase price was substantially correct. Pursuant to the terms of the acquisition agreement, an independent actuary has been engaged to resolve this matter. In November 2015, HSU was informed by the Texas Comptroller of Public Accounts that a surplus lines tax audit covering the period January 1, 2010 through December 31, 2013 was complete. HSU frequently acts as a managing general underwriter (“MGU”) authorized to underwrite policies on behalf of Republic Vanguard Insurance Company and HSIC, both Texas eligible surplus lines insurance carriers. In its role as the MGU, HSU underwrites policies on behalf of these carriers while other agencies located in Texas (generally referred to as “producing agents”) deliver the policies to the insureds and collect all premiums due from the insureds. During the period under audit, the producing agents also collected the surplus lines premium taxes due on the policies from the insureds, held them in trust, and timely remitted those taxes to the Comptroller. We believe this system for collecting and paying the required surplus lines premium taxes complies in all respects with the Texas Insurance Code and other regulations, which clearly require that the same party who delivers the policies and collects the premiums will also collect premium taxes, hold premium taxes in trust, and pay premium taxes to the Comptroller. It also complies with long standing industry practice. In addition, effective January 1, 2012 the Texas Legislators enacted House Bill 3410 (HB3410) which allows an MGU to contractually pass the collection, payment and administration of surplus lines taxes down to another Texas licensed surplus line agent. The Comptroller asserts that HSU is liable for the surplus lines premium taxes related to policy transactions and premiums collected from surplus lines insureds during January 1, 2010 through December 31, 2011, the period prior to the passage of HB3410, and that HSU therefore owes $2.5 million in premium taxes, as well as $0.7 million in penalties and interest for the audit period. We disagree with the Comptroller and intend to vigorously fight their assertion that HSU is liable for the surplus lines premium taxes. We are currently in negotiations with the Comptroller to settle the matter. However, we are presently unable to reasonably estimate the possible loss or legal costs that are likely to arise out of the surplus lines tax audit or any future proceedings relating to this matter. Therefore we have not accrued any amount as of March 31, 2016 related to this matter. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income Balances | 3 Months Ended |
Mar. 31, 2016 | |
Changes in Accumulated Other Comprehensive Income Balances [Abstract] | |
Changes in Accumulated Other Comprehensive Income Balances | 18. Changes in Accumulated Other Comprehensive Income Balances The changes in accumulated other comprehensive income balances as of March 31, 2016 and 2015 were as follows (in thousands): Minimum Accumulated Other Pension Unrealized Comprehensive Liability Gains (Loss) Income Balance at December 31, 2014 $ (2,600) $ 20,401 $ 17,801 Other comprehensive income : Change in net actuarial gain 26 - 26 Tax effect on change in net actuarial gain (9) - (9) Net unrealized holding gains arising during the period - 7,069 7,069 Tax effect on unrealized gains arising during the period - (2,474) (2,474) Reclassification adjustment for gains included in net realized gains - (861) (861) Tax effect on reclassification adjustment for gains included in income tax expense - 301 301 Other comprehensive income, net of tax 17 4,035 4,052 Balance at March 31, 2015 $ (2,583) $ 24,436 $ 21,853 Balance at December 31, 2015 $ (2,572) $ 9,990 $ 7,418 Other comprehensive income : Change in net actuarial gain 28 - 28 Tax effect on change in net actuarial gain (10) - (10) Net unrealized holding gains arising during the period - 1,371 1,371 Tax effect on unrealized gains arising during the period - (480) (480) Reclassification adjustment for gains included in net realized gains - (74) (74) Tax effect on reclassification adjustment for gains included in income tax expense - 26 26 Other comprehensive income, net of tax 18 843 861 Balance at March 31, 2016 $ (2,554) $ 10,833 $ 8,279 |
Basis of Presentation (Policy)
Basis of Presentation (Policy) | 3 Months Ended |
Mar. 31, 2016 | |
Basis of Presentation [Abstract] | |
Business Combinations | Business Combinations We account for business combinations using the acquisition method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, “Business Combinations.” The base cash purchase price plus the estimated fair value of any non-cash or contingent consideration given for an acquired business is allocated to the assets acquired (including identified intangible assets) and liabilities assumed based on the estimated fair values of such assets and liabilities. The excess of the fair value of the total consideration given for an acquired business over the aggregate net fair values assigned to the assets acquired and liabilities assumed is recorded as goodwill. Contingent consideration is recognized as a liability at fair value as of the acquisition date with subsequent fair value adjustments recorded in the consolidated statements of operations. The valuation of contingent consideration requires assumptions regarding anticipated cash flows, probabilities of cash flows, discount rates and other factors. Significant judgment is employed in determining the propriety of these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions, can materially impact the amount of contingent consideration expense we record in any given period. Indirect and general expenses related to business combinations are expensed as incurred. |
Income Taxes | Income Taxes We file a consolidated federal income tax return. Deferred federal income taxes reflect the future tax consequences of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year end. Deferred taxes are recognized using the liability method, whereby tax rates are applied to cumulative temporary differences based on when and how they are expected to affect the tax return. Deferred tax assets and liabilities are adjusted for tax rate changes in effect for the year in which these temporary differences are expected to be recovered or settled. |
Use of Estimates in the Preparation of the Financial Statements | Use of Estimates in the Preparation of the Financial Statements Our preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the date of our consolidated financial statements, as well as our reported amounts of revenues and expenses during the reporting period. Refer to “Critical Accounting Estimates and Judgments” under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2015 for information on accounting policies that we consider critical in preparing our consolidated financial statements. Actual results could differ materially from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value estimates are made at a point in time based on relevant market data as well as the best information available about the financial instruments. Fair value estimates for financial instruments for which no or limited observable market data is available are based on judgments regarding current economic conditions, credit and interest rate risk. These estimates involve significant uncertainties and judgments and cannot be determined with precision. As a result, such calculated fair value estimates may not be realizable in a current sale or immediate settlement of the instrument. In addition, changes in the underlying assumptions used in the fair value measurement technique, including discount rate and estimates of future cash flows, could significantly affect these fair value estimates. Cash and Cash Equivalents : The carrying amounts reported in the balance sheet for these instruments approximate their fair values. Restricted Cash : The carrying amount for restricted cash reported in the balance sheet approximates the fair value. Revolving Credit Facility Payable : A revolving credit facility with The Frost National Bank had a carried value of $ 30.0 million and a fair value of $ 30.1 million as of March 31, 2016 . The fair value is based on discounted cash flows using a discount rate derived from LIBOR spot rates plus a market spread resulting in discount rates ranging between 3.6% to 4.3% for each future payment date. This revolving credit facility would be included in Level 3 of the fair value hierarchy if it was reported at fair value. Subordinated Debt Securities : Our trust preferred securities have a carried value of $56.7 million and a fair value of $ 42.6 million as of March 31, 2016. The fair value of our trust preferred securities is based on discounted cash flows using a current yield to maturity of 8.0% , which is based on similar issues to discount future cash flows. Our trust preferred securities would be included in Level 3 of the fair value hierarchy if they were reported at fair value. For reinsurance balances, premiums receivable, federal income tax payable, other assets and other liabilities, the carrying amounts approximate fair value because of the short maturity of such financial instruments. |
Variable Interest Entities | Variable Interest Entities On June 21, 2005, we formed Hallmark Statutory Trust I (“Trust I”), an unconsolidated trust subsidiary, for the sole purpose of issuing $30.0 million in trust preferred securities. Trust I used the proceeds from the sale of these securities and our initial capital contribution to purchase $30.9 million of subordinated debt securities from Hallmark. The debt securities are the sole assets of Trust I, and the payments under the debt securities are the sole revenues of Trust I. On August 23, 2007, we formed Hallmark Statutory Trust II (“Trust II”), an unconsolidated trust subsidiary, for the sole purpose of issuing $25.0 million in trust preferred securities. Trust II used the proceeds from the sale of these securities and our initial capital contribution to purchase $25.8 million of subordinated debt securities from Hallmark. The debt securities are the sole assets of Trust II, and the payments under the debt securities are the sole revenues of Trust II. We evaluate on an ongoing basis our investments in Trust I and Trust II (collectively the “Trusts”) and have determined that we do not have a variable interest in the Trusts. Therefore, the Trusts are not included in our consolidated financial statements. We are also involved in the normal course of business with variable interest entities (“VIE’s”) primarily as a passive investor in mortgage-backed securities and certain collateralized corporate bank loans issued by third party VIE’s. The maximum exposure to loss with respect to these investments is the investment carrying values included in the consolidated balance sheets. |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“ FASB ”) issued guidance which revises the criteria for revenue recognition. Insurance contracts are excluded from the scope of the new guidance. Under the guidance, the transaction price is attributed to underlying performance obligations in the contract and revenue is recognized as the entity satisfies the performance obligations and transfers control of a good or service to the customer. Incremental costs of obtaining a contract may be capitalized to the extent the entity expects to recover those costs. The guidance is effective for reporting periods beginning after December 15, 2017 and is to be applied retrospectively. We are in the process of evaluating the impact of adoption, which is not expected to be material to our results of operations or financial position. In February 2015, the FASB issued ASU 2015-02, "Amendments to the Consolidation Analysis" (Topic 810). ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether entities should be consolidated if they are deemed variable interest entities. It is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2015. We have adopted this standard as of the effective date, and the adoption did not impact our financial statements. In May 2015, the FASB issued guidance which requires additional disclosures about short-duration contracts for products in effect for typically a year or less. The disclosures will focus on the liability for unpaid claims and claim adjustment expenses. This guidance is effective for annual periods beginning after December 15, 2015 and interim periods within annual periods beginning after December 15, 2016. We are in the process of evaluating the impact of the adoption, which is not expected to be material to our results of operations or financial position. |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value [Abstract] | |
Fair Value, Assets Measured on Recurring Basis | The following table presents for each of the fair value hierarchy levels, our assets that are measured at fair value on a recurring basis at March 31, 2016 and December 31, 2015 (in thousands): As of March 31, 2016 Quoted Prices in Other Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total U.S. Treasury securities and obligations of U.S. Government $ - $ 74,569 $ - $ 74,569 Corporate bonds - 160,695 - 160,695 Collateralized corporate bank loans - 80,391 - 80,391 Municipal bonds - 178,564 14,116 192,680 Mortgage-backed - 56,423 - 56,423 Total debt securities - 550,642 14,116 564,758 Total equity securities 48,706 - 622 49,328 Total debt and equity securities $ 48,706 $ 550,642 $ 14,738 $ 614,086 As of December 31, 2015 Quoted Prices in Other Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total U.S. Treasury securities and obligations of U.S. Government $ - $ 76,269 $ - $ 76,269 Corporate bonds - 121,709 - 121,709 Collateralized corporate bank loans - 81,596 - 81,596 Municipal bonds - 178,281 14,087 192,368 Mortgage-backed - 59,383 - 59,383 Total debt securities - 517,238 14,087 531,325 Total equity securities 47,504 - - 47,504 Total debt and equity securities $ 47,504 $ 517,238 $ 14,087 $ 578,829 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following table summarizes the changes in fair value for all financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2016 and 2015 (in thousands): Beginning balance as of January 1, 2016 $ 14,087 Sales - Settlements - Purchases - Issuances - Total realized/unrealized gains included in net income - Net gains included in other comprehensive income 29 Transfers into Level 3 622 Transfers out of Level 3 - Ending balance as of March 31, 2016 $ 14,738 Beginning balance as of January 1, 2015 $ 14,598 Sales - Settlements (59) Purchases - Issuances - Total realized/unrealized gains included in net income - Net losses included in other comprehensive income (105) Transfers into Level 3 - Transfers out of Level 3 - Ending balance as of March 31, 2015 $ 14,434 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Investments [Abstract] | |
Amortized Cost and Estimated Fair Value of Investments in Debt and Equity Securities by Category | The amortized cost and estimated fair value of investments in debt and equity securities by category is as follows (in thousands): Gross Gross Amortized Unrealized Unrealized Fair As of March 31, 2016 Cost Gains Losses Value U.S. Treasury securities and obligations of U.S. Government $ 74,338 $ 231 $ - $ 74,569 Corporate bonds 161,211 956 (1,472) 160,695 Collateralized corporate bank loans 81,062 116 (787) 80,391 Municipal bonds 196,870 2,194 (6,384) 192,680 Mortgage-backed 56,599 387 (563) 56,423 Total debt securities 570,080 3,884 (9,206) 564,758 Total equity securities 27,460 22,998 (1,130) 49,328 Total debt and equity securities $ 597,540 $ 26,882 $ (10,336) $ 614,086 As of December 31, 2015 U.S. Treasury securities and obligations of U.S. Government $ 76,323 $ 7 $ (61) $ 76,269 Corporate bonds 122,894 637 (1,822) 121,709 Collateralized corporate bank loans 83,434 44 (1,882) 81,596 Municipal bonds 196,446 1,888 (5,966) 192,368 Mortgage-backed 59,532 155 (304) 59,383 Total debt securities 538,629 2,731 (10,035) 531,325 Total equity securities 24,951 23,391 (838) 47,504 Total debt and equity securities $ 563,580 $ 26,122 $ (10,873) $ 578,829 |
Summary of Realized Gain (Loss) on Investments | Major categories of net realized gains (losses) on investments are summarized as follows (in thousands): Three Months Ended March 31, 2016 2015 U.S. Treasury securities and obligations of U.S. Government $ - $ - Corporate bonds 80 - Collateralized corporate bank loans 18 18 Municipal bonds (24) (26) Mortgage-backed - 187 Equity securities - 682 Gain on investments 74 861 Other-than-temporary impairments (301) (277) Net realized (losses) gains $ (227) $ 584 |
Summary of Gross Unrealized Losses for Investments that have been Continuously in Unrealized Loss Position | The following schedules summarize the gross unrealized losses showing the length of time that investments have been continuously in an unrealized loss position as of March 31, 2016 and December 31, 2015 (in thousands): As of March 31, 2016 12 months or less Longer than 12 months Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses U.S. Treasury securities and obligations of U.S. Government $ - $ - $ - $ - $ - $ - Corporate bonds 72,123 (1,472) - - 72,123 (1,472) Collateralized corporate bank loans 45,414 (691) 5,314 (96) 50,728 (787) Municipal bonds 16,565 (279) 20,798 (6,105) 37,363 (6,384) Mortgage-backed 29,780 (561) 44 (2) 29,824 (563) Total debt securities 163,882 (3,003) 26,156 (6,203) 190,038 (9,206) Total equity securities 2,796 (474) 1,689 (656) 4,485 (1,130) Total debt and equity securities $ 166,678 $ (3,477) $ 27,845 $ (6,859) $ 194,523 $ (10,336) As of December 31, 2015 12 months or less Longer than 12 months Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses U.S. Treasury securities and obligations of U.S. Government $ 41,428 $ (61) $ - $ - $ 41,428 $ (61) Corporate bonds 96,475 (1,822) - - 96,475 (1,822) Collateralized corporate bank loans 65,868 (1,758) 3,532 (124) 69,400 (1,882) Municipal bonds 44,525 (488) 25,310 (5,478) 69,835 (5,966) Mortgage-backed 36,251 (302) 48 (2) 36,299 (304) Total debt securities 284,547 (4,431) 28,890 (5,604) 313,437 (10,035) Total equity securities 6,584 (838) - - 6,584 (838) Total debt and equity securities $ 291,131 $ (5,269) $ 28,890 $ (5,604) $ 320,021 $ (10,873) |
Schedule of Amortized Cost and Estimated Fair Value of Debt Securities by Contractual Maturities | Amortized Fair Cost Value (in thousands) Due in one year or less $ 76,399 $ 76,378 Due after one year through five years 275,361 274,245 Due after five years through ten years 100,146 96,120 Due after ten years 61,575 61,592 Mortgage-backed 56,599 56,423 $ 570,080 $ 564,758 |
Share-Based Payment Arrangeme29
Share-Based Payment Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Share-Based Payment Arrangements [Abstract] | |
Summary of the Status of Stock Options | A summary of the status of our stock options as of March 31, 2016 and changes during the three months then ended is presented below: Average Weighted Remaining Aggregate Average Contractual Intrinsic Number of Exercise Term Value Shares Price (Years) ($000) Outstanding at January 1, 2016 869,113 $ 9.51 Granted - $ - Exercised - $ - Forfeited or expired (25,716) $ 11.93 Outstanding at March 31, 2016 843,397 $ 9.43 2.3 $ 2,002 Exercisable at March 31, 2016 792,326 $ 9.61 2.2 $ 1,752 |
Schedule of Options, Grants in Period and Grant Date Intrinsic Value | The following table details the intrinsic value of options exercised, total cost of share-based payments charged against income before income tax benefit and the amount of related income tax benefit recognized in income for the periods indicated (in thousands): Three Months Ended March 31, 2016 2015 Intrinsic value of options exercised $ - $ 114 Cost of share-based payments (non-cash) $ 38 $ 39 Income tax benefit of share-based payments recognized in income $ 8 $ 8 |
Summary of the Status of Restricted Stock Units | A summary of the status of our restricted stock units as of March 31, 2016 and changes during the three months then ended is presented below: Number of Restricted Stock Units Non-vested at January 1, 2016 296,571 Granted - Vested (7,144) Forfeited (71,460) Non-vested at March 31, 2016 217,967 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Information [Abstract] | |
Schedule of Business Segment Information | The following is business segment information for the three months ended March 31, 2016 and 2015 (in thousands): Three Months Ended March 31, 2016 2015 Revenues: Specialty Commercial Segment $ 60,583 $ 62,257 Standard Commercial Segment 17,992 20,381 Personal Segment 12,090 8,653 Corporate (637) 159 Consolidated $ 90,028 $ 91,450 Pre-tax income (loss): Specialty Commercial Segment $ 10,312 $ 9,721 Standard Commercial Segment 1,416 1,886 Personal Segment (1,083) (296) Corporate (4,656) (3,622) Consolidated $ 5,989 $ 7,689 |
Schedule of Additional Business Segment Information | The following is additional business segment information as of the dates indicated (in thousands): March 31, December 31, 2016 2015 Assets Specialty Commercial Segment $ 673,102 $ 660,263 Standard Commercial Segment 160,005 156,722 Personal Segment 236,025 239,632 Corporate 20,917 19,983 $ 1,090,049 $ 1,076,600 |
Reinsurance (Tables)
Reinsurance (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Reinsurance [Abstract] | |
Schedule of Reinsurance Ceded and Recoveries | The following table shows earned premiums ceded and reinsurance loss recoveries by period (in thousands): Three Months Ended March 31, 2016 2015 Ceded earned premiums $ 38,980 $ 32,939 Reinsurance recoveries $ 23,949 $ 19,358 |
Deferred Policy Acquisition C32
Deferred Policy Acquisition Costs (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Deferred Policy Acquisition Costs [Abstract] | |
Deferred Amortized Policy Acquisition Costs | The following table shows total deferred and amortized policy acquisition cost activity by period (in thousands): Three Months Ended March 31, 2016 2015 Deferred $ (13,738) $ (3,718) Amortized 13,367 3,334 Net $ (371) $ (384) |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings per Share [Abstract] | |
Schedule of Weighted Average Number of Shares Outstanding | The following table sets forth basic and diluted weighted average shares outstanding for the periods indicated (in thousands): Three Months Ended March 31, 2016 2015 Weighted average shares - basic 19,013 19,227 Effect of dilutive securities 175 202 Weighted average shares - assuming dilution 19,188 19,429 |
Net Periodic Pension Cost (Tabl
Net Periodic Pension Cost (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Net Periodic Pension Cost [Abstract] | |
Schedule of Net Benefit Costs | The following table details the net periodic pension cost incurred by period (in thousands): Three Months Ended March 31, 2016 2015 Interest cost $ 128 $ 129 Amortization of net loss 28 26 Expected return on plan assets (161) (175) Net periodic pension cost $ (5) $ (20) Contributed amount $ - $ - |
Changes in Accumulated Other 35
Changes in Accumulated Other Comprehensive Income Balances (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Changes in Accumulated Other Comprehensive Income Balances [Abstract] | |
Schedule of Changes in Accumulated Other Comprehensive Income | The changes in accumulated other comprehensive income balances as of March 31, 2016 and 2015 were as follows (in thousands): Minimum Accumulated Other Pension Unrealized Comprehensive Liability Gains (Loss) Income Balance at December 31, 2014 $ (2,600) $ 20,401 $ 17,801 Other comprehensive income : Change in net actuarial gain 26 - 26 Tax effect on change in net actuarial gain (9) - (9) Net unrealized holding gains arising during the period - 7,069 7,069 Tax effect on unrealized gains arising during the period - (2,474) (2,474) Reclassification adjustment for gains included in net realized gains - (861) (861) Tax effect on reclassification adjustment for gains included in income tax expense - 301 301 Other comprehensive income, net of tax 17 4,035 4,052 Balance at March 31, 2015 $ (2,583) $ 24,436 $ 21,853 Balance at December 31, 2015 $ (2,572) $ 9,990 $ 7,418 Other comprehensive income : Change in net actuarial gain 28 - 28 Tax effect on change in net actuarial gain (10) - (10) Net unrealized holding gains arising during the period - 1,371 1,371 Tax effect on unrealized gains arising during the period - (480) (480) Reclassification adjustment for gains included in net realized gains - (74) (74) Tax effect on reclassification adjustment for gains included in income tax expense - 26 26 Other comprehensive income, net of tax 18 843 861 Balance at March 31, 2016 $ (2,554) $ 10,833 $ 8,279 |
General (Narrative) (Details)
General (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2016segment | |
General [Abstract] | |
Number of reportable segments | 3 |
Basis of Presentation (Narrativ
Basis of Presentation (Narrative) (Details) - USD ($) | Aug. 23, 2007 | Jun. 21, 2005 | Mar. 31, 2016 |
Revolving Credit Facility [Member] | |||
Variable Interest Entity [Line Items] | |||
Credit facility, amount outstanding | $ 0 | ||
Revolving Credit Facility B [Member] | |||
Variable Interest Entity [Line Items] | |||
Credit facility, amount outstanding | 30,000,000 | ||
Credit facility, fair value | $ 30,100,000 | ||
Revolving Credit Facility B [Member] | Minimum [Member] | |||
Variable Interest Entity [Line Items] | |||
Fair value inputs, discount rate | 3.60% | ||
Revolving Credit Facility B [Member] | Maximum [Member] | |||
Variable Interest Entity [Line Items] | |||
Fair value inputs, discount rate | 4.30% | ||
Hallmark Statutory Trust I [Member] | |||
Variable Interest Entity [Line Items] | |||
Proceeds from issuance of trust preferred securities | $ 30,000,000 | ||
Hallmark Statutory Trust II [Member] | |||
Variable Interest Entity [Line Items] | |||
Proceeds from issuance of trust preferred securities | $ 25,000,000 | ||
Subordinated Debt [Member] | |||
Variable Interest Entity [Line Items] | |||
Trust preferred securities, carrying value | $ 56,700,000 | ||
Trust preferred securities, fair value | $ 42,600,000 | ||
Current yield to maturity percentage | 8.00% | ||
Subordinated Debt [Member] | Hallmark Statutory Trust I [Member] | |||
Variable Interest Entity [Line Items] | |||
Payments to acquire trust preferred investments | $ 30,900,000 | ||
Subordinated Debt [Member] | Hallmark Statutory Trust II [Member] | |||
Variable Interest Entity [Line Items] | |||
Payments to acquire trust preferred investments | $ 25,800,000 |
Acquisitions, Dispositions an38
Acquisitions, Dispositions and Business Combinations (Narrative) (Details) - Workers Compensation Business Unit [Member] - Renewal Rights [Member] - USD ($) | Sep. 15, 2015 | Sep. 30, 2015 | Jun. 30, 2015 |
Business Acquisition [Line Items] | |||
One-time payment related to divesture of renewal rights | $ 83,000 | ||
Gain on disposition of intangible assets | $ 400,000 | $ 200,000 | |
Proceeds from sale of finite lived assets | $ 115,000 |
Fair Value (Narrative) (Details
Fair Value (Narrative) (Details) | Mar. 31, 2016USD ($) |
Fair Value [Abstract] | |
Fair value, equity, Level 1 to Level 2 transfers, amount | $ 0 |
Fair value, equity, Level 2 to Level 1 transfers, amount | $ 0 |
Fair Value (Fair Value, Assets
Fair Value (Fair Value, Assets Measured on Recurring Basis) (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | $ 564,758 | $ 531,325 |
Total equity securities | 49,328 | 47,504 |
Total debt and equity securities | 614,086 | 578,829 |
Us Treasury Securities and Obligations of U.S. Government [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | 74,569 | 76,269 |
Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | 160,695 | 121,709 |
Collateralized Corporate Bank Loans [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | 80,391 | 81,596 |
Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | 192,680 | 192,368 |
Mortgage Backed [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | 56,423 | 59,383 |
Quoted Prices in Active Markets for Identical Assets, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total equity securities | 48,706 | 47,504 |
Total debt and equity securities | 48,706 | 47,504 |
Other Observable Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | 550,642 | 517,238 |
Total debt and equity securities | 550,642 | 517,238 |
Other Observable Inputs, Level 2 [Member] | Us Treasury Securities and Obligations of U.S. Government [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | 74,569 | 76,269 |
Other Observable Inputs, Level 2 [Member] | Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | 160,695 | 121,709 |
Other Observable Inputs, Level 2 [Member] | Collateralized Corporate Bank Loans [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | 80,391 | 81,596 |
Other Observable Inputs, Level 2 [Member] | Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | 178,564 | 178,281 |
Other Observable Inputs, Level 2 [Member] | Mortgage Backed [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | 56,423 | 59,383 |
Unobservable Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | 14,116 | 14,087 |
Total equity securities | 622 | |
Total debt and equity securities | 14,738 | 14,087 |
Unobservable Inputs, Level 3 [Member] | Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt securities | $ 14,116 | $ 14,087 |
Fair Value (Fair Value, Asset41
Fair Value (Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fair Value [Abstract] | ||
Beginning balance | $ 14,087 | $ 14,598 |
Sales | ||
Settlements | $ (59) | |
Purchases | ||
Issuances | ||
Total realized/unrealized gains included in net income | ||
Net gains (losses) included in other comprehensive income | $ 29 | $ (105) |
Transfers into Level 3 | $ 622 | |
Transfers out of Level 3 | ||
Ending balance | $ 14,738 | $ 14,434 |
Investments (Narrative) (Detail
Investments (Narrative) (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016USD ($)security | Mar. 31, 2015USD ($) | Dec. 31, 2015security | |
Investments [Abstract] | |||
Gross gains on investments | $ 100 | $ 900 | |
Gross losses on investments | 23 | 28 | |
Proceeds from sale of investment securities | $ 4,800 | $ 1,600 | |
Number of debt security positions, greater than 12 months | security | 33 | 39 |
Investments (Amortized Cost and
Investments (Amortized Cost and Estimated Fair Value of Investments in Debt and Equity Securities by Category) (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of Investments [Line Items] | ||
Investments, Amortized Cost | $ 597,540 | $ 563,580 |
Investments, Gross Unrealized Gains | 26,882 | 26,122 |
Investments, Gross Unrealized Losses | (10,336) | (10,873) |
Investments, Fair Value | 614,086 | 578,829 |
Equity Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Investments, Amortized Cost | 27,460 | 24,951 |
Investments, Gross Unrealized Gains | 22,998 | 23,391 |
Investments, Gross Unrealized Losses | (1,130) | (838) |
Investments, Fair Value | 49,328 | 47,504 |
Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Investments, Amortized Cost | 570,080 | 538,629 |
Investments, Gross Unrealized Gains | 3,884 | 2,731 |
Investments, Gross Unrealized Losses | (9,206) | (10,035) |
Investments, Fair Value | 564,758 | 531,325 |
Us Treasury Securities and Obligations of U.S. Government [Member] | Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Investments, Amortized Cost | 74,338 | 76,323 |
Investments, Gross Unrealized Gains | 231 | 7 |
Investments, Gross Unrealized Losses | (61) | |
Investments, Fair Value | 74,569 | 76,269 |
Corporate Bonds [Member] | Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Investments, Amortized Cost | 161,211 | 122,894 |
Investments, Gross Unrealized Gains | 956 | 637 |
Investments, Gross Unrealized Losses | (1,472) | (1,822) |
Investments, Fair Value | 160,695 | 121,709 |
Collateralized Corporate Bank Loans [Member] | Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Investments, Amortized Cost | 81,062 | 83,434 |
Investments, Gross Unrealized Gains | 116 | 44 |
Investments, Gross Unrealized Losses | (787) | (1,882) |
Investments, Fair Value | 80,391 | 81,596 |
Municipal Bonds [Member] | Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Investments, Amortized Cost | 196,870 | 196,446 |
Investments, Gross Unrealized Gains | 2,194 | 1,888 |
Investments, Gross Unrealized Losses | (6,384) | (5,966) |
Investments, Fair Value | 192,680 | 192,368 |
Mortgage Backed [Member] | Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Investments, Amortized Cost | 56,599 | 59,532 |
Investments, Gross Unrealized Gains | 387 | 155 |
Investments, Gross Unrealized Losses | (563) | (304) |
Investments, Fair Value | $ 56,423 | $ 59,383 |
Investments (Summary of Realize
Investments (Summary of Realized Gain (Loss) on Investments) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Schedule of Investments [Line Items] | ||
Gain (loss) on investments | $ 74 | $ 861 |
Other-than-temporary impairment | (301) | (277) |
Net realized (losses) gains | $ (227) | $ 584 |
Us Treasury Securities and Obligations of U.S. Government [Member] | ||
Schedule of Investments [Line Items] | ||
Gain (loss) on investments | ||
Corporate Bonds [Member] | ||
Schedule of Investments [Line Items] | ||
Gain (loss) on investments | $ 80 | |
Collateralized Corporate Bank Loans [Member] | ||
Schedule of Investments [Line Items] | ||
Gain (loss) on investments | 18 | $ 18 |
Municipal Bonds [Member] | ||
Schedule of Investments [Line Items] | ||
Gain (loss) on investments | $ (24) | (26) |
Mortgage Backed [Member] | ||
Schedule of Investments [Line Items] | ||
Gain (loss) on investments | 187 | |
Equity Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Gain (loss) on investments | $ 682 |
Investments (Summary of Gross U
Investments (Summary of Gross Unrealized Losses for Investments that have been Continuously in Unrealized Loss Position) (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of Investments [Line Items] | ||
Fair Value 12 months or less | $ 166,678 | $ 291,131 |
Unrealized Losses 12 months or less | (3,477) | (5,269) |
Fair Value Longer than 12 months | 27,845 | 28,890 |
Unrealized Losses Longer than 12 months | (6,859) | (5,604) |
Total Fair Value | 194,523 | 320,021 |
Total Unrealized Losses | (10,336) | (10,873) |
Equity Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Fair Value 12 months or less | 2,796 | 6,584 |
Unrealized Losses 12 months or less | (474) | (838) |
Fair Value Longer than 12 months | 1,689 | |
Unrealized Losses Longer than 12 months | (656) | |
Total Fair Value | 4,485 | 6,584 |
Total Unrealized Losses | (1,130) | (838) |
Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Fair Value 12 months or less | 163,882 | 284,547 |
Unrealized Losses 12 months or less | (3,003) | (4,431) |
Fair Value Longer than 12 months | 26,156 | 28,890 |
Unrealized Losses Longer than 12 months | (6,203) | (5,604) |
Total Fair Value | 190,038 | 313,437 |
Total Unrealized Losses | (9,206) | (10,035) |
Us Treasury Securities and Obligations of U.S. Government [Member] | Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Fair Value 12 months or less | 41,428 | |
Unrealized Losses 12 months or less | (61) | |
Total Fair Value | 41,428 | |
Total Unrealized Losses | (61) | |
Corporate Bonds [Member] | Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Fair Value 12 months or less | 72,123 | 96,475 |
Unrealized Losses 12 months or less | (1,472) | (1,822) |
Total Fair Value | 72,123 | 96,475 |
Total Unrealized Losses | (1,472) | (1,822) |
Collateralized Corporate Bank Loans [Member] | Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Fair Value 12 months or less | 45,414 | 65,868 |
Unrealized Losses 12 months or less | (691) | (1,758) |
Fair Value Longer than 12 months | 5,314 | 3,532 |
Unrealized Losses Longer than 12 months | (96) | (124) |
Total Fair Value | 50,728 | 69,400 |
Total Unrealized Losses | (787) | (1,882) |
Municipal Bonds [Member] | Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Fair Value 12 months or less | 16,565 | 44,525 |
Unrealized Losses 12 months or less | (279) | (488) |
Fair Value Longer than 12 months | 20,798 | 25,310 |
Unrealized Losses Longer than 12 months | (6,105) | (5,478) |
Total Fair Value | 37,363 | 69,835 |
Total Unrealized Losses | (6,384) | (5,966) |
Mortgage Backed [Member] | Debt Securities [Member] | ||
Schedule of Investments [Line Items] | ||
Fair Value 12 months or less | 29,780 | 36,251 |
Unrealized Losses 12 months or less | (561) | (302) |
Fair Value Longer than 12 months | 44 | 48 |
Unrealized Losses Longer than 12 months | (2) | (2) |
Total Fair Value | 29,824 | 36,299 |
Total Unrealized Losses | $ (563) | $ (304) |
Investments (Schedule of Amorti
Investments (Schedule of Amortized Cost and Estimated Fair Value of Debt Securities by Contractual Maturities) (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of Investments [Line Items] | ||
Due in one year or less, Amortized Cost | $ 76,399 | |
Due after one year through five years, Amortized Cost | 275,361 | |
Due after five years through ten years, Amortized Cost | 100,146 | |
Due after ten years, Amortized Cost | 61,575 | |
Debt securities, available-for-sale, cost (in dollars) | 570,080 | $ 538,629 |
Due in one year or less, Fair Value | 76,378 | |
Due after one year through five years, Fair Value | 274,245 | |
Due after five years through ten years, Fair Value | 96,120 | |
Due after ten years, Fair Value | 61,592 | |
Debt Securities, Fair Value | 564,758 | 531,325 |
Mortgage Backed [Member] | ||
Schedule of Investments [Line Items] | ||
Debt securities, available-for-sale, cost (in dollars) | 56,599 | |
Debt Securities, Fair Value | $ 56,423 | $ 59,383 |
Pledged Investments (Narrative)
Pledged Investments (Narrative) (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Pledged Investments [Abstract] | ||
Securities available-for-sale pledged, carrying value | $ 17.6 | $ 17.6 |
Reserves for Unpaid Losses an48
Reserves for Unpaid Losses and Loss Adjustment Expenses (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Favorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | $ 1.7 | $ 1.1 |
Loss and Loss Adjustment Expenses Incurred in 2015 Accident Year [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Favorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 3.6 | |
Loss and Loss Adjustment Expenses Incurred in 2014 Accident Year [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Favorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 0.2 | 2.4 |
Loss And Loss Adjustment Expenses Incurred In 2013 Accident Year [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Unfavorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 1.7 | 0.1 |
Loss and Loss Adjustment Expenses Incurred In 2012 Accident Year [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Unfavorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 1.1 | 0.2 |
Loss and Loss Adjustment Expenses Incurred In 2011 Accident Year [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Favorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 0.7 | 0.4 |
Loss And Loss Adjustment Expenses Incurred In 2010 And Prior Accident Year [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Unfavorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 1.4 | |
Standard Commercial P & C Business Unit [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Favorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 0.2 | 1.4 |
Occupational Accident [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Unfavorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 0.6 | |
Commercial Property and General Liability [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Favorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 0.8 | |
Workers Compensation Business Unit [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Favorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 0.2 | |
Specailty Commercial Segment [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Favorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 0.1 | 0.5 |
MGA Commerical Products [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Favorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 2.2 | |
Unfavorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 0.3 | |
MGA Commerical Products [Member] | Loss and Loss Adjustment Expenses Incurred in 2013, 2012 and 2010 and Prior Accident Years [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Unfavorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 0.3 | |
Commerical Excess Liability [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Favorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 0.3 | |
General Aviation [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Favorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 0.2 | |
Personal Lines Business Unit [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Unfavorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | 1 | 0.5 |
Personal Lines Business Unit [Member] | Loss and Loss Adjustment Expenses Incurred in 2014 Accident Year [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Unfavorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | $ 0.5 | |
Specialty Personal Lines [Member] | Loss and Loss Adjustment Expenses Incurred in 2015 and Prior Accident Years [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Unfavorable Adjustment to Prior Years Liability for Unpaid Claims and Claims Adjustment Expense | $ 1 |
Share-Based Payment Arrangeme49
Share-Based Payment Arrangements (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 01, 2016 | Mar. 31, 2016 | May. 29, 2015 | Apr. 02, 2015 | Mar. 31, 2015 | Apr. 10, 2013 | Jul. 27, 2012 | Mar. 31, 2016 | Mar. 31, 2015 | Jun. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Other than options, granted | 8,616 | |||||||||||||
Stock options, granted | ||||||||||||||
Long Term Incentive Plan 2005 [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Number of incentive stock options to purchase shares of common stock outstanding | 539,240 | |||||||||||||
Number of non-qualified stock options to purchase shares of common stock outstanding | 304,157 | |||||||||||||
Number of restricted stock units to receive shares of common stock | 177,755 | |||||||||||||
Long Term Incentive Plan 2005 [Member] | Share-based Compensation Award, Tranche One [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Percentage of options vested or expected to vest | 10.00% | 10.00% | ||||||||||||
Long Term Incentive Plan 2005 [Member] | Share-based Compensation Award, Tranche Two [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Percentage of options vested or expected to vest | 20.00% | 20.00% | ||||||||||||
Long Term Incentive Plan 2005 [Member] | Share-based Compensation Award, Tranche Three [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Percentage of options vested or expected to vest | 30.00% | 30.00% | ||||||||||||
Long Term Incentive Plan 2005 [Member] | Share-based Compensation Award, Tranche Four [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Percentage of options vested or expected to vest | 40.00% | 40.00% | ||||||||||||
Long Term Incentive Plan 2005 [Member] | Minimum [Member] | Option Issued Prior to 2009 [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Incentive stock options termination period | 5 years | |||||||||||||
Long Term Incentive Plan 2005 [Member] | Maximum [Member] | Option Issued Prior to 2009 [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Incentive stock options termination period | 10 years | |||||||||||||
Long Term Incentive Plan 2015 [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Stock compensation plan, number of shares authorized | 2,000,000 | |||||||||||||
Number of restricted stock units to receive shares of common stock | 149,196 | |||||||||||||
Stock options, granted | 0 | |||||||||||||
Incentive Stock Options 2009 [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Incentive stock options termination period | 7 years | |||||||||||||
Share-based payment, award vesting period | 10 years | |||||||||||||
Incentive Stock Options 2010 [Member] | 25,000 [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Incentive stock options termination period | 10 years | |||||||||||||
Share-based payment, award vesting period | 3 years | |||||||||||||
Number of options vested or expected to vest | 25,000 | 25,000 | ||||||||||||
Non Qualified Stock Options [Member] | Long Term Incentive Plan 2005 [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Percentage of options vested or expected to vest | 100.00% | 100.00% | ||||||||||||
Incentive stock options termination period | 10 years | |||||||||||||
Incentive Non Qualified Stock Options 2009 [Member] | 200,000 Grant [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Incentive stock options termination period | 10 years | |||||||||||||
Share-based payment, award vesting period | 7 years | |||||||||||||
Number of options vested or expected to vest | 200,000 | 200,000 | ||||||||||||
Restricted Stock Units (RSUs) [Member] | Minimum [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Percentage of restricted stock units granted as result of meeting growth rates | 50.00% | 50.00% | ||||||||||||
Restricted Stock Units (RSUs) [Member] | Maximum [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Percentage of restricted stock units granted as result of meeting growth rates | 150.00% | 150.00% | ||||||||||||
Restricted Stock Units (RSUs) [Member] | Long Term Incentive Plan 2005 [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Restricted stock or unit expense | $ 101 | $ 332 | ||||||||||||
Other than options, granted | 122,823 | 129,463 | 175,983 | |||||||||||
Other than options, forfeited | 71,460 | 9,280 | ||||||||||||
Vested | 7,144 | 8,616 | 7,144 | |||||||||||
Other than options, grant date fair value | $ 11.10 | $ 9.66 | $ 9.20 | |||||||||||
Income tax benefit of share-based payments recognized in income | $ 35 | $ 116 | ||||||||||||
Restricted Stock Units (RSUs) [Member] | Long Term Incentive Plan 2015 [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Other than options, granted | 103,351 | |||||||||||||
Restricted Stock Units (RSUs) [Member] | Long Term Incentive Plan 2005 and 2015 [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Total unrecognized compensation cost related to non-vested share-based compensation arrangements | $ 700 | 700 | ||||||||||||
Compensation costs expected to be recognized during remainder of the fiscal period | 300 | 300 | ||||||||||||
Compensation costs expected to be recognized during next fiscal year | 300 | 300 | ||||||||||||
Compensation costs expected to be recognized in second future fiscal year | $ 100 | $ 100 | ||||||||||||
Subsequent Event [Member] | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Other than options, granted | 7,144 |
Share-Based Payment Arrangeme50
Share-Based Payment Arrangements (Summary of the Status of Stock Options) (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($)$ / sharesshares | |
Share-Based Payment Arrangements [Abstract] | |
Stock Options, Outstanding at January 1, 2016 | 869,113 |
Stock options, granted | |
Stock Options, Forfeited or Expired | (25,716) |
Stock Options, Outstanding at March 31, 2016 | 843,397 |
Stock Options, Exercisable at March 31, 2015 | 792,326 |
Weighted Average Exercise Price, Outstanding at January 1, 2016 | $ / shares | $ 9.51 |
Weighted Average Exercise Price, Forfeited or Expired | $ / shares | 11.93 |
Weighted Average Exercise Price, Outstanding at March 31, 2016 | $ / shares | 9.43 |
Weighted Average Exercise Price, Exercisable at March 31, 2016 | $ / shares | $ 9.61 |
Average Remaining Contractual Term, Outstanding at March 31, 2016 | 2 years 3 months 18 days |
Average Remaining Contractual Term, Exercisable at March 31, 2016 | 2 years 2 months 12 days |
Aggregate Intrinsic Value, Outstanding at March 31, 2016 | $ | $ 2,002 |
Aggregate Intrinsic Value, Exercisable at March 31, 2016 | $ | $ 1,752 |
Share-Based Payment Arrangeme51
Share-Based Payment Arrangements (Schedule of Options, Grants in Period and Grant Date Intrinsic Value) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cost of share-based payments (non-cash) | $ 139 | $ 371 |
Employee Stock Option [Member] | ||
Intrinsic value of options exercised | 114 | |
Cost of share-based payments (non-cash) | 38 | 39 |
Income tax benefit of share-based payments recognized in income | $ 8 | $ 8 |
Share-Based Payment Arrangeme52
Share-Based Payment Arrangements (Summary of the Status of Restricted Stock Units) (Details) - shares | Mar. 31, 2016 | Apr. 02, 2015 | Mar. 31, 2015 | Apr. 10, 2013 | Jul. 27, 2012 | Mar. 31, 2016 | Jun. 30, 2013 | Sep. 30, 2014 |
Granted | 8,616 | |||||||
Long Term Incentive Plan 2005 [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||
Nonvested at January 1, 2016 | 296,571 | |||||||
Granted | 122,823 | 129,463 | 175,983 | |||||
Vested | (7,144) | (8,616) | (7,144) | |||||
Forfeited | (71,460) | (9,280) | ||||||
Nonvested at March 31, 2016 | 217,967 | 217,967 |
Segment Information (Schedule o
Segment Information (Schedule of Business Segment Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues [Abstract] | ||
Revenues | $ 90,028 | $ 91,450 |
Pre-tax income (loss) [Abstract] | ||
Pre-tax income (loss) | 5,989 | 7,689 |
Specialty Commercial Segment [Member] | ||
Revenues [Abstract] | ||
Revenues | 60,583 | 62,257 |
Pre-tax income (loss) [Abstract] | ||
Pre-tax income (loss) | 10,312 | 9,721 |
Standard Commercial Segment [Member] | ||
Revenues [Abstract] | ||
Revenues | 17,992 | 20,381 |
Pre-tax income (loss) [Abstract] | ||
Pre-tax income (loss) | 1,416 | 1,886 |
Personal Segment [Member] | ||
Revenues [Abstract] | ||
Revenues | 12,090 | 8,653 |
Pre-tax income (loss) [Abstract] | ||
Pre-tax income (loss) | (1,083) | (296) |
Corporate [Member] | ||
Revenues [Abstract] | ||
Revenues | (637) | 159 |
Pre-tax income (loss) [Abstract] | ||
Pre-tax income (loss) | $ (4,656) | $ (3,622) |
Segment Information (Schedule54
Segment Information (Schedule of Additional Business Segment Information) (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Segment Reporting Information [Line Items] | ||
Assets | $ 1,090,049 | $ 1,076,600 |
Specialty Commercial Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | 673,102 | 660,263 |
Standard Commercial Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | 160,005 | 156,722 |
Personal Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | 236,025 | 239,632 |
Corporate [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 20,917 | $ 19,983 |
Reinsurance (Schedule of Reinsu
Reinsurance (Schedule of Reinsurance Ceded and Recoveries) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Reinsurance [Abstract] | ||
Ceded earned premiums | $ 38,980 | $ 32,939 |
Reinsurance recoveries | $ 23,949 | $ 19,358 |
Revolving Credit Facility (Narr
Revolving Credit Facility (Narrative) (Details) - USD ($) | Dec. 17, 2015 | Mar. 31, 2016 |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 15,000,000 | |
Credit facility, amount outstanding | $ 0 | |
Debt instrument, description of variable rate basis | prime rate or LIBOR plus 2.5% | |
Line of credit facility, unused capacity, commitment fee percentage | 0.25% | |
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||
Line of Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 2.50% | |
Revolving Credit Facility B [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 30,000,000 | |
Credit facility, amount outstanding | $ 30,000,000 | |
Debt instrument, description of variable rate basis | prime rate or LIBOR plus 3.00% | |
Debt instrument, basis spread on variable rate | 3.00% | |
Line of credit facility, unused capacity, commitment fee percentage | 0.25% | |
Line of credit facility, commitment fee amount | $ 75,000 | |
Letter of Credit [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 5,000,000 | |
Line of credit facility, commitment fee percentage | 1.00% |
Subordinated Debt Securities (N
Subordinated Debt Securities (Narrative) (Details) - USD ($) $ in Millions | Jun. 16, 2015 | Aug. 23, 2007 | Jun. 21, 2005 | Mar. 31, 2016 |
Subordinated Debt Due In 2035 [Member] | Trust I [Member] | ||||
Subordinated Borrowing [Line Items] | ||||
Long-term debt, gross | $ 30.9 | $ 30.9 | ||
Proceeds from issuance of trust preferred securities | 30 | |||
Proceeds from issuance of common stock | $ 0.9 | |||
Subordinated borrowing, interest rate | 7.725% | |||
Debt instrument, interest rate fixed to floating date | Jun. 15, 2015 | |||
Debt instrument, maturity date | Jun. 15, 2035 | |||
Debt instrument, description of variable rate basis | interest adjusts quarterly to the three-month LIBOR rate plus 3.25 percentage points | |||
Debt instrument, basis spread on variable rate | 3.25% | |||
Debt instrument, interest rate, effective percentage | 3.88% | |||
Subordinated Debt Due In 2037 [Member] | Trust II [Member] | ||||
Subordinated Borrowing [Line Items] | ||||
Long-term debt, gross | $ 25.8 | $ 25.8 | ||
Proceeds from issuance of trust preferred securities | 25 | |||
Proceeds from issuance of common stock | $ 0.8 | |||
Subordinated borrowing, interest rate | 8.28% | |||
Debt instrument, interest rate fixed to floating date | Sep. 15, 2017 | |||
Debt instrument, maturity date | Sep. 15, 2037 | |||
Debt instrument, description of variable rate basis | three-month LIBOR rate plus 2.90 percentage | |||
Debt instrument, basis spread on variable rate | 2.90% |
Deferred Policy Acquisition C58
Deferred Policy Acquisition Costs (Deferred Amortized Policy Acquisition Costs) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Document and Entity Information [Abstract] | ||
Deferred | $ (13,738) | $ (3,718) |
Amortized | 13,367 | 3,334 |
Net | $ (371) | $ (384) |
Earnings per Share (Narrative)
Earnings per Share (Narrative) (Details) - shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share, amount | 421,666 | 504,999 |
Earnings per Share (Schedule of
Earnings per Share (Schedule of Weighted Average Number of Shares Outstanding) (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings per Share [Abstract] | ||
Weighted average shares - basic | 19,013 | 19,227 |
Effect of dilutive securities | 175 | 202 |
Weighted average shares - assuming dilution | 19,188 | 19,429 |
Net Periodic Pension Cost (Sche
Net Periodic Pension Cost (Schedule of Net Benefit Costs) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net Periodic Pension Cost [Abstract] | ||
Interest cost | $ 128 | $ 129 |
Amortization of net loss | 28 | 26 |
Expected return on plan assets | (161) | (175) |
Net periodic pension cost | $ (5) | $ (20) |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Taxes [Abstract] | ||
Effective income tax rate, continuing operations | 32.00% | 30.50% |
Commitments and Contingencies (
Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2015 | Mar. 31, 2016 | |
Contingent liability premium taxes | $ 2.5 | |
Contingent liability penalties and interest | 0.7 | |
TBIC Holding Corporation [Member] | ||
Payment of contingent consideration | $ 1.2 | |
Potential remaining contingent purchase price, maximum | $ 1.8 |
Changes in Accumulated Other 64
Changes in Accumulated Other Comprehensive Income Balances (Schedule of Changes in Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | $ 7,418 | |
Other comprehensive income (loss): | ||
Change in net actuarial gain | 28 | $ 26 |
Tax effect on change in net actuarial gain | (10) | (9) |
Net unrealized holding gains (losses) arising during the period | 1,371 | 7,069 |
Tax effect on unrealized gains arising during the period | (480) | (2,474) |
Reclassification adjustment for gains included in net realized gains (losses) | (74) | (861) |
Tax effect on reclassification adjustment for gains (losses) included in net income | 26 | 301 |
Other comprehensive income (loss), net of tax | 861 | 4,052 |
Ending Balance | 8,279 | |
Minimum Pension Liability [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | (2,572) | (2,600) |
Other comprehensive income (loss): | ||
Change in net actuarial gain | 28 | 26 |
Tax effect on change in net actuarial gain | (10) | (9) |
Other comprehensive income (loss), net of tax | 18 | 17 |
Ending Balance | (2,554) | (2,583) |
Unrealized Gain (Loss) [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | 9,990 | 20,401 |
Other comprehensive income (loss): | ||
Net unrealized holding gains (losses) arising during the period | 1,371 | 7,069 |
Tax effect on unrealized gains arising during the period | (480) | (2,474) |
Reclassification adjustment for gains included in net realized gains (losses) | (74) | (861) |
Tax effect on reclassification adjustment for gains (losses) included in net income | 26 | 301 |
Other comprehensive income (loss), net of tax | 843 | 4,035 |
Ending Balance | 10,833 | 24,436 |
Accumulated Other Comprehensive Income [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | 7,418 | 17,801 |
Other comprehensive income (loss): | ||
Change in net actuarial gain | 28 | 26 |
Tax effect on change in net actuarial gain | (10) | (9) |
Net unrealized holding gains (losses) arising during the period | 1,371 | 7,069 |
Tax effect on unrealized gains arising during the period | (480) | (2,474) |
Reclassification adjustment for gains included in net realized gains (losses) | (74) | (861) |
Tax effect on reclassification adjustment for gains (losses) included in net income | 26 | 301 |
Other comprehensive income (loss), net of tax | 861 | 4,052 |
Ending Balance | $ 8,279 | $ 21,853 |