Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 09, 2017 | Jun. 30, 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 | 18,616,982 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 | ||
Entity Well-Known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 157.3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Debt securities, available-for-sale, at fair value (cost; $597,784 in 2016 and $538,629 in 2015) | $ 597,457 | $ 531,325 |
Equity securities, available-for-sale, at fair value (cost; $31,449 in 2016 and $24,524 in 2015) | 51,711 | 47,050 |
Other investments (cost; $3,763 in 2016 and $427 in 2015) | 4,951 | 454 |
Total investments | 654,119 | 578,829 |
Cash and cash equivalents | 79,632 | 114,446 |
Restricted cash | 7,327 | 8,522 |
Ceded unearned premiums | 81,482 | 65,094 |
Premiums receivable | 89,715 | 83,376 |
Accounts receivable | 2,269 | 2,005 |
Receivable for securities | 3,047 | 10,424 |
Reinsurance recoverable | 147,821 | 114,287 |
Deferred policy acquisition costs | 19,193 | 20,366 |
Goodwill | 44,695 | 44,695 |
Intangible assets, net | 12,491 | 14,959 |
Deferred federal income taxes, net | 1,365 | 3,360 |
Federal income tax recoverable | 3,951 | 1,779 |
Prepaid expenses | 1,552 | 3,213 |
Other assets | 13,801 | 10,192 |
Total assets | 1,162,460 | 1,075,547 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Revolving credit facility payable | 30,000 | 30,000 |
Subordinated debt securities (less unamortized debt issuance cost of $1,001 in 2016 and $1,053 in 2015) | 55,701 | 55,649 |
Reserves for unpaid losses and loss adjustment expenses | 481,567 | 450,878 |
Unearned premiums | 241,254 | 216,407 |
Reinsurance balances payable | 46,488 | 33,741 |
Pension liability | 2,203 | 2,496 |
Payable for securities | 14,215 | 1,097 |
Accounts payable and other accrued expenses | 25,296 | 23,253 |
Total liabilities | 896,724 | 813,521 |
Stockholders' equity: | ||
Common stock, $.18 par value, authorized 33,333,333 shares; issued 20,872,831 shares in 2016 and 2015 | 3,757 | 3,757 |
Additional paid-in capital | 123,166 | 123,480 |
Retained earnings | 148,027 | 141,501 |
Accumulated other comprehensive income | 10,371 | 7,418 |
Treasury stock (2,260,849 shares in 2016 and 1,775,512 in 2015), at cost | (19,585) | (14,130) |
Total stockholders equity | 265,736 | 262,026 |
Liabilities and equity, total | $ 1,162,460 | $ 1,075,547 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Debt securities, available-for-sale, cost (in dollars) | $ 597,784 | $ 538,629 |
Equity securities, available for sale, cost (in dollars) | 31,449 | 24,524 |
Other investments, available-for-sale, cost (in dollars) | 632,996 | 563,580 |
Unamortized debt issuance cost (in dollars) | $ 1,001 | $ 1,053 |
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 | 2,260,849 | 1,775,512 |
Other Investments [Member] | ||
Other investments, available-for-sale, cost (in dollars) | $ 3,763 | $ 427 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Operations [Abstract] | |||
Gross premiums written | $ 549,077 | $ 514,223 | $ 473,218 |
Ceded premiums written | (187,248) | (157,279) | (148,866) |
Net premiums written | 361,829 | 356,944 | 324,352 |
Change in unearned premiums | (8,459) | (7,863) | (3,135) |
Net premiums earned | 353,370 | 349,081 | 321,217 |
Investment income (loss), net of expenses | 16,342 | 13,969 | 12,383 |
Net realized gains | (369) | 2,503 | 134 |
Finance charges | 4,977 | 5,952 | 5,279 |
Commissions and fees | 1,427 | 213 | (1,694) |
Other income | 205 | 684 | 47 |
Total revenues | 375,952 | 372,402 | 337,366 |
Losses and loss adjustment expenses | 253,688 | 230,149 | 210,055 |
Operating expenses | 106,769 | 103,993 | 101,427 |
Interest expense | 4,549 | 3,906 | 4,576 |
Amortization of intangible assets | 2,468 | 2,468 | 2,526 |
Total expenses | 367,474 | 340,516 | 318,584 |
Income (loss) before equity in undistributed earnings (loss) of subsidiaries and income tax benefit | 8,478 | 31,886 | 18,782 |
Income tax expense (benefit) | 1,952 | 10,023 | 5,353 |
Net income (loss) | 6,526 | 21,863 | 13,429 |
Net income (loss) attributable to Hallmark Financial Services, Inc. | $ 6,526 | $ 21,863 | $ 13,429 |
Net income (loss) per share attributable to Hallmark Financial Services, Inc. common stockholders: | |||
Basic (in dollars per share) | $ 0.35 | $ 1.14 | $ 0.70 |
Diluted (in dollars per share) | $ 0.34 | $ 1.13 | $ 0.69 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Comprehensive Income (Loss) [Abstract] | |||
Net income (loss) | $ 6,526 | $ 21,863 | $ 13,429 |
Other comprehensive income (loss): | |||
Change in net actuarial gain (loss) | (145) | 43 | (1,723) |
Tax effect on change in net actuarial gain (loss) | 51 | (15) | 603 |
Unrealized holding (losses) gains arising during the period | 6,019 | (10,191) | 3,543 |
Tax effect on unrealized holding (losses) gains arising during the period | (2,107) | 3,567 | (1,240) |
Reclassification adjustment for gains included in net realized gains | (1,331) | (5,826) | (408) |
Tax effect on reclassification adjustment for gains included in income tax expense | 466 | 2,039 | 143 |
Other comprehensive income (loss), net of tax | 2,953 | (10,383) | 918 |
Comprehensive income (loss) | $ 9,479 | $ 11,480 | $ 14,347 |
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 |
Beginning balance at Dec. 31, 2013 | $ 3,757 | $ 122,827 | $ 106,209 | $ 16,883 | $ (11,558) | $ 238,118 |
Beginning balance (in shares) at Dec. 31, 2013 | 20,873,000 | 1,609,000 | ||||
Acquisition of treasury shares | $ (1,805) | (1,805) | ||||
Acquisition of treasury shares (in shares) | 181,000 | |||||
Equity incentive plan activity | 222 | 222 | ||||
Stock options exercised | 145 | $ 1,010 | 1,155 | |||
Stock options, exercised (in shares) | (135,000) | |||||
Net income (loss) | 13,429 | 13,429 | ||||
Other comprehensive income, net of tax | 918 | 918 | ||||
Ending balance at Dec. 31, 2014 | $ 3,757 | 123,194 | 119,638 | 17,801 | $ (12,353) | 252,037 |
Ending balance (in shares) at Dec. 31, 2014 | 20,873,000 | 1,655,000 | ||||
Acquisition of treasury shares | $ (2,532) | (2,532) | ||||
Acquisition of treasury shares (in shares) | 221,000 | |||||
Equity incentive plan activity | 383 | 383 | ||||
Stock options exercised | (97) | $ 755 | 658 | |||
Stock options, exercised (in shares) | (100,000) | |||||
Net income (loss) | 21,863 | 21,863 | ||||
Other comprehensive income, net of tax | (10,383) | (10,383) | ||||
Ending balance at Dec. 31, 2015 | $ 3,757 | 123,480 | 141,501 | 7,418 | $ (14,130) | 262,026 |
Ending balance (in shares) at Dec. 31, 2015 | 20,873,000 | 1,776,000 | ||||
Acquisition of treasury shares | $ (6,117) | (6,117) | ||||
Acquisition of treasury shares (in shares) | 562,000 | |||||
Equity incentive plan activity | (118) | (118) | ||||
Stock options exercised | (196) | $ 662 | $ 466 | |||
Stock options, exercised (in shares) | (77,000) | (70,000) | ||||
Net income (loss) | 6,526 | $ 6,526 | ||||
Other comprehensive income, net of tax | 2,953 | 2,953 | ||||
Ending balance at Dec. 31, 2016 | $ 3,757 | $ 123,166 | $ 148,027 | $ 10,371 | $ (19,585) | $ 265,736 |
Ending balance (in shares) at Dec. 31, 2016 | 20,873,000 | 2,261,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 6,526 | $ 21,863 | $ 13,429 |
Adjustments to reconcile net income (loss) to cash provided by operating activities: | |||
Depreciation and amortization expense | 3,894 | 3,516 | 3,224 |
Deferred federal income taxes | 405 | (1,030) | (393) |
Net realized gains | 369 | (2,503) | (134) |
Share-based payments expense | (118) | 383 | 222 |
Change in ceded unearned premiums | (16,388) | (11,718) | (8,388) |
Change in premiums receivable | (6,339) | (12,373) | 154 |
Change in accounts receivable | (264) | 1,136 | (759) |
Change in deferred policy acquisition costs | 1,173 | 380 | 1,840 |
Change in unpaid losses and loss adjustment expenses | 30,689 | 35,743 | 32,495 |
Change in unearned premiums | 24,847 | 19,581 | 11,523 |
Change in reinsurance recoverable | (33,534) | (4,568) | (32,901) |
Change in reinsurance balances payable | 12,747 | 7,338 | 5,805 |
Change in current federal income tax (recoverable)/payable | (2,172) | (2,747) | 249 |
Change in all other liabilities | 3,586 | (1,368) | 7,998 |
Change in all other assets | 5,433 | (697) | (680) |
Net cash provided by operating activities | 30,854 | 52,936 | 33,684 |
Cash flows from investing activities: | |||
Purchases of property and equipment, net | (4,340) | (3,608) | (546) |
Net transfers from restricted cash | 1,195 | 3,392 | 276 |
Purchases of investment securities | (241,374) | (265,482) | (188,749) |
Maturities, sales and redemptions of investment securities | 186,286 | 169,409 | 146,777 |
Net cash used in investing activities | (58,233) | (96,289) | (42,242) |
Cash flows from financing activities: | |||
Activity under revolving credit facility, net | 30,000 | (1,473) | |
Payment of debt issuance costs | (96) | ||
Payment of contingent consideration | (1,784) | (1,216) | |
Proceeds from exercise of employee stock options | 466 | 658 | 1,155 |
Purchase of treasury shares | (6,117) | (2,532) | (1,805) |
Net cash provided by (used in) financing activities | (7,435) | 26,814 | (2,123) |
Decrease in cash and cash equivalents | (34,814) | (16,539) | (10,681) |
Cash and cash equivalents at beginning of year | 114,446 | 130,985 | 141,666 |
Cash and cash equivalents at end of year | 79,632 | 114,446 | 130,985 |
Supplemental cash flow information: | |||
Interest paid | 4,287 | 3,906 | 4,576 |
Income taxes paid | 3,718 | 13,800 | 5,497 |
Supplemental schedule of non-cash activities: | |||
Change in receivable for securities related to investment disposals that settled after the balance sheet date | 7,377 | (9,492) | 388 |
Change in payable for securities related to investment purchases that settled after the balance sheet date | $ 13,118 | $ (224) | $ 1,115 |
Accounting Policies
Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Accounting Policies | 1. Accounting Policies : General Hallmark Financial Services, Inc. (“Hallmark” and, together with subsidiaries, the “Company”, “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 market, distribute, underwrite and service our property/casualty insurance products 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 handles primarily commercial insurance products and services and is comprised of Hallmark Specialty Underwriters, Inc. (“HSU”), Pan American Acceptance Corporation (“PAAC”) and TGA Special Risk, Inc. (“TGASRI”). Our Specialty Commercial operating unit offers (i) general aviation insurance products and services, (ii) low and middle market commercial umbrella and excess liability insurance, (iii) medical professional liability insurance products and services, (iv) satellite launch insurance products, and (v) primary/excess commercial property coverages for both catastrophe and non-catastrophe exposures. Our Specialty Commercial operating unit is comprised of Aerospace Insurance Managers, Inc. (“Aerospace Insurance Managers”), Aerospace Special Risk, Inc. (“ASRI”), Aerospace Claims Management Group, Inc. (“ACMG”), Heath XS, LLC (“HXS”) and Hardscrabble Data Solutions, LLC (“HDS”). Our Standard Commercial P&C operating unit handles commercial insurance products and services and is comprised of American Hallmark Insurance Services, Inc. (“American Hallmark Insurance Services”) and Effective Claims Management, Inc. (“ECM”). Our Workers Compensation operating unit specializes in small and middle market workers compensation business and is comprised of TBIC Holding Corporation, Inc. (“TBIC Holding”), Texas Builders Insurance Company (“TBIC”) and TBIC Risk Management (“TBICRM”). 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 handles personal insurance products and services and is comprised of American Hallmark General Agency, Inc. (“AHGA”) and Hallmark Claims Services, Inc. (“HCS”). Our insurance company subsidiaries supporting these operating units are American Hallmark Insurance Company of Texas (“AHIC”), Hallmark Insurance Company (“HIC”), Hallmark Specialty Insurance Company (“HSIC”), Hallmark County Mutual Insurance Company (“HCM”), Hallmark National Insurance Company (“HNIC”) and TBIC. 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 Specialty Personal Lines operating unit. Basis of Presentation The accompanying consolidated financial statements include the accounts and operations of Hallmark and its subsidiaries. Intercompany accounts and transactions have been eliminated. The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) which, as to our insurance company subsidiaries, differ from statutory accounting practices prescribed or permitted for insurance companies by insurance regulatory authorities. Reclassifications Certain prior year amounts have been reclassfied to conform with current year presentation . Use of Estimates in the Preparation of Financial Statements Our preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect our reported amounts of assets and liabilities at the dates of the financial statements and our reported amounts of revenues and expenses during the reporting periods. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. Since future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment may be reflected in the financial statements in future periods. 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: Our revolving credit facility with Frost Bank had a carried value of $30.0 million and a fair value of $30.2 million as of December 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 3.3% to 4.5% 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 are reported at carry value of $55.7 million and $55.6 million, and had a fair value of $44.2 million and $44.2 million, as of December 31, 2016 and 2015, respectively. The fair value of our trust preferred securities is based on discounted cash flows using current yields to maturity of 8.0% and 8.0% as of December 31, 2016 and 2015, respectively, which are based on similar issues to discount future cash flows and 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. Investments Debt and equity securities available for sale are reported at fair value. Unrealized gains and losses are recorded as a component of stockholders’ equity, net of related tax effects. Equity securities that are determined to have other-than-temporary impairment are recognized as a loss on investments in the consolidated statements of operations. Debt securities that are determined to have other-than-temporary impairment are recognized as a loss on investments in the consolidated statements of operations for the portion that is related to credit deterioration with the remaining portion recognized in other comprehensive income. Debt security premiums and discounts are amortized into earnings using the effective interest method. Maturities of debt securities and sales of equity securities are recorded in receivable for securities until the cash is settled. Purchases of debt and equity securities are recorded in payable for securities until the cash is settled. Other investments consists of an equity warrant which is reported at fair value. Unrealized gains and losses are reported in the statement of operations as a component of net realized gains (losses). Realized investment gains and losses are recognized in operations on the specific identification method. Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted Cash We collect premiums from customers and, after deducting authorized commissions, remit these premiums to the Company’s consolidated insurance subsidiaries. Unremitted insurance premiums are held in a fiduciary capacity until disbursed to the Company’s consolidated insurance subsidiaries. Premiums Receivable Premiums receivable represent amounts due from policyholders or independent agents for premiums written and uncollected. These balances are carried at net realizable value. Reinsurance We are routinely involved in reinsurance transactions with other companies. Reinsurance premiums, losses and loss adjustment expenses (“LAE”) are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. (See Note 7.) Deferred Policy Acquisition Costs Policy acquisition costs (mainly commission, underwriting and marketing expenses) that are directly related to the successful acquisition of new and renewal insurance contracts are deferred and charged to operations over periods in which the related premiums are earned. The method followed in computing deferred policy acquisition costs limits the amount of such deferred costs to their estimated realizable value. In determining estimated realizable value, the computation gives effect to the premium to be earned, expected investment income, losses and LAE and certain other costs expected to be incurred as the premiums are earned. If the computation results in an estimated net realizable value less than zero, a liability will be accrued for the premium deficiency. During 2016, 2015 and 2014, we deferred $37.9 million, $32.3 million and $39.1 million of policy acquisition costs and amorti zed $39.1 million, $32.7 million and $40.9 million of deferred policy acquisition costs, respectively. Therefore, the net (amortization) deferrals of policy acquisition costs were ($1.2) million, ($0.4) million and ($1.8) million for 2016, 2015 and 201 4, respectively. 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. Goodwill and Intangible Assets, net We account for our goodwill and intangible assets according to ASC 350, “Intangibles – Goodwill and Other.” Under ASC 350 , Intangible assets with a finite life are amortized over the estimated useful life of the asset. Goodwill and intangible assets with an indefinite useful life are not amortized. Goodwill and intangible assets are tested for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. For goodwill, we may perform a qualitative test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test. The first step of the quantitative test is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill (“Step 1”). If the fair value of a reporting unit exceeds its carrying value amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step is not necessary. However, if the carrying amount of the reporting unit exceeds its fair value, the second step (“Step 2”) is performed to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any. Step 2 compares the implied fair value of goodwill with the carrying amount of goodwill. If the implied value of goodwill is less than the carrying amount of goodwill, it is written down to its fair value with a corresponding expense reflected in the Consolidated Statements of Income. The implied goodwill is calculated based on a hypothetical purchase price allocation, similar to the requirements in the accounting guidance for business combinations, whereby the implied fair value of the reporting unit is allocated to the fair value of the assets and liabilities of the reporting unit. We have elected to perform our goodwill impairment test on the first day of the fourth quarter, October 1, of each year. Leases We have several leases, primarily for office facilities and computer equipment, which expire in various years through 2022. Some of these leases include rent escalation provisions throughout the term of the lease. We expense the average annual cost of the lease with the difference to the actual rent invoices recorded as deferred rent which is classified in accounts payable and other accrued expenses on our consolidated balance sheets. Property and Equipment Property and equipment (including leasehold improvements), aggregating $22.2 million and $ 17.9 million, at December 31, 2016 and 2015, respectively, which is included in other assets, is recorded at cost and is depreciated using the straight-line method over the estimated useful lives of the assets ( three to ten years). Depreciation expense for 2016, 2015 and 2014 was $1.4 million, $1.0 million and $0.7 million, respectively. Accumulated depreciation was $15.1 million and $13.7 million at December 31, 2016 and 2015, respectively. 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 we do not have variable interests in the Trusts. Therefore, the Trusts are not consolidated in our consolidated financial statements. We are also involved in the normal course of business with variable interest entities primarily as a passive investor in mortgage-backed securities and certain collateralized corporate bank loans issued by third party variable interest entities. The maximum exposure to loss with respect to these investments is limited to the investment carrying values included in the consolidated balance sheets. Losses and Loss Adjustment Expenses Losses and LAE represent the estimated ultimate net cost of all reported and unreported losses incurred through December 31, 2016 and 2015. The reserves for unpaid losses and LAE are estimated using individual case-basis valuations and statistical analyses. These estimates are subject to the effects of trends in loss severity and frequency. Although considerable variability is inherent in such estimates, we believe that the reserves for unpaid losses and LAE are adequate. The estimates are continually reviewed and adjusted as experience develops or new information becomes known. Such adjustments are included in current operations. Recognition of Premium Revenues Insurance premiums are earned pro rata over the terms of the policies. Insurance policy fees are earned as of the effective date of the policy. Upon cancellation, any unearned premium is refunded to the insured. Insurance premiums written include gross policy fees of $9.8 million, $11.2 million and $11.5 million for the years ended December 31, 2016, 2015, and 2014, respectively. Insurance premiums on monthly reporting workers’ compensation policies are earned on the conclusion of the monthly coverage period. Deposit premiums for workers’ compensation policies are earned upon the expiration of the policy. Finance Charges We receive premium installment fees for each direct bill payment from policyholders. Installment fee income is classified as finance charges on the consolidated statement of operations and is recognized as the fee is invoiced. Relationship with Third Party Insurers Through December 31, 2005, our Standard Commercial P&C operating unit marketed policies on behalf of Clarendon National Insurance Company (“Clarendon”), a third-party insurer. Through December 31, 2008, all business of our MGA Commercial Products operating unit was produced under a fronting agreement with member companies of the Republic Group (“Republic”), a third-party insurer. These insurance contracts on third party paper are accounted for under agency accounting. Ceding commissions and other fees received under these arrangements were classified as unearned commission revenue until earned pro rata over the terms of the policies. Profit sharing commission is calculated and recognized when the loss ratio, as determined by a qualified actuary, deviates from contractual targets. We received a provisional commission as policies were produced as an advance against the later determination of the profit sharing commission actually earned. The profit sharing commission is an estimate that varies with the estimated loss ratio and is sensitive to changes in that estimate. Profit share commission is classified as commissions and fees on the consolidated statement of operations . The following table details the profit sharing commission provisional loss ratio compared to the estimated ultimate loss ratio for each effective quota share treaty between the Standard Commercial P&C operating unit and Clarendon. Treaty Effective Dates 7/1/2001 7/1/2002 7/1/2003 7/1/2004 7/1/2005 Provisional loss ratio 60.0% 59.0% 59.0% 64.2% 64.2% Estimated ultimate loss ratio recorded at December 31, 2016 63.5% 64.5% 61.2% 66.1% 61.0% As of December 31, 2016, we had a payable of $0.6 million on these profit share treaties. The payable or receivable is the difference between the cash received to date and the recognized commission revenue based on the estimated ultimate loss ratio. The following table details the profit sharing commission revenue provisional loss ratio compared to the estimated ultimate loss ratio for the effective quota share treaty between the MGA Commercial Products operating unit and Republic. Treaty Effective Dates 1/1/2006 1/1/2007 1/1/2008 Provisional loss ratio 65.0% 65.0% 65.0% Estimated ultimate loss ratio recorded at December 31, 2016 59.1% 65.0% 60.6% As of December 31, 2016, we had a net payable of $1.1 million on these profit share treaties. The payable or receivable is the difference between the cash received to date and the recognized commission revenue based on the estimated ultimate loss ratio. Agent Commissions We pay monthly commissions to agents based on written premium produced, but generally recognize the expense pro rata over the term of the policy. If the policy is cancelled prior to its expiration, the unearned portion of the agent commission is refundable to us. The unearned portion of commissions paid to agents is included in deferred policy acquisition costs. We annually pay a profit sharing commission to our independent agency force based upon the results of the business produced by each agent. We estimate and accrue this liability to commission expense in the year the business is produced. Commission expense is classified as operating expenses in the consolidated statement s of operations. 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. Earnings Per Share The computation of earnings per share is based upon the weighted average number of common shares outstanding during the period plus the effect of common shares potentially issuable (in periods in which they have a dilutive effect), primarily from stock options. (See Notes 11 and 13.) Adoption of New Accounting Pronouncements 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 April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” which amends the guidance in Accounting Standards Codification Topic 835-30 “Interest-Imputation of Interest.” ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public business entities, the guidance was effective for annual and interim periods beginning after December 15, 2015. We adopted this guidance effective January 1, 2016 and adjusted our prior period balances to reflect the adoption of this guidance. 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 losses and loss 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 have adopted this standard as of the effective date, and the adoption had no impact on our financial statements other than to provide for additional footnote disclosures. Recently Issued Accounting Pronouncements In May 2014, the 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. Revenue from insurance contracts is excluded from the scope of this new guidance and as a result, adoption of this guidance is not expected to have a material impact on our results of operations or financial position. In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (Subtopic 825-10). ASU 2016-01 will require equity investments that are not consolidated or accounted for under the equity method of accounting to be measured at fair value with changes in fair value recognized in net income. This ASU will also require us to assess the ability to realize our deferred tax assets (“DTAs”) related to an available-for-sale debt security in combination with our other DTAs. The ASU will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. While we continue to evaluate the impact of this ASU, we anticipate the standard will increase the volatility of our consolidated statements of income, resulting from the remeasurement of our equity investments. In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842). ASU 2016-02 requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Additionally, the ASU modifies current guidance for lessors' accounting. The ASU is effective for interim and annual reporting periods beginning on or after January 1, 2019, with early adoption permitted. We do not anticipate that this ASU will have a material impact on our results of operations, but we anticipate an increase to the value of our assets and liabilities related to leases, with no material impact to equity. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (Topic 326). ASU 2016-13 requires organizations to estimate credit losses on certain types of financial instruments, including receivables and available-for-sale debt securities, by introducing an approach based on expected losses. The expected loss approach will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The ASU requires a modified retrospective transition method and early adoption is permitted. We are currently evaluating the impact that the adoption of the ASU will have on our financial results and disclosures, but do not anticipate that any such potential impact would be material. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2016 | |
Investments [Abstract] | |
Investments | 2. Investments : The amortized cost and estimated fair value of investments in debt and equity securities by category is as follows (in thousands): As of December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury securities and obligations of U.S. Government $ 41,976 $ 66 $ (20) $ 42,022 Corporate bonds 224,915 1,722 (575) 226,062 Collateralized corporate bank loans 105,220 959 (170) 106,009 Municipal bonds 165,900 956 (2,961) 163,895 Mortgage-backed 59,773 49 (353) 59,469 Total debt securities 597,784 3,752 (4,079) 597,457 Total equity securities 31,449 21,052 (790) 51,711 Total other investments 3,763 1,188 - 4,951 Total investments $ 632,996 $ 25,992 $ (4,869) $ 654,119 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 24,524 23,364 (838) 47,050 Total other investments 427 27 - 454 Total investments $ 563,580 $ 26,122 $ (10,873) $ 578,829 Major categories of net investment income are summarized as follows (in thousands): Twelve Months Ended December 31 2016 2015 2014 U.S. Treasury securities and obligations of U.S. Government $ 594 $ 670 $ 395 Corporate bonds 5,573 1,435 1,378 Collateralized corporate bank loans 3,190 4,727 4,400 Municipal bonds 5,442 5,901 5,232 Mortgage-backed 1,320 1,288 995 Equity securities 638 673 509 Other investments - - - Cash and cash equivalents 277 148 230 17,034 14,842 13,139 Investment expenses (692) (873) (756) Investment income, net of expenses $ 16,342 $ 13,969 $ 12,383 No investments in any entity or its affiliates exceeded 10% of stockholders’ equity at December 31, 2016 or 2015. Major categories of net realized gains (losses) on investments are summarized as follows (in thousands): Twelve Months Ended December 31 2016 2015 2014 U.S. Treasury securities and obligations of U.S. Government $ - $ - $ - Corporate bonds (264) - 263 Collateralized corporate bank loans (86) 126 109 Municipal bonds (189) (83) (140) Mortgage-backed (1) 240 32 Equity securities 1,871 5,543 144 Gain on investments 1,331 5,826 408 Unrealized gain on other investments 1,188 - - Other-than-temporary impairments (2,888) (3,323) (274) Net realized (losses) gains $ (369) $ 2,503 $ 134 We realized gross gains on investments of $2.1 million, $6.7 million, and $0.6 million during the years ended December 31, 2016, 2015 and 2014, respectively. We realized gross losses on investments of $0.8 million, $0.9 million and $0.2 million during the years ended December 31, 2016, 2015 and 2014, respectively. We recorded proceeds from the sale of investment securities of $28.5 million, $51.7 million and $15.3 million during the years ended December 31, 2016, 2015 and 2014, 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 December 31, 2016 and December 31, 2015 (in thousands): As of December 31, 2016 12 months or less Longer than 12 months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities and obligations of U.S. Government $ 7,037 $ (20) $ - $ - $ 7,037 $ (20) Corporate bonds 86,592 (575) - - 86,592 (575) Collateralized corporate bank loans 2,637 (7) 8,314 (163) 10,951 (170) Municipal bonds 70,633 (1,327) 13,574 (1,634) 84,207 (2,961) Mortgage-backed 29,475 (348) 2,430 (5) 31,905 (353) Total debt securities 196,374 (2,277) 24,318 (1,802) 220,692 (4,079) Total equity securities 4,109 (483) 2,037 (307) 6,146 (790) Total other investments - - - - - - Total investments $ 200,483 $ (2,760) $ 26,355 $ (2,109) $ 226,838 $ (4,869) As of December 31, 2015 12 months or less Longer than 12 months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized 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 other investments - - - - - - Total investments $ 291,131 $ (5,269) $ 28,890 $ (5,604) $ 320,021 $ (10,873) At December 31, 2016, the gross unrealized losses more than twelve months old were attributable to 28 debt security positions and one equity position . 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 securities 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. Based on evidence gathered through our normal credit evaluation process, we presently expect that all debt securities held in our investment portfolio will be paid in accordance with their contractual terms. Nonetheless, it is at least reasonably possible that the performance of certain issuers of these debt securities will be worse than currently expected resulting in future write-downs within our portfolio of debt securities. Also, as a result of the challenging market conditions, we expect the volatility in the valuation of our equity securities to continue in the foreseeable future. This volatility may lead to impairments on our equity securities portfolio or changes regarding retention strategies for certain equity securities. 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. We recognized other-than-temporary losses on our debt securities portfolio of $2.9 million during 2016. Of the $2.9 million other-than-temporary impairments recorded for fiscal 2016, $2.6 million relate to credit losses on certain senior and subordinated municipal bonds. We utilized the most recent restructuring offer for each of the senior and subordinated bonds to estimate the credit loss portion of the other-than-temporary impairments. 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. Details regarding the carrying value of the other invested assets portfolio as of December 31, 2016 and 2015 were as follows: 2016 2015 Investment Type Equity warrant $ 4,951 $ 454 Total other investments $ 4,951 $ 454 We acquired this equity warrant in an active market and it entitles us to buy the underlying common stock of a publicly traded company at a fixed exercise price until the expiration date of January 19, 2021. The amortized cost and estimated fair value of debt securities at December 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 Cost Fair Value (in thousands) Due in one year or less $ 97,836 $ 97,849 Due after one year through five years 272,190 272,168 Due after five years through ten years 114,461 115,248 Due after ten years 53,524 52,723 Mortgage-backed 59,773 59,469 $ 597,784 $ 597,457 We have certain of our securities pledged 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 $21.1 million at December 31, 2016 and a carrying value of $17.6 million at December 31, 2015. |
Fair Value
Fair Value | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value [Abstract] | |
Fair Value | 3. 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 and the equity warrant classified as Other Investment s . Level 2 investment securities include corporate bonds, collateralized corporate bank loans, municipal bonds, U.S. Treasury securities, other obligations of the U.S. Government and mortgage-backed 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 third party pricing services. There were no transfers between Level 1 and Level 2 securities. 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. 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 December 31, 2016 and December 31, 2015 (in thousands). As of December 31, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Total U.S. Treasury securities and obligations of U.S. Government $ - $ 42,022 $ - $ 42,022 Corporate bonds - 226,062 - 226,062 Collateralized corporate bank loans - 106,009 - 106,009 Municipal bonds - 158,216 5,679 163,895 Mortgage-backed - 59,469 - 59,469 Total debt securities - 591,778 5,679 597,457 Total equity securities 51,445 - 266 51,711 Total other investments 4,951 - - 4,951 Total investments $ 56,396 $ 591,778 $ 5,945 $ 654,119 As of December 31, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (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 47,050 - - 47,050 Total other investments 454 - - 454 Total investments $ 47,504 $ 517,238 $ 14,087 $ 578,829 Due to significant unobservable inputs into the valuation model for certain municipal bonds in illiquid markets, we classified these 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 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 year ended December 31, 2016 and 2015 (in thousands). 2016 2015 Beginning balance as of January 1 $ 14,087 $ 14,598 Sales - (370) Settlements (8,825) - Purchases - - Issuances - - Total realized/unrealized gains included in net income 417 - Net losses included in other comprehensive income - (141) Transfers into Level 3 266 - Transfers out of Level 3 - - Ending balance as of December 31 $ 5,945 $ 14,087 |
Acquisitions, Goodwill and Inta
Acquisitions, Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets [Abstract] | |
Acquisitions, Goodwill and Intangible Assets | 4. Acquisitions, Goodwill and Intangible Assets: 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 in Other Income in the Consolidated Statement of Operations on the sale of the renewal rights. 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 an additional $ 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 in Other Income in the Consolidated Statement of Operations as a result of this Amendment No.1. Goodwill is tested for impairment at the reporting unit level (operating unit or one level below an operating unit) on an annual basis (October 1) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. For purposes of evaluating goodwill for impairment, we have determined that our reporting units are the same as our operating units except for the Specialty Commercial operating unit for which reporting units are at the component level (“one level below”). Our consolidated balance sheet as of December 31, 2016 includes goodwill of acquired businesses of $44.7 million that is assigned to our operating units as follows: Standard Commercial P&C operating unit - $2.1 million; MGA Commercial Products operating unit - $19.8 million; Specialty Commercial operating unit- $17.4 million (comprised of $7.7 million for the primary/ excess & umbrella component and $9.7 million for the general aviation and satellite component); and Specialty Personal Lines operating unit - $5.4 million. This amount has been recorded as a result of prior bus iness acquisitions accounted for under the acquisition method of accounting. Under ASC 350, “Intangibles- Goodwill and Other,” goodwill is tested for impairment annually. We completed our last annual test for impairment on the first day of the fourth quarter of 2016 and determined that there was no impairment. The income approach to determining fair value computed the projections of the cash flows that the reporting unit was expected to generate converted into a present value equivalent through discounting. Significant assumptions in the income approach model included income projections, discount rates and terminal growth values. The income projections reflect ed an improved premium rate environment across most of our lines of business that continued throughout 201 6 . The income projections also included loss and LAE assumptions which reflected recent historical claim trends and the movement towards a more favorable pricing environment. The income projections also included assumptions for expense growth and investment yields which were based on business plans for each of our operating units. The discount rate was based on a risk free rate plus a beta adjusted equity risk premium and specific company risk premium. The assumptions were based on historical experience, expectations of future performance, expected market conditions and other factors requiring judgment and estimates. While we believe the assumptions used in these models were reasonable, the inherent uncertainty in predicting future performance and market conditions may change over time and influence the outcome of future testing. During 2016, 2015, and 2014, we completed the first step prescribed by ASC 350 for testing for impairment and determined that there was no impairment. We have obtained various intangible assets from several acquisitions since 2002. The table below details the gross and net carrying amounts of these assets by major category (in thousands): December 31 2016 2015 Gross Carrying Amount: Customer/agent relationships $ 32,177 $ 32,177 Tradename 3,440 3,440 Management agreement 3,232 3,232 Non-compete & employment agreements 4,235 4,235 Insurance licenses 1,300 1,300 Total gross carrying amount 44,384 44,384 Accumulated Amortization: Customer/agent relationships (22,038) (19,799) Tradename (2,388) (2,159) Management agreement (3,232) (3,232) Non-compete & employment agreements (4,235) (4,235) Total accumulated amortization (31,893) (29,425) Total net carrying amount $ 12,491 $ 14,959 Insurance licenses are not amortized because they have an indefinite life. We amortize definite-lived intangible assets straight line over their respective lives. The estimated aggregate amortization expense for definite-lived intangible assets for the next five years is as follows (in thousands): 2017 $ 2,468 2018 $ 2,468 2019 $ 2,468 2020 $ 2,468 2021 $ 503 The weighted average amortization period for definite-lived intangible assets by major class is as follows: Years Tradename 15 Customer/ agent relationships 15 Management agreement 4 Non-compete agreements 5 The aggregate weighted average period to amortize these assets is approximately 13 years. |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2016 | |
Other Assets [Abstract] | |
Other Assets | 5. Other Assets: The following table details our other assets as of December 31, 2016 and 2015 (in thousands): 2016 2015 Profit sharing commission receivable $ 251 $ 228 Credit Facility B issuance costs 109 92 Accrued investment income 4,599 3,876 Investment in unconsolidated trust subsidiaries 1,702 1,702 Fixed assets 6,947 4,120 Other assets 193 174 $ 13,801 $ 10,192 |
Reserves for Unpaid Losses and
Reserves for Unpaid Losses and Loss Adjustment Expenses | 12 Months Ended |
Dec. 31, 2016 | |
Reserves for Unpaid Losses and Loss Adjustment Expenses [Abstract] | |
Reserves for Unpaid Losses and Loss Adjustment Expenses | 6. Reserves for Losses and Loss Adjustment Expenses: Activity in the consolidated reserves for unpaid losses and LAE is summarized as follows (in thousands): 2016 2015 2014 Balance at January 1 $ 450,878 $ 415,135 $ 382,640 Less reinsurance recoverable 102,791 91,943 70,172 Net balance at January 1 348,087 323,192 312,468 Incurred related to: Current year 246,080 237,102 215,258 Prior years 7,608 (6,953) (5,203) Total incurred 253,688 230,149 210,055 Paid related to: Current year 93,067 83,132 76,231 Prior years 150,378 122,122 123,100 Total paid 243,445 205,254 199,331 Net balance at December 31 358,330 348,087 323,192 Plus reinsurance recoverable 123,237 102,791 91,943 Balance at December 31 $ 481,567 $ 450,878 $ 415,135 The $7.6 million unfavorable net development, $7.0 million favorable net development and $5.2 million favorable net development in prior accident years recognized in 2016, 2015 and 2014, respectively, represent normal changes in our loss reserve estimates. In 2016 , the aggregate loss reserve estimates for prior years were increased to reflect unfavorable loss development when the available information indicated a reasonable likelihood that the ultimate losses would be more than the previous estimates. In 2015 and 2014, the aggregate loss reserve estimates for prior years were decreased to reflect favorable loss development when the available information indicated a reasonable likelihood that the ultimate losses would be less than the previous estimates. Generally, changes in reserves are caused by variations between actual experience and previous expectations and by reduced emphasis on the Bornhuetter-Ferguson method due to the aging of the accident years. The $7.6 million increase in prior period reserves for unpaid losses and LAE recognized in 2016 was attributable to $5.3 million favorable net development on claims incurred in the 2015 accident year, $3.9 million unfavorable net development on claims incurred in the 2014 accident year and $9.0 million unfavorable net development on claims incurred in the 2013 and prior accident years. Our MGA Commercial Products operating unit, Specialty Personal Lines operating unit and Specialty Commercial operating unit accounted for $11.3 million, $5.0 million, and $1.2 million, respectively, of the increase in prior period reserves recognized during 2016. The increase in reserves for our MGA Commercial operating unit was primarily related to our commercial auto liability line of business. The increase in reserves for our Specialty Personal Lines operating unit was primarily attributable to the 2015, 2014 and 2013 and prior accident years. The increase in reserves for our Specialty Commercial operating unit was primarily related to $0.9 million unfavorable development in our medical professional liability products and $0.7 million related to our commercial auto liability specialty program, partially offset by $0.3 million favorable development in our general aviation line of business and $0.1 million favorable development in our commercial excess liability line of business. These unfavorable developments were partially offset by favorable development of $6.6 million in our Standard Commercial P&C operating unit and $3.3 in our Workers Compensation operating unit. The decrease in reserves for our Standard Commercial P&C operating unit was primarily related to our general liability lines of business. The decrease in prior period reserves for our Workers Compensation operating unit was attributable to the 2015, 2014, 2013 and prior accident years. Short-Duration Contract Disclosures ASU 2015-09, “Disclosures about Short-Duration Contracts” (Topic 944), requires insurers to make disclosures about their liability for unpaid claims and claim adjustment expenses for short-duration insurance contracts. These disclosures include tables showing incurred and paid claims development information (net of reinsurance and excluding unallocated loss adjustment expenses) which are disaggregated based on the characteristics of the insurance contracts that the insurer writes and other factors specific to the reporting entity. The information should be disclosed by accident year for the number of years claims typically remain outstanding, but need not be more than 10 years, including a reconciliation of the disaggregated information to the consolidated statement of financial position. The basis for our disaggregation of this information is by each of our three reportable segments. See Note 10, “Segment Information,” for additional information regarding our three reportable segments. Reserves for Incurred But Not Reported (“IBNR”) Claims Reserves for IBNR claims are based on the estimated ultimate cost of settling claims, including the effects of inflation and other social and economic factors, using past experience adjusted for current trends and any other factors that would modify past experience. We use a variety of statistical and actuarial techniques to analyze current claims costs, including frequency and severity data and prevailing economic, social and legal factors. Each such method has its own set of assumptions and outputs, and each has strengths and weaknesses in different areas. Since no single estimation method is superior to another method in all situations, the methods and assumptions used to project loss reserves will vary by coverage and product. We use what we believe to be the most appropriate set of actuarial methods and assumptions for each product line grouping and coverage. While the loss projection methods may vary by product line and coverage, the general approach for calculating IBNR remains the same: ultimate losses are forecasted first, and that amount is reduced by the amount of cumulative paid claims and case reserves. Reserves established in prior years are adjusted as loss experience develops and new information becomes available. Adjustments to previously estimated reserves are reflected in the results of operations in the year in which they are made. As described above, various actuarial methods are utilized to determine the reserves for losses and LAE recorded in our Consolidated Balance Sheets. Weightings of methods at a detailed level may change from evaluation to evaluation based on a number of observations, measures, and time elements. There were no significant changes to the methods and assumptions underlying our consolidated reserve estimations and selections as of December 31, 2016. Methodology for Determining Cumulative Number of Reported Claims A claim file is created when the Company is notified of an actual demand for payment, notified of an event that may lead to a demand for payment or when it is determined that a demand for payment could possibly lead to a future demand for payment on another coverage on the same policy or on another policy. The cumulative number of reported claims is predominately measured at a coverage level by occurrence, with the exception of our Specialty Commercial operating unit which is predominately measured at the claim level. Reported occurrences that do not result in a liability are included in reported claims. The Company does not generate claim counts for ceded business. Incurred & Paid Claims Development Disclosures The following tables provide information about incurred and cumulative paid losses and allocated loss adjustment expenses (“ALAE”), net of reinsurance for our three reportable segments, our Specialty Commercial Segment, our Standard Commercial Segment and our Personal Segment. The incurred and paid losses by accident year information presented for all segments in the below tables for calendar years prior to 2016 is required supplementary information and is unaudited. The following tables also include IBNR reserves plus expected development on reported claims and the cumulative number of reported claims as of December 31, 2016 ($ in thousands): Specialty Commercial Segment Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, Accident Year For the Years Ended December 31, IBNR Cumulative Number of Reported Claims Unaudited 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016 2016 2007 $ 51,458 $ 52,141 $ 51,813 $ 52,673 $ 50,158 $ 49,654 $ 49,096 $ 49,056 $ 49,290 $ 49,544 $ 68 6,095 2008 55,617 56,150 58,143 57,923 56,579 55,157 55,425 55,457 55,864 (102) 7,367 2009 60,950 62,679 61,196 59,471 59,831 59,635 59,988 61,361 87 5,456 2010 74,187 78,089 75,695 77,593 78,003 77,972 77,631 1,227 4,999 2011 88,679 87,558 91,059 90,713 89,737 87,793 1,641 5,782 2012 106,371 111,253 111,841 115,709 116,320 2,020 7,337 2013 140,546 135,114 137,230 143,983 2,127 9,188 2014 144,996 133,464 138,842 6,547 10,049 2015 147,304 146,610 23,447 10,707 2016 151,494 52,283 10,424 Total $ 1,029,442 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Accident Year For the Years Ended December 31, Unaudited 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 $ 18,851 $ 33,504 $ 41,344 $ 44,861 $ 47,453 $ 48,612 $ 48,612 $ 48,783 $ 48,860 $ 49,025 2008 24,134 37,803 44,903 51,280 53,723 53,577 54,080 54,909 55,372 2009 21,259 34,411 45,757 53,135 56,791 57,641 59,149 60,785 2010 24,818 45,234 58,139 68,625 73,398 74,513 75,787 2011 27,454 53,509 71,697 80,004 83,787 84,936 2012 37,655 60,923 82,066 97,680 109,060 2013 40,475 76,366 101,725 126,025 2014 42,097 73,631 99,521 2015 39,515 74,906 2016 41,397 Total $ 776,814 All outstanding liabilities before 2007, net of reinsurance (26) Liabilities for claims and claim adjustment expenses, net of reinsurance $ 252,602 (1 S tandard Commercial Segment Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, Accident Year For the Years Ended December 31, IBNR Cumulative Number of Reported Claims Unaudited 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016 2016 2007 $ 48,423 $ 45,280 $ 42,632 $ 42,898 $ 41,814 $ 39,476 $ 37,894 $ 36,798 $ 37,321 $ 36,419 $ 576 3,156 2008 49,452 47,557 46,762 45,556 42,758 41,597 40,387 40,001 39,195 1,826 3,246 2009 44,719 45,674 46,772 46,778 45,970 44,159 43,851 43,107 2,102 2,632 2010 45,263 45,235 44,847 43,164 43,459 42,426 42,175 2,252 2,903 2011 60,236 56,489 55,156 49,268 47,266 47,423 3,387 4,364 2012 51,998 52,554 48,222 45,990 44,272 5,144 3,212 2013 55,482 57,528 56,703 53,174 6,379 3,910 2014 55,488 55,808 53,568 8,979 3,531 2015 49,571 49,857 11,946 3,129 2016 46,880 16,885 2,554 Total $ 456,070 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Accident Year For the Years Ended December 31, Unaudited 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 $ 13,883 $ 20,362 $ 25,484 $ 28,908 $ 31,311 $ 32,288 $ 32,949 $ 33,561 $ 33,982 $ 34,483 2008 17,182 25,624 29,058 32,523 34,056 34,762 35,360 36,276 36,859 2009 15,242 28,313 32,075 35,818 38,316 40,389 40,575 40,629 2010 21,302 28,342 30,957 33,428 37,166 39,115 39,706 2011 24,899 35,119 38,909 40,301 41,140 42,441 2012 23,445 32,203 34,789 37,191 38,526 2013 23,123 36,411 41,809 44,475 2014 24,255 37,122 41,514 2015 19,085 34,245 2016 21,508 Total $ 374,386 All outstanding liabilities before 2007, net of reinsurance 538 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 82,222 Personal Segment Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, Accident Year For the Years Ended December 31, IBNR Cumulative Number of Reported Claims Unaudited 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016 2016 2007 $ 28,774 $ 31,603 $ 31,252 $ 31,485 $ 31,651 $ 31,931 $ 32,272 $ 32,517 $ 32,528 $ 32,528 $ - 15,814 2008 36,247 36,976 38,329 39,412 39,793 40,170 40,239 40,324 40,369 - 17,353 2009 40,436 42,092 46,244 47,977 48,930 49,694 49,772 49,891 - 21,052 2010 63,862 78,294 80,765 84,724 83,903 84,252 84,591 6 30,179 2011 75,746 77,652 87,810 86,757 86,804 86,948 (28) 31,612 2012 58,604 73,795 70,552 71,513 72,042 50 23,937 2013 55,706 59,132 60,100 60,211 234 23,461 2014 5,452 5,340 6,243 406 19,275 2015 23,104 25,682 1,813 23,234 2016 32,260 6,638 21,134 Total $ 490,765 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Accident Year For the Years Ended December 31, Unaudited 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 $ $ 18,106 $ 27,757 $ 30,043 $ 30,975 $ 31,355 $ 31,523 $ 32,056 $ 31,213 $ 32,531 $ 32,530 2008 20,005 32,555 36,782 38,925 39,511 40,210 40,309 40,323 40,347 2009 23,306 37,621 44,689 47,967 49,287 49,539 49,704 49,853 2010 38,643 67,755 75,199 82,624 83,511 84,111 84,556 2011 46,416 67,939 83,497 85,533 86,217 86,593 2012 37,860 64,278 68,849 70,807 71,995 2013 45,901 54,514 58,047 59,775 2014 2,515 4,418 5,631 2015 11,570 22,281 2016 21,669 Total $ 475,230 All outstanding liabilities before 2007, net of reinsurance 9 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 15,544 The reconciliation of the net incurred and paid development tables to the liability for unpaid losses and LAE in our Consolidated Balance Sheets is as follows (in thousands): 2016 Net outstanding liabilities for losses and LAE Specialty Commercial Segment $ 252,602 Standard Commercial Segment 82,222 Personal Segment 15,544 Liabilities for unpaid losses and allocated loss adjustment expenses, net of reinsurance 350,368 Reinsurance recoverable on unpaid losses and LAE Specialty Commercial Segment 102,597 Standard Commercial Segment 8,540 Personal Segment 12,100 Total reinsurance recoverable on unpaid losses and LAE 123,237 Unallocated loss adjustment expenses Specialty Commercial Segment 3,831 Standard Commercial Segment 3,031 Personal Segment 1,100 Total unallocated loss adjustment expenses 7,962 Total reserves for unpaid losses and loss adjustment expenses $ 481,567 C laims Duration The following table provides supplementary unaudited information about the annual percentage payout of incurred losses and ALAE, net of reinsurance, as of December 31, 2016: Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (1) Unaudited Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Specialty Commercial Segment 32.4% 24.8% 17.4% 12.0% 6.0% 1.2% 1.2% 1.5% 0.5% -0.3% Standard Commercial Segment 44.6% 23.0% 8.7% 6.6% 5.0% 3.3% 1.3% 1.4% 1.3% -1.4% Personal Segment 51.5% 29.2% 10.9% 4.3% 1.4% 0.8% 0.7% -0.7% 1.9% 0.0% ( (1) The average annual percentage payout is calculated from a paid losses and ALAE development pattern based on an actuarial analysis of the paid losses and ALAE movements by accident year for each disaggregation category. The paid losses and AL A E development pattern provides the expected percentage of ultimate losses and ALAE to be paid in each year. The pattern considers all accident years included in the claims development tables . |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2016 | |
Reinsurance [Abstract] | |
Reinsurance | 7. 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 December 31, 2016 was with reinsurers that had an A.M. Best rating of “A–” or better. We also mitigate our credit risk for the remaining reinsurance recoverable by obtaining letters of credit. The following table presents our gross and net premiums written and earned and reinsurance recoveries for each of the last three years (in thousands): Included in reinsurance recoverable on the consolidated balance sheets are paid loss recoverables of $ XX million and $ 17.0 million as of December 31, 2015 and 2014, respectively. 2016 2015 2014 Premium Written : Direct $ 549,077 $ 514,223 $ 473,233 Assumed - - (15) Ceded (187,248) (157,279) (148,866) $ 361,829 $ 356,944 $ 324,352 Premium Earned: Direct $ 524,229 $ 494,643 $ 461,367 Assumed - - 327 Ceded (170,859) (145,562) (140,477) $ 353,370 $ 349,081 $ 321,217 Reinsurance recoveries $ 116,057 $ 89,892 $ 99,911 Included in reinsurance recoverable on the consolidated balance sheets are paid loss recoverables of $ 24.4 million and $11.1 million as of December 31, 2016 and 2015, respectively. |
Revolving Credit Facility and N
Revolving Credit Facility and Notes Payable | 12 Months Ended |
Dec. 31, 2016 | |
Revolving Credit Facility and Notes Payable [Abstract] | |
Revolving Credit Facility and Notes Payable | 8. Revolving Credit Facility and Notes Payable : Our Second Restated Credit Agreement with Frost Bank (“Frost”) dated June 30, 2015, reinstated the credit facility with Frost which expired by its terms on April 30, 2015. The Second Restated Credit Agreement also amended certain provisions of the credit facility and restated the agreement with Frost in its entirety. The Second Restated Credit Agreement provides a $15.0 million revolving credit facility (“Facility A”), with a $5.0 million letter of credit sub-facility. The outstanding balance of the Facility A 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 Facility A and letter of credit fees at the rate of 1.00% per annum. As of December 31, 2016, we had no outstanding borrowings under Facility A. On December 17, 2015, we entered into a First Amendment to Second Restated Credit Agreement and a Revolving Facility B Agreement (the “Facility B Agreement”) with Frost to provide a new $30.0 million revolving credit facility (“Facility B”), in addition to Facility A. On November 1, 2016, we amended the Facility B Agreement with Frost to extend by one year the termination date for draws under Facility B and the maturity date for amounts outstanding thereunder. We paid Frost a commitment fee of $75,000 when Facility B was established and an additional $30,000 fee when Facility B was extended. We may use Facility B loan proceeds solely for the purpose of making capital contributions to AHIC and HIC. As amended, we may borrow, repay and reborrow under Facility B until December 17, 2018 , at which time all amounts outstanding under Facility B are converted to a term loan. Through December 17, 2018, we pay Frost a quarterly fee 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, 2018, 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, 2018 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 on Facility B become due and payable on December 17, 2023. As of December 31, 2016 and 2015, respectively , we had $30.0 million outstanding under Facility B. The obligations under both Facility A and Facility B are secured by a security interest in the capital stock of AHIC and HIC. Both Facility A and Facility B contain covenants that, among other things, require us to maintain certain financial and operating ratios and restrict certain distributions, transactions and organizational changes. As of December 31, 2016, we were in compliance with all of these covenants. |
Subordinated Debt Securities
Subordinated Debt Securities | 12 Months Ended |
Dec. 31, 2016 | |
Subordinated Debt Securities [Abstract] | |
Subordinated Debt Securities | 9. 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 7.725% 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 December 31, 2016, the principal balance of our Trust I subordinated debt was $30.9 million and the interest rate was 4.21% 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 December 31, 2016, the principal balance of our Trust II subordinated debt was $25.8 million. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2016 | |
Segment Information [Abstract] | |
Segment Information | 10. Segment Information : We pursue our business activities primarily through subsidiaries whose operations are organized into producing units and are supported by our insurance carrier subsidiaries. Our non-carrier insurance activities are organized by operating units into the following reportable segments: Specialty Commercial Segment. Our Specialty Commercial Segment includes the excess and surplus lines commercial property/casualty insurance products and services handled by our MGA Commercial Products operating unit and the general aviation, satellite launch, commercial umbrella and primary/excess liability, medical professional liability and primary/excess commercial property insurance products and services handled by our Specialty Commercial operating unit . Certain specialty programs are also managed by our Specialty Commercial operating unit . Our MGA Commercial Products operating unit is comprised of our HSU, PAAC and TGASRI subsidiaries. Our Specialty Commercial operating unit is comprised of our Aerospace Insurance Managers, ASRI, ACMG, HXS and HDS subsidiaries. Standard Commercial Segment. The Standard Commercial Segment includes the standard lines commercial property/casualty and occupational accident insurance products and services handled by our Standard Commercial P&C operating unit and the workers compensation insurance products handled by our Workers Compensation operating unit. Effective June 1, 2016, we no longer market new or renewal occupational accident policies. Effective July 1, 2015, the Workers Compensation operating unit no longer retains any risk on new or renewal policies. Our Standard Commercial P&C operating unit is comprised of our American Hallmark Insurance Services and ECM subsidiaries. Our Workers Compensation operating unit is comprised of our TBIC Holdings, TBIC and TBICRM subsidiaries. Personal Segment. Our Personal Segment includes the non-standard personal automobile and renters insurance products and services handled by our Specialty Personal Lines operating unit. During the fourth quarter of 2014, our Specialty Personal Lines operating unit discontinued the low value dwelling/homeowners and manufactured homes insurance products it previously offered. Our Specialty Personal Lines operating unit is comprised of AHGA and HCS. The retained premium produced by these reportable segments is supported by our AHIC, HSIC, HIC, HNIC and TBIC insurance company subsidiaries. In addition, control and management of HCM is maintained through our wholly owned subsidiary, CYR Insurance Management Company (“CYR”). CYR has as its primary asset a management agreement with HCM which provides for CYR to have management and control of HCM. HCM is used to front certain lines of business in our Specialty Commercial and Personal Segments in Texas. HCM does not retain any business. AHIC, HIC, HSIC and HNIC have entered into a pooling arrangement, pursuant to which AHIC retains 34% of the net premiums written by any of them, HIC retains 32% of the net premiums written by any of them, HSIC retains 24% of the net premiums written by any of them and HNIC retains 10% of the net premiums written by any of them. Neither HCM nor TBIC is a party to the intercompany pooling arrangement. The following is additional business segment information for the twelve months ended December 31, 2016, 2015 and 2014 (in thousands): 2016 2015 2014 Revenues Specialty Commercial Segment $ 255,897 $ 249,910 $ 241,920 Standard Commercial Segment 71,966 76,864 81,464 Personal Segment 49,826 45,538 20,404 Corporate (1,737) 90 (6,422) Consolidated $ 375,952 $ 372,402 $ 337,366 Depreciation and Amortization Expense Specialty Commercial Segment $ 2,579 $ 2,537 $ 2,503 Standard Commercial Segment 101 136 183 Personal Segment 1,070 779 515 Corporate 144 64 23 Consolidated $ 3,894 $ 3,516 $ 3,224 Interest Expense Specialty Commercial Segment $ - $ - $ - Standard Commercial Segment - - - Personal Segment - - - Corporate 4,549 3,906 4,576 Consolidated $ 4,549 $ 3,906 $ 4,576 Tax Expense (Benefit) Specialty Commercial Segment $ 7,886 $ 11,609 $ 9,690 Standard Commercial Segment 3,011 1,436 622 Personal Segment (3,821) (1,345) (574) Corporate (5,124) (1,677) (4,385) Consolidated $ 1,952 $ 10,023 $ 5,353 Pre-tax Income (Loss) Specialty Commercial Segment $ 24,417 $ 40,277 $ 34,237 Standard Commercial Segment 8,866 6,687 4,595 Personal Segment (6,839) (885) 1,226 Corporate (17,966) (14,193) (21,276) Consolidated $ 8,478 $ 31,886 $ 18,782 The following is additional business segment information as of the following dates (in thousands): December 31 2016 2015 Assets Specialty Commercial Segment $ 734,763 $ 660,263 Standard Commercial Segment 164,295 156,722 Personal Segment 241,686 239,632 Corporate 21,716 18,930 Consolidated $ 1,162,460 $ 1,075,547 |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 11. Earnings Per Share : We have adopted the provisions of ASC 260, “Earnings Per Share,” requiring presentation of both basic and diluted earnings per share. A reconciliation of the numerators and denominators of the basic and diluted per share calculations is presented below (in thousands, except per share amounts): 2016 2015 2014 Numerator for both basic and diluted earnings per share: Net income $ 6,526 $ 21,863 $ 13,429 Denominator, basic shares 18,780 19,211 19,197 Effect of dilutive securities: Stock-based compensation awards 161 194 169 Denominator, diluted shares 18,941 19,405 19,366 Basic earnings per share: $ 0.35 $ 1.14 $ 0.70 Diluted earnings per share: $ 0.34 $ 1.13 $ 0.69 We had 272,500 shares, 267,500 shares and 544,999 shares of common stock potentially issuable upon exercise of employee stock options for years ended December 31, 2016, 2015 and 2014, respectively, that were excluded from the weighted average number of shares outstanding on a diluted basis because the effect of such options would be anti-dilutive. These instruments expire at varying times from 2017 to 2021. |
Regulatory Capital Restrictions
Regulatory Capital Restrictions | 12 Months Ended |
Dec. 31, 2016 | |
Regulatory Capital Restrictions [Abstract] | |
Regulatory Capital Restrictions | 12. Regulatory Capital Restrictions : Hallmark, as a holding company, is dependent on dividend payments and management fees from its subsidiaries to fund its operating expenses, debt obligations and capital needs, including the ability to pay dividends to its stockholders. Hallmark has never paid dividends on its common stock. Hallmark intends to continue this policy for the foreseeable future in order to retain earnings for development of its business. There are no regulatory or contractual restrictions on the ability of Hallmark to pay dividends other than customary default provisions and the impact of any dividend payment on financial ratio covenants in certain credit agreements. However, there are restrictions on the ability of Hallmark’s insurance carrier subsidiaries to transfer funds to the holding company. The amount of retained earnings that is unrestricted for the payment of dividends by Hallmark to its shareholders was $68.4 million as of December 31, 2016. AHIC and TBIC, domiciled in Texas, are limited in the payment of dividends to their stockholders in any 12-month period, without the prior written consent of the Texas Department of Insurance, to the greater of statutory net income for the prior calendar year or 10% of statutory policyholders’ surplus as of the prior year end . HIC and HNIC, both domiciled in Arizona, are limited in the payment of dividends to the lesser of 10% of prior year policyholders’ surplus or prior year’s net investment income , without prior written approval from the Arizona Department of Insurance. HSIC, domiciled in Oklahoma, is limited in the payment of dividends to the greater of 10% of prior year policyholders’ surplus or prior year’s statutory net income, not including realized capital gains , without prior written approval from the Oklahoma Insurance Department. For all our insurance companies, dividends may only be paid from unassigned surplus funds. During 2017, the aggregate ordinary dividend capacity of these subsidiaries is $28.0 million, of which $19.4 million is available to Hallmark. As a county mutual, dividends from HCM are payable to policyholders. During the years ended December 31, 2016 and 2015 our insurance company subsidiaries paid $10.5 million and $8.0 million, respectively, in dividends to Hallmark. The total restricted net assets of our insurance company subsidiaries as of December 31, 2016, was $197.3 million. The state insurance departments also regulate financial transactions between our insurance subsidiaries and their affiliated companies. Applicable regulations require approval of management fees, expense sharing contracts and similar transactions. The net amount paid in management fees by our insurance subsidiaries to Hallmark and our non-insurance company subsidiaries was $1.1 million, $1.3 million and $1.1 million during each of 2016, 2015 and 2014, respectively. Statutory capital and surplus is calculated as statutory assets less statutory liabilities. The various state insurance departments that regulate our insurance company subsidiaries require us to maintain a minimum statutory capital and surplus. As of December 31, 2016 and 2015, our insurance company subsidiaries reported statutory capital and surplus of $248.4 million and $247.2 million, respectively, substantially greater than the minimum requirements for each state. For the years ended December 31, 2016, 2015, 2014, respectively, our insurance company subsidiaries reported statutory net income of $8.7 million, $24.6 million and $22.3 million, respectively. The National Association of Insurance Commissioners requires property/casualty insurers to file a risk-based capital calculation according to a specified formula. The purpose of the formula is twofold: (1) to assess the adequacy of an insurer’s statutory capital and surplus based upon a variety of factors such as potential risks related to investment portfolio, ceded reinsurance and product mix; and (2) to assist state regulators under the RBC for Insurers Model Act by providing thresholds at which a state commissioner is authorized and expected to take regulatory action. As of December 31, 2016, the adjusted capital under the risk-based capital calculation of each of our insurance company subsidiaries substantially exceeded the minimum requirements. |
Share-based Payment Arrangement
Share-based Payment Arrangements | 12 Months Ended |
Dec. 31, 2016 | |
Share-based Payment Arrangements [Abstract] | |
Share-based Payment Arrangements | 13. 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 December 31, 2016, there were outstanding incentive stock options to purchase 335,074 shares of our common stock, non-qualified stock options to purchase 289,157 shares of our common stock and restricted stock units representing the right to receive up to 151,901 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. Our 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 December 31, 2016, restricted stock units representing the right to receive up to 292,961 shares of our common stock were outstanding under the 2015 LTIP. There were no stock option awards granted under the 2015 LTIP as of December 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 December 31, 2016 and changes during the year then ended is presented below: Number of Shares Weighted Average Exercise Price Average Remaining Contractual Term (Years) Aggregate Instrinsic Value ($000) Outstanding at January 1, 2016 869,113 $ 9.51 Granted - Exercised (70,000) $ 6.66 Forfeited or expired (174,882) $ 11.96 Outstanding at December 31, 2016 624,231 $ 9.14 1.7 $ 1,714 Exercisable at December 31, 2016 624,231 $ 9.14 1.7 $ 1,714 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): 2016 2015 2014 Intrinsic value of options exercised $ 250 $ 393 $ 412 Cost of share-based payments (non-cash) $ 38 $ 157 $ 173 Income tax benefit of share-based payments recognized in income $ 8 $ 30 $ 30 As of December 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 in 2016, 2015 or 2014. 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 under the 2005 LTIP. On May 29, 2015, an aggregate of 103,351 restricted stock units were granted to certain employees under the 2015 LTIP. Subsequently on July 22, 2016, an aggregate of 122,770 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 unit grants 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, 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. 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. 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, the restricted stock units granted on May 29, 2015 will vest on March 31, 2018 and the restricted stock units granted on July 22, 2016 will vest on March 31, 2019. 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. The grant date fair value of the restricted stock units granted in 2016 is $11.41 per unit. We incurred compensation (benefit) expense of ( $156 ) thousand, $226 thousand and $49 thousand related to restricted stock units during the year ended December 31, 2016, 2015 and 2014, respectively. We recorded income tax (expense) benefit of ( $55 ) thousand, $79 thousand and $17 thousand related to restricted stock units during the year ended December 31, 2016, 2015 and 2014, respectively. A summary of the status of our restricted stock units as of December 31, 2016 and changes during the year then ended is presented below: Number of Restricted Stock Units Nonvested at January 1, 2016 296,571 Granted 122,770 Vested (7,144) Forfeited (115,623) Nonvested at December 31, 2016 296,574 As of December 31, 2016, there was $141 thousand of total unrecognized compensation cost related to unvested restricted stock units granted under our 2005 LTIP and 2015 LTIP, of which $80 thousand is expected to be recognized in 2017, $50 thousand is expected to be recognized in 2018 and $11 thousand is expected to be recognized in 2019. |
Retirement Plans
Retirement Plans | 12 Months Ended |
Dec. 31, 2016 | |
Retirement Plans [Abstract] | |
Retirement Plans | 14. Retirement Plans : Certain employees of the Standard Commercial Segment were participants in a defined cash balance plan covering all full-time employees who had completed at least 1,000 hours of service. This plan was frozen in March 2001 in anticipation of distribution of plan assets to members upon plan termination. All participants were vested when the plan was frozen. The following tables provide detail of the changes in benefit obligations, components of benefit costs, weighted-average assumptions, and plan assets for the retirement plan as of and for the twelve months ending December 31, 2016, 2015 and 2014 (in thousands) using a measurement date of December 31. 2016 2015 2014 Assumptions (end of period): Discount rate used in determining benefit obligation 3.88% 4.12% 3.86% Rate of compensation increase N/A N/A N/A Reconciliation of funded status (end of period): Accumulated benefit obligation $ (12,618) $ (12,915) $ (13,909) Projected benefit obligation $ (12,618) $ (12,915) $ (13,909) Fair value of plan assets 10,415 10,419 11,290 Funded status $ (2,203) $ (2,496) $ (2,619) Net actuarial loss (4,102) (3,957) (4,000) Accumulated other comprehensive loss (4,102) (3,957) (4,000) Prepaid pension cost 1,899 1,461 1,381 Net amount recognized as of December 31 $ (2,203) $ (2,496) $ (2,619) Changes in projected benefit obligation: Benefit obligation as of beginning of period $ 12,915 $ 13,909 $ 12,284 Interest cost 512 518 532 Actuarial liability loss/(gain) 19 (646) 1,947 Benefits paid (828) (866) (854) Benefit obligation as of end of period $ 12,618 $ 12,915 $ 13,909 Change in plan assets: Fair value of plan assets as of beginning of period $ 10,419 $ 11,290 $ 10,851 Actual return on plan assets (net of expenses) 415 (5) 760 Employer contributions 409 - 533 Benefits paid (828) (866) (854) Fair value of plan assets as of end of period $ 10,415 $ 10,419 $ 11,290 Net periodic pension cost: Service cost - benefits earned during the period $ - $ - $ - Interest cost on projected benefit obligation 512 518 532 Expected return on plan assets (653) (701) (698) Recognized actuarial loss 112 103 162 Net periodic pension cost $ (29) $ (80) $ (4) Discount rate 4.12% 3.86% 4.49% Expected return on plan assets 6.50% 6.50% 6.50% Rate of compensation increase N/A N/A N/A Estimated future benefit payments by fiscal year (in thousands): 2017 $ 884 2018 $ 883 2019 $ 875 2020 $ 862 2021 $ 863 2022-2026 $ 4,071 As of December 31, 2016, the fair value of the plan assets was composed of cash and cash equivalents of $0.3 million, debt securities of $3.4 million and equity securities of $6.7 million. Our investment objectives are to preserve capital and to achieve long-term growth through a favorable rate of return equal to or greater than 5% over the long-term ( 60 year) average inflation rate as measured by the consumer price index. The objective of the equity portion of the portfolio is to achieve a return in excess of the Standard & Poor’s 500 index. The objective of the fixed income portion of the portfolio is to add stability, consistency, safety and total return to the total fund portfolio. We prohibit investments in options, futures, precious metals, short sales and purchase on margin. We also restrict the investment in fixed income securities to “A” rated or better by Moody’s or Standard & Poor’s rating services and restrict investments in common stocks to only those that are listed and actively traded on one or more of the major United States stock exchanges, including NASDAQ. We manage to an asset allocation of 45% to 75% in equity securities. An investment in any single stock issue is restricted to 5% of the total portfolio value and 90% of the securities held in mutual or commingled funds must meet the criteria for common stocks. To develop the expected long-term rate of return on assets assumption, we consider the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. This resulted in the selection of the 6.5% long-term rate of return on assets assumption. The expected return on plan assets uses the fair market value as of December 31, 2016. To develop the discount rate used in determining the benefit obligation we used the BPS&M AA Pension Discount Curve at the measurement date to match the timing and amounts of projected future benefits. A corridor approach is used to amortize actuarial gains and losses. We are applying the 10% threshold set forth in ASC 715. In addition, since all accrued benefits under the plan are frozen, we are amortizing the unrecognized gains and losses outside of the corridor by the average life expectancy of the plan participants. We expect that we will not be required to make a contribution to the defined benefit cash balance plan during 2017. We expect our 201 7 periodic pension cost to be $(63) thousand, the components of which are interest cost of $444 thousand, expected return on plan assets of ($649) thousand and amortization of actuarial loss of $142 thousand. The following table shows the weighted-average asset allocation for the defined benefit cash balance plan held as of December 31, 2016 and 2015. December 31 2016 2015 Asset Category: Debt securities 33% 33% Equity securities 64% 64% Other 3% 3% Total 100% 100% We determine the fair value of our financial instruments based on the fair value hierarchy established in ASC 820. (See Note 3.) The following table presents, for each of the fair value hierarchy levels, our plan assets that are measured at fair value on a recurring basis at December 31, 2016 and December 31, 2015 (in thousands). As of December 31, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Total Debt securities $ - $ 3,438 $ - $ 3,438 Equity securities 6,653 - - 6,653 Total $ 6,653 $ 3,438 $ - $ 10,091 As of December 31, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Total Debt securities $ - $ 3,423 $ - $ 3,423 Equity securities 6,697 - - 6,697 Total $ 6,697 $ 3,423 $ - $ 10,120 Our plan assets also include cash and cash equivalents of $0.3 million and $0.3 million at December 31, 2016 and 2015, respectively, and are carried at cost which approximates fair value. We sponsor a defined contribution plan. Under this plan, employees may contribute a portion of their compensation on a tax-deferred basis, and we may contribute a discretionary amount each year. We contributed $0.4 million, $0.3 million and $0.3 million for the years ended December 31, 2016, 2015 and 2014, respectively |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | 15. Income Taxes : The composition of deferred tax assets and liabilities and the related tax effects as of December 31, 2016 and 2015, are as follows (in thousands): 2016 2015 Deferred tax liabilities: Deferred policy acquisition costs $ (6,717) $ (7,128) Net unrealized holding gain on investments (7,395) (5,339) Agency relationship (56) (66) Intangible assets (4,623) (5,118) Goodwill (559) (519) Fixed assets (1,106) (861) Other (435) (367) Total deferred tax liabilities (20,891) (19,398) Deferred tax assets: Unearned premiums 11,184 10,592 Amortization of non-compete agreements 238 298 Pension liability 1,436 1,385 Net operating loss carry-forward 319 426 Unpaid loss and loss adjustment expense 6,208 6,920 Rent reserve 247 297 Bond amortization 434 421 Bonus accrual 291 759 Investment impairments 1,419 1,120 Other 480 540 Total deferred tax assets 22,256 22,758 Deferred federal income taxes, net $ 1,365 $ 3,360 We concluded that no valuation allowance was necessary to provide against our deferred tax assets as of December 31, 2016. A reconciliation of the income tax provisions based on the 35% statutory tax rate to the provision reflected in the consolidated financial statements for the years ended December 31, 2016, 2015 and 2014, is as follows (in thousands): 2016 2015 2014 Computed expected income tax expense at statutory regulatory tax rate $ 2,967 $ 11,160 $ 6,574 Meals and entertainment 81 32 27 Tax exempt interest (1,164) (1,259) (1,276) Dividends received deduction (133) (141) (107) State taxes (net of federal benefit) 203 176 259 Other (2) 55 (124) Income tax expense $ 1,952 $ 10,023 $ 5,353 Current income tax expense $ 1,547 $ 11,053 $ 5,746 Deferred tax expense (benefit) 405 (1,030) (393) Income tax expense $ 1,952 $ 10,023 $ 5,353 We have available, for federal income tax purposes, unused net operating loss of $0.9 million at December 31, 2016. The losses were acquired as part of the HIC and HCM acquisitions and may be used to offset future taxable income. Utilization of the losses is limited under Internal Revenue Code Section 382. The Internal Revenue Code provides that effective with tax years beginning September 1997, the carry-back and carry-forward periods are 2 years and 20 years, respectively, with respect to newly generated operating losses. The net operating losses will expire if unused, as follows (in thousands): Year 2022 $ 553 2028 2 2029 25 2031 45 2032 77 2033 73 2034 59 2035 33 2036 44 $ 911 We are no longer subject to U.S. federal, state, local or non-U.S. income tax examinations by tax authorities for years prior to 2013. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. There were no uncertain tax positions at December 31, 2016. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 16. Commitments and Contingencies : We have several leases, primarily for office facilities and computer equipment, which expire in various years through 2022. Certain of these leases contain renewal options. Rental expense amounted to $2.5 million, $2.2 million and $2.3 million for the years ended December 31, 2016, 2015, and 2014, respectively. Future minimum lease payments under non-cancelable operating leases as of December 31, 2016 are as follows (in thousands): Year 2017 $ 2,281 2018 1,948 2019 1,874 2020 1,841 2021 994 2022 and thereafter 341 Total minimum lease payments (a) $ 9,279 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $0.5 million due in the future under noncancelable subleases. From time to time, assessments are levied on us by the guaranty association of the states where we offer our insurance products. Such assessments are made primarily to cover the losses of policyholders of insolvent or rehabilitated insurers. Since these assessments can generally be recovered through a reduction in future premium taxes paid, we capitalize the assessments that can be recovered as they are paid and amortize the capitalized balance against our premium tax expense. We paid an assessment of $0.1 million in 2016. There were no assessments during 2015. In November 2015, one of the subsidiaries in our MGA Commercial operating unit, Hallmark Specialty Underwriters, Inc. (“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 legislature 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 has asserted 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 December 31, 2016 related to this matter. We are engaged in 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. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income Balances | 12 Months Ended |
Dec. 31, 2016 | |
Changes in Accumulated Other Comprehensive Income Balances [Abstract] | |
Changes in Accumulated Other Comprehensive Income Balances | 17. Changes in Accumulated Other Comprehensive Income Balances: The changes in accumulated other comprehensive income balances as of December 31, 2016, 2015, and 2014 were as follows (in thousands): Pension Liability Unrealized Gains (Loss) Accumulated Other Comprehensive Income (Loss) Balance at January 1, 2014 $ (1,480) $ 18,363 $ 16,883 Other comprehensive income: Change in net actuarial loss (1,723) - (1,723) Tax effect on change in net actuarial loss 603 - 603 Unrealized holding gains arising during the period - 3,543 3,543 Tax effect on unrealized gains arising during the period - (1,240) (1,240) Reclassification adjustment for gains included in net realized gains - (408) (408) Tax effect on reclassification adjustment for gains included in income tax expense - 143 143 Other comprehensive income, net of tax (1,120) 2,038 918 Balance at December 31, 2014 $ (2,600) $ 20,401 $ 17,801 Other comprehensive loss: Change in net actuarial gain 43 - 43 Tax effect on change in net actuarial gain (15) - (15) Unrealized holding losses arising during the period - (10,191) (10,191) Tax effect on unrealized losses arising during the period - 3,567 3,567 Reclassification adjustment for gains included in net realized gains - (5,826) (5,826) Tax effect on reclassification adjustment for gains included in income tax expense - 2,039 2,039 Other comprehensive loss, net of tax 28 (10,411) (10,383) Balance at December 31, 2015 $ (2,572) $ 9,990 $ 7,418 Other comprehensive income: Change in net actuarial loss (145) - (145) Tax effect on change in net actuarial loss 51 - 51 Unrealized holding gains arising during the period - 6,019 6,019 Tax effect on unrealized gains arising during the period - (2,107) (2,107) Reclassification adjustment for gains included in net realized gains - (1,331) (1,331) Tax effect on reclassification adjustment for gains included in income tax expense - 466 466 Other comprehensive income, net of tax (94) 3,047 2,953 Balance at December 31, 2016 $ (2,666) $ 13,037 $ 10,371 |
Concentrations of Credit Risk
Concentrations of Credit Risk | 12 Months Ended |
Dec. 31, 2016 | |
Concentrations of Credit Risk [Abstract] | |
Concentrations of Credit Risk | 18. Concentrations of Credit Risk : We maintain cash and cash equivalents in accounts with four financial institutions in excess of the amount insured by the Federal Deposit Insurance Corporation. We monitor the financial stability of the depository institutions regularly and do not believe excessive risk of depository institution failure existed at December 31, 2016. We are also subject to credit risk with respect to reinsurers to whom we have ceded underwriting risk. Although a reinsurer is liable for losses to the extent of the coverage it assumes, we remain obligated to our policyholders in the event that the reinsurers do not meet their obligations under the reinsurance agreements. In order to mitigate credit risk to reinsurance companies, we monitor the financial condition of reinsurers on an ongoing basis and review our reinsurance arrangements periodically. Most of our reinsurance recoverable balances as of December 31, 2016 were with reinsurers that had an A.M. Best rating of “A-” or better. We also mitigate our credit risk for the remaining reinsurance recoverable by obtaining letters of credit. |
Unaudited Selected Quarterly Fi
Unaudited Selected Quarterly Financial Information | 12 Months Ended |
Dec. 31, 2016 | |
Unaudited Selected Quarterly Financial Information [Abstract] | |
Unaudited Selected Quarterly Financial Information | 19. Unaudited Selected Financial Quarterly Information : Following is a summary of the unaudited interim results of operations for the years ended December 31, 2016 and 2015 (in thousands, except per share data). In the opinion of management, all adjustments necessary to present fairly the results of operations for such periods have been made. 2016 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total revenue $ 90,028 $ 91,052 $ 97,618 $ 97,254 $ 91,450 $ 97,197 $ 93,684 $ 90,071 Total expense 84,039 89,565 90,442 103,428 83,761 87,922 83,849 84,984 Income (loss) before tax 5,989 1,487 7,176 (6,174) 7,689 9,275 9,835 5,087 Income tax expense (benefit) 1,915 421 2,128 (2,512) 2,346 2,899 3,137 1,641 Net income (loss) $ 4,074 1,066 $ 5,048 (3,662) $ 5,343 6,376 $ 6,698 3,446 Basic earnings (loss) per share: $ 0.21 $ 0.06 $ 0.27 $ (0.20) $ 0.28 $ 0.33 $ 0.35 $ 0.18 Diluted earnings (loss) per share: $ 0.21 $ 0.06 $ 0.27 $ (0.20) $ 0.28 $ 0.33 $ 0.35 $ 0.17 |
Schedule II - Condensed Financi
Schedule II - Condensed Financial Information of Registrant (Parent Company Only) | 12 Months Ended |
Dec. 31, 2016 | |
Condensed Financial Information Of Parent Company Only Disclosure [Abstract] | |
Condensed Financial Information of Parent Company Only Disclosure | HALLMARK FINANCIAL SERVICES, INC. BALANCE SHEETS December 31, 2016 and 2015 (In thousands) 2016 2015 ASSETS Cash and cash equivalents $ 9,034 $ 8,014 Investment in subsidiaries 363,078 361,769 Deferred federal income taxes 333 942 Federal income tax recoverable 2,756 - Other assets 3,878 3,435 Total assets $ 379,079 $ 374,160 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities: Revolving credit facility payable $ 30,000 $ 30,000 Subordinated debt securities (less unamortized debt issuance cost of $1,001 in 2016 and $1,053 in 2015) 55,701 55,649 Current federal income tax payable - 72 Accounts payable and other accrued expenses 27,642 26,413 Total liabilities 113,343 112,134 Stockholders’ equity: Common stock, $.18 par value, authorized 33,333,333 shares; issued 20,872,831 shares in 2016 and in 2015 3,757 3,757 Additional paid-in capital 123,166 123,480 Retained earnings 148,027 141,501 Accumulated other comprehensive income 10,371 7,418 Treasury stock (2,260,849 shares in 2016 and 1,775,512 in 2015), at cost (19,585) (14,130) Total stockholders’ equity 265,736 262,026 Total liabilities and stockholders’ equity $ 379,079 $ 374,160 See accompanying report of independent registered public accounting firm. HALLMARK FINANCIAL SERVICES, INC. STATEMENTS OF OPERATIONS For the years ended December 31, 2016, 2015 and 2014 (In thousands) 2016 2015 2014 Investment income, net of expenses $ 70 $ 120 $ 133 Dividend income from subsidiaries 10,500 8,000 8,000 Management fee income 10,711 10,053 9,614 Total revenues 21,281 18,173 17,747 Operating expenses 9,878 10,222 9,759 Interest expense 4,549 3,906 4,576 Total expenses 14,427 14,128 14,335 Income before equity in undistributed earnings (loss) of subsidiaries and income tax benefit 6,854 4,045 3,412 Income tax benefit (1,315) (1,273) (1,623) Income before equity in undistributed earnings (loss) of subsidiaries 8,169 5,318 5,035 Equity in undistributed share of (loss) earnings in subsidiaries (1,643) 16,545 8,394 Net income $ 6,526 $ 21,863 $ 13,429 Comprehensive income $ 9,479 $ 11,480 $ 14,347 See accompanying report of independent registered public accounting firm. HALLMARK FINANCIAL SERVICES, INC. STATEMENTS OF CASH FLOWS For the years ended December 31, 2016, 2015 and 2014 (In thousands) 2016 2015 2014 Cash flows from operating activities: Net income $ 6,526 $ 21,863 $ 13,429 Adjustments to reconcile net income to cash provided by (used in) operating activities: Depreciation and amortization expense 148 65 68 Deferred income tax expense (benefit) 609 (195) 183 Undistributed share of loss (earnings) of subsidiaries 1,643 (16,545) (8,394) Change in current federal income tax (recoverable) payable (2,828) 8 (3,290) Change in all other liabilities 1,228 (7,080) 4,134 Change in all other assets 814 188 (184) Net cash provided by (used in) operating activities 8,140 (1,696) 5,946 Cash flows from investing activities: Purchases of property and equipment, net (1,469) (159) (47) Capital contribution to subsidiaries - (30,000) - Net cash used in investing activities (1,469) (30,159) (47) Cash flows from financing activities: Proceeds from exercise of employee stock options 466 658 1,155 Purchase of treasury shares (6,117) (2,532) (1,805) Activity under revolving credit facility, net - 30,000 (1,473) Payment of debt issuance costs - (96) - Net cash (used in) provided by financing activities (5,651) 28,030 (2,123) Increase (decrease) in cash and cash equivalents 1,020 (3,825) 3,776 Cash and cash equivalents at beginning of year 8,014 11,839 8,063 Cash and cash equivalents at end of year $ 9,034 $ 8,014 $ 11,839 Supplemental cash flow information: Interest paid $ 4,287 $ 3,906 $ 4,576 Income taxes paid (recovered) $ 904 $ (1,086) $ 1,481 See accompanying report of independent registered public accounting firm. |
Schedule III -Supplementary Ins
Schedule III -Supplementary Insurance Information | 12 Months Ended |
Dec. 31, 2016 | |
Schedule III - Supplementary Insurance Information [Abstract] | |
Supplementary Insurance Information | FINANCIAL STATEMENT SCHEDULES Schedule III - Supplementary Insurance Information (In thousands) Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K Segment Deferred Policy Acquisition Costs Future Policy Benefits, Losses, Claims, and Loss Adjustment Expenses Unearned Premiums Other Policy Claims and Benefits Payable Premium Revenue Net Investment Income Benefits, Claims, Losses and Settlement Expenses Amortization of Deferred Policy Acquisition Costs Other Operating Expenses Net Premiums Written 2016 Specialty Commercial Segment $ 11,961 $ 358,961 $ 185,634 $ - $ 241,890 $ 12,962 $ 169,125 $ 27,474 $ 58,678 $ 249,072 Standard Commercial Segment 5,849 93,793 34,334 - 67,510 3,471 41,173 12,199 22,117 68,490 Personal Segment 1,383 28,813 21,286 - 43,970 1,276 43,390 (597) 13,119 44,267 Corporate - - - - - (1,367) - - 11,682 - Consolidated $ 19,193 $ 481,567 $ 241,254 $ - $ 353,370 $ 16,342 $ 253,688 $ 39,076 $ 105,596 $ 361,829 2015 Specialty Commercial Segment $ 13,501 $ 314,975 $ 161,730 $ - $ 237,640 $ 11,524 $ 148,664 $ 23,371 $ 58,212 $ 241,775 Standard Commercial Segment 5,633 105,971 33,701 - 72,613 3,623 47,071 4,237 22,820 71,097 Personal Segment 1,232 29,932 20,976 - 38,828 1,235 34,414 5,066 12,205 44,072 Corporate - - - - - (2,413) - - 10,377 - Consolidated $ 20,366 $ 450,878 $ 216,407 $ - $ 349,081 $ 13,969 $ 230,149 $ 32,674 $ 103,614 $ 356,944 2014 Specialty Commercial Segment $ 14,125 $ 275,868 $ 146,521 $ - $ 228,823 $ 12,643 $ 149,961 $ 28,186 $ 53,851 $ 230,638 Standard Commercial Segment 5,892 109,672 34,822 - 78,311 4,663 51,130 3,389 25,479 76,912 Personal Segment 729 29,595 15,483 - 14,083 1,633 8,964 9,315 9,977 16,802 Corporate - - - - - (6,556) - - 10,279 - Consolidated $ 20,746 $ 415,135 $ 196,826 $ - $ 321,217 $ 12,383 $ 210,055 $ 40,890 $ 99,586 $ 324,352 See accompanying report of independent registered public accounting firm. |
Schedule IV -Reinsurance
Schedule IV -Reinsurance | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Schedule of Reinsurance Premiums For Insurance Companies [Abstract] | |
Reinsurance | Schedule IV – Reinsurance (In thousands) Year Ended December 31, 2016 Column B Gross Amount Column C Ceded to Other Companies Column D Assumed from Other Companies Column E Net Amount Column F Percentage of Amount Assumed to Net Life insurance in force $ - $ - $ - $ - Premiums Life insurance $ - $ - $ - $ - Accident and health insurance - - - - Property and liability insurance 524,229 170,859 - 353,370 0.00% Title Insurance - - - - Total premiums $ 524,229 $ 170,859 $ - $ 353,370 0.00% Year Ended December 31, 2015 Life insurance in force $ - $ - $ - $ - Premiums Life insurance $ - $ - $ - $ - Accident and health insurance - - - - Property and liability insurance 494,643 145,562 - 349,081 0.00% Title Insurance - - - - Total premiums $ 494,643 $ 145,562 $ - $ 349,081 0.00% Year Ended December 31, 2014 Life insurance in force $ - $ - $ - $ - Premiums Life insurance $ - $ - $ - $ - Accident and health insurance - - - - Property and liability insurance 461,367 140,477 327 321,217 0.10% Title Insurance - - - - Total premiums $ 461,367 $ 140,477 $ 327 $ 321,217 0.10% See accompanying report of independent registered public accounting firm. |
Schedule VI -Supplemental Infor
Schedule VI -Supplemental Information Concerning Property-Casualty Insurance Operations | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Information For Property, Casualty Insurance Underwriters [Abstract] | |
Supplemental Information Concerning Property-Casualty Insurance Operations | FINANCIAL STATEMENT SCHEDULES Schedule VI - Supplemental Information Concerning Property-Casualty Insurance Operations (In thousands) Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K Affiliation With Registrant Deferred Policy Acquisition Costs Reserves for Unpaid Claims and Claim Adjustment Expenses Discount if any, Deducted In Column C Unearned Premiums Earned Premiums Net Investment Income Claims and Claim Adjustment Expenses Incurred Related to Amortization of Deferred Policy Acquisitions Costs Paid Claims and Claims Adjustment Expenses Net Premiums Written (1) Current Year (2) Prior Years (a) Consolidated property-casualty Entities 2016 $ 19,193 $ 481,567 $ - $ 241,254 $ 353,370 $ 16,342 $ 246,080 $ 7,608 $ 39,076 $ 243,445 $ 361,829 2015 $ 20,366 $ 450,878 $ - $ 216,407 $ 349,081 $ 13,969 $ 237,102 $ (6,953) $ 32,674 $ 205,254 $ 356,944 2014 $ 20,746 $ 415,135 $ - $ 196,826 $ 321,217 $ 12,383 $ 215,258 $ (5,203) $ 40,890 $ 199,331 $ 324,352 See accompanying report of independent registered public accounting firm. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
General | General Hallmark Financial Services, Inc. (“Hallmark” and, together with subsidiaries, the “Company”, “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 market, distribute, underwrite and service our property/casualty insurance products 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 handles primarily commercial insurance products and services and is comprised of Hallmark Specialty Underwriters, Inc. (“HSU”), Pan American Acceptance Corporation (“PAAC”) and TGA Special Risk, Inc. (“TGASRI”). Our Specialty Commercial operating unit offers (i) general aviation insurance products and services, (ii) low and middle market commercial umbrella and excess liability insurance, (iii) medical professional liability insurance products and services, (iv) satellite launch insurance products, and (v) primary/excess commercial property coverages for both catastrophe and non-catastrophe exposures. Our Specialty Commercial operating unit is comprised of Aerospace Insurance Managers, Inc. (“Aerospace Insurance Managers”), Aerospace Special Risk, Inc. (“ASRI”), Aerospace Claims Management Group, Inc. (“ACMG”), Heath XS, LLC (“HXS”) and Hardscrabble Data Solutions, LLC (“HDS”). Our Standard Commercial P&C operating unit handles commercial insurance products and services and is comprised of American Hallmark Insurance Services, Inc. (“American Hallmark Insurance Services”) and Effective Claims Management, Inc. (“ECM”). Our Workers Compensation operating unit specializes in small and middle market workers compensation business and is comprised of TBIC Holding Corporation, Inc. (“TBIC Holding”), Texas Builders Insurance Company (“TBIC”) and TBIC Risk Management (“TBICRM”). 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 handles personal insurance products and services and is comprised of American Hallmark General Agency, Inc. (“AHGA”) and Hallmark Claims Services, Inc. (“HCS”). Our insurance company subsidiaries supporting these operating units are American Hallmark Insurance Company of Texas (“AHIC”), Hallmark Insurance Company (“HIC”), Hallmark Specialty Insurance Company (“HSIC”), Hallmark County Mutual Insurance Company (“HCM”), Hallmark National Insurance Company (“HNIC”) and TBIC. 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 Specialty Personal Lines operating unit. |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the accounts and operations of Hallmark and its subsidiaries. Intercompany accounts and transactions have been eliminated. The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) which, as to our insurance company subsidiaries, differ from statutory accounting practices prescribed or permitted for insurance companies by insurance regulatory authorities. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassfied to conform with current year presentation . |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements Our preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect our reported amounts of assets and liabilities at the dates of the financial statements and our reported amounts of revenues and expenses during the reporting periods. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. Since future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment may be reflected in the financial statements in future periods. |
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: Our revolving credit facility with Frost Bank had a carried value of $30.0 million and a fair value of $30.2 million as of December 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 3.3% to 4.5% 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 are reported at carry value of $55.7 million and $55.6 million, and had a fair value of $44.2 million and $44.2 million, as of December 31, 2016 and 2015, respectively. The fair value of our trust preferred securities is based on discounted cash flows using current yields to maturity of 8.0% and 8.0% as of December 31, 2016 and 2015, respectively, which are based on similar issues to discount future cash flows and 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. |
Investments | Investments Debt and equity securities available for sale are reported at fair value. Unrealized gains and losses are recorded as a component of stockholders’ equity, net of related tax effects. Equity securities that are determined to have other-than-temporary impairment are recognized as a loss on investments in the consolidated statements of operations. Debt securities that are determined to have other-than-temporary impairment are recognized as a loss on investments in the consolidated statements of operations for the portion that is related to credit deterioration with the remaining portion recognized in other comprehensive income. Debt security premiums and discounts are amortized into earnings using the effective interest method. Maturities of debt securities and sales of equity securities are recorded in receivable for securities until the cash is settled. Purchases of debt and equity securities are recorded in payable for securities until the cash is settled. Other investments consists of an equity warrant which is reported at fair value. Unrealized gains and losses are reported in the statement of operations as a component of net realized gains (losses). Realized investment gains and losses are recognized in operations on the specific identification method. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. |
Restricted Cash | Restricted Cash We collect premiums from customers and, after deducting authorized commissions, remit these premiums to the Company’s consolidated insurance subsidiaries. Unremitted insurance premiums are held in a fiduciary capacity until disbursed to the Company’s consolidated insurance subsidiaries. |
Premiums Receivable | Premiums Receivable Premiums receivable represent amounts due from policyholders or independent agents for premiums written and uncollected. These balances are carried at net realizable value. |
Reinsurance | Reinsurance We are routinely involved in reinsurance transactions with other companies. Reinsurance premiums, losses and loss adjustment expenses (“LAE”) are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. (See Note 7.) |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs Policy acquisition costs (mainly commission, underwriting and marketing expenses) that are directly related to the successful acquisition of new and renewal insurance contracts are deferred and charged to operations over periods in which the related premiums are earned. The method followed in computing deferred policy acquisition costs limits the amount of such deferred costs to their estimated realizable value. In determining estimated realizable value, the computation gives effect to the premium to be earned, expected investment income, losses and LAE and certain other costs expected to be incurred as the premiums are earned. If the computation results in an estimated net realizable value less than zero, a liability will be accrued for the premium deficiency. During 2016, 2015 and 2014, we deferred $37.9 million, $32.3 million and $39.1 million of policy acquisition costs and amorti zed $39.1 million, $32.7 million and $40.9 million of deferred policy acquisition costs, respectively. Therefore, the net (amortization) deferrals of policy acquisition costs were ($1.2) million, ($0.4) million and ($1.8) million for 2016, 2015 and 201 4, respectively. |
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. |
Goodwill and Intangible Assets, net | Goodwill and Intangible Assets, net We account for our goodwill and intangible assets according to ASC 350, “Intangibles – Goodwill and Other.” Under ASC 350 , Intangible assets with a finite life are amortized over the estimated useful life of the asset. Goodwill and intangible assets with an indefinite useful life are not amortized. Goodwill and intangible assets are tested for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. For goodwill, we may perform a qualitative test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test. The first step of the quantitative test is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill (“Step 1”). If the fair value of a reporting unit exceeds its carrying value amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step is not necessary. However, if the carrying amount of the reporting unit exceeds its fair value, the second step (“Step 2”) is performed to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any. Step 2 compares the implied fair value of goodwill with the carrying amount of goodwill. If the implied value of goodwill is less than the carrying amount of goodwill, it is written down to its fair value with a corresponding expense reflected in the Consolidated Statements of Income. The implied goodwill is calculated based on a hypothetical purchase price allocation, similar to the requirements in the accounting guidance for business combinations, whereby the implied fair value of the reporting unit is allocated to the fair value of the assets and liabilities of the reporting unit. We have elected to perform our goodwill impairment test on the first day of the fourth quarter, October 1, of each year. |
Leases | Leases We have several leases, primarily for office facilities and computer equipment, which expire in various years through 2022. Some of these leases include rent escalation provisions throughout the term of the lease. We expense the average annual cost of the lease with the difference to the actual rent invoices recorded as deferred rent which is classified in accounts payable and other accrued expenses on our consolidated balance sheets. |
Property and Equipment | Property and Equipment Property and equipment (including leasehold improvements), aggregating $22.2 million and $ 17.9 million, at December 31, 2016 and 2015, respectively, which is included in other assets, is recorded at cost and is depreciated using the straight-line method over the estimated useful lives of the assets ( three to ten years). Depreciation expense for 2016, 2015 and 2014 was $1.4 million, $1.0 million and $0.7 million, respectively. Accumulated depreciation was $15.1 million and $13.7 million at December 31, 2016 and 2015, respectively. |
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 we do not have variable interests in the Trusts. Therefore, the Trusts are not consolidated in our consolidated financial statements. We are also involved in the normal course of business with variable interest entities primarily as a passive investor in mortgage-backed securities and certain collateralized corporate bank loans issued by third party variable interest entities. The maximum exposure to loss with respect to these investments is limited to the investment carrying values included in the consolidated balance sheets. |
Losses and Loss Adjustment Expenses | Losses and Loss Adjustment Expenses Losses and LAE represent the estimated ultimate net cost of all reported and unreported losses incurred through December 31, 2016 and 2015. The reserves for unpaid losses and LAE are estimated using individual case-basis valuations and statistical analyses. These estimates are subject to the effects of trends in loss severity and frequency. Although considerable variability is inherent in such estimates, we believe that the reserves for unpaid losses and LAE are adequate. The estimates are continually reviewed and adjusted as experience develops or new information becomes known. Such adjustments are included in current operations. |
Recognition of Premium Revenues | Recognition of Premium Revenues Insurance premiums are earned pro rata over the terms of the policies. Insurance policy fees are earned as of the effective date of the policy. Upon cancellation, any unearned premium is refunded to the insured. Insurance premiums written include gross policy fees of $9.8 million, $11.2 million and $11.5 million for the years ended December 31, 2016, 2015, and 2014, respectively. Insurance premiums on monthly reporting workers’ compensation policies are earned on the conclusion of the monthly coverage period. Deposit premiums for workers’ compensation policies are earned upon the expiration of the policy. |
Finance Charges | Finance Charges We receive premium installment fees for each direct bill payment from policyholders. Installment fee income is classified as finance charges on the consolidated statement of operations and is recognized as the fee is invoiced. |
Relationship with Third Party Insurers | Relationship with Third Party Insurers Through December 31, 2005, our Standard Commercial P&C operating unit marketed policies on behalf of Clarendon National Insurance Company (“Clarendon”), a third-party insurer. Through December 31, 2008, all business of our MGA Commercial Products operating unit was produced under a fronting agreement with member companies of the Republic Group (“Republic”), a third-party insurer. These insurance contracts on third party paper are accounted for under agency accounting. Ceding commissions and other fees received under these arrangements were classified as unearned commission revenue until earned pro rata over the terms of the policies. |
Recognition of Commission Revenues of Our Standard and Specialty Commercial Segments | Profit sharing commission is calculated and recognized when the loss ratio, as determined by a qualified actuary, deviates from contractual targets. We received a provisional commission as policies were produced as an advance against the later determination of the profit sharing commission actually earned. The profit sharing commission is an estimate that varies with the estimated loss ratio and is sensitive to changes in that estimate. Profit share commission is classified as commissions and fees on the consolidated statement of operations . The following table details the profit sharing commission provisional loss ratio compared to the estimated ultimate loss ratio for each effective quota share treaty between the Standard Commercial P&C operating unit and Clarendon. Treaty Effective Dates 7/1/2001 7/1/2002 7/1/2003 7/1/2004 7/1/2005 Provisional loss ratio 60.0% 59.0% 59.0% 64.2% 64.2% Estimated ultimate loss ratio recorded at December 31, 2016 63.5% 64.5% 61.2% 66.1% 61.0% As of December 31, 2016, we had a payable of $0.6 million on these profit share treaties. The payable or receivable is the difference between the cash received to date and the recognized commission revenue based on the estimated ultimate loss ratio. The following table details the profit sharing commission revenue provisional loss ratio compared to the estimated ultimate loss ratio for the effective quota share treaty between the MGA Commercial Products operating unit and Republic. Treaty Effective Dates 1/1/2006 1/1/2007 1/1/2008 Provisional loss ratio 65.0% 65.0% 65.0% Estimated ultimate loss ratio recorded at December 31, 2016 59.1% 65.0% 60.6% As of December 31, 2016, we had a net payable of $1.1 million on these profit share treaties. The payable or receivable is the difference between the cash received to date and the recognized commission revenue based on the estimated ultimate loss ratio. |
Agent Commissions | Agent Commissions We pay monthly commissions to agents based on written premium produced, but generally recognize the expense pro rata over the term of the policy. If the policy is cancelled prior to its expiration, the unearned portion of the agent commission is refundable to us. The unearned portion of commissions paid to agents is included in deferred policy acquisition costs. We annually pay a profit sharing commission to our independent agency force based upon the results of the business produced by each agent. We estimate and accrue this liability to commission expense in the year the business is produced. Commission expense is classified as operating expenses in the consolidated statement s of operations. |
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. |
Earnings Per Share | Earnings Per Share The computation of earnings per share is based upon the weighted average number of common shares outstanding during the period plus the effect of common shares potentially issuable (in periods in which they have a dilutive effect), primarily from stock options. (See Notes 11 and 13.) |
Adoption of New Accounting Pronouncements | Adoption of New Accounting Pronouncements 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 April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” which amends the guidance in Accounting Standards Codification Topic 835-30 “Interest-Imputation of Interest.” ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public business entities, the guidance was effective for annual and interim periods beginning after December 15, 2015. We adopted this guidance effective January 1, 2016 and adjusted our prior period balances to reflect the adoption of this guidance. 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 losses and loss 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 have adopted this standard as of the effective date, and the adoption had no impact on our financial statements other than to provide for additional footnote disclosures. Recently Issued Accounting Pronouncements In May 2014, the 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. Revenue from insurance contracts is excluded from the scope of this new guidance and as a result, adoption of this guidance is not expected to have a material impact on our results of operations or financial position. In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (Subtopic 825-10). ASU 2016-01 will require equity investments that are not consolidated or accounted for under the equity method of accounting to be measured at fair value with changes in fair value recognized in net income. This ASU will also require us to assess the ability to realize our deferred tax assets (“DTAs”) related to an available-for-sale debt security in combination with our other DTAs. The ASU will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. While we continue to evaluate the impact of this ASU, we anticipate the standard will increase the volatility of our consolidated statements of income, resulting from the remeasurement of our equity investments. In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842). ASU 2016-02 requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Additionally, the ASU modifies current guidance for lessors' accounting. The ASU is effective for interim and annual reporting periods beginning on or after January 1, 2019, with early adoption permitted. We do not anticipate that this ASU will have a material impact on our results of operations, but we anticipate an increase to the value of our assets and liabilities related to leases, with no material impact to equity. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (Topic 326). ASU 2016-13 requires organizations to estimate credit losses on certain types of financial instruments, including receivables and available-for-sale debt securities, by introducing an approach based on expected losses. The expected loss approach will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The ASU requires a modified retrospective transition method and early adoption is permitted. We are currently evaluating the impact that the adoption of the ASU will have on our financial results and disclosures, but do not anticipate that any such potential impact would be material. |
Accounting Policies (Tables)
Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Profit Sharing Commission | The following table details the profit sharing commission provisional loss ratio compared to the estimated ultimate loss ratio for each effective quota share treaty between the Standard Commercial P&C operating unit and Clarendon. Treaty Effective Dates 7/1/2001 7/1/2002 7/1/2003 7/1/2004 7/1/2005 Provisional loss ratio 60.0% 59.0% 59.0% 64.2% 64.2% Estimated ultimate loss ratio recorded at December 31, 2016 63.5% 64.5% 61.2% 66.1% 61.0% As of December 31, 2016, we had a payable of $0.6 million on these profit share treaties. The payable or receivable is the difference between the cash received to date and the recognized commission revenue based on the estimated ultimate loss ratio. The following table details the profit sharing commission revenue provisional loss ratio compared to the estimated ultimate loss ratio for the effective quota share treaty between the MGA Commercial Products operating unit and Republic. Treaty Effective Dates 1/1/2006 1/1/2007 1/1/2008 Provisional loss ratio 65.0% 65.0% 65.0% Estimated ultimate loss ratio recorded at December 31, 2016 59.1% 65.0% 60.6% |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Investments [Abstract] | |
Amortized Cost and Estimated Fair Value of Investments in Debt and Equity Securities | The amortized cost and estimated fair value of investments in debt and equity securities by category is as follows (in thousands): As of December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury securities and obligations of U.S. Government $ 41,976 $ 66 $ (20) $ 42,022 Corporate bonds 224,915 1,722 (575) 226,062 Collateralized corporate bank loans 105,220 959 (170) 106,009 Municipal bonds 165,900 956 (2,961) 163,895 Mortgage-backed 59,773 49 (353) 59,469 Total debt securities 597,784 3,752 (4,079) 597,457 Total equity securities 31,449 21,052 (790) 51,711 Total other investments 3,763 1,188 - 4,951 Total investments $ 632,996 $ 25,992 $ (4,869) $ 654,119 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 24,524 23,364 (838) 47,050 Total other investments 427 27 - 454 Total investments $ 563,580 $ 26,122 $ (10,873) $ 578,829 |
Major Categories of Investment Income | Major categories of net investment income are summarized as follows (in thousands): Twelve Months Ended December 31 2016 2015 2014 U.S. Treasury securities and obligations of U.S. Government $ 594 $ 670 $ 395 Corporate bonds 5,573 1,435 1,378 Collateralized corporate bank loans 3,190 4,727 4,400 Municipal bonds 5,442 5,901 5,232 Mortgage-backed 1,320 1,288 995 Equity securities 638 673 509 Other investments - - - Cash and cash equivalents 277 148 230 17,034 14,842 13,139 Investment expenses (692) (873) (756) Investment income, net of expenses $ 16,342 $ 13,969 $ 12,383 |
Major Categories of Net Realized Gains on Investments | Major categories of net realized gains (losses) on investments are summarized as follows (in thousands): Twelve Months Ended December 31 2016 2015 2014 U.S. Treasury securities and obligations of U.S. Government $ - $ - $ - Corporate bonds (264) - 263 Collateralized corporate bank loans (86) 126 109 Municipal bonds (189) (83) (140) Mortgage-backed (1) 240 32 Equity securities 1,871 5,543 144 Gain on investments 1,331 5,826 408 Unrealized gain on other investments 1,188 - - Other-than-temporary impairments (2,888) (3,323) (274) Net realized (losses) gains $ (369) $ 2,503 $ 134 |
Summary of Gross 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 December 31, 2016 and December 31, 2015 (in thousands): As of December 31, 2016 12 months or less Longer than 12 months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities and obligations of U.S. Government $ 7,037 $ (20) $ - $ - $ 7,037 $ (20) Corporate bonds 86,592 (575) - - 86,592 (575) Collateralized corporate bank loans 2,637 (7) 8,314 (163) 10,951 (170) Municipal bonds 70,633 (1,327) 13,574 (1,634) 84,207 (2,961) Mortgage-backed 29,475 (348) 2,430 (5) 31,905 (353) Total debt securities 196,374 (2,277) 24,318 (1,802) 220,692 (4,079) Total equity securities 4,109 (483) 2,037 (307) 6,146 (790) Total other investments - - - - - - Total investments $ 200,483 $ (2,760) $ 26,355 $ (2,109) $ 226,838 $ (4,869) As of December 31, 2015 12 months or less Longer than 12 months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized 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 other investments - - - - - - Total investments $ 291,131 $ (5,269) $ 28,890 $ (5,604) $ 320,021 $ (10,873) |
Carrying Value of Other Invested Assets Portfolio | Details regarding the carrying value of the other invested assets portfolio as of December 31, 2016 and 2015 were as follows: 2016 2015 Investment Type Equity warrant $ 4,951 $ 454 Total other investments $ 4,951 $ 454 |
Schedule of Amortized Cost and Estimated Fair Value of Debt Securities | The amortized cost and estimated fair value of debt securities at December 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 Cost Fair Value (in thousands) Due in one year or less $ 97,836 $ 97,849 Due after one year through five years 272,190 272,168 Due after five years through ten years 114,461 115,248 Due after ten years 53,524 52,723 Mortgage-backed 59,773 59,469 $ 597,784 $ 597,457 |
Fair Value (Tables)
Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value [Abstract] | |
Fair Value of Assets Measured on a 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 December 31, 2016 and December 31, 2015 (in thousands). As of December 31, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Total U.S. Treasury securities and obligations of U.S. Government $ - $ 42,022 $ - $ 42,022 Corporate bonds - 226,062 - 226,062 Collateralized corporate bank loans - 106,009 - 106,009 Municipal bonds - 158,216 5,679 163,895 Mortgage-backed - 59,469 - 59,469 Total debt securities - 591,778 5,679 597,457 Total equity securities 51,445 - 266 51,711 Total other investments 4,951 - - 4,951 Total investments $ 56,396 $ 591,778 $ 5,945 $ 654,119 As of December 31, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (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 47,050 - - 47,050 Total other investments 454 - - 454 Total investments $ 47,504 $ 517,238 $ 14,087 $ 578,829 |
Fair Value, Assets Measured on Recurring Basis Using Significant Unobservable Inputs (Level 3) | 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 year ended December 31, 2016 and 2015 (in thousands). 2016 2015 Beginning balance as of January 1 $ 14,087 $ 14,598 Sales - (370) Settlements (8,825) - Purchases - - Issuances - - Total realized/unrealized gains included in net income 417 - Net losses included in other comprehensive income - (141) Transfers into Level 3 266 - Transfers out of Level 3 - - Ending balance as of December 31 $ 5,945 $ 14,087 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets [Abstract] | |
Schedule of Acquired Intangible Assets by Major Category | We have obtained various intangible assets from several acquisitions since 2002. The table below details the gross and net carrying amounts of these assets by major category (in thousands): December 31 2016 2015 Gross Carrying Amount: Customer/agent relationships $ 32,177 $ 32,177 Tradename 3,440 3,440 Management agreement 3,232 3,232 Non-compete & employment agreements 4,235 4,235 Insurance licenses 1,300 1,300 Total gross carrying amount 44,384 44,384 Accumulated Amortization: Customer/agent relationships (22,038) (19,799) Tradename (2,388) (2,159) Management agreement (3,232) (3,232) Non-compete & employment agreements (4,235) (4,235) Total accumulated amortization (31,893) (29,425) Total net carrying amount $ 12,491 $ 14,959 |
Schedule of Estimated Aggregate Amortization Expense for Definite-Lived Intangible Assets | Insurance licenses are not amortized because they have an indefinite life. We amortize definite-lived intangible assets straight line over their respective lives. The estimated aggregate amortization expense for definite-lived intangible assets for the next five years is as follows (in thousands): 2017 $ 2,468 2018 $ 2,468 2019 $ 2,468 2020 $ 2,468 2021 $ 503 |
Schedule of Weighted Average Amortization Period for Definite Lived Intangible Assets by Major Cass | The weighted average amortization period for definite-lived intangible assets by major class is as follows: Years Tradename 15 Customer/ agent relationships 15 Management agreement 4 Non-compete agreements 5 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Other Assets [Abstract] | |
Schedule of Other Assets | The following table details our other assets as of December 31, 2016 and 2015 (in thousands): 2016 2015 Profit sharing commission receivable $ 251 $ 228 Credit Facility B issuance costs 109 92 Accrued investment income 4,599 3,876 Investment in unconsolidated trust subsidiaries 1,702 1,702 Fixed assets 6,947 4,120 Other assets 193 174 $ 13,801 $ 10,192 |
Reserves for Unpaid Losses an37
Reserves for Unpaid Losses and Loss Adjustment Expenses (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Reserves for Unpaid Losses and Loss Adjustment Expenses [Abstract] | |
Activity in the Reserves for Unpaid Losses and Loss Adjustment Expense | Activity in the consolidated reserves for unpaid losses and LAE is summarized as follows (in thousands): 2016 2015 2014 Balance at January 1 $ 450,878 $ 415,135 $ 382,640 Less reinsurance recoverable 102,791 91,943 70,172 Net balance at January 1 348,087 323,192 312,468 Incurred related to: Current year 246,080 237,102 215,258 Prior years 7,608 (6,953) (5,203) Total incurred 253,688 230,149 210,055 Paid related to: Current year 93,067 83,132 76,231 Prior years 150,378 122,122 123,100 Total paid 243,445 205,254 199,331 Net balance at December 31 358,330 348,087 323,192 Plus reinsurance recoverable 123,237 102,791 91,943 Balance at December 31 $ 481,567 $ 450,878 $ 415,135 |
Schedule of Incurred and Paid Claims Development | The following tables also include IBNR reserves plus expected development on reported claims and the cumulative number of reported claims as of December 31, 2016 ($ in thousands): Specialty Commercial Segment Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, Accident Year For the Years Ended December 31, IBNR Cumulative Number of Reported Claims Unaudited 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016 2016 2007 $ 51,458 $ 52,141 $ 51,813 $ 52,673 $ 50,158 $ 49,654 $ 49,096 $ 49,056 $ 49,290 $ 49,544 $ 68 6,095 2008 55,617 56,150 58,143 57,923 56,579 55,157 55,425 55,457 55,864 (102) 7,367 2009 60,950 62,679 61,196 59,471 59,831 59,635 59,988 61,361 87 5,456 2010 74,187 78,089 75,695 77,593 78,003 77,972 77,631 1,227 4,999 2011 88,679 87,558 91,059 90,713 89,737 87,793 1,641 5,782 2012 106,371 111,253 111,841 115,709 116,320 2,020 7,337 2013 140,546 135,114 137,230 143,983 2,127 9,188 2014 144,996 133,464 138,842 6,547 10,049 2015 147,304 146,610 23,447 10,707 2016 151,494 52,283 10,424 Total $ 1,029,442 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Accident Year For the Years Ended December 31, Unaudited 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 $ 18,851 $ 33,504 $ 41,344 $ 44,861 $ 47,453 $ 48,612 $ 48,612 $ 48,783 $ 48,860 $ 49,025 2008 24,134 37,803 44,903 51,280 53,723 53,577 54,080 54,909 55,372 2009 21,259 34,411 45,757 53,135 56,791 57,641 59,149 60,785 2010 24,818 45,234 58,139 68,625 73,398 74,513 75,787 2011 27,454 53,509 71,697 80,004 83,787 84,936 2012 37,655 60,923 82,066 97,680 109,060 2013 40,475 76,366 101,725 126,025 2014 42,097 73,631 99,521 2015 39,515 74,906 2016 41,397 Total $ 776,814 All outstanding liabilities before 2007, net of reinsurance (26) Liabilities for claims and claim adjustment expenses, net of reinsurance $ 252,602 (1 S tandard Commercial Segment Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, Accident Year For the Years Ended December 31, IBNR Cumulative Number of Reported Claims Unaudited 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016 2016 2007 $ 48,423 $ 45,280 $ 42,632 $ 42,898 $ 41,814 $ 39,476 $ 37,894 $ 36,798 $ 37,321 $ 36,419 $ 576 3,156 2008 49,452 47,557 46,762 45,556 42,758 41,597 40,387 40,001 39,195 1,826 3,246 2009 44,719 45,674 46,772 46,778 45,970 44,159 43,851 43,107 2,102 2,632 2010 45,263 45,235 44,847 43,164 43,459 42,426 42,175 2,252 2,903 2011 60,236 56,489 55,156 49,268 47,266 47,423 3,387 4,364 2012 51,998 52,554 48,222 45,990 44,272 5,144 3,212 2013 55,482 57,528 56,703 53,174 6,379 3,910 2014 55,488 55,808 53,568 8,979 3,531 2015 49,571 49,857 11,946 3,129 2016 46,880 16,885 2,554 Total $ 456,070 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Accident Year For the Years Ended December 31, Unaudited 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 $ 13,883 $ 20,362 $ 25,484 $ 28,908 $ 31,311 $ 32,288 $ 32,949 $ 33,561 $ 33,982 $ 34,483 2008 17,182 25,624 29,058 32,523 34,056 34,762 35,360 36,276 36,859 2009 15,242 28,313 32,075 35,818 38,316 40,389 40,575 40,629 2010 21,302 28,342 30,957 33,428 37,166 39,115 39,706 2011 24,899 35,119 38,909 40,301 41,140 42,441 2012 23,445 32,203 34,789 37,191 38,526 2013 23,123 36,411 41,809 44,475 2014 24,255 37,122 41,514 2015 19,085 34,245 2016 21,508 Total $ 374,386 All outstanding liabilities before 2007, net of reinsurance 538 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 82,222 Personal Segment Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance As of December 31, Accident Year For the Years Ended December 31, IBNR Cumulative Number of Reported Claims Unaudited 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016 2016 2007 $ 28,774 $ 31,603 $ 31,252 $ 31,485 $ 31,651 $ 31,931 $ 32,272 $ 32,517 $ 32,528 $ 32,528 $ - 15,814 2008 36,247 36,976 38,329 39,412 39,793 40,170 40,239 40,324 40,369 - 17,353 2009 40,436 42,092 46,244 47,977 48,930 49,694 49,772 49,891 - 21,052 2010 63,862 78,294 80,765 84,724 83,903 84,252 84,591 6 30,179 2011 75,746 77,652 87,810 86,757 86,804 86,948 (28) 31,612 2012 58,604 73,795 70,552 71,513 72,042 50 23,937 2013 55,706 59,132 60,100 60,211 234 23,461 2014 5,452 5,340 6,243 406 19,275 2015 23,104 25,682 1,813 23,234 2016 32,260 6,638 21,134 Total $ 490,765 Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Accident Year For the Years Ended December 31, Unaudited 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 $ $ 18,106 $ 27,757 $ 30,043 $ 30,975 $ 31,355 $ 31,523 $ 32,056 $ 31,213 $ 32,531 $ 32,530 2008 20,005 32,555 36,782 38,925 39,511 40,210 40,309 40,323 40,347 2009 23,306 37,621 44,689 47,967 49,287 49,539 49,704 49,853 2010 38,643 67,755 75,199 82,624 83,511 84,111 84,556 2011 46,416 67,939 83,497 85,533 86,217 86,593 2012 37,860 64,278 68,849 70,807 71,995 2013 45,901 54,514 58,047 59,775 2014 2,515 4,418 5,631 2015 11,570 22,281 2016 21,669 Total $ 475,230 All outstanding liabilities before 2007, net of reinsurance 9 Liabilities for claims and claim adjustment expenses, net of reinsurance $ 15,544 |
Reconciliation of Claims Development to Liability for Unpaid Losses | The reconciliation of the net incurred and paid development tables to the liability for unpaid losses and LAE in our Consolidated Balance Sheets is as follows (in thousands): 2016 Net outstanding liabilities for losses and LAE Specialty Commercial Segment $ 252,602 Standard Commercial Segment 82,222 Personal Segment 15,544 Liabilities for unpaid losses and allocated loss adjustment expenses, net of reinsurance 350,368 Reinsurance recoverable on unpaid losses and LAE Specialty Commercial Segment 102,597 Standard Commercial Segment 8,540 Personal Segment 12,100 Total reinsurance recoverable on unpaid losses and LAE 123,237 Unallocated loss adjustment expenses Specialty Commercial Segment 3,831 Standard Commercial Segment 3,031 Personal Segment 1,100 Total unallocated loss adjustment expenses 7,962 Total reserves for unpaid losses and loss adjustment expenses $ 481,567 |
Annual percentage payout of incurred losses and ALAE | The following table provides supplementary unaudited information about the annual percentage payout of incurred losses and ALAE, net of reinsurance, as of December 31, 2016: Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (1) Unaudited Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Specialty Commercial Segment 32.4% 24.8% 17.4% 12.0% 6.0% 1.2% 1.2% 1.5% 0.5% -0.3% Standard Commercial Segment 44.6% 23.0% 8.7% 6.6% 5.0% 3.3% 1.3% 1.4% 1.3% -1.4% Personal Segment 51.5% 29.2% 10.9% 4.3% 1.4% 0.8% 0.7% -0.7% 1.9% 0.0% ( The average annual percentage payout is calculated from a paid losses and ALAE development pattern based on an actuarial analysis of the paid losses and ALAE movements by accident year for each disaggregation category. The paid losses and AL A E development pattern provides the expected percentage of ultimate losses and ALAE to be paid in each year. The pattern considers all accident years included in the claims development tables |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Reinsurance [Abstract] | |
Schedule of Reinsurance Ceded and Recoveries | The following table presents our gross and net premiums written and earned and reinsurance recoveries for each of the last three years (in thousands): Included in reinsurance recoverable on the consolidated balance sheets are paid loss recoverables of $ XX million and $ 17.0 million as of December 31, 2015 and 2014, respectively. 2016 2015 2014 Premium Written : Direct $ 549,077 $ 514,223 $ 473,233 Assumed - - (15) Ceded (187,248) (157,279) (148,866) $ 361,829 $ 356,944 $ 324,352 Premium Earned: Direct $ 524,229 $ 494,643 $ 461,367 Assumed - - 327 Ceded (170,859) (145,562) (140,477) $ 353,370 $ 349,081 $ 321,217 Reinsurance recoveries $ 116,057 $ 89,892 $ 99,911 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Information [Abstract] | |
Schedule of Segment Reporting, by Segment | The following is additional business segment information for the twelve months ended December 31, 2016, 2015 and 2014 (in thousands): 2016 2015 2014 Revenues Specialty Commercial Segment $ 255,897 $ 249,910 $ 241,920 Standard Commercial Segment 71,966 76,864 81,464 Personal Segment 49,826 45,538 20,404 Corporate (1,737) 90 (6,422) Consolidated $ 375,952 $ 372,402 $ 337,366 Depreciation and Amortization Expense Specialty Commercial Segment $ 2,579 $ 2,537 $ 2,503 Standard Commercial Segment 101 136 183 Personal Segment 1,070 779 515 Corporate 144 64 23 Consolidated $ 3,894 $ 3,516 $ 3,224 Interest Expense Specialty Commercial Segment $ - $ - $ - Standard Commercial Segment - - - Personal Segment - - - Corporate 4,549 3,906 4,576 Consolidated $ 4,549 $ 3,906 $ 4,576 Tax Expense (Benefit) Specialty Commercial Segment $ 7,886 $ 11,609 $ 9,690 Standard Commercial Segment 3,011 1,436 622 Personal Segment (3,821) (1,345) (574) Corporate (5,124) (1,677) (4,385) Consolidated $ 1,952 $ 10,023 $ 5,353 Pre-tax Income (Loss) Specialty Commercial Segment $ 24,417 $ 40,277 $ 34,237 Standard Commercial Segment 8,866 6,687 4,595 Personal Segment (6,839) (885) 1,226 Corporate (17,966) (14,193) (21,276) Consolidated $ 8,478 $ 31,886 $ 18,782 |
Schedule of Segment Reporting Additional Information by Segment | The following is additional business segment information as of the following dates (in thousands): December 31 2016 2015 Assets Specialty Commercial Segment $ 734,763 $ 660,263 Standard Commercial Segment 164,295 156,722 Personal Segment 241,686 239,632 Corporate 21,716 18,930 Consolidated $ 1,162,460 $ 1,075,547 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | A reconciliation of the numerators and denominators of the basic and diluted per share calculations is presented below (in thousands, except per share amounts): 2016 2015 2014 Numerator for both basic and diluted earnings per share: Net income $ 6,526 $ 21,863 $ 13,429 Denominator, basic shares 18,780 19,211 19,197 Effect of dilutive securities: Stock-based compensation awards 161 194 169 Denominator, diluted shares 18,941 19,405 19,366 Basic earnings per share: $ 0.35 $ 1.14 $ 0.70 Diluted earnings per share: $ 0.34 $ 1.13 $ 0.69 |
Share-based Payment Arrangeme41
Share-based Payment Arrangements (Tables) | 12 Months Ended |
Dec. 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 December 31, 2016 and changes during the year then ended is presented below: Number of Shares Weighted Average Exercise Price Average Remaining Contractual Term (Years) Aggregate Instrinsic Value ($000) Outstanding at January 1, 2016 869,113 $ 9.51 Granted - Exercised (70,000) $ 6.66 Forfeited or expired (174,882) $ 11.96 Outstanding at December 31, 2016 624,231 $ 9.14 1.7 $ 1,714 Exercisable at December 31, 2016 624,231 $ 9.14 1.7 $ 1,714 |
Schedule of Options, Grants in Period, 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): 2016 2015 2014 Intrinsic value of options exercised $ 250 $ 393 $ 412 Cost of share-based payments (non-cash) $ 38 $ 157 $ 173 Income tax benefit of share-based payments recognized in income $ 8 $ 30 $ 30 |
Schedule of Nonvested Restricted Stock Units Activity | A summary of the status of our restricted stock units as of December 31, 2016 and changes during the year then ended is presented below: Number of Restricted Stock Units Nonvested at January 1, 2016 296,571 Granted 122,770 Vested (7,144) Forfeited (115,623) Nonvested at December 31, 2016 296,574 |
Retirement Plans (Tables)
Retirement Plans (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Retirement Plans [Abstract] | |
Changes in Benefit Obligations, Components of Benefit Costs, Weighted-Average Assumptions, and Plan Assets | The following tables provide detail of the changes in benefit obligations, components of benefit costs, weighted-average assumptions, and plan assets for the retirement plan as of and for the twelve months ending December 31, 2016, 2015 and 2014 (in thousands) using a measurement date of December 31. 2016 2015 2014 Assumptions (end of period): Discount rate used in determining benefit obligation 3.88% 4.12% 3.86% Rate of compensation increase N/A N/A N/A Reconciliation of funded status (end of period): Accumulated benefit obligation $ (12,618) $ (12,915) $ (13,909) Projected benefit obligation $ (12,618) $ (12,915) $ (13,909) Fair value of plan assets 10,415 10,419 11,290 Funded status $ (2,203) $ (2,496) $ (2,619) Net actuarial loss (4,102) (3,957) (4,000) Accumulated other comprehensive loss (4,102) (3,957) (4,000) Prepaid pension cost 1,899 1,461 1,381 Net amount recognized as of December 31 $ (2,203) $ (2,496) $ (2,619) Changes in projected benefit obligation: Benefit obligation as of beginning of period $ 12,915 $ 13,909 $ 12,284 Interest cost 512 518 532 Actuarial liability loss/(gain) 19 (646) 1,947 Benefits paid (828) (866) (854) Benefit obligation as of end of period $ 12,618 $ 12,915 $ 13,909 Change in plan assets: Fair value of plan assets as of beginning of period $ 10,419 $ 11,290 $ 10,851 Actual return on plan assets (net of expenses) 415 (5) 760 Employer contributions 409 - 533 Benefits paid (828) (866) (854) Fair value of plan assets as of end of period $ 10,415 $ 10,419 $ 11,290 Net periodic pension cost: Service cost - benefits earned during the period $ - $ - $ - Interest cost on projected benefit obligation 512 518 532 Expected return on plan assets (653) (701) (698) Recognized actuarial loss 112 103 162 Net periodic pension cost $ (29) $ (80) $ (4) Discount rate 4.12% 3.86% 4.49% Expected return on plan assets 6.50% 6.50% 6.50% Rate of compensation increase N/A N/A N/A |
Estimated Future Benefit Payments | Estimated future benefit payments by fiscal year (in thousands): 2017 $ 884 2018 $ 883 2019 $ 875 2020 $ 862 2021 $ 863 2022-2026 $ 4,071 |
Weighted-Average Asset Allocation for the Defined Benefit Cash Balance Plan | The following table shows the weighted-average asset allocation for the defined benefit cash balance plan held as of December 31, 2016 and 2015. December 31 2016 2015 Asset Category: Debt securities 33% 33% Equity securities 64% 64% Other 3% 3% Total 100% 100% |
Schedule of Fair Value, Assets Measured on Recurring Basis | The following table presents, for each of the fair value hierarchy levels, our plan assets that are measured at fair value on a recurring basis at December 31, 2016 and December 31, 2015 (in thousands). As of December 31, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Total Debt securities $ - $ 3,438 $ - $ 3,438 Equity securities 6,653 - - 6,653 Total $ 6,653 $ 3,438 $ - $ 10,091 As of December 31, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Total Debt securities $ - $ 3,423 $ - $ 3,423 Equity securities 6,697 - - 6,697 Total $ 6,697 $ 3,423 $ - $ 10,120 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | The composition of deferred tax assets and liabilities and the related tax effects as of December 31, 2016 and 2015, are as follows (in thousands): 2016 2015 Deferred tax liabilities: Deferred policy acquisition costs $ (6,717) $ (7,128) Net unrealized holding gain on investments (7,395) (5,339) Agency relationship (56) (66) Intangible assets (4,623) (5,118) Goodwill (559) (519) Fixed assets (1,106) (861) Other (435) (367) Total deferred tax liabilities (20,891) (19,398) Deferred tax assets: Unearned premiums 11,184 10,592 Amortization of non-compete agreements 238 298 Pension liability 1,436 1,385 Net operating loss carry-forward 319 426 Unpaid loss and loss adjustment expense 6,208 6,920 Rent reserve 247 297 Bond amortization 434 421 Bonus accrual 291 759 Investment impairments 1,419 1,120 Other 480 540 Total deferred tax assets 22,256 22,758 Deferred federal income taxes, net $ 1,365 $ 3,360 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the income tax provisions based on the 35% statutory tax rate to the provision reflected in the consolidated financial statements for the years ended December 31, 2016, 2015 and 2014, is as follows (in thousands): 2016 2015 2014 Computed expected income tax expense at statutory regulatory tax rate $ 2,967 $ 11,160 $ 6,574 Meals and entertainment 81 32 27 Tax exempt interest (1,164) (1,259) (1,276) Dividends received deduction (133) (141) (107) State taxes (net of federal benefit) 203 176 259 Other (2) 55 (124) Income tax expense $ 1,952 $ 10,023 $ 5,353 Current income tax expense $ 1,547 $ 11,053 $ 5,746 Deferred tax expense (benefit) 405 (1,030) (393) Income tax expense $ 1,952 $ 10,023 $ 5,353 |
Summary of Operating Loss Carryforwards | The net operating losses will expire if unused, as follows (in thousands): Year 2022 $ 553 2028 2 2029 25 2031 45 2032 77 2033 73 2034 59 2035 33 2036 44 $ 911 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payments under non-cancelable operating leases as of December 31, 2016 are as follows (in thousands): Year 2017 $ 2,281 2018 1,948 2019 1,874 2020 1,841 2021 994 2022 and thereafter 341 Total minimum lease payments (a) $ 9,279 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $0.5 million due in the future under noncancelable subleases. |
Changes in Accumulated Other 45
Changes in Accumulated Other Comprehensive Income Balances (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Changes in Accumulated Other Comprehensive Income Balances [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The changes in accumulated other comprehensive income balances as of December 31, 2016, 2015, and 2014 were as follows (in thousands): Pension Liability Unrealized Gains (Loss) Accumulated Other Comprehensive Income (Loss) Balance at January 1, 2014 $ (1,480) $ 18,363 $ 16,883 Other comprehensive income: Change in net actuarial loss (1,723) - (1,723) Tax effect on change in net actuarial loss 603 - 603 Unrealized holding gains arising during the period - 3,543 3,543 Tax effect on unrealized gains arising during the period - (1,240) (1,240) Reclassification adjustment for gains included in net realized gains - (408) (408) Tax effect on reclassification adjustment for gains included in income tax expense - 143 143 Other comprehensive income, net of tax (1,120) 2,038 918 Balance at December 31, 2014 $ (2,600) $ 20,401 $ 17,801 Other comprehensive loss: Change in net actuarial gain 43 - 43 Tax effect on change in net actuarial gain (15) - (15) Unrealized holding losses arising during the period - (10,191) (10,191) Tax effect on unrealized losses arising during the period - 3,567 3,567 Reclassification adjustment for gains included in net realized gains - (5,826) (5,826) Tax effect on reclassification adjustment for gains included in income tax expense - 2,039 2,039 Other comprehensive loss, net of tax 28 (10,411) (10,383) Balance at December 31, 2015 $ (2,572) $ 9,990 $ 7,418 Other comprehensive income: Change in net actuarial loss (145) - (145) Tax effect on change in net actuarial loss 51 - 51 Unrealized holding gains arising during the period - 6,019 6,019 Tax effect on unrealized gains arising during the period - (2,107) (2,107) Reclassification adjustment for gains included in net realized gains - (1,331) (1,331) Tax effect on reclassification adjustment for gains included in income tax expense - 466 466 Other comprehensive income, net of tax (94) 3,047 2,953 Balance at December 31, 2016 $ (2,666) $ 13,037 $ 10,371 |
Unaudited Selected Quarterly 46
Unaudited Selected Quarterly Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Unaudited Selected Quarterly Financial Information [Abstract] | |
Schedule of Quarterly Financial Information | Following is a summary of the unaudited interim results of operations for the years ended December 31, 2016 and 2015 (in thousands, except per share data). In the opinion of management, all adjustments necessary to present fairly the results of operations for such periods have been made. 2016 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total revenue $ 90,028 $ 91,052 $ 97,618 $ 97,254 $ 91,450 $ 97,197 $ 93,684 $ 90,071 Total expense 84,039 89,565 90,442 103,428 83,761 87,922 83,849 84,984 Income (loss) before tax 5,989 1,487 7,176 (6,174) 7,689 9,275 9,835 5,087 Income tax expense (benefit) 1,915 421 2,128 (2,512) 2,346 2,899 3,137 1,641 Net income (loss) $ 4,074 1,066 $ 5,048 (3,662) $ 5,343 6,376 $ 6,698 3,446 Basic earnings (loss) per share: $ 0.21 $ 0.06 $ 0.27 $ (0.20) $ 0.28 $ 0.33 $ 0.35 $ 0.18 Diluted earnings (loss) per share: $ 0.21 $ 0.06 $ 0.27 $ (0.20) $ 0.28 $ 0.33 $ 0.35 $ 0.17 |
Accounting Policies (Narrative)
Accounting Policies (Narrative) (Details) $ in Millions | Aug. 23, 2007USD ($) | Jun. 21, 2005USD ($) | Dec. 31, 2016USD ($)segment | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Number of reportable segments | segment | 3 | ||||
Deferred policy acquisition costs, additions | $ 37.9 | $ 32.3 | $ 39.1 | ||
Deferred policy acquisition costs, amortized | (39.1) | (32.7) | (40.9) | ||
Deferred policy acquisition cost, (amortization) deferrals | (1.2) | (0.4) | (1.8) | ||
Property and equipment, gross | $ 22.2 | 17.9 | |||
Property and equipment, depreciation method | straight-line method | ||||
Depreciation | $ 1.4 | 1 | 0.7 | ||
Property and equipment, accumulated depreciation | 15.1 | 13.7 | |||
Policy fees | 9.8 | $ 11.2 | $ 11.5 | ||
Hallmark Statutory Trust I [Member] | |||||
Long-term debt, gross | $ 30.9 | 30.9 | |||
Proceeds from issuance of trust preferred securities | 30 | ||||
Facility B Revolving Credit Facility [Member] | |||||
Credit facility, carried value | 30 | ||||
Credit facility, fair value | $ 30.2 | ||||
Minimum [Member] | |||||
Property and equipment, estimated useful lives | 3 years | 3 years | |||
Minimum [Member] | Facility B Revolving Credit Facility [Member] | |||||
Fair value inputs, discount rate | 3.30% | ||||
Maximum [Member] | |||||
Property and equipment, estimated useful lives | 10 years | 10 years | |||
Maximum [Member] | Facility B Revolving Credit Facility [Member] | |||||
Fair value inputs, discount rate | 4.50% | ||||
Subordinated Debt [Member] | |||||
Long-term debt, gross | $ 55.7 | $ 55.6 | |||
Trust Preferred Securities, fair value | $ 44.2 | $ 44.2 | |||
Current yield to maturity, percentage | 8.00% | 8.00% | |||
Subordinated Debt [Member] | Hallmark Statutory Trust I [Member] | |||||
Long-term debt, gross | 30.9 | ||||
Proceeds from issuance of trust preferred securities | $ 30 | ||||
Subordinated Debt [Member] | Hallmark Statutory Trust I I [Member] | |||||
Long-term debt, gross | $ 25.8 | $ 25.8 | |||
Proceeds from issuance of trust preferred securities | $ 25 | ||||
Standard Commercial P & C Business Unit [Member] | Quota Share Treaty Effective January 1, 2006 [Member] | |||||
Profit sharing payable | 0.6 | ||||
MGA Commercial Products [Member] | Quota Share Treaty Effective January 1, 2006 [Member] | |||||
Profit sharing payable | $ 1.1 |
Accounting Policies (Schedule o
Accounting Policies (Schedule of Profit Sharing Commission) (Details) | Jan. 01, 2008 | Jan. 01, 2007 | Jan. 01, 2006 | Dec. 31, 2005 | Jul. 01, 2004 | Jul. 01, 2003 | Jul. 01, 2002 | Jul. 01, 2001 |
Standard Commercial P & C Business Unit [Member] | ||||||||
Provisional loss ratio | 64.20% | 64.20% | 59.00% | 59.00% | 60.00% | |||
Estimated ultimate loss ratio recorded to at December 31, 2015 | 61.00% | 66.10% | 61.20% | 64.50% | 63.50% | |||
MGA Commercial Products [Member] | ||||||||
Provisional loss ratio | 65.00% | 65.00% | 65.00% | |||||
Estimated ultimate loss ratio recorded to at December 31, 2015 | 60.60% | 65.00% | 59.10% |
Investments (Narrative) (Detail
Investments (Narrative) (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016USD ($)security | Dec. 31, 2015USD ($)security | Dec. 31, 2014USD ($) | |
Maximum restricted level of investment upon stockholders equity | 10.00% | 10.00% | |
Gross realized gains on investments | $ 2.1 | $ 6.7 | $ 0.6 |
Gross realized losses on investments | 0.8 | 0.9 | 0.2 |
Proceeds from sale of available-for-sale securities | $ 28.5 | $ 51.7 | $ 15.3 |
Number of debt security positions | security | 28 | 39 | |
Recognized other-than-temporary losses on our debt securities portfolio | $ 2.9 | ||
Securities pledged for the benefit of various state insurance departments and reinsurers | 21.1 | $ 17.6 | |
Municipal Bonds [Member] | |||
Recognized other-than-temporary losses on our debt securities portfolio | $ 2.6 |
Investments (Amortized Cost and
Investments (Amortized Cost and Estimated Fair Value of Investments in Debt and Equity Securities) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Investments, Amortized Cost | $ 632,996 | $ 563,580 |
Investments, Gross Unrealized Gains | 25,992 | 26,122 |
Investments, Gross Unrealized Losses | (4,869) | (10,873) |
Total investments | 654,119 | 578,829 |
Other Investments [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Investments, Amortized Cost | 3,763 | 427 |
Investments, Gross Unrealized Gains | 1,188 | 27 |
Total investments | 4,951 | 454 |
Equity Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Investments, Amortized Cost | 31,449 | 24,524 |
Investments, Gross Unrealized Gains | 21,052 | 23,364 |
Investments, Gross Unrealized Losses | (790) | (838) |
Total investments | 51,711 | 47,050 |
Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Investments, Amortized Cost | 597,784 | 538,629 |
Investments, Gross Unrealized Gains | 3,752 | 2,731 |
Investments, Gross Unrealized Losses | (4,079) | (10,035) |
Total investments | 597,457 | 531,325 |
U.S. Treasury securities and obligations of U.S. Government [Member] | Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Investments, Amortized Cost | 41,976 | 76,323 |
Investments, Gross Unrealized Gains | 66 | 7 |
Investments, Gross Unrealized Losses | (20) | (61) |
Total investments | 42,022 | 76,269 |
Corporate Bonds [Member] | Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Investments, Amortized Cost | 224,915 | 122,894 |
Investments, Gross Unrealized Gains | 1,722 | 637 |
Investments, Gross Unrealized Losses | (575) | (1,822) |
Total investments | 226,062 | 121,709 |
Collateralized Corporate Bank Loans [Member] | Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Investments, Amortized Cost | 105,220 | 83,434 |
Investments, Gross Unrealized Gains | 959 | 44 |
Investments, Gross Unrealized Losses | (170) | (1,882) |
Total investments | 106,009 | 81,596 |
Municipal Bonds [Member] | Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Investments, Amortized Cost | 165,900 | 196,446 |
Investments, Gross Unrealized Gains | 956 | 1,888 |
Investments, Gross Unrealized Losses | (2,961) | (5,966) |
Total investments | 163,895 | 192,368 |
Collateralized Mortgage Backed Securities [Member] | Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Investments, Amortized Cost | 59,773 | 59,532 |
Investments, Gross Unrealized Gains | 49 | 155 |
Investments, Gross Unrealized Losses | (353) | (304) |
Total investments | 59,469 | $ 59,383 |
Equity Securities All Others [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Investments, Gross Unrealized Gains | $ 1,188 |
Investments (Major Categories o
Investments (Major Categories of Investment Income) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Investment income | $ 17,034 | $ 14,842 | $ 13,139 |
Investment expenses | (692) | (873) | (756) |
Investment income (loss), net of expenses | 16,342 | 13,969 | 12,383 |
U.S. Treasury securities and obligations of U.S. Government [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Investment income | 594 | 670 | 395 |
Corporate Bonds [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Investment income | 5,573 | 1,435 | 1,378 |
Collateralized Corporate Bank Loans [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Investment income | 3,190 | 4,727 | 4,400 |
Municipal Bonds [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Investment income | 5,442 | 5,901 | 5,232 |
Collateralized Mortgage Backed Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Investment income | 1,320 | 1,288 | 995 |
Cash and Cash Equivalents [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Investment income | 277 | 148 | 230 |
Parent Company [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Investment income (loss), net of expenses | 70 | 120 | 133 |
Equity Securities [Member] | Equity Securities All Others [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Investment income | $ 638 | $ 673 | $ 509 |
Investments (Major Categories52
Investments (Major Categories of Net Realized Gains on Investments) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Gain on investments | $ 1,331 | $ 5,826 | $ 408 |
Unrealized gain on investment | 25,992 | 26,122 | |
Other-than-temporary impairments | (2,888) | (3,323) | (274) |
Net realized gain | (369) | 2,503 | 134 |
Corporate Bonds [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Gain on investments | (264) | 263 | |
Collateralized Corporate Bank Loans [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Gain on investments | (86) | 126 | 109 |
Municipal Bonds [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Gain on investments | (189) | (83) | (140) |
Collateralized Mortgage Backed Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Gain on investments | (1) | 240 | 32 |
Equity Securities All Others [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Unrealized gain on investment | 1,188 | ||
Other Investments [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Unrealized gain on investment | 1,188 | 27 | |
Equity Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Gain on investments | 1,871 | 5,543 | $ 144 |
Unrealized gain on investment | $ 21,052 | $ 23,364 |
Investments (Summary of Gross U
Investments (Summary of Gross Unrealized Loss Position) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value 12 months or less | $ 200,483 | $ 291,131 |
Unrealized Losses 12 months or less | (2,760) | (5,269) |
Fair Value Longer than 12 months | 26,355 | 28,890 |
Unrealized Losses Longer than 12 months | (2,109) | (5,604) |
Fair Value Total | 226,838 | 320,021 |
Unrealized Losses Total | (4,869) | (10,873) |
Other Investments [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value 12 months or less | ||
Unrealized Losses 12 months or less | ||
Fair Value Longer than 12 months | ||
Unrealized Losses Longer than 12 months | ||
Fair Value Total | ||
Unrealized Losses Total | ||
Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value 12 months or less | 196,374 | 284,547 |
Unrealized Losses 12 months or less | (2,277) | (4,431) |
Fair Value Longer than 12 months | 24,318 | 28,890 |
Unrealized Losses Longer than 12 months | (1,802) | (5,604) |
Fair Value Total | 220,692 | 313,437 |
Unrealized Losses Total | (4,079) | (10,035) |
Equity Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value 12 months or less | 4,109 | 6,584 |
Unrealized Losses 12 months or less | (483) | (838) |
Fair Value Longer than 12 months | 2,037 | |
Unrealized Losses Longer than 12 months | (307) | |
Fair Value Total | 6,146 | 6,584 |
Unrealized Losses Total | (790) | (838) |
U.S. Treasury securities and obligations of U.S. Government [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value 12 months or less | 7,037 | 41,428 |
Unrealized Losses 12 months or less | (20) | (61) |
Fair Value Total | 7,037 | 41,428 |
Unrealized Losses Total | (20) | (61) |
Corporate Bonds [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value 12 months or less | 86,592 | 96,475 |
Unrealized Losses 12 months or less | (575) | (1,822) |
Fair Value Total | 86,592 | 96,475 |
Unrealized Losses Total | (575) | (1,822) |
Collateralized Corporate Bank Loans [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value 12 months or less | 2,637 | 65,868 |
Unrealized Losses 12 months or less | (7) | (1,758) |
Fair Value Longer than 12 months | 8,314 | 3,532 |
Unrealized Losses Longer than 12 months | (163) | (124) |
Fair Value Total | 10,951 | 69,400 |
Unrealized Losses Total | (170) | (1,882) |
Municipal Bonds [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value 12 months or less | 70,633 | 44,525 |
Unrealized Losses 12 months or less | (1,327) | (488) |
Fair Value Longer than 12 months | 13,574 | 25,310 |
Unrealized Losses Longer than 12 months | (1,634) | (5,478) |
Fair Value Total | 84,207 | 69,835 |
Unrealized Losses Total | (2,961) | (5,966) |
Collateralized Mortgage Backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Value 12 months or less | 29,475 | 36,251 |
Unrealized Losses 12 months or less | (348) | (302) |
Fair Value Longer than 12 months | 2,430 | 48 |
Unrealized Losses Longer than 12 months | (5) | (2) |
Fair Value Total | 31,905 | 36,299 |
Unrealized Losses Total | $ (353) | $ (304) |
Investments (Carrying Value of
Investments (Carrying Value of Other Invested Assets Portfolio) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Investments [Abstract] | ||
Equity warrant | $ 4,951 | $ 454 |
Other investments (cost; $3,763 in 2016 and $427 in 2015) | $ 4,951 | $ 454 |
Investments (Schedule of Amorti
Investments (Schedule of Amortized Cost and Estimated Fair Value of Debt Securities) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost, Due in one year or less | $ 97,836 | |
Amortized Cost, Due after one year through five years | 272,190 | |
Amortized Cost, Due after five years through ten years | 114,461 | |
Amortized Cost, Amortized Cost Due after ten years | 53,524 | |
Debt Maturities, Amortized Cost | 597,784 | $ 538,629 |
Fair Value, Due in one year or less | 97,849 | |
Fair Value, Due after one year through five years | 272,168 | |
Fair Value, Due after five years through ten years | 115,248 | |
Fair Value, Due after ten years | 52,723 | |
Debt securities | 597,457 | 531,325 |
Collateralized Mortgage Backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Debt Maturities, Amortized Cost | 59,773 | |
Debt securities | $ 59,469 | $ 59,383 |
Fair Value (Fair Value of Asset
Fair Value (Fair Value of Assets Measured on a Recurring Basis) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | $ 597,457 | $ 531,325 |
Equity securities | 51,711 | 47,050 |
Other investments (cost; $3,763 in 2016 and $427 in 2015) | 4,951 | 454 |
Debt and equity securities | 654,119 | 578,829 |
U.S. Treasury securities and obligations of U.S. Government [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 42,022 | 76,269 |
Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 226,062 | 121,709 |
Collateralized Corporate Bank Loans [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 106,009 | 81,596 |
Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 163,895 | 192,368 |
Collateralized Mortgage Backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 59,469 | 59,383 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 51,445 | 47,050 |
Other investments (cost; $3,763 in 2016 and $427 in 2015) | 4,951 | 454 |
Debt and equity securities | 56,396 | 47,504 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 591,778 | 517,238 |
Debt and equity securities | 591,778 | 517,238 |
Fair Value, Inputs, Level 2 [Member] | U.S. Treasury securities and obligations of U.S. Government [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 42,022 | 76,269 |
Fair Value, Inputs, Level 2 [Member] | Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 226,062 | 121,709 |
Fair Value, Inputs, Level 2 [Member] | Collateralized Corporate Bank Loans [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 106,009 | 81,596 |
Fair Value, Inputs, Level 2 [Member] | Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 158,216 | 178,281 |
Fair Value, Inputs, Level 2 [Member] | Collateralized Mortgage Backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 59,469 | 59,383 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 5,679 | 14,087 |
Equity securities | 266 | |
Debt and equity securities | 5,945 | 14,087 |
Fair Value, Inputs, Level 3 [Member] | Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | $ 5,679 | $ 14,087 |
Fair Value (Fair Value, Assets
Fair Value (Fair Value, Assets Measured on Recurring Basis Using Significant Unobservable Inputs (Level 3)) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value [Abstract] | ||
Beginning balance as of January 1 | $ 14,087 | $ 14,598 |
Sales | (370) | |
Settlements | (8,825) | |
Purchases | ||
Issuances | ||
Total realized/unrealized gains included in net income | 417 | |
Net gains included in other comprehensive income | (141) | |
Transfers into Level 3 | 266 | |
Transfers out of Level 3 | ||
Ending balance as of December 31 | $ 5,945 | $ 14,087 |
Goodwill and Intangible Asset58
Goodwill and Intangible Assets (Narrative) (Details) - USD ($) | Sep. 15, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill | $ 44,695,000 | $ 44,695,000 | ||||
Impairment of goodwill | $ 0 | $ 0 | $ 0 | |||
Weighted average period to amortize acquired intangible assets | 13 years | |||||
Standard Commercial P & C Business Unit [Member] | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill | $ 2,100,000 | |||||
Workers Compensation Business Unit [Member] | Renewal Rights [Member] | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
One-time payment related to divestiture of renewal rights | $ 83,000 | |||||
Gain (loss) on disposition of property, plant and equipment | $ 400,000 | $ 200,000 | ||||
Proceeds from sale of finite-lived assets | $ 115,000 | |||||
Specialty Commercial Segment [Member] | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill | 17,400,000 | |||||
MGA Commercial Products [Member] | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill | 19,800,000 | |||||
Excess and Umbrella Business Unit [Member] | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill | 7,700,000 | |||||
General Aviation and Satellite Component [Member] | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill | 9,700,000 | |||||
Personal Lines Business Unit [Member] | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill | $ 5,400,000 |
Goodwill and Intangible Asset59
Goodwill and Intangible Assets (Schedule of Acquired Intangible Assets by Major Category) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total gross carrying amount | $ 44,384 | $ 44,384 |
Total accumulated amortization | (31,893) | (29,425) |
Total net carrying amount | 12,491 | 14,959 |
Customer Relationships [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total gross carrying amount | 32,177 | 32,177 |
Total accumulated amortization | (22,038) | (19,799) |
Trade Names [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total gross carrying amount | 3,440 | 3,440 |
Total accumulated amortization | (2,388) | (2,159) |
Management Agreement [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total gross carrying amount | 3,232 | 3,232 |
Total accumulated amortization | (3,232) | (3,232) |
Non-compete & Employment Agreements [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total gross carrying amount | 4,235 | 4,235 |
Total accumulated amortization | (4,235) | (4,235) |
Insurance Licenses [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Total gross carrying amount | $ 1,300 | $ 1,300 |
Goodwill and Intangible Asset60
Goodwill and Intangible Assets (Schedule of Estimated Aggregate Amortization Expense for Finite-Lived Intangible Assets) (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Goodwill and Intangible Assets [Abstract] | |
2,017 | $ 2,468 |
2,018 | 2,468 |
2,019 | 2,468 |
2,020 | 2,468 |
2,021 | $ 503 |
Goodwill and Intangible Asset61
Goodwill and Intangible Assets (Schedule of Weighted Average Amortization Period for Definite Lived Intangible Assets by Major Class) (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average period to amortize acquired intangible assets | 13 years |
Trade Names [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average period to amortize acquired intangible assets | 15 years |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average period to amortize acquired intangible assets | 15 years |
Management Agreement [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average period to amortize acquired intangible assets | 4 years |
Non-compete & Employment Agreements [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average period to amortize acquired intangible assets | 5 years |
Other Assets (Schedule of Other
Other Assets (Schedule of Other Assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Other Assets [Abstract] | ||
Profit sharing commission receivable | $ 251 | $ 228 |
Credit Facility B issuance costs | 109 | 92 |
Accrued investment income | 4,599 | 3,876 |
Investment in unconsolidated trust subsidiaries | 1,702 | 1,702 |
Fixed assets | 6,947 | 4,120 |
Other assets | 193 | 174 |
Other Assets, Total | $ 13,801 | $ 10,192 |
Reserves for Unpaid Losses an63
Reserves for Unpaid Losses and Loss Adjustment Expenses (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
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 | $ 7,000 | $ 5,200 | |
Unfavorable adjustment to prior years liability for unpaid claims and claims adjustment expense | $ 7,600 | ||
Claims and Claim Adjustment Expenses Incurred Related to Prior Years | 7,608 | (6,953) | (5,203) |
Loss Adjustment Expenses Recognized in 2013 and Prior [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 | 9,000 | ||
Loss Adjustment Expenses Recognized In 2014 [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 | 3,900 | ||
Loss Adjustment Expenses Recognized in 2015 [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 | 5,300 | ||
Specialty Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2014 [Member] | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Claims and Claim Adjustment Expenses Incurred Related to Prior Years | 138,842 | 133,464 | 144,996 |
Specialty Commercial Segment [Member] | Loss Adjustment Expenses Recognized in 2015 [Member] | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Claims and Claim Adjustment Expenses Incurred Related to Prior Years | 146,610 | 147,304 | |
Specialty Commercial Unit [Member] | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Claims and Claim Adjustment Expenses Incurred Related to Prior Years | 1,200 | ||
Medical Professional Liability Products [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 | 900 | ||
Commercial Auto [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 | 700 | ||
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 | 300 | ||
Commercial Umbrella and Excess Liability Risks [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 | 100 | ||
MGA Commercial Products [Member] | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Claims and Claim Adjustment Expenses Incurred Related to Prior Years | 11,300 | ||
Standard Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2014 [Member] | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Claims and Claim Adjustment Expenses Incurred Related to Prior Years | 53,568 | 55,808 | 55,488 |
Standard Commercial Segment [Member] | Loss Adjustment Expenses Recognized in 2015 [Member] | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Claims and Claim Adjustment Expenses Incurred Related to Prior Years | 49,857 | 49,571 | |
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 | 6,600 | ||
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 | 3,300 | ||
Personal Segment [Member] | Loss Adjustment Expenses Recognized In 2014 [Member] | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Claims and Claim Adjustment Expenses Incurred Related to Prior Years | 6,243 | 5,340 | $ 5,452 |
Personal Segment [Member] | Loss Adjustment Expenses Recognized in 2015 [Member] | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Claims and Claim Adjustment Expenses Incurred Related to Prior Years | 25,682 | $ 23,104 | |
Specialty Personal [Member] | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Claims and Claim Adjustment Expenses Incurred Related to Prior Years | $ 5,000 |
Reserves for Unpaid Losses an64
Reserves for Unpaid Losses and Loss Adjustment Expenses (Activity in the Reserves for Unpaid Losses and Loss Adjustment Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reserves for Unpaid Losses and Loss Adjustment Expenses [Abstract] | |||
Balance at January 1 | $ 450,878 | $ 415,135 | $ 382,640 |
Less reinsurance recoverable | 102,791 | 91,943 | 70,172 |
Net Balance at January 1 | 348,087 | 323,192 | 312,468 |
Incurred related to: | |||
Claims and Claim Adjustment Expenses Incurred Related to Current Year | 246,080 | 237,102 | 215,258 |
Claims and Claim Adjustment Expenses Incurred Related to Prior Years | 7,608 | (6,953) | (5,203) |
Total incurred | 253,688 | 230,149 | 210,055 |
Paid related to: | |||
Current year | 93,067 | 83,132 | 76,231 |
Prior years | 150,378 | 122,122 | 123,100 |
Total paid | 243,445 | 205,254 | 199,331 |
Net Balance at December 31 | 358,330 | 348,087 | 323,192 |
Plus reinsurance recoverable | 123,237 | 102,791 | 91,943 |
Balance at December 31 | $ 481,567 | $ 450,878 | $ 415,135 |
Reserves for Unpaid Losses an65
Reserves for Unpaid Losses and Loss Adjustment Expenses (Incurred and Paid Claims Development - Specialty Commercial Segment) (Details) $ in Thousands | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($)claim | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($) | Dec. 31, 2011USD ($) | Dec. 31, 2010USD ($) | Dec. 31, 2009USD ($) | Dec. 31, 2008USD ($) | Dec. 31, 2007USD ($) | |
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | $ 7,608 | $ (6,953) | $ (5,203) | |||||||
Incurred claims and claim adjustment expenses related to current year | 246,080 | 237,102 | 215,258 | |||||||
Total incurred | 253,688 | 230,149 | 210,055 | |||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | 150,378 | 122,122 | 123,100 | |||||||
Paid claims and allocated claim adjustment expenses related to current year | 93,067 | 83,132 | 76,231 | |||||||
Total paid | 243,445 | 205,254 | 199,331 | |||||||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 358,330 | 348,087 | 323,192 | $ 312,468 | ||||||
Specialty Commercial Segment [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Total incurred | 1,029,442 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Total paid | 776,814 | |||||||||
All outstanding liabilities before 2007, net of reinsurance | (26) | |||||||||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 252,602 | |||||||||
Specialty Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2007 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 49,544 | 49,290 | 49,056 | 49,096 | $ 49,654 | $ 50,158 | $ 52,673 | $ 51,813 | $ 52,141 | $ 51,458 |
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 68 | |||||||||
Cumulative number of reported claims | claim | 6,095 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 49,025 | 48,860 | 48,783 | 48,612 | 48,612 | 47,453 | 44,861 | 41,344 | 33,504 | $ 18,851 |
Specialty Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2008 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 55,864 | 55,457 | 55,425 | 55,157 | 56,579 | 57,923 | 58,143 | 56,150 | 55,617 | |
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ (102) | |||||||||
Cumulative number of reported claims | claim | 7,367 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 55,372 | 54,909 | 54,080 | 53,577 | 53,723 | 51,280 | 44,903 | 37,803 | $ 24,134 | |
Specialty Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2009 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 61,361 | 59,988 | 59,635 | 59,831 | 59,471 | 61,196 | 62,679 | 60,950 | ||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 87 | |||||||||
Cumulative number of reported claims | claim | 5,456 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 60,785 | 59,149 | 57,641 | 56,791 | 53,135 | 45,757 | 34,411 | $ 21,259 | ||
Specialty Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2010 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 77,631 | 77,972 | 78,003 | 77,593 | 75,695 | 78,089 | 74,187 | |||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 1,227 | |||||||||
Cumulative number of reported claims | claim | 4,999 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 75,787 | 74,513 | 73,398 | 68,625 | 58,139 | 45,234 | $ 24,818 | |||
Specialty Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2011 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 87,793 | 89,737 | 90,713 | 91,059 | 87,558 | 88,679 | ||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 1,641 | |||||||||
Cumulative number of reported claims | claim | 5,782 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 84,936 | 83,787 | 80,004 | 71,697 | 53,509 | $ 27,454 | ||||
Specialty Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2012 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 116,320 | 115,709 | 111,841 | 111,253 | 106,371 | |||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 2,020 | |||||||||
Cumulative number of reported claims | claim | 7,337 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 109,060 | 97,680 | 82,066 | 60,923 | $ 37,655 | |||||
Specialty Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2013 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 143,983 | 137,230 | 135,114 | 140,546 | ||||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 2,127 | |||||||||
Cumulative number of reported claims | claim | 9,188 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 126,025 | 101,725 | 76,366 | $ 40,475 | ||||||
Specialty Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2014 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 138,842 | 133,464 | 144,996 | |||||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 6,547 | |||||||||
Cumulative number of reported claims | claim | 10,049 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 99,521 | 73,631 | $ 42,097 | |||||||
Specialty Commercial Segment [Member] | Loss Adjustment Expenses Recognized in 2015 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 146,610 | 147,304 | ||||||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 23,447 | |||||||||
Cumulative number of reported claims | claim | 10,707 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 74,906 | $ 39,515 | ||||||||
Specialty Commercial Segment [Member] | Loss Adjustment Expenses Recognized in 2016 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to current year | 151,494 | |||||||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 52,283 | |||||||||
Cumulative number of reported claims | claim | 10,424 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to current year | $ 41,397 |
Reserves for Unpaid Losses an66
Reserves for Unpaid Losses and Loss Adjustment Expenses (Incurred and Paid Claims Development - Standard Commercial Segment) (Details) $ in Thousands | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($)claim | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($) | Dec. 31, 2011USD ($) | Dec. 31, 2010USD ($) | Dec. 31, 2009USD ($) | Dec. 31, 2008USD ($) | Dec. 31, 2007USD ($) | |
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | $ 7,608 | $ (6,953) | $ (5,203) | |||||||
Incurred claims and claim adjustment expenses related to current year | 246,080 | 237,102 | 215,258 | |||||||
Total incurred | 253,688 | 230,149 | 210,055 | |||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | 150,378 | 122,122 | 123,100 | |||||||
Paid claims and allocated claim adjustment expenses related to current year | 93,067 | 83,132 | 76,231 | |||||||
Total paid | 243,445 | 205,254 | 199,331 | |||||||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 358,330 | 348,087 | 323,192 | $ 312,468 | ||||||
Standard Commercial Segment [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Total incurred | 456,070 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Total paid | 374,386 | |||||||||
All outstanding liabilities before 2007, net of reinsurance | 538 | |||||||||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 82,222 | |||||||||
Standard Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2007 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 36,419 | 37,321 | 36,798 | 37,894 | $ 39,476 | $ 41,814 | $ 42,898 | $ 42,632 | $ 45,280 | $ 48,423 |
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 576 | |||||||||
Cumulative number of reported claims | claim | 3,156 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 34,483 | 33,982 | 33,561 | 32,949 | 32,288 | 31,311 | 28,908 | 25,484 | 20,362 | $ 13,883 |
Standard Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2008 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 39,195 | 40,001 | 40,387 | 41,597 | 42,758 | 45,556 | 46,762 | 47,557 | 49,452 | |
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 1,826 | |||||||||
Cumulative number of reported claims | claim | 3,246 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 36,859 | 36,276 | 35,360 | 34,762 | 34,056 | 32,523 | 29,058 | 25,624 | $ 17,182 | |
Standard Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2009 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 43,107 | 43,851 | 44,159 | 45,970 | 46,778 | 46,772 | 45,674 | 44,719 | ||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 2,102 | |||||||||
Cumulative number of reported claims | claim | 2,632 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 40,629 | 40,575 | 40,389 | 38,316 | 35,818 | 32,075 | 28,313 | $ 15,242 | ||
Standard Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2010 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 42,175 | 42,426 | 43,459 | 43,164 | 44,847 | 45,235 | 45,263 | |||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 2,252 | |||||||||
Cumulative number of reported claims | claim | 2,903 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 39,706 | 39,115 | 37,166 | 33,428 | 30,957 | 28,342 | $ 21,302 | |||
Standard Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2011 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 47,423 | 47,266 | 49,268 | 55,156 | 56,489 | 60,236 | ||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 3,387 | |||||||||
Cumulative number of reported claims | claim | 4,364 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 42,441 | 41,140 | 40,301 | 38,909 | 35,119 | $ 24,899 | ||||
Standard Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2012 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 44,272 | 45,990 | 48,222 | 52,554 | 51,998 | |||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 5,144 | |||||||||
Cumulative number of reported claims | claim | 3,212 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 38,526 | 37,191 | 34,789 | 32,203 | $ 23,445 | |||||
Standard Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2013 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 53,174 | 56,703 | 57,528 | 55,482 | ||||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 6,379 | |||||||||
Cumulative number of reported claims | claim | 3,910 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 44,475 | 41,809 | 36,411 | $ 23,123 | ||||||
Standard Commercial Segment [Member] | Loss Adjustment Expenses Recognized In 2014 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 53,568 | 55,808 | 55,488 | |||||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 8,979 | |||||||||
Cumulative number of reported claims | claim | 3,531 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 41,514 | 37,122 | $ 24,255 | |||||||
Standard Commercial Segment [Member] | Loss Adjustment Expenses Recognized in 2015 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 49,857 | 49,571 | ||||||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 11,946 | |||||||||
Cumulative number of reported claims | claim | 3,129 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 34,245 | $ 19,085 | ||||||||
Standard Commercial Segment [Member] | Loss Adjustment Expenses Recognized in 2016 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to current year | 46,880 | |||||||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 16,885 | |||||||||
Cumulative number of reported claims | claim | 2,554 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to current year | $ 21,508 |
Reserves for Unpaid Losses an67
Reserves for Unpaid Losses and Loss Adjustment Expenses (Incurred and Paid Claims Development - Personal Segment) (Details) $ in Thousands | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($)claim | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($) | Dec. 31, 2011USD ($) | Dec. 31, 2010USD ($) | Dec. 31, 2009USD ($) | Dec. 31, 2008USD ($) | Dec. 31, 2007USD ($) | |
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | $ 7,608 | $ (6,953) | $ (5,203) | |||||||
Incurred claims and claim adjustment expenses related to current year | 246,080 | 237,102 | 215,258 | |||||||
Total incurred | 253,688 | 230,149 | 210,055 | |||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | 150,378 | 122,122 | 123,100 | |||||||
Paid claims and allocated claim adjustment expenses related to current year | 93,067 | 83,132 | 76,231 | |||||||
Total paid | 243,445 | 205,254 | 199,331 | |||||||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 358,330 | 348,087 | 323,192 | $ 312,468 | ||||||
Personal Segment [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Total incurred | 490,765 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Total paid | 475,230 | |||||||||
All outstanding liabilities before 2007, net of reinsurance | 9 | |||||||||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 15,544 | |||||||||
Personal Segment [Member] | Loss Adjustment Expenses Recognized In 2007 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | $ 32,528 | 32,528 | 32,517 | 32,272 | $ 31,931 | $ 31,651 | $ 31,485 | $ 31,252 | $ 31,603 | $ 28,774 |
Cumulative number of reported claims | claim | 15,814 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 32,530 | 32,531 | 31,213 | 32,056 | 31,523 | 31,355 | 30,975 | 30,043 | 27,757 | $ 18,106 |
Personal Segment [Member] | Loss Adjustment Expenses Recognized In 2008 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | $ 40,369 | 40,324 | 40,239 | 40,170 | 39,793 | 39,412 | 38,329 | 36,976 | 36,247 | |
Cumulative number of reported claims | claim | 17,353 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 40,347 | 40,323 | 40,309 | 40,210 | 39,511 | 38,925 | 36,782 | 32,555 | $ 20,005 | |
Personal Segment [Member] | Loss Adjustment Expenses Recognized In 2009 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | $ 49,891 | 49,772 | 49,694 | 48,930 | 47,977 | 46,244 | 42,092 | 40,436 | ||
Cumulative number of reported claims | claim | 21,052 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 49,853 | 49,704 | 49,539 | 49,287 | 47,967 | 44,689 | 37,621 | $ 23,306 | ||
Personal Segment [Member] | Loss Adjustment Expenses Recognized In 2010 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 84,591 | 84,252 | 83,903 | 84,724 | 80,765 | 78,294 | 63,862 | |||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 6 | |||||||||
Cumulative number of reported claims | claim | 30,179 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 84,556 | 84,111 | 83,511 | 82,624 | 75,199 | 67,755 | $ 38,643 | |||
Personal Segment [Member] | Loss Adjustment Expenses Recognized In 2011 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 86,948 | 86,804 | 86,757 | 87,810 | 77,652 | 75,746 | ||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ (28) | |||||||||
Cumulative number of reported claims | claim | 31,612 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 86,593 | 86,217 | 85,533 | 83,497 | 67,939 | $ 46,416 | ||||
Personal Segment [Member] | Loss Adjustment Expenses Recognized In 2012 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 72,042 | 71,513 | 70,552 | 73,795 | 58,604 | |||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 50 | |||||||||
Cumulative number of reported claims | claim | 23,937 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 71,995 | 70,807 | 68,849 | 64,278 | $ 37,860 | |||||
Personal Segment [Member] | Loss Adjustment Expenses Recognized In 2013 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 60,211 | 60,100 | 59,132 | 55,706 | ||||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 234 | |||||||||
Cumulative number of reported claims | claim | 23,461 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 59,775 | 58,047 | 54,514 | $ 45,901 | ||||||
Personal Segment [Member] | Loss Adjustment Expenses Recognized In 2014 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 6,243 | 5,340 | 5,452 | |||||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 406 | |||||||||
Cumulative number of reported claims | claim | 19,275 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 5,631 | 4,418 | $ 2,515 | |||||||
Personal Segment [Member] | Loss Adjustment Expenses Recognized in 2015 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to prior years | 25,682 | 23,104 | ||||||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 1,813 | |||||||||
Cumulative number of reported claims | claim | 23,234 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to prior years | $ 22,281 | $ 11,570 | ||||||||
Personal Segment [Member] | Loss Adjustment Expenses Recognized in 2016 [Member] | ||||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Incurred Claims [Abstract] | ||||||||||
Incurred claims and claim adjustment expenses related to current year | 32,260 | |||||||||
Total of incurred-but-not-reported liabilities plus expected development on reported claims | $ 6,638 | |||||||||
Cumulative number of reported claims | claim | 21,134 | |||||||||
Liability For Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract] | ||||||||||
Paid claims and allocated claim adjustment expenses related to current year | $ 21,669 |
Reserves for Unpaid Losses an68
Reserves for Unpaid Losses and Loss Adjustment Expenses (Reconciliation of Incurred and Paid Claims to Liability for Unpaid Losses and LAE) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Liabilities for unpaid losses and allocated loss adjustment expense, net of reinsurance | $ 350,368 | |||
Reinsurance recoverable on unpaid claims | 123,237 | |||
Unallocated claims adjustment expenses | 7,962 | |||
Total gross liability for unpaid claims and claim adjustment expenses | 481,567 | $ 450,878 | $ 415,135 | $ 382,640 |
Specialty Commercial Segment [Member] | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Liabilities for unpaid losses and allocated loss adjustment expense, net of reinsurance | 252,602 | |||
Reinsurance recoverable on unpaid claims | 102,597 | |||
Unallocated claims adjustment expenses | 3,831 | |||
Standard Commercial Segment [Member] | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Liabilities for unpaid losses and allocated loss adjustment expense, net of reinsurance | 82,222 | |||
Reinsurance recoverable on unpaid claims | 8,540 | |||
Unallocated claims adjustment expenses | 3,031 | |||
Personal Segment [Member] | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Liabilities for unpaid losses and allocated loss adjustment expense, net of reinsurance | 15,544 | |||
Reinsurance recoverable on unpaid claims | 12,100 | |||
Unallocated claims adjustment expenses | $ 1,100 |
Reserves for Unpaid Losses an69
Reserves for Unpaid Losses and Loss Adjustment Expenses (Average Annual Percentage Payout of Incurred Claims) (Details) | Dec. 31, 2016 |
Specialty Commercial Segment [Member] | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |
Average annual percentage payout of incurred claims, year one | 32.40% |
Average annual percentage payout of incurred claims, year two | 24.80% |
Average annual percentage payout of incurred claims, year three | 17.40% |
Average annual percentage payout of incurred claims, year four | 12.00% |
Average annual percentage payout of incurred claims, year five | 6.00% |
Average annual percentage payout of incurred claims, year six | 1.20% |
Average annual percentage payout of incurred claims, year seven | 1.20% |
Average annual percentage payout of incurred claims, year eight | 1.50% |
Average annual percentage payout of incurred claims, year nine | 0.50% |
Average annual percentage payout of incurred claims, year ten | (0.30%) |
Standard Commercial Segment [Member] | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |
Average annual percentage payout of incurred claims, year one | 44.60% |
Average annual percentage payout of incurred claims, year two | 23.00% |
Average annual percentage payout of incurred claims, year three | 8.70% |
Average annual percentage payout of incurred claims, year four | 6.60% |
Average annual percentage payout of incurred claims, year five | 5.00% |
Average annual percentage payout of incurred claims, year six | 3.30% |
Average annual percentage payout of incurred claims, year seven | 1.30% |
Average annual percentage payout of incurred claims, year eight | 1.40% |
Average annual percentage payout of incurred claims, year nine | 1.30% |
Average annual percentage payout of incurred claims, year ten | (1.40%) |
Personal Segment [Member] | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |
Average annual percentage payout of incurred claims, year one | 51.50% |
Average annual percentage payout of incurred claims, year two | 29.20% |
Average annual percentage payout of incurred claims, year three | 10.90% |
Average annual percentage payout of incurred claims, year four | 4.30% |
Average annual percentage payout of incurred claims, year five | 1.40% |
Average annual percentage payout of incurred claims, year six | 0.80% |
Average annual percentage payout of incurred claims, year seven | 0.70% |
Average annual percentage payout of incurred claims, year eight | (0.70%) |
Average annual percentage payout of incurred claims, year nine | 1.90% |
Average annual percentage payout of incurred claims, year ten | 0.00% |
Reinsurance (Narrative) (Detail
Reinsurance (Narrative) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Reinsurance [Abstract] | ||
Paid loss recoverable | $ 24.4 | $ 11.1 |
Reinsurance (Schedule of Reinsu
Reinsurance (Schedule of Reinsurance Ceded and Recoveries) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Premium Written : | |||
Direct | $ 549,077 | $ 514,223 | $ 473,233 |
Assumed | (15) | ||
Ceded premiums written | (187,248) | (157,279) | (148,866) |
Net premiums written | 361,829 | 356,944 | 324,352 |
Premium Earned: | |||
Direct | 524,229 | 494,643 | 461,367 |
Assumed | 327 | ||
Ceded | (170,859) | (145,562) | (140,477) |
Premiums Earned, Net, Property and Casualty | 353,370 | 349,081 | 321,217 |
Reinsurance recoveries | $ 116,057 | $ 89,892 | $ 99,911 |
Revolving Credit Facility and72
Revolving Credit Facility and Notes Payable (Narrative) (Details) - USD ($) | Nov. 01, 2016 | Dec. 17, 2015 | Dec. 31, 2016 |
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $ 15,000,000 | ||
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% | ||
Line of credit facility, amount outstanding | $ 0 | ||
Facility B Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $ 30,000,000 | ||
Debt instrument, description of variable rate basis | prime rate or LIBOR plus 3.00% | ||
Line of credit facility, unused capacity, commitment fee percentage | 0.25% | ||
Line of credit facility, commitment fee amount | $ 30,000 | $ 75,000 | |
Line of credit facility, amount outstanding | $ 30,000,000 | ||
Line of credit facility, expiration date | Dec. 17, 2018 | ||
Letters 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% | ||
London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, basis spread on variable rate | 2.50% | ||
London Interbank Offered Rate (LIBOR) [Member] | Facility B Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, basis spread on variable rate | 3.00% |
Subordinated Debt Securities (N
Subordinated Debt Securities (Narrative) (Details) - USD ($) $ in Millions | Aug. 23, 2007 | Jun. 21, 2005 | Dec. 31, 2016 | Jun. 15, 2015 | Dec. 31, 2015 |
Subordinated Debt [Member] | |||||
Subordinated Borrowing [Line Items] | |||||
Long-term debt, gross | $ 55.7 | $ 55.6 | |||
Hallmark Statutory Trust I [Member] | |||||
Subordinated Borrowing [Line Items] | |||||
Long-term debt, gross | $ 30.9 | $ 30.9 | |||
Debt instrument, maturity date | Jun. 15, 2035 | ||||
Proceeds from issuance of trust preferred securities | $ 30 | ||||
Proceeds from issuance of common stock | $ 0.9 | ||||
Subordinated borrowing, interest rate | 4.21% | 7.725% | |||
Debt instrument interest rate fixed to floating date | Jun. 15, 2015 | ||||
Debt instrument, description of variable rate basis | interest adjusts quarterly to the three-month LIBOR rate plus 3.25 percentage points | ||||
Hallmark Statutory Trust I [Member] | Subordinated Debt [Member] | |||||
Subordinated Borrowing [Line Items] | |||||
Long-term debt, gross | $ 30.9 | ||||
Proceeds from issuance of trust preferred securities | $ 30 | ||||
Hallmark Statutory Trust I I [Member] | Subordinated Debt [Member] | |||||
Subordinated Borrowing [Line Items] | |||||
Long-term debt, gross | $ 25.8 | $ 25.8 | |||
Debt instrument, maturity date | Sep. 15, 2037 | ||||
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, description of variable rate basis | three-month LIBOR rate plus 2.90 percentage points | ||||
London Interbank Offered Rate (LIBOR) [Member] | Hallmark Statutory Trust I [Member] | |||||
Subordinated Borrowing [Line Items] | |||||
Debt instrument, basis spread on variable rate | 3.25% | ||||
London Interbank Offered Rate (LIBOR) [Member] | Hallmark Statutory Trust I I [Member] | Subordinated Debt [Member] | |||||
Subordinated Borrowing [Line Items] | |||||
Debt instrument, basis spread on variable rate | 2.90% |
Segment Information (Narrative)
Segment Information (Narrative) (Details) | 12 Months Ended |
Dec. 31, 2016 | |
American Hallmark Insurance Company [Member] | |
Net premiums written, percentage | 34.00% |
Hallmark Insurance Company (Payer) [Member] | |
Net premiums written, percentage | 32.00% |
Hallmark Specialty Insurance Company [Member] | |
Net premiums written, percentage | 24.00% |
Hallmark National Insurance Company [Member] | |
Net premiums written, percentage | 10.00% |
Segment Information (Schedule o
Segment Information (Schedule of Segment Reporting, by Segment) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues | |||||||||||
Revenues | $ 97,254 | $ 97,618 | $ 91,052 | $ 90,028 | $ 90,071 | $ 93,684 | $ 97,197 | $ 91,450 | $ 375,952 | $ 372,402 | $ 337,366 |
Depreciation and Amortization Expense | |||||||||||
Depreciation and Amortization Expense | 3,894 | 3,516 | 3,224 | ||||||||
Interest Expense | |||||||||||
Interest Expense | 4,549 | 3,906 | 4,576 | ||||||||
Tax Expense (Benefit) | |||||||||||
Income tax expense (benefit) | $ (2,512) | $ 2,128 | $ 421 | $ 1,915 | $ 1,641 | $ 3,137 | $ 2,899 | $ 2,346 | 1,952 | 10,023 | 5,353 |
Pre-tax income (loss), net of non-controlling interest: | |||||||||||
Consolidated pre-tax income (loss), net of non-controlling interest | 8,478 | 31,886 | 18,782 | ||||||||
Specialty Commercial Segment [Member] | |||||||||||
Revenues | |||||||||||
Revenues | 255,897 | 249,910 | 241,920 | ||||||||
Depreciation and Amortization Expense | |||||||||||
Depreciation and Amortization Expense | 2,579 | 2,537 | 2,503 | ||||||||
Interest Expense | |||||||||||
Interest Expense | |||||||||||
Tax Expense (Benefit) | |||||||||||
Income tax expense (benefit) | 7,886 | 11,609 | 9,690 | ||||||||
Pre-tax income (loss), net of non-controlling interest: | |||||||||||
Consolidated pre-tax income (loss), net of non-controlling interest | 24,417 | 40,277 | 34,237 | ||||||||
Standard Commercial Segment [Member] | |||||||||||
Revenues | |||||||||||
Revenues | 71,966 | 76,864 | 81,464 | ||||||||
Depreciation and Amortization Expense | |||||||||||
Depreciation and Amortization Expense | 101 | 136 | 183 | ||||||||
Interest Expense | |||||||||||
Interest Expense | |||||||||||
Tax Expense (Benefit) | |||||||||||
Income tax expense (benefit) | 3,011 | 1,436 | 622 | ||||||||
Pre-tax income (loss), net of non-controlling interest: | |||||||||||
Consolidated pre-tax income (loss), net of non-controlling interest | 8,866 | 6,687 | 4,595 | ||||||||
Personal Segment [Member] | |||||||||||
Revenues | |||||||||||
Revenues | 49,826 | 45,538 | 20,404 | ||||||||
Depreciation and Amortization Expense | |||||||||||
Depreciation and Amortization Expense | 1,070 | 779 | 515 | ||||||||
Interest Expense | |||||||||||
Interest Expense | |||||||||||
Tax Expense (Benefit) | |||||||||||
Income tax expense (benefit) | (3,821) | (1,345) | (574) | ||||||||
Pre-tax income (loss), net of non-controlling interest: | |||||||||||
Consolidated pre-tax income (loss), net of non-controlling interest | (6,839) | (885) | 1,226 | ||||||||
Corporate [Member] | |||||||||||
Revenues | |||||||||||
Revenues | (1,737) | 90 | (6,422) | ||||||||
Depreciation and Amortization Expense | |||||||||||
Depreciation and Amortization Expense | 144 | 64 | 23 | ||||||||
Interest Expense | |||||||||||
Interest Expense | 4,549 | 3,906 | 4,576 | ||||||||
Tax Expense (Benefit) | |||||||||||
Income tax expense (benefit) | (5,124) | (1,677) | (4,385) | ||||||||
Pre-tax income (loss), net of non-controlling interest: | |||||||||||
Consolidated pre-tax income (loss), net of non-controlling interest | (17,966) | (14,193) | (21,276) | ||||||||
Parent Company [Member] | |||||||||||
Revenues | |||||||||||
Revenues | 21,281 | 18,173 | 17,747 | ||||||||
Depreciation and Amortization Expense | |||||||||||
Depreciation and Amortization Expense | 148 | 65 | 68 | ||||||||
Interest Expense | |||||||||||
Interest Expense | 4,549 | 3,906 | 4,576 | ||||||||
Tax Expense (Benefit) | |||||||||||
Income tax expense (benefit) | $ (1,315) | $ (1,273) | $ (1,623) |
Segment Information (Schedule76
Segment Information (Schedule of Segment Reporting Additional Information by Segment) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Assets | $ 1,162,460 | $ 1,075,547 |
Specialty Commercial Segment [Member] | ||
Assets | 734,763 | 660,263 |
Standard Commercial Segment [Member] | ||
Assets | 164,295 | 156,722 |
Personal Segment [Member] | ||
Assets | 241,686 | 239,632 |
Corporate [Member] | ||
Assets | 21,716 | 18,930 |
Parent Company [Member] | ||
Assets | $ 379,079 | $ 374,160 |
Earnings Per Share (Narrative)
Earnings Per Share (Narrative) (Details) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share [Abstract] | |||
Antidilutive securities excluded from computation of earnings per share | 272,500 | 267,500 | 544,999 |
Earnings Per Share (Schedule of
Earnings Per Share (Schedule of Earnings Per Share, Basic and Diluted) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Numerator for both basic and diluted earnings per share: | |||||||||||
Net income (loss) attributable to Hallmark Financial Services, Inc. | $ 6,526 | $ 21,863 | $ 13,429 | ||||||||
Denominator, basic shares | 18,780 | 19,211 | 19,197 | ||||||||
Effect of dilutive securities: | |||||||||||
Stock-based compensation awards | 161 | 194 | 169 | ||||||||
Denominator, diluted shares | 18,941 | 19,405 | 19,366 | ||||||||
Basic earnings per share: (in dollars per share) | $ (0.20) | $ 0.27 | $ 0.06 | $ 0.21 | $ 0.18 | $ 0.35 | $ 0.33 | $ 0.28 | $ 0.35 | $ 1.14 | $ 0.70 |
Diluted earnings per share: (in dollars per share) | $ (0.20) | $ 0.27 | $ 0.06 | $ 0.21 | $ 0.17 | $ 0.35 | $ 0.33 | $ 0.28 | $ 0.34 | $ 1.13 | $ 0.69 |
Regulatory Capital Restrictio79
Regulatory Capital Restrictions (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Regulatory Capital Restrictions [Line Items] | |||
Retained earnings, unappropriated | $ 68.4 | ||
Aggregate amount of shareholder dividends, maximum available next current fiscal year | 19.4 | ||
Hallmark (Payee) [Member] | |||
Regulatory Capital Restrictions [Line Items] | |||
Dividends paid by subsidiaries | 10.5 | $ 8 | |
Hallmark Insurance Company (Payer) [Member] | Hallmark (Payee) [Member] | |||
Regulatory Capital Restrictions [Line Items] | |||
Insurance agency management fee | $ 1.1 | 1.3 | $ 1.1 |
Subsidiaries [Member] | |||
Regulatory Capital Restrictions [Line Items] | |||
Statutory Accounting Practices, Future Dividend Payments Restrictions | lesser of 10% of prior year policyholders' surplus or prior year's net investment income | ||
Aggregate amount of shareholder dividends, maximum available next current fiscal year | $ 28 | ||
American Hallmark Insurance Company and Texas Builders Insurance Company [Member] | |||
Regulatory Capital Restrictions [Line Items] | |||
Statutory Accounting Practices, Future Dividend Payments Restrictions | greater of statutory net income for the prior calendar year or 10% of statutory policyholders' surplus as of the prior year end | ||
Hallmark Specialty Insurance Company [Member] | |||
Regulatory Capital Restrictions [Line Items] | |||
Statutory Accounting Practices, Future Dividend Payments Restrictions | greater of 10% of prior year policyholders' surplus or prior year's statutory net income, not including realized capital gains | ||
Hallmark Insurance Company Subsidiaries [Member] | |||
Regulatory Capital Restrictions [Line Items] | |||
Amount of restricted net assets for consolidated and unconsolidated subsidiaries | $ 197.3 | ||
Statutory accounting practices, statutory capital and surplus, balance | 248.4 | 247.2 | |
Statutory accounting practices, statutory net income amount | $ 8.7 | $ 24.6 | $ 22.3 |
Share-based Payment Arrangeme80
Share-based Payment Arrangements (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 22, 2016 | Apr. 01, 2016 | May 29, 2015 | Apr. 01, 2015 | Sep. 08, 2014 | Apr. 10, 2013 | Jul. 27, 2012 | Jun. 30, 2013 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock options, Granted | 0 | 0 | 0 | |||||||||
Options contractual term | 1 year 8 months 12 days | |||||||||||
Other than options, granted | 7,144 | 8,616 | ||||||||||
Long Term Incentive Plan 2005 [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based compensation arrangement by share-based payment award, incentive stock options to purchase number of shares | 335,074 | |||||||||||
Share-based compensation arrangement by share-based payment award, non-qualified stock options to purchase number of shares | 289,157 | |||||||||||
Share-based compensation arrangement by share-based payment award, restricted stock options to purchase number of shares | 151,901 | |||||||||||
Long Term Incentive Plan 2015 [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based compensation arrangement by share-based payment award, number of shares authorized | 2,000,000 | |||||||||||
Share-based compensation arrangement by share-based payment award, restricted stock options to purchase number of shares | 292,961 | |||||||||||
Stock options, Granted | 0 | |||||||||||
Long Term Incentive Plan 2005 and 2015 [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Unrecognized compensation cost related to non-vested awards | $ 0 | |||||||||||
Prior to 2009 Incentive Stock Options [Member] | Minimum [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock-based compensation incentive stock options grant under incentive plan termination period | 5 years | |||||||||||
Prior to 2009 Incentive Stock Options [Member] | Maximum [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock-based compensation incentive stock options grant under incentive plan termination period | 10 years | |||||||||||
Prior to 2009 Incentive Stock Options [Member] | Long Term Incentive Plan 2005 [Member] | First Anniversary [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Percentage | 10.00% | |||||||||||
Prior to 2009 Incentive Stock Options [Member] | Long Term Incentive Plan 2005 [Member] | Second Anniversary [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Percentage | 20.00% | |||||||||||
Prior to 2009 Incentive Stock Options [Member] | Long Term Incentive Plan 2005 [Member] | Third Anniversary [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Percentage | 30.00% | |||||||||||
Prior to 2009 Incentive Stock Options [Member] | Long Term Incentive Plan 2005 [Member] | Fourth Anniversary [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Percentage | 40.00% | |||||||||||
2009 Incentive Stock Options [Member] | Long Term Incentive Plan 2005 [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock-based compensation incentive stock options grant under incentive plan termination period | 10 years | |||||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights | vest in equal annual increments on each of the first seven anniversary dates | |||||||||||
Incentive Stock Options 2010 [Member] | Long Term Incentive Plan 2005 [Member] | 25,000 Grant [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock-based compensation incentive stock options grant under incentive plan termination period | 10 years | |||||||||||
Share-based compensation arrangement by share based payment award options vested and expected to vest number | 25,000 | |||||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights | vests in equal annual increments on each of the first three anniversary dates | |||||||||||
Non Qualified Stock Options [Member] | Long Term Incentive Plan 2005 [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 100.00% | |||||||||||
Stock-based compensation incentive stock options grant under incentive plan termination period | 10 years | |||||||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 6 months | |||||||||||
Non Qualified Stock Options [Member] | Long Term Incentive Plan 2005 [Member] | 200,000 Grant [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock-based compensation incentive stock options grant under incentive plan termination period | 10 years | |||||||||||
Share-based compensation arrangement by share based payment award options vested and expected to vest number | 200,000 | |||||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights | vests in equal annual increments on each of the first seven anniversary dates | |||||||||||
Restricted Stock Units (RSUs) [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Allocated share-based compensation expense | $ 226 | $ 49 | ||||||||||
Allocated share based compensation benefit | $ 156 | |||||||||||
Income tax benefit of share-based payments recognized in income | $ 79 | $ 17 | ||||||||||
Income tax expense of share-based payments recognized in income | $ 55 | |||||||||||
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% | |||||||||||
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% | |||||||||||
Restricted Stock Units (RSUs) [Member] | Long Term Incentive Plan 2005 [Member] | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Other than options, granted | 175,983 | 122,823 | 129,463 | 122,770 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 7,144 | 8,616 | 7,144 | |||||||||
Other than options, forfeited | 9,280 | 115,623 | ||||||||||
Vested | 7,144 | 8,616 | 7,144 | |||||||||
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 | 122,770 | 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] | ||||||||||||
Unrecognized compensation cost related to non-vested awards | $ 141 | |||||||||||
Employee Service Share-based Compensation Nonvested Awards, Total Compensation Cost Not Yet Recognized Next Twelve Months | 80 | |||||||||||
Employee Service Share-based Compensation Nonvested Awards, Total Compensation Cost Expected to Recognize During Remainder of Year Two | 50 | |||||||||||
Employee Service Share-based Compensation Nonvested Awards, Total Compensation Cost Expected to Recognize During Remainder of Year Three | $ 11 | |||||||||||
Other than options granted, weighted average grant date fair value | $ 11.41 | $ 11.10 | $ 9.66 | $ 9.20 |
Share-based Payment Arrangeme81
Share-based Payment Arrangements (Summary of the Status of Stock Options) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Payment Arrangements [Abstract] | |||
Stock options, Outstanding at January 1, 2016 | 869,113 | ||
Stock options, Granted | 0 | 0 | 0 |
Stock options, exercised (in shares) | (70,000) | ||
Stock options, forfeited or expired | (174,882) | ||
Stock options, Outstanding at December 31, 2016 | 624,231 | 869,113 | |
Stock options, Exercisable at December 31, 2016 | 624,231 | ||
Weighted Average Exercise Price, Outstanding at January 1, 2016 | $ 9.51 | ||
Weighted Average Exercise Price, Exercised | 6.66 | ||
Weighted Average Exercise Price, Forfeited or expired | 11.96 | ||
Weighted Average Exercise Price, Outstanding at December 31, 2016 | 9.14 | $ 9.51 | |
Weighted Average Exercise Price, Exercisable at December 31, 2016 | $ 9.14 | ||
Average Remaining Contractual Term, Outstanding at December 31, 2016 (in years) | 1 year 8 months 12 days | ||
Average Remaining Contractual Term, Exercisable at December 31, 2016 (in years) | 1 year 8 months 12 days | ||
Aggregate Intrinsic Value, Outstanding at December 31, 2016 | $ 1,714 | ||
Aggregate Intrinsic Value, Exercisable at December 31, 2016 | $ 1,714 |
Share-based Payment Arrangeme82
Share-based Payment Arrangements (Schedule of Options, Grants in Period, Grant Date Intrinsic Value) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Cost of share-based payments (non-cash) | $ (118) | $ 383 | $ 222 |
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Intrinsic value of options exercised | 250 | 393 | 412 |
Cost of share-based payments (non-cash) | 38 | 157 | 173 |
Income tax benefit of share-based payments recognized in income | $ 8 | $ 30 | $ 30 |
Share-based Payment Arrangeme83
Share-based Payment Arrangements (Schedule of Nonvested Restricted Stock Units Activity) (Details) - shares | Apr. 01, 2016 | Apr. 01, 2015 | Sep. 08, 2014 | Apr. 10, 2013 | Jul. 27, 2012 | Jun. 30, 2013 | Dec. 31, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted | 7,144 | 8,616 | |||||
Long Term Incentive Plan 2005 [Member] | Restricted Stock Units (RSUs) [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Nonvested at January 1, 2015 | 296,571 | ||||||
Granted | 175,983 | 122,823 | 129,463 | 122,770 | |||
Vested | (7,144) | (8,616) | (7,144) | ||||
Forfeited | (9,280) | (115,623) | |||||
Nonvested at December 31, 2015 | 296,574 |
Retirement Plans (Narrative) (D
Retirement Plans (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Defined Benefit Plan Disclosure [Line Items] | |||||
Defined benefit plan, fair value of plan assets | $ 10,415 | $ 10,419 | $ 11,290 | $ 10,851 | |
Defined benefit plan, fair value of plan assets, excluding cash and cash equivalents | $ 10,091 | $ 10,120 | |||
Favorable rate of return equal to or greater than average inflation rate | 5.00% | ||||
Investment objective achievement period | 60 years | ||||
Single stock issue restricted among total portfolio value | 5.00% | ||||
Securities held in mutual or commingled funds | 90.00% | ||||
Expected return on plan assets | 6.50% | 6.50% | 6.50% | ||
Net periodic pension cost | $ (29) | $ (80) | $ (4) | ||
Interest cost on projected benefit obligation | 512 | 518 | 532 | ||
Defined benefit plan, expected return on plan assets | (653) | (701) | (698) | ||
Defined contribution plan, employer discretionary contribution amount | 400 | 300 | $ 300 | ||
Scenario, Forecast for 2017 [Member] | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Net periodic pension cost | $ (63) | ||||
Interest cost on projected benefit obligation | 444 | ||||
Defined benefit plan, expected return on plan assets | (649) | ||||
Defined benefit plan, amortization of losses (gains) | $ 142 | ||||
Cash and Cash Equivalents [Member] | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Defined benefit plan, fair value of plan assets | 300 | 300 | |||
Equity Securities [Member] | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Defined benefit plan, fair value of plan assets, excluding cash and cash equivalents | $ 6,653 | 6,697 | |||
Defined benefit plan, target plan asset allocations range, minimum | 45.00% | ||||
Defined benefit plan, target plan asset allocations range, maximum | 75.00% | ||||
Debt Securities [Member] | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Defined benefit plan, fair value of plan assets, excluding cash and cash equivalents | $ 3,438 | $ 3,423 | |||
Standard Commercial P & C Business Unit [Member] | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Minimum hours of service to participate within defined benefit plan | 1000 hours |
Retirement Plans (Changes in Be
Retirement Plans (Changes in Benefit Obligations, Components of Benefit Costs, Weighted-Average Assumptions, and Plan Assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Assumptions (end of period): | |||
Discount rate used in determining benefit obligation | 3.88% | 4.12% | 3.86% |
Reconciliation of funded status (end of period): | |||
Accumulated benefit obligation | $ (12,618) | $ (12,915) | $ (13,909) |
Projected benefit obligation | (12,618) | (12,915) | (13,909) |
Fair value of plan assets | 10,415 | 10,419 | 11,290 |
Defined benefit plan, funded status of plan, total | (2,203) | (2,496) | (2,619) |
Net actuarial loss | (4,102) | (3,957) | (4,000) |
Accumulated other comprehensive loss | (4,102) | (3,957) | (4,000) |
Prepaid pension cost | 1,899 | 1,461 | 1,381 |
Net amount recognized as of December 31 | (2,203) | (2,496) | (2,619) |
Changes in projected benefit obligation: | |||
Benefit obligation as of beginning of period | 12,915 | 13,909 | 12,284 |
Interest cost | 512 | 518 | 532 |
Actuarial liability loss | 19 | (646) | 1,947 |
Benefits paid | (828) | (866) | (854) |
Benefit obligation as of end of period | 12,618 | 12,915 | 13,909 |
Change in plan assets: | |||
Fair value of plan assets as of beginning of period | 10,419 | 11,290 | 10,851 |
Actual return on plan assets (net of expenses) | 415 | (5) | 760 |
Employer contributions | 409 | 533 | |
Benefits paid | 828 | 866 | 854 |
Fair value of plan assets as of end of period | 10,415 | 10,419 | 11,290 |
Net periodic pension cost: | |||
Service cost - benefits earned during the period | |||
Interest cost on projected benefit obligation | 512 | 518 | 532 |
Expected return on plan assets | (653) | (701) | (698) |
Recognized actuarial loss | 112 | 103 | 162 |
Net periodic pension cost | $ (29) | $ (80) | $ (4) |
Discount rate | 4.12% | 3.86% | 4.49% |
Expected return on plan assets | 6.50% | 6.50% | 6.50% |
Retirement Plans (Estimated Fut
Retirement Plans (Estimated Future Benefit Payments) (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Retirement Plans [Abstract] | |
2,017 | $ 884 |
2,018 | 883 |
2,019 | 875 |
2,020 | 862 |
2,021 | 863 |
2022-2026 | $ 4,071 |
Retirement Plans (Weighted-Aver
Retirement Plans (Weighted-Average Asset Allocation for the Defined Benefit Cash Balance Plan) (Details) | Dec. 31, 2016 | Dec. 31, 2015 |
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, actual plan asset allocations | 100.00% | 100.00% |
Debt Securities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, actual plan asset allocations | 33.00% | 33.00% |
Equity Securities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, actual plan asset allocations | 64.00% | 64.00% |
Other Liabilities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, actual plan asset allocations | 3.00% | 3.00% |
Retirement Plans (Schedule of F
Retirement Plans (Schedule of Fair Value, Assets Measured on Recurring Basis) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, fair value of plan assets, excluding cash and cash equivalents | $ 10,091 | $ 10,120 |
Debt Securities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, fair value of plan assets, excluding cash and cash equivalents | 3,438 | 3,423 |
Equity Securities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, fair value of plan assets, excluding cash and cash equivalents | 6,653 | 6,697 |
Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, fair value of plan assets, excluding cash and cash equivalents | 6,653 | 6,697 |
Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, fair value of plan assets, excluding cash and cash equivalents | 6,653 | 6,697 |
Fair Value, Inputs, Level 2 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, fair value of plan assets, excluding cash and cash equivalents | 3,438 | 3,423 |
Fair Value, Inputs, Level 2 [Member] | Debt Securities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan, fair value of plan assets, excluding cash and cash equivalents | $ 3,438 | $ 3,423 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Income Taxes [Abstract] | |
Operating loss carryforwards | $ 911 |
Income tax carryback period | 2 years |
Income tax carryforward period | 20 years |
Uncertain tax positions | $ 0 |
Income Taxes (Schedule of Defer
Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax liabilities: | ||
Deferred policy acquisition costs | $ (6,717) | $ (7,128) |
Net unrealized holding gain on investments | (7,395) | (5,339) |
Agency relationship | (56) | (66) |
Intangible assets | (4,623) | (5,118) |
Goodwill | (559) | (519) |
Fixed assets | (1,106) | (861) |
Other | (435) | (367) |
Total deferred tax liabilities | (20,891) | (19,398) |
Deferred tax assets: | ||
Unearned premiums | 11,184 | 10,592 |
Amortization of non-compete agreements | 238 | 298 |
Pension liability | 1,436 | 1,385 |
Net operating loss carry-forward | 319 | 426 |
Unpaid loss and loss adjustment expense | 6,208 | 6,920 |
Rent reserve | 247 | 297 |
Bond amortization | 434 | 421 |
Bonus accrual | 291 | 759 |
Investment impairments | 1,419 | 1,120 |
Other | 480 | 540 |
Total deferred tax assets | 22,256 | 22,758 |
Deferred federal income taxes, net | $ 1,365 | $ 3,360 |
Income Taxes (Schedule of Effec
Income Taxes (Schedule of Effective Income Tax Rate Reconciliation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes [Abstract] | |||||||||||
Computed expected income tax expense (benefit) at statutory regulatory tax rate | $ 2,967 | $ 11,160 | $ 6,574 | ||||||||
Meals and entertainment | 81 | 32 | 27 | ||||||||
Tax exempt interest | (1,164) | (1,259) | (1,276) | ||||||||
Dividends received deduction | (133) | (141) | (107) | ||||||||
State taxes (net of federal benefit) | 203 | 176 | 259 | ||||||||
Other | (2) | 55 | (124) | ||||||||
Income tax expense (benefit) | $ (2,512) | $ 2,128 | $ 421 | $ 1,915 | $ 1,641 | $ 3,137 | $ 2,899 | $ 2,346 | 1,952 | 10,023 | 5,353 |
Current income tax (benefit) expense | 1,547 | 11,053 | 5,746 | ||||||||
Deferred income tax expense (benefit) | 405 | (1,030) | (393) | ||||||||
Income tax (benefit) expense | $ (2,512) | $ 2,128 | $ 421 | $ 1,915 | $ 1,641 | $ 3,137 | $ 2,899 | $ 2,346 | $ 1,952 | $ 10,023 | $ 5,353 |
Income Taxes (Summary of Operat
Income Taxes (Summary of Operating Loss Carryforwards) (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Net Operating Loss | $ 911 |
Operating Loss Expires In 2022 [Member] | |
Net Operating Loss | 553 |
Operating Loss Expires In 2028 [Member] | |
Net Operating Loss | 2 |
Operating Loss Expires in 2029 [Member] | |
Net Operating Loss | 25 |
Operating Loss Expires In 2031 [Member] | |
Net Operating Loss | 45 |
Operating Loss Expires In 2032 [Member] | |
Net Operating Loss | 77 |
Operating Loss Expires In 2033 [Member] | |
Net Operating Loss | 73 |
Operating Loss Expires In 2034 [Member] | |
Net Operating Loss | 59 |
Operating Loss Expires in 2035 [Member] | |
Net Operating Loss | 33 |
Operating Loss Expires in 2036 [Member] | |
Net Operating Loss | $ 44 |
Commitments and Contingencies93
Commitments and Contingencies (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies [Abstract] | |||
Operating leases, rent expense, net | $ 2,500,000 | $ 2,200,000 | $ 2,300,000 |
Guaranty association assessments | 100,000 | $ 0 | |
Contingent liability premium taxes | 2,500,000 | ||
Contingent liability penalties and interest | $ 700,000 |
Commitments and Contingencies94
Commitments and Contingencies (Schedule of Future Minimum Rental Payments for Operating Leases) (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Commitments and Contingencies [Abstract] | |
2,017 | $ 2,281 |
2,018 | 1,948 |
2,019 | 1,874 |
2,020 | 1,841 |
2,021 | 994 |
2022 and thereafter | 341 |
Total minimum lease payments | 9,279 |
Minimum sublease rentals due under noncancelable subleases | $ 500 |
Changes in Accumulated Other 95
Changes in Accumulated Other Comprehensive Income Balances (Schedule of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | $ 7,418 | ||
Other comprehensive income (loss): | |||
Change in net actuarial gain (loss) | (145) | $ 43 | $ (1,723) |
Tax effect on change in net actuarial gain (loss) | 51 | (15) | 603 |
Unrealized holding (losses) gains arising during the period | 6,019 | (10,191) | 3,543 |
Tax effect on unrealized gains (losses) arising during the period | (2,107) | 3,567 | (1,240) |
Reclassification adjustment for gains included in net realized gains | (1,331) | (5,826) | (408) |
Tax effect on reclassification adjustment for gains included in income tax expense | 466 | 2,039 | 143 |
Other comprehensive income, net of tax | 2,953 | (10,383) | 918 |
Ending Balance | 10,371 | 7,418 | |
Pension Liability [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | (2,572) | (2,600) | (1,480) |
Other comprehensive income (loss): | |||
Change in net actuarial gain (loss) | (145) | 43 | (1,723) |
Tax effect on change in net actuarial gain (loss) | 51 | (15) | 603 |
Other comprehensive income, net of tax | (94) | 28 | (1,120) |
Ending Balance | (2,666) | (2,572) | (2,600) |
Unrealized Gains (Loss) [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | 9,990 | 20,401 | 18,363 |
Other comprehensive income (loss): | |||
Unrealized holding (losses) gains arising during the period | 6,019 | (10,191) | 3,543 |
Tax effect on unrealized gains (losses) arising during the period | (2,107) | 3,567 | (1,240) |
Reclassification adjustment for gains included in net realized gains | (1,331) | (5,826) | (408) |
Tax effect on reclassification adjustment for gains included in income tax expense | 466 | 2,039 | 143 |
Other comprehensive income, net of tax | 3,047 | (10,411) | 2,038 |
Ending Balance | 13,037 | 9,990 | 20,401 |
Accumulated Other Comprehensive Income [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | 7,418 | 17,801 | 16,883 |
Other comprehensive income (loss): | |||
Change in net actuarial gain (loss) | (145) | 43 | (1,723) |
Tax effect on change in net actuarial gain (loss) | 51 | (15) | 603 |
Unrealized holding (losses) gains arising during the period | 6,019 | (10,191) | 3,543 |
Tax effect on unrealized gains (losses) arising during the period | (2,107) | 3,567 | (1,240) |
Reclassification adjustment for gains included in net realized gains | (1,331) | (5,826) | (408) |
Tax effect on reclassification adjustment for gains included in income tax expense | 466 | 2,039 | 143 |
Other comprehensive income, net of tax | 2,953 | (10,383) | 918 |
Ending Balance | 10,371 | 7,418 | $ 17,801 |
Parent Company [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | 7,418 | ||
Other comprehensive income (loss): | |||
Ending Balance | $ 10,371 | $ 7,418 |
Unaudited Selected Quarterly 96
Unaudited Selected Quarterly Financial Information (Schedule of Quarterly Financial Information) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Unaudited Selected Quarterly Financial Information [Abstract] | |||||||||||
Total revenue | $ 97,254 | $ 97,618 | $ 91,052 | $ 90,028 | $ 90,071 | $ 93,684 | $ 97,197 | $ 91,450 | $ 375,952 | $ 372,402 | $ 337,366 |
Total expense | 103,428 | 90,442 | 89,565 | 84,039 | 84,984 | 83,849 | 87,922 | 83,761 | 367,474 | 340,516 | 318,584 |
Income (loss) before tax | (6,174) | 7,176 | 1,487 | 5,989 | 5,087 | 9,835 | 9,275 | 7,689 | 8,478 | 31,886 | 18,782 |
Income tax expense (benefit) | (2,512) | 2,128 | 421 | 1,915 | 1,641 | 3,137 | 2,899 | 2,346 | 1,952 | 10,023 | 5,353 |
Net income (loss) | $ (3,662) | $ 5,048 | $ 1,066 | $ 4,074 | $ 3,446 | $ 6,698 | $ 6,376 | $ 5,343 | 6,526 | 21,863 | 13,429 |
Net income (loss) attributable to Hallmark Financial Services, Inc. | $ 6,526 | $ 21,863 | $ 13,429 | ||||||||
Basic earnings (loss) per share: | $ (0.20) | $ 0.27 | $ 0.06 | $ 0.21 | $ 0.18 | $ 0.35 | $ 0.33 | $ 0.28 | $ 0.35 | $ 1.14 | $ 0.70 |
Diluted earnings (loss) per share: | $ (0.20) | $ 0.27 | $ 0.06 | $ 0.21 | $ 0.17 | $ 0.35 | $ 0.33 | $ 0.28 | $ 0.34 | $ 1.13 | $ 0.69 |
Schedule II - Condensed Finan97
Schedule II - Condensed Financial Information of Registrant (Parent Company Only) (Balance Sheet) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
ASSETS | ||||
Cash and cash equivalents | $ 79,632 | $ 114,446 | $ 130,985 | $ 141,666 |
Investment in subsidiaries | 1,702 | 1,702 | ||
Deferred federal income taxes | 1,365 | 3,360 | ||
Federal income tax recoverable | 3,951 | 1,779 | ||
Other assets | 13,801 | 10,192 | ||
Total assets | 1,162,460 | 1,075,547 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Revolving credit facility payable | 30,000 | 30,000 | ||
Subordinated debt securities (less unamortized debt issuance cost of $1,001 in 2016 and $1,053 in 2015) | 55,701 | 55,649 | ||
Accounts payable and other accrued expenses | 25,296 | 23,253 | ||
Total liabilities | 896,724 | 813,521 | ||
Stockholders' equity: | ||||
Common stock, $.18 par value, authorized 33,333,333 shares; issued 20,872,831 shares in 2016 and 2015 | 3,757 | 3,757 | ||
Capital in excess of par value | 123,166 | 123,480 | ||
Retained earnings | 148,027 | 141,501 | ||
Accumulated other comprehensive income | 10,371 | 7,418 | ||
Treasury stock (2,260,849 shares in 2016 and 1,775,512 in 2015), at cost | (19,585) | (14,130) | ||
Total stockholders equity | 265,736 | 262,026 | 252,037 | 238,118 |
Total liabilities and stockholders' equity | 1,162,460 | 1,075,547 | ||
Parent Company [Member] | ||||
ASSETS | ||||
Cash and cash equivalents | 9,034 | 8,014 | $ 11,839 | $ 8,063 |
Investment in subsidiaries | 363,078 | 361,769 | ||
Deferred federal income taxes | 333 | 942 | ||
Federal income tax recoverable | 2,756 | |||
Other assets | 3,878 | 3,435 | ||
Total assets | 379,079 | 374,160 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Revolving credit facility payable | 30,000 | 30,000 | ||
Subordinated debt securities (less unamortized debt issuance cost of $1,001 in 2016 and $1,053 in 2015) | 55,701 | 55,649 | ||
Current federal income tax payable | 72 | |||
Accounts payable and other accrued expenses | 27,642 | 26,413 | ||
Total liabilities | 113,343 | 112,134 | ||
Stockholders' equity: | ||||
Common stock, $.18 par value, authorized 33,333,333 shares; issued 20,872,831 shares in 2016 and 2015 | 3,757 | 3,757 | ||
Capital in excess of par value | 123,166 | 123,480 | ||
Retained earnings | 148,027 | 141,501 | ||
Accumulated other comprehensive income | 10,371 | 7,418 | ||
Treasury stock (2,260,849 shares in 2016 and 1,775,512 in 2015), at cost | (19,585) | (14,130) | ||
Total stockholders equity | 265,736 | 262,026 | ||
Total liabilities and stockholders' equity | $ 379,079 | $ 374,160 |
Schedule II - Condensed Finan98
Schedule II - Condensed Financial Information of Registrant (Parent Company Only) (Balance Sheet Extra) (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Unamortized debt issuance cost (in dollars) | $ 1,001 | $ 1,053 |
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 | 2,260,849 | 1,775,512 |
Parent Company [Member] | ||
Unamortized debt issuance cost (in dollars) | $ 1,001 | $ 1,053 |
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 | 2,260,849 | 1,775,512 |
Schedule II - Condensed Finan99
Schedule II - Condensed Financial Information of Registrant (Parent Company Only) (Comprehensive (loss) Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Investment loss, net of expenses | $ 16,342 | $ 13,969 | $ 12,383 | ||||||||
Management fee income | 4,977 | 5,952 | 5,279 | ||||||||
Total revenues | $ 97,254 | $ 97,618 | $ 91,052 | $ 90,028 | $ 90,071 | $ 93,684 | $ 97,197 | $ 91,450 | 375,952 | 372,402 | 337,366 |
Interest expense | 4,549 | 3,906 | 4,576 | ||||||||
Amortization of intangible assets | 2,468 | 2,468 | 2,526 | ||||||||
Loss before equity in undistributed earnings (loss) of subsidiaries and income tax benefit | (6,174) | 7,176 | 1,487 | 5,989 | 5,087 | 9,835 | 9,275 | 7,689 | 8,478 | 31,886 | 18,782 |
Income tax benefit | $ (2,512) | $ 2,128 | $ 421 | $ 1,915 | $ 1,641 | $ 3,137 | $ 2,899 | $ 2,346 | 1,952 | 10,023 | 5,353 |
Net income (loss) attributable to Hallmark Financial Services, Inc. | 6,526 | 21,863 | 13,429 | ||||||||
Parent Company [Member] | |||||||||||
Investment loss, net of expenses | 70 | 120 | 133 | ||||||||
Dividend income from subsidiaries | 10,500 | 8,000 | 8,000 | ||||||||
Management fee income | 10,711 | 10,053 | 9,614 | ||||||||
Total revenues | 21,281 | 18,173 | 17,747 | ||||||||
Operating expenses | 9,878 | 10,222 | 9,759 | ||||||||
Interest expense | 4,549 | 3,906 | 4,576 | ||||||||
Operating Costs and Expenses | 14,427 | 14,128 | 14,335 | ||||||||
Loss before equity in undistributed earnings (loss) of subsidiaries and income tax benefit | 6,854 | 4,045 | 3,412 | ||||||||
Income tax benefit | (1,315) | (1,273) | (1,623) | ||||||||
Income (loss) before equity in undistributed earnings of subsidiaries | 8,169 | 5,318 | 5,035 | ||||||||
Equity in undistributed share of earnings (loss) in subsidiaries | (1,643) | 16,545 | 8,394 | ||||||||
Net income (loss) attributable to Hallmark Financial Services, Inc. | 6,526 | 21,863 | 13,429 | ||||||||
Comprehensive income (loss) | $ 9,479 | $ 11,480 | $ 14,347 |
Schedule II - Condensed Fina100
Schedule II - Condensed Financial Information of Registrant (Parent Company Only) (Cash Flows) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||||||||||
Net income (loss) | $ (3,662) | $ 5,048 | $ 1,066 | $ 4,074 | $ 3,446 | $ 6,698 | $ 6,376 | $ 5,343 | $ 6,526 | $ 21,863 | $ 13,429 |
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | |||||||||||
Depreciation and amortization expense | 3,894 | 3,516 | 3,224 | ||||||||
Deferred income tax expense (benefit) | 405 | (1,030) | (393) | ||||||||
Realized loss | 369 | (2,503) | (134) | ||||||||
Change in current federal income tax (recoverable)/payable | (2,172) | (2,747) | 249 | ||||||||
Change in all other liabilities | 3,586 | (1,368) | 7,998 | ||||||||
Change in all other assets | 5,433 | (697) | (680) | ||||||||
Net cash provided by operating activities | 30,854 | 52,936 | 33,684 | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment, net | (4,340) | (3,608) | (546) | ||||||||
Purchase of fixed maturity and equity securities | (241,374) | (265,482) | (188,749) | ||||||||
Maturities and redemptions of investment securities | 186,286 | 169,409 | 146,777 | ||||||||
Net cash used in investing activities | (58,233) | (96,289) | (42,242) | ||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from exercise of employee stock options | 466 | 658 | 1,155 | ||||||||
Purchase of treasury shares | (6,117) | (2,532) | (1,805) | ||||||||
Activity under revolving credit facility, net | 30,000 | (1,473) | |||||||||
Payment of debt issuance costs | (96) | ||||||||||
Net cash provided by (used in) financing activities | (7,435) | 26,814 | (2,123) | ||||||||
Decrease in cash and cash equivalents | (34,814) | (16,539) | (10,681) | ||||||||
Cash and cash equivalents at beginning of year | 114,446 | 130,985 | 114,446 | 130,985 | 141,666 | ||||||
Cash and cash equivalents at end of year | 79,632 | 114,446 | 79,632 | 114,446 | 130,985 | ||||||
Supplemental cash flow information: | |||||||||||
Interest paid | 4,287 | 3,906 | 4,576 | ||||||||
Income taxes (recovered) paid | 3,718 | 13,800 | 5,497 | ||||||||
Parent Company [Member] | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income (loss) | 6,526 | 21,863 | 13,429 | ||||||||
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | |||||||||||
Depreciation and amortization expense | 148 | 65 | 68 | ||||||||
Deferred income tax expense (benefit) | 609 | (195) | 183 | ||||||||
Undistributed share of (earnings) loss of subsidiaries | 1,643 | (16,545) | (8,394) | ||||||||
Change in current federal income tax (recoverable)/payable | (2,828) | 8 | (3,290) | ||||||||
Change in all other liabilities | 1,228 | (7,080) | 4,134 | ||||||||
Change in all other assets | 814 | 188 | (184) | ||||||||
Net cash provided by operating activities | 8,140 | (1,696) | 5,946 | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment, net | (1,469) | (159) | (47) | ||||||||
Capital contribution to subsidiaries | (30,000) | ||||||||||
Net cash used in investing activities | (1,469) | (30,159) | (47) | ||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from exercise of employee stock options | 466 | 658 | 1,155 | ||||||||
Purchase of treasury shares | (6,117) | (2,532) | (1,805) | ||||||||
Activity under revolving credit facility, net | 30,000 | (1,473) | |||||||||
Payment of debt issuance costs | (96) | ||||||||||
Net cash provided by (used in) financing activities | (5,651) | 28,030 | (2,123) | ||||||||
Decrease in cash and cash equivalents | 1,020 | (3,825) | 3,776 | ||||||||
Cash and cash equivalents at beginning of year | $ 8,014 | $ 11,839 | 8,014 | 11,839 | 8,063 | ||||||
Cash and cash equivalents at end of year | $ 9,034 | $ 8,014 | 9,034 | 8,014 | 11,839 | ||||||
Supplemental cash flow information: | |||||||||||
Interest paid | 4,287 | 3,906 | 4,576 | ||||||||
Income taxes (recovered) paid | $ 904 | $ (1,086) | $ 1,481 |
Schedule III - Supplementary In
Schedule III - Supplementary Insurance Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Supplementary Insurance Information, by Segment [Line Items] | |||
Deferred Policy Acquisition Costs | $ 19,193 | $ 20,366 | $ 20,746 |
Future Policy Benefits, Losses, Claims and Loss Adjustment Expenses | 481,567 | 450,878 | 415,135 |
Unearned Premiums | 241,254 | 216,407 | 196,826 |
Premium Revenue | 353,370 | 349,081 | 321,217 |
Net Investment Income | 16,342 | 13,969 | 12,383 |
Benefits Claims, Losses and Settlement Expenses | 253,688 | 230,149 | 210,055 |
Amortization of Deferred Policy Acquisition Costs | 39,076 | 32,674 | 40,890 |
Other Operating Expenses | 105,596 | 103,614 | 99,586 |
Net Premiums Written | 361,829 | 356,944 | 324,352 |
Specialty Commercial Segment [Member] | |||
Supplementary Insurance Information, by Segment [Line Items] | |||
Deferred Policy Acquisition Costs | 11,961 | 13,501 | 14,125 |
Future Policy Benefits, Losses, Claims and Loss Adjustment Expenses | 358,961 | 314,975 | 275,868 |
Unearned Premiums | 185,634 | 161,730 | 146,521 |
Premium Revenue | 241,890 | 237,640 | 228,823 |
Net Investment Income | 12,962 | 11,524 | 12,643 |
Benefits Claims, Losses and Settlement Expenses | 169,125 | 148,664 | 149,961 |
Amortization of Deferred Policy Acquisition Costs | 27,474 | 23,371 | 28,186 |
Other Operating Expenses | 58,678 | 58,212 | 53,851 |
Net Premiums Written | 249,072 | 241,775 | 230,638 |
Standard Commercial Segment [Member] | |||
Supplementary Insurance Information, by Segment [Line Items] | |||
Deferred Policy Acquisition Costs | 5,849 | 5,633 | 5,892 |
Future Policy Benefits, Losses, Claims and Loss Adjustment Expenses | 93,793 | 105,971 | 109,672 |
Unearned Premiums | 34,334 | 33,701 | 34,822 |
Premium Revenue | 67,510 | 72,613 | 78,311 |
Net Investment Income | 3,471 | 3,623 | 4,663 |
Benefits Claims, Losses and Settlement Expenses | 41,173 | 47,071 | 51,130 |
Amortization of Deferred Policy Acquisition Costs | 12,199 | 4,237 | 3,389 |
Other Operating Expenses | 22,117 | 22,820 | 25,479 |
Net Premiums Written | 68,490 | 71,097 | 76,912 |
Personal Segment [Member] | |||
Supplementary Insurance Information, by Segment [Line Items] | |||
Deferred Policy Acquisition Costs | 1,383 | 1,232 | 729 |
Future Policy Benefits, Losses, Claims and Loss Adjustment Expenses | 28,813 | 29,932 | 29,595 |
Unearned Premiums | 21,286 | 20,976 | 15,483 |
Premium Revenue | 43,970 | 38,828 | 14,083 |
Net Investment Income | 1,276 | 1,235 | 1,633 |
Benefits Claims, Losses and Settlement Expenses | 43,390 | 34,414 | 8,964 |
Amortization of Deferred Policy Acquisition Costs | (597) | 5,066 | 9,315 |
Other Operating Expenses | 13,119 | 12,205 | 9,977 |
Net Premiums Written | 44,267 | 44,072 | 16,802 |
Corporate [Member] | |||
Supplementary Insurance Information, by Segment [Line Items] | |||
Net Investment Income, Corporate | (1,367) | (2,413) | (6,556) |
Other Operating Expenses | $ 11,682 | $ 10,377 | $ 10,279 |
Schedule IV - Reinsurance (Deta
Schedule IV - Reinsurance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Premium Earned: | |||
Gross amount | $ 524,229 | $ 494,643 | $ 461,367 |
Ceded to other companies | 170,859 | 145,562 | 140,477 |
Assumed from other companies | 327 | ||
Net premiums earned | $ 353,370 | $ 349,081 | $ 321,217 |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.10% |
Property, Liability and Casualty Insurance Segment [Member] | |||
Premium Earned: | |||
Gross amount | $ 524,229 | $ 494,643 | $ 461,367 |
Ceded to other companies | 170,859 | 145,562 | 140,477 |
Assumed from other companies | 327 | ||
Net premiums earned | $ 353,370 | $ 349,081 | $ 321,217 |
Percentage of amount assumed to net | 0.00% | 0.00% | 0.10% |
Schedule VI - Supplemental Info
Schedule VI - Supplemental Information Concerning Property-Casualty Insurance Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Supplemental Information For Property, Casualty Insurance Underwriters [Abstract] | |||
Deferred Policy Acquisition Costs | $ 19,193 | $ 20,366 | $ 20,746 |
Reserves for Unpaid Claims and Claim Adjustment Expenses | 481,567 | 450,878 | 415,135 |
Unearned Premiums | 241,254 | 216,407 | 196,826 |
Earned Premiums | 353,370 | 349,081 | 321,217 |
Net Investment Income | 16,342 | 13,969 | 12,383 |
Claims and Claim Adjustment Expenses Incurred Related to Current Year | 246,080 | 237,102 | 215,258 |
Claims and Claim Adjustment Expenses Incurred Related to Prior Years | 7,608 | (6,953) | (5,203) |
Amortization of Deferred Policy Acquisition Costs | 39,076 | 32,674 | 40,890 |
Paid Claims and Claims Adjustment Expenses | 243,445 | 205,254 | 199,331 |
Premiums Written | $ 361,829 | $ 356,944 | $ 324,352 |