Document and Entity Information
Document and Entity Information Document - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 13, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NATIONAL SECURITY GROUP INC | |
Entity Central Index Key | 865,058 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 2,527,136 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Investments | ||
Fixed maturities held-to-maturity, at amortized cost (estimated fair value: 2018 - $1,512; 2017 - $1,645) | $ 1,523,000 | $ 1,616,000 |
Fixed maturities available-for-sale, at estimated fair value (cost: 2018 - $98,514; 2017 - $94,467) | 97,036,000 | 95,758,000 |
Equity securities, at estimated fair value (cost: 2018 - $1,842; 2017 - $1,842) | 4,140,000 | 4,509,000 |
Trading securities | 107,000 | 107,000 |
Mortgage loans on real estate, at cost | 160,000 | 162,000 |
Investment real estate, at book value | 2,945,000 | 3,221,000 |
Policy loans | 1,851,000 | 1,810,000 |
Company owned life insurance | 4,838,000 | 4,974,000 |
Other invested assets | 2,346,000 | 2,574,000 |
Total Investments | 114,946,000 | 114,731,000 |
Cash and cash equivalents | 4,543,000 | 6,644,000 |
Accrued investment income | 808,000 | 768,000 |
Policy receivables and agents' balances, net | 12,870,000 | 11,653,000 |
Reinsurance recoverable | 278,000 | 366,000 |
Deferred policy acquisition costs | 8,140,000 | 8,124,000 |
Property and equipment, net | 1,712,000 | 1,781,000 |
Income tax recoverable | 711,000 | 393,000 |
Deferred income tax asset, net | 1,405,000 | 1,487,000 |
Other assets | 886,000 | 491,000 |
Total Assets | 146,299,000 | 146,438,000 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Property and casualty benefit and loss reserves | 6,847,000 | 7,075,000 |
Accident and health benefit and loss reserves | 3,583,000 | 3,595,000 |
Life and annuity benefit and loss reserves | 33,538,000 | 33,283,000 |
Unearned premiums | 32,080,000 | 30,112,000 |
Policy and contract claims | 942,000 | 903,000 |
Other policyholder funds | 1,708,000 | 1,706,000 |
Short-term notes payable and current portion of long-term debt | 800,000 | 1,300,000 |
Long-term debt | 14,345,000 | 14,339,000 |
Other liabilities | 6,059,000 | 6,500,000 |
Total Liabilities | 99,902,000 | 98,813,000 |
Contingencies | ||
Shareholders' equity | ||
Common stock | 2,527,000 | 2,522,000 |
Additional paid-in capital | 5,554,000 | 5,483,000 |
Accumulated other comprehensive income (loss) | (1,441,000) | 2,646,000 |
Retained earnings | 39,757,000 | 36,974,000 |
Total Shareholders' Equity | 46,397,000 | 47,625,000 |
Total Liabilities and Shareholders' Equity | $ 146,299,000 | $ 146,438,000 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Investments | ||
Fixed maturities held-to-maturity, at estimated fair value | $ 1,512 | $ 1,645 |
Fixed maturities available-for-sale, at cost | 98,514 | 94,467 |
Equity securities, at cost | $ 1,842 | $ 1,842 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
REVENUES | ||||
Net premiums earned | $ 15,260 | $ 15,331 | $ 30,319 | $ 30,371 |
Net investment income | 998 | 930 | 1,779 | 1,856 |
Net realized investment gains (losses) | (203) | 77 | (328) | 237 |
Other income | 148 | 145 | 309 | 297 |
Total Revenues | 16,203 | 16,483 | 32,079 | 32,761 |
BENEFITS, LOSSES AND EXPENSES | ||||
Policyholder benefits and settlement expenses | 9,772 | 12,581 | 19,199 | 23,727 |
Amortization of deferred policy acquisition costs | 787 | 819 | 1,590 | 1,764 |
Commissions | 1,732 | 1,758 | 3,792 | 3,851 |
General and administrative expenses | 2,668 | 2,215 | 4,671 | 4,012 |
Taxes, licenses and fees | 349 | 517 | 998 | 1,206 |
Interest expense | 309 | 326 | 611 | 649 |
Total Benefits, Losses and Expenses | 15,617 | 18,216 | 30,861 | 35,209 |
Income (Loss) Before Income Taxes | 586 | (1,733) | 1,218 | (2,448) |
INCOME TAX EXPENSE (BENEFIT) | ||||
Current | 216 | (572) | (318) | (897) |
Deferred | (87) | (162) | 608 | (236) |
Total income tax expense | 129 | (734) | 290 | (1,133) |
Net Income (Loss) | $ 457 | $ (999) | $ 928 | $ (1,315) |
INCOME (LOSS) PER COMMON SHARE BASIC AND DILUTED (in dollars per share) | $ 0.18 | $ (0.39) | $ 0.37 | $ (0.52) |
DIVIDENDS DECLARED PER SHARE (in dollars per share) | $ 0.050 | $ 0.050 | $ 0.10 | $ 0.10 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 457 | $ (999) | $ 928 | $ (1,315) |
Other comprehensive income (loss), net of tax | ||||
Unrealized gains (losses) on securities, net of reclassification adjustment of $102 and $155 for 2018 and 2017, respectively | (811) | 502 | (2,187) | 846 |
Unrealized gain on interest rate swap | 75 | 40 | 207 | 110 |
Other comprehensive income (loss), net of tax | (736) | 542 | (1,980) | 956 |
Comprehensive income (loss) | $ (279) | $ (457) | $ (1,052) | $ (359) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Reclassification adjustment | $ 102 | $ 155 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Common Stock | Additional Paid-in Capital |
Cumulative effect of change in accounting principle | $ 0 | $ 2,107 | $ (2,107) | ||
Balance at Dec. 31, 2017 | 47,625 | 36,974 | 2,646 | $ 2,522 | $ 5,483 |
Net income for June 30, 2018 | 928 | 928 | |||
Other comprehensive income (net of tax) | (1,980) | (1,980) | |||
Common stock issued | 76 | 5 | 71 | ||
Cash dividends | (252) | (252) | |||
Balance at Jun. 30, 2018 | $ 46,397 | $ 39,757 | $ (1,441) | $ 2,527 | $ 5,554 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ 928 | $ (1,315) |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation expense and amortization/accretion, net | 169 | 265 |
(Increase) decrease in cash surrender value of company owned life insurance | 136 | (56) |
Net realized gains (losses) on investments | 328 | (237) |
Deferred income taxes | 608 | (236) |
Amortization of deferred policy acquisition costs | 1,590 | 1,764 |
Changes in assets and liabilities: | ||
Change in receivable for securities sold | 0 | 499 |
Change in accrued investment income | (40) | 43 |
Change in reinsurance recoverable | 88 | 1,274 |
Policy acquisition costs deferred | (1,606) | (1,931) |
Change in accrued income taxes | (318) | (898) |
Change in net policy liabilities and claims | 800 | 1,090 |
Change in other assets/liabilities, net | (270) | (715) |
Other, net | 5 | 6 |
Net cash provided by (used in) operating activities | 2,418 | (447) |
Cash Flows from Investing Activities | ||
Available-for-sale securities | (10,579) | (8,467) |
Property and equipment | (8) | (51) |
Held-to-maturity securities | 99 | 139 |
Available-for-sale securities | 6,570 | 10,202 |
Real estate held for investment | 188 | 0 |
Property and equipment | 0 | 2 |
Other invested assets, net | (39) | (29) |
Net cash provided by (used in) investing activities | (3,769) | 1,796 |
Cash Flows from Financing Activities | ||
Change in other policyholder funds | 2 | 40 |
Change in short-term notes payable | (500) | (500) |
Dividends paid | (252) | (252) |
Net cash used in financing activities | (750) | (712) |
Net change in cash and cash equivalents | (2,101) | 637 |
Cash and cash equivalents, beginning of year | 6,644 | 7,368 |
Cash and cash equivalents, end of period | $ 4,543 | $ 8,005 |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of The National Security Group, Inc. (the Company) and its wholly-owned subsidiaries: National Security Insurance Company (NSIC), National Security Fire and Casualty Company (NSFC) and NATSCO, Inc. (NATSCO). NSFC includes a wholly-owned subsidiary, Omega One Insurance Company (Omega). The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the consolidated financial statements have been included. All significant intercompany transactions and accounts have been eliminated. The financial information presented herein should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, which includes information and disclosures not presented herein. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among the more significant estimates included in these consolidated financial statements are reserves for future life insurance policy benefits, liabilities for losses and loss adjustment expenses, reinsurance recoverable associated with loss and loss adjustment expense liabilities, deferred policy acquisition costs, deferred income tax assets and liabilities, assessments of other-than-temporary impairments on investments and accruals for contingencies. Actual results could differ from these estimates. Earnings Per Share Earnings per share of common stock is based on the weighted average number of shares outstanding during each year. The adjusted weighted average shares outstanding were 2,523,484 at June 30, 2018 and 2,518,520 at June 30, 2017. The Company did not have any dilutive securities as of June 30, 2018 and 2017. Reclassifications Certain 2017 amounts have been reclassified from the prior year consolidated financial statements to conform to the 2018 presentation. Concentration of Credit Risk The Company maintains cash balances which are generally held in non-interest bearing demand deposit accounts subject to FDIC insured limits of $250,000 per entity. At June 30, 2018 , the net amount exceeding FDIC insured limits was $ 2,903,000 at three financial institutions. The Company has not experienced any losses in such accounts. Management of the Company reviews financial information of financial institutions on a quarterly basis and believes the Company is not exposed to any significant credit risk on cash and cash equivalents. Policy receivables are reported at unpaid balances. Policy receivables are generally offset by associated unearned premium liabilities and are not subject to significant credit risk. Receivables from agents, less provision for credit losses, are composed of balances due from independent agents. At June 30, 2018 , the single largest balance due from one agent totaled $963,000 . Reinsurance contracts do not relieve the Company of its obligations to policyholders. A failure of a reinsurer to meet its obligation could result in losses to the insurance subsidiaries. Allowances for losses on reinsurance recoverables are established if amounts are believed to be uncollectible. At June 30, 2018 and December 31, 2017, no amounts were deemed uncollectible. The Company, at least annually, evaluates the financial condition of all reinsurers and evaluates any potential concentrations of credit risk. At June 30, 2018 , management does not believe the Company is exposed to any significant credit risk related to its reinsurance program. Accounting Changes Not Yet Adopted Improvements to Nonemployee Share-Based Payment Accounting In June 2018, the Financial Accounting Standards Board (FASB) issued guidance to simplify the accounting for nonemployee share-based payment awards. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year The Company does not make any material share-based payments and does not expect the adoption to have a material impact on its financial position or results of operations. Recognition and Measurement of Financial Assets and Financial Liabilities In February 2018, the FASB issued guidance to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years beginning after June 15, 2018. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Leases In February 2016, the FASB issued guidance that requires lessees (for capital and operating leases) to recognize the lease liability and right-of-use asset at the commencement date of the lease. Additional transition guidance was issued in 2018. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Contingent Put and Call Options in Debt Instruments In March 2016, the FASB issued guidance that clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Financial Instruments - Credit Losses In June 2016, the FASB issued guidance that replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Receivables - Nonrefundable Fees and Other Costs In March 2017, the FASB issued guidance that shortens the amortization period for certain callable debt securities held at a premium and requires the premium to be amortized to the earliest call date. The guidance is effective for fiscal years beginning after December 15, 2018 and interim reporting periods within those fiscal years. The Company does not expect the adoption of this new guidance to have a significant impact on our financial position, results of operations or cash flows. Derivatives and Hedging In August 2017, the FASB issued guidance that amends and simplifies hedge accounting guidance in order to enable entities to better portray the economic results of their risk management activities. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those periods. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its consolidated financial statements and related disclosures. Recently Adopted Accounting Standards Income Statement - Reporting Comprehensive Income In February 2018, the Financial Accounting Standards Board (FASB) issued guidance that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The guidance eliminates the stranded tax effects resulting from the Tax Cuts and Jobs Act and improves the usefulness of information reported to financial statement users. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those periods. Early adoption is permitted. The Company adopted this guidance as of December 31, 2017. The adoption of this guidance resulted in a $435,000 reclassification to accumulated other comprehensive income from retained earnings related to stranded tax effects resulting from the Tax Cuts and Jobs Act. Revenue from Contracts with Customers In May 2014, FASB issued guidance on a comprehensive new revenue recognition standard. This standard will not impact accounting for insurance contracts, leases, financial instruments and guarantees. For those contracts that are impacted by the new guidance, the guidance will require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to, in exchange for those goods or services. The guidance requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued a deferral of the effective date by one year. This guidance is effective retrospectively for fiscal years beginning after December 15, 2017 and interim periods within those years. Early adoption of this standard is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Insurance contracts are specifically scoped out of this new guidance. The Company does not have policy fees or any material services that may be subject to the new revenue recognition guidance. The Company adopted this guidance as of January 1, 2018. The adoption of this guidance did not have an impact on its condensed consolidated financial statements. Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued guidance that requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The guidance requires entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset. The guidance eliminates the requirement for public companies to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company adopted this guidance as of January 1, 2018. The adoption of this guidance resulted in a $2,107,000 reclassification to retained earnings from accumulated other comprehensive income related to accumulated unrealized gains on equity securities as well as recognition of a $292,000 loss, net of tax, related to the change in value of equity securities. Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued guidance that clarifies how certain cash receipts and cash payments shall be presented and classified in the statement of cash flows. This guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted this guidance as of January 1, 2018. The adoption of this guidance did not have a significant impact on our financial position, results of operations or cash flows. Compensation - Stock Compensation In May 2017, the FASB issued guidance to provide clarity and reduce diversity in practice as well as cost and complexity when there is a change in the terms or conditions of a share-based payment award. The guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company adopted this guidance as of January 1, 2018. The adoption of this guidance did not have a significant impact on our financial position, results of operations or cash flows. |
Variable Interest Entities
Variable Interest Entities | 6 Months Ended |
Jun. 30, 2018 | |
Variable Interest Entities [Abstract] | |
Variable Interest Entities | VARIABLE INTEREST ENTITIES The Company holds a passive interest in a limited partnership that is considered to be a Variable Interest Entity (VIE) under the provisions of ASC 810 Consolidation . The Company is not the primary beneficiary of the entity and is not required to consolidate under ASC 810. The entity is a private placement investment fund formed for the purpose of investing in private equity investments. The Company owns less than 1% of the limited partnership. The carrying value of the investment totals $132,000 and is included as a component of Other Invested Assets in the accompanying consolidated balance sheets. In December 2005, the Company formed National Security Capital Trust I, a statutory trust created under the Delaware Statutory Trust Act, for the sole purpose of issuing, in private placement transactions, $9,000,000 of trust preferred securities (TPS) and using the proceeds thereof, together with the equity proceeds received from the Company in the initial formation of the Trust, to purchase $9,279,000 of variable rate subordinated debentures issued by the Company. The Company owns all voting securities of the Trust and the subordinated debentures are the sole assets of the Trust. The Trust will meet the obligations of the TPS with the interest and principal paid on the subordinated debentures. The Company received net proceeds from the TPS transactions, after commissions and other costs of issuance, of $9,005,000 . The Company also holds all the voting securities issued by the Trust and such trusts are considered to be VIE's. The Trust is not consolidated because the Company is not the primary beneficiary of the trust. The Subordinated Debentures, disclosed in Note 7, are reported in the accompanying condensed consolidated balance sheets as a component of long-term debt. The Company's equity investments in the Trust total $279,000 and are included in Other Assets in the accompanying consolidated balance sheets. In June 2007, the Company formed National Security Capital Trust II for the sole purpose of issuing, in private placement transactions, $3,000,000 of trust preferred securities (TPS) and using the proceeds thereof, together with the equity proceeds received from the Company in the initial formation of the Trust, to purchase $3,093,000 unsecured junior subordinated deferrable interest debentures. The Company owns all voting securities of the Trust and the subordinated debentures are the sole assets of the Trust. The Trust will meet the obligations of the TPS with the interest and principal paid on the subordinated debentures. The Company received net proceeds from the TPS transactions, after commissions and other costs of issuance, of $2,995,000 . The Company also holds all the voting securities issued by the Trust and such trusts are considered to be VIE's. The Trust is not consolidated because the Company is not the primary beneficiary of the Trust. The Subordinated Debentures, disclosed in Note 7, are reported in the accompanying condensed consolidated balance sheets as a component of long-term debt. The Company's equity investments in the Trust total $93,000 and are included in Other Assets in the accompanying condensed consolidated balance sheets. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2018 | |
Investments [Abstract] | |
Investments | INVESTMENTS Our investment in available-for-sale securities, which are reported at fair value, includes fixed maturity securities and prior to January 1, 2018, equity securities. Net unrealized gains or losses on equity securities prior to January 1, 2018, and on fixed maturities are reported after-tax as a component of other comprehensive income. As of January 1, 2018, changes in fair value of equity securities are recognized through net income. The amortized cost and aggregate fair values of investments in available-for-sale securities as of June 30, 2018 are as follows ( dollars in thousands ): Available-for-sale securities: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate debt securities $ 39,440 $ 439 $ 1,118 $ 38,761 Mortgage backed securities 13,773 89 576 13,286 Private label asset backed securities 14,007 205 24 14,188 Obligations of states and political subdivisions 11,954 201 144 12,011 U.S. Treasury securities and obligations of U.S. Government corporations and agencies 19,340 34 584 18,790 Total $ 98,514 $ 968 $ 2,446 $ 97,036 The amortized cost and aggregate fair values of investments in held-to-maturity securities as of June 30, 2018 are as follows ( dollars in thousands ): Held-to-maturity securities: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Mortgage backed securities $ 1,523 $ 12 $ 23 $ 1,512 Total $ 1,523 $ 12 $ 23 $ 1,512 The amortized cost and aggregate fair values of investments in available-for-sale securities as of December 31, 2017 are as follows ( dollars in thousands ): Available-for-sale securities: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate debt securities $ 39,127 $ 1,103 $ 321 $ 39,909 Mortgage backed securities 12,892 177 274 12,795 Private label asset backed securities 10,128 382 — 10,510 Obligations of states and political subdivisions 13,758 389 54 14,093 U.S. Treasury securities and obligations of U.S. Government corporations and agencies 18,562 206 317 18,451 Total fixed maturities 94,467 2,257 966 95,758 Equity securities 1,842 2,667 — 4,509 Total $ 96,309 $ 4,924 $ 966 $ 100,267 The amortized cost and aggregate fair values of investments in held-to-maturity securities as of December 31, 2017 are as follows ( dollars in thousands ): Held-to-maturity securities: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Mortgage backed securities $ 1,615 $ 29 $ — $ 1,644 U.S. Treasury securities and obligations of U.S. Government corporations and agencies 1 — — 1 Total $ 1,616 $ 29 $ — $ 1,645 The amortized cost and aggregate fair value of debt securities at June 30, 2018 , by contractual maturity, are presented in the following table ( dollars in thousands ). Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. (Dollars in Thousands) Amortized Cost Fair Value Available-for-sale securities: Due in one year or less $ 1,093 $ 1,100 Due after one year through five years 17,858 17,806 Due after five years through ten years 27,667 27,317 Due after ten years 51,896 50,813 Total $ 98,514 $ 97,036 Held-to-maturity securities: Due in one year or less $ — $ — Due after one year through five years 4 5 Due after five years through ten years 48 50 Due after ten years 1,471 1,457 Total $ 1,523 $ 1,512 A summary of securities available-for-sale with unrealized losses as of June 30, 2018 , along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows ( dollars in thousands ): Less than 12 months 12 months or longer Total June 30, 2018 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Total Securities in a Loss Position Fixed maturities Corporate debt securities $ 19,523 $ 676 $ 7,400 $ 442 $ 26,923 $ 1,118 47 Mortgage backed securities 6,380 164 4,869 412 11,249 576 25 Private asset backed securities 4,381 24 — — 4,381 24 5 Obligations of state and political subdivisions 4,366 62 2,516 82 6,882 144 14 U.S. Treasury securities and obligations of U.S. Government corporations and agencies 8,691 198 7,677 386 16,368 584 24 $ 43,341 $ 1,124 $ 22,462 $ 1,322 $ 65,803 $ 2,446 115 A summary of securities held-to-maturity with unrealized losses as of June 30, 2018 along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows: Less than 12 months 12 months or longer Total June 30, 2018 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Total Securities in a Loss Position Fixed maturities: Mortgage backed securities $ 1,091 $ 23 $ — $ — $ 1,091 $ 23 1 $ 1,091 $ 23 $ — $ — $ 1,091 $ 23 1 A summary of securities available-for-sale with unrealized losses as of December 31, 2017 , along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows ( dollars in thousands ): Less than 12 months 12 months or longer Total December 31, 2017 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Total Securities in a Loss Position Fixed maturities Corporate debt securities $ 6,567 $ 166 $ 5,607 $ 155 $ 12,174 $ 321 20 Mortgage backed securities 5,872 124 2,281 150 8,153 274 17 Obligations of state and political subdivisions 2,176 7 2,574 47 4,750 54 9 U.S. Treasury securities and obligations of U.S. Government corporations and agencies 4,878 111 6,667 206 11,545 317 18 $ 19,493 $ 408 $ 17,129 $ 558 $ 36,622 $ 966 64 There were no equity securities or securities held-to-maturity with unrealized losses as of December 31, 2017 . The Company conducts periodic reviews to identify and evaluate securities in an unrealized loss position in order to identify other-than-temporary impairments. For securities in an unrealized loss position, the Company assesses whether the Company has the intent to sell the security or more-likely-than-not will be required to sell the security before the anticipated recovery. If either of these conditions is met, the Company is required to recognize an other-than-temporary impairment with the entire unrealized loss reported in earnings. For securities in an unrealized loss position that do not meet these conditions, the Company assesses whether the impairment of a security is other-than-temporary. If the impairment is determined to be other-than-temporary, the Company is required to separate the other-than-temporary impairments into two components: the amount representing the credit loss and the amount related to all other factors. The credit loss is the portion of the amortized book value in excess of the net present value of the projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. The credit loss component of other-than-temporary impairments is reported in earnings, whereas the amount relating to factors other than credit losses are recorded in other comprehensive income, net of taxes. Management has evaluated each security in a significant unrealized loss position in both the debt and equity investment portfolios. The Company has no material exposure to sub-prime mortgage loans and approximately 5.79% of the fixed income investment portfolio is rated below investment grade. In evaluating whether or not the equity loss positions were other-than-temporary impairments, Management evaluated financial information on each company and where available, reviewed analyst reports from at least two independent sources. Based on a review of the available financial information, the prospect for future earnings of each company and consideration of the Company’s intent and ability to hold the securities until market values recovered, it was determined that the securities in an accumulated loss position in the portfolio were temporary impairments. For the six months ended June 30, 2018 and year ended December 31, 2017, the Company realized no other-than-temporary impairments. At June 30, 2018, the single largest loss not realized as an impairment was in the bond portfolio and totaled $103,000 . The second largest loss position was in the bond portfolio and totaled $98,000 . The third largest loss position was in the bond portfolio and totaled $96,000 . At December 31, 2017, the single largest loss not realized as an impairment was in the bond portfolio and totaled $75,000 . The second largest loss position was in the bond portfolio and totaled $60,000 . The third largest loss position was in the bond portfolio and totaled $53,000 . Major categories of investment income are summarized as follows (dollars in thousands): Three months ended Six months ended 2018 2017 2018 2017 Fixed maturities $ 963 $ 841 $ 1,854 $ 1,658 Equity securities 20 24 40 48 Mortgage loans on real estate 2 3 4 5 Investment real estate — — 1 2 Policy loans 35 33 70 66 Company owned life insurance change in surrender value 3 14 (136 ) 57 Other 7 42 15 87 1,030 957 1,848 1,923 Less: Investment expenses 32 27 69 67 Net investment income $ 998 $ 930 $ 1,779 $ 1,856 Major categories of realized investment gains and losses are summarized as follows (dollars in thousands): Three months ended Six months ended 2018 2017 2018 2017 Fixed maturities $ 48 $ 75 $ 129 $ 235 Change in fair value of equity securities (163 ) — (369 ) — Other, principally real estate (88 ) 2 (88 ) 2 Net realized investment gains (losses) $ (203 ) $ 77 $ (328 ) $ 237 An analysis of the net change in unrealized gains and losses on available-for-sale securities follows (dollars in thousands): June 30, December 31, 2017 Net change in unrealized gains (losses) on available-for-sale securities before deferred tax $ (2,768 ) $ 1,402 Deferred income tax 581 (476 ) Net change in unrealized gains (losses) on available-for-sale securities $ (2,187 ) $ 926 |
Fair Value of Financial Assets
Fair Value of Financial Assets and Financial Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Assets and Financial Liabilities | FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES Our available-for-sale securities consists of fixed maturity and equity securities which are recorded at fair value in the accompanying consolidated balance sheets. The change in the fair value of these investments, unless deemed to be other-than-temporarily impaired, is recorded as a component of other comprehensive income. We are permitted to elect to measure financial instruments and certain other items at fair value, with the change in fair value recorded in earnings. We elected not to measure any eligible items using the fair value option. Accounting standards define fair value as the price that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market participants at the measurement date, and establishes a framework to make the measurement of fair value more consistent and comparable. In determining fair value, we primarily use prices and other relevant information generated by market transactions involving identical or comparable assets. The Company categorizes assets and liabilities carried at their fair value based upon a fair value hierarchy: Level 1 – Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 1 assets and liabilities consist of money market fund deposits and certain of our marketable debt and equity instruments, including equity instruments offsetting deferred compensation, that are traded in an active market with sufficient volume and frequency of transactions. Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets include certain of our marketable debt and equity instruments with quoted market prices that are traded in less active markets or priced using a quoted market price for similar instruments. Level 2 assets also include marketable equity instruments with security-specific restrictions that would transfer to the buyer, marketable debt instruments priced using indicator prices which represent non-binding market consensus prices that can be corroborated by observable market quotes, as well as derivative contracts and debt instruments priced using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Marketable debt instruments in this category generally include commercial paper, bank time deposits, repurchase agreements for fixed-income instruments, and a majority of floating-rate notes, corporate bonds, and municipal bonds. Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. Level 3 assets and liabilities include marketable debt instruments, non-marketable equity investments, derivative contracts, and company issued debt with values are determined using inputs that are both unobservable and significant to the values of the instruments being measured. Level 3 assets also include marketable debt instruments that are priced using indicator prices that we were unable to corroborate with observable market quotes. Marketable debt instruments in this category generally include asset-backed securities and certain floating-rate notes, corporate bonds, and municipal bonds. Assets/Liabilities Measured at Fair Value on a Recurring Basis Financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2018 are summarized in the following table by the type of inputs applicable to the fair value measurements (in thousands): Fair Value Measurements at Reporting Date Using Description Total Level 1 Level 2 Level 3 Financial Assets Fixed maturities available-for-sale Corporate debt securities $ 38,761 $ — $ 38,761 $ — Mortgage backed securities 13,286 — 13,286 — Private label asset backed securities 14,188 — 14,188 — Obligations of states and political subdivisions 12,011 — 12,011 — U.S. Treasury securities and obligations of U.S. Government corporations and agencies 18,790 18,790 — — Trading securities 107 107 — — Equity securities 4,140 3,084 — 1,056 Total Financial Assets $ 101,283 $ 21,981 $ 78,246 $ 1,056 Financial Liabilities Interest rate swap $ (346 ) $ — $ — $ (346 ) Total Financial Liabilities $ (346 ) $ — $ — $ (346 ) The methods and assumptions the Company uses to estimate the fair value of assets and liabilities measured at fair value on a recurring basis are summarized below. Fixed maturities available-for-sale — The fair values of the Company’s public fixed maturity securities are generally based on prices obtained from independent pricing services. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. Trading securities — Trading securities consist primarily of mutual funds whose fair values are determined consistent with similar instruments described above under “Fixed Maturities” and below under “Equity Securities.” Equity securities — Equity securities consist principally of investments in common and preferred stock of publicly traded companies and privately traded securities. The fair values of our publicly traded equity securities are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. Estimated fair values for our privately traded equity securities require a substantial level of judgment. Privately traded equity securities are classified within Level 3. Interest rate swaps — Interest rate swaps are recorded at fair value either as assets, within other assets or as liabilities, within other liabilities. The fair values of our interest rate swaps are provided by a third-party broker and are classified within Level 3. As of June 30, 2018 , Level 3 fair value measurements of assets include $1,056,000 of equity securities in a local community bank whose value is based on an evaluation of the financial statements of the entity. The Company does not develop the unobservable inputs used in measuring fair value. As of June 30, 2018 , Level 3 fair value measurements of liabilities include $346,000 net fair value of various interest rate swap agreements whose value is based on analysis provided by a third party that utilizes financial modeling tools and assumptions on interest and other factors. The Company does not develop the unobservable inputs used in measuring fair value. Additional information regarding the interest rate swap agreements is provided in Note 7. The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2018 (in thousands): For the six months ended June 30, 2018 Equity Securities Interest Rate Swap Beginning balance $ 1,073 $ (608 ) Total gains or losses (realized and unrealized): Included in earnings (17 ) — Included in other comprehensive income — 262 Purchases: — — Sales: — — Issuances: — — Settlements: — — Transfers in/(out) of Level 3 — — Ending balance $ 1,056 $ (346 ) The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held as of June 30, 2018: $ — $ — For the six months ended ended June 30, 2018 , there were no assets or liabilities measured at fair values on a nonrecurring basis. Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 are summarized in the following table by the type of inputs applicable to the fair value measurements (in thousands): Fair Value Measurements at Reporting Date Using Description Total Level 1 Level 2 Level 3 Financial Assets Fixed maturities available-for-sale Corporate debt securities $ 39,909 $ — $ 39,909 $ — Mortgage backed securities 12,795 — 12,795 — Private label asset backed securities 10,510 — 10,510 — Obligations of states and political subdivisions 14,093 — 14,093 — U.S. Treasury securities and obligations of U.S. Government corporations and agencies 18,451 18,451 — — Trading securities 107 107 — — Equity securities available-for-sale 4,509 3,436 — 1,073 Total Financial Assets $ 100,374 $ 21,994 $ 77,307 $ 1,073 Financial Liabilities Interest rate swap $ (608 ) $ — $ — $ (608 ) Total Financial Liabilities $ (608 ) $ — $ — $ (608 ) The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2017 (in thousands): For the year ended December 31, 2017 Equity Securities Available-for-Sale Interest Rate Swap Beginning balance $ 1,258 $ (1,030 ) Total gains or losses (realized and unrealized): Included in earnings — — Included in other comprehensive income 114 422 Purchases: 46 — Sales: (345 ) — Issuances: — — Settlements: — — Transfers in/(out) of Level 3 — — Ending balance $ 1,073 $ (608 ) The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held as of December 31, 2017: $ — $ — For the year ended December 31, 2017, there were no assets or liabilities measured at fair values on a nonrecurring basis. The Company is exposed to certain risks in the normal course of its business operations. The primary risk that is managed through the use of derivatives is interest rate risk on floating rate borrowings. This risk is managed through the use of interest rate swap agreements which are designated as cash flow hedges. For cash flow hedges, the effective portion of the gain or loss on the interest rate swap is included as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction is recognized in earnings. The Company does not hold or issue derivatives that are not designated as hedging instruments. See Note 7 for additional information about the interest rate swap agreements. The following methods and assumptions were used to estimate fair value of each class of financial instrument for which it is practical to estimate that value: Cash and cash equivalents — the carrying amount is a reasonable estimate of fair value. Fixed maturities held-to-maturity — the carrying amount is amortized cost; the fair values of the Company’s public fixed maturity securities that are classified as held-to-maturity are generally based on prices obtained from independent pricing services. Mortgage loans — the carrying amount is a reasonable estimate of fair value due to the restrictive nature and limited marketability of the mortgage notes. Policy loans — the carrying amount is a reasonable estimate of fair value. Company owned life insurance — the carrying amount is a reasonable estimate of fair value. Other invested assets — the carrying amount is a reasonable estimate of fair value. Other policyholder funds — the carrying amount is a reasonable estimate of fair value. Debt — the carrying amount is a reasonable estimate of fair value. The carrying amount and estimated fair value of the Company’s financial instruments as of June 30, 2018 and December 31, 2017 are as follows (in thousands): June 30, 2018 December 31, 2017 Assets and related instruments Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Held-to-maturity securities $ 1,523 $ 1,512 $ 1,616 $ 1,645 Mortgage loans 160 160 162 162 Policy loans 1,851 1,851 1,810 1,810 Company owned life insurance 4,838 4,838 4,974 4,974 Other invested assets 2,346 2,346 2,574 2,574 Liabilities and related instruments Other policyholder funds 1,708 1,708 1,706 1,706 Short-term notes payable and current portion of long-term debt 800 800 1,300 1,300 Long-term debt 14,345 14,345 14,339 14,339 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | PROPERTY AND EQUIPMENT Major categories of property and equipment are summarized as follows (dollars in thousands): June 30, 2018 December 31, 2017 Building and improvements $ 3,378 $ 3,378 Electronic data processing equipment 1,519 1,512 Furniture and fixtures 486 486 5,383 5,376 Less accumulated depreciation 3,671 3,595 Property and equipment, net $ 1,712 $ 1,781 Depreciation expense for the six months ended June 30, 2018 was $76,000 ( $121,000 for the year ended December 31, 2017). |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES On December 22, 2017, the President signed the Tax Cuts and Jobs Act (TCJA), a comprehensive tax legislation which, among other things, reduced the Company's statutory federal income tax rate from 34% to 21% effective January 1, 2018. In addition to the reduction in tax rates, the TCJA makes broad and complex changes to the Internal Revenue Code that will introduce changes to many tax related exclusions, deductions and credits. Management believes that, based on its historical pattern of taxable income, the Company will produce sufficient income in the future to realize its deferred tax assets. The Company recognized net deferred tax asset positions of $1,405,000 at June 30, 2018 and $1,487,000 at December 31, 2017 . The tax effect of significant differences representing deferred tax assets and liabilities are as follows (dollars in thousands): As of June 30, 2018 As of December 31, 2017 General expenses $ 1,071 $ 1,069 Unearned premiums 1,348 1,269 Claims liabilities 470 484 AMT credit 788 1,575 Impairment on real estate owned 116 116 Unrealized losses on securities available-for-sale 310 — Unrealized loss on interest rate swaps 72 128 Deferred tax assets 4,175 4,641 Depreciation (82 ) (88 ) Deferred policy acquisition costs (1,710 ) (1,706 ) Pre-1984 policyholder surplus account (496 ) (529 ) Unrealized gains on securities available-for-sale — (831 ) Unrealized gains on equity securities (482 ) — Deferred tax liabilities (2,770 ) (3,154 ) Net deferred tax asset $ 1,405 $ 1,487 The appropriate income tax effects of changes in temporary differences are as follows (dollars in thousands): Six months ended 2018 2017 Deferred policy acquisition costs $ 4 $ 57 Unearned premiums (79 ) (163 ) General expenses (2 ) 30 Depreciation (6 ) (4 ) Claims liabilities 14 (109 ) AMT credit 787 (47 ) Impact of repeal of special provision on pre-1984 policyholder surplus (33 ) — Unrealized gains on equity securities (77 ) — Deferred income tax expense (benefit) $ 608 $ (236 ) Total income tax expense (benefit) varies from amounts computed by applying current federal income tax rates to income or loss before income taxes. The reasons for these differences and the approximate tax effects are as follows: Six months ended 2018 2017 Federal income tax rate applied to pre-tax income/loss 21.0 % 34.0 % Dividends received deduction and tax-exempt interest (1.2 )% 1.4 % Company owned life insurance 2.3 % 0.8 % Small life deduction — % 11.5 % Other, net 1.7 % (1.4 )% Effective federal income tax rate 23.8 % 46.3 % The Company recognizes tax-related interest and penalties as a component of tax expense. The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is not subject to examinations by authorities related to its U.S. federal or state income tax filings for years prior to 2011. Tax returns have been filed through the year 2016. |
Notes Payable and Long-Term Deb
Notes Payable and Long-Term Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable and Long-Term Debt | NOTES PAYABLE AND LONG-TERM DEBT Short-term debt and current portion of long-term debt consisted of the following as of June 30, 2018 and December 31, 2017 ( dollars in thousands) : June 30, December 31, 2018 2017 Current portion of installment note payable due in November with variable interest rate equal to the WSJ prime rate plus 0.5%. Unsecured. $ 800 $ 800 Line of credit with variable interest rate equal to the WSJ prime rate, subject to a 5.0% floor; maturity March 2020 (renewed March 2018). Interest payments due quarterly. Unsecured. — 500 $ 800 $ 1,300 Long-term debt consisted of the following as of June 30, 2018 and December 31, 2017 ( dollars in thousands ): June 30, December 31, 2018 2017 Promissory note with variable interest rate equal to the WSJ prime rate plus 0.5%; maturity November 2019. Annual installment payments beginning November 2017 with final balloon payment due November 30, 2019. Unsecured. $ 2,200 $ 2,200 Subordinated debentures issued on December 15, 2005 with floating rate interest equal to 3-Month LIBOR plus 375 basis points; net of $164,000 in debt issuance cost ($168,000 in 2017); maturity December 2035. Interest payable quarterly. Redeemable prior to maturity. Unsecured. 9,115 9,111 Subordinated debentures issued on June 21, 2007 with floating rate interest equal to 3-Month LIBOR plus 340 basis points; net of $63,000 in debt issuance cost ($65,000 in 2017); maturity June 15, 2037. Interest payable quarterly. Redeemable prior to maturity. Unsecured. 3,030 3,028 $ 14,345 $ 14,339 The Company has entered into various swap agreements related to the trust preferred securities. On March 19, 2009, the Company entered into a forward swap effective September 17, 2012, with a notional amount of $3,000,000 and designated the swap as a hedge against changes in cash flows attributable to changes in the benchmark interest rate (LIBOR) associated with the subordinated debentures issued June 21, 2007. Quarterly, commencing September 17, 2012, under the terms of the forward swap, the Company will pay interest at a fixed rate of 7.02% until March 15, 2019. On May 26, 2010, the Company entered into a forward swap with a notional amount of $9,000,000 effective December 15, 2015, which hedges against changes in cash flows following the termination of the fixed rate period. Quarterly, commencing March 16, 2016 under the terms of the forward swap, the Company pays interest at a fixed rate of 8.49% until March 15, 2020. The swaps entered into in 2009 and 2010 have fair values of $26,000 (liability) and $320,000 (liability), respectively, for a total liability of $346,000 at June 30, 2018 ( $608,000 at December 31, 2017 ). The swap liability is reported as a component of other liabilities on the consolidated balance sheets. A net valuation gain of $207,000 (net of tax) is included in accumulated other comprehensive income related to the swap agreements at June 30, 2018 . A net valuation gain of $278,000 (net of tax) was included in accumulated other comprehensive income related to the swap at December 31, 2017 . We use dollar offset at the hedge's inception and for each reporting period thereafter to assess whether the derivative used in a hedging transaction is expected to be, and has been, effective in offsetting changes in the fair value of the hedged item. Since inception, no portion of the hedged item has been deemed ineffective. For all hedges, we discontinue hedge accounting if it is determined that a derivative is not expected to be, or has ceased to be, effective as a hedge. The Company’s interest rate swaps include provisions requiring the Company to post collateral when the derivative is in a net liability position. At June 30, 2018 , the Company has securities on deposit with fair market values of $926,000 ( $926,000 of which is posted as collateral). At December 31, 2017 , the Company had securities on deposit with fair market values of $1,446,000 (all of which is posted as collateral). See Note 4 for additional information about the interest rate swaps. |
Policy and Claim Reserves
Policy and Claim Reserves | 6 Months Ended |
Jun. 30, 2018 | |
Insurance [Abstract] | |
Policy and Claim Reserves | POLICY AND CLAIM RESERVES The Company regularly updates its reserve estimates as new information becomes available and events occur that may impact the resolution of unsettled claims. Reserve estimation can be an inherently uncertain process and reserves estimates can be revised up or down depending on changes in circumstances. Changes in prior years' reserve estimates are reflected in the results of operations in the year such changes are determined. The following table is a reconciliation of beginning and ending property and casualty reserve balances for claims and claim adjustment expense (dollars in thousands): Six months ended 2018 2017 Summary of claims and claim adjustment expense reserves Balance, beginning of year $ 7,075 $ 7,531 Less reinsurance recoverable on unpaid losses 327 1,184 Net balances at beginning of year 6,748 6,347 Net losses: Provision for claims and claim adjustment expenses for claims arising in current year 17,375 22,667 Estimated claims and claim adjustment expenses for claims arising in prior years (896 ) (1,202 ) Total increases 16,479 21,465 Claims and claim adjustment expense payments for claims arising in: Current year 13,424 18,033 Prior years 3,144 2,532 Total payments 16,568 20,565 Net balance at end of period 6,659 7,247 Plus reinsurance recoverable on unpaid losses 188 356 Claims and claim adjustment expense reserves at end of period $ 6,847 $ 7,603 The decline in claim and claim adjustment expense reserves before reinsurance recoverable is primarily due to the decrease in catastrophe losses during the period. The estimate for claims arising in prior years was reduced $896,000 in 2018 (reduced $1,202,000 in 2017) due to favorable loss development during the year on claims arising in prior years. Accident and Health Claim Reserves The Company, through its life insurance subsidiary, underwrites a limited number of short duration accident and health contracts. These claims are typically settled in three years or less and the reserve for unpaid claims totaled $358,000 at June 30, 2018 ( $367,000 at December 31, 2017). These claims are a component of policy and contract claims which totaled $942,000 at June 30, 2018 ( $903,000 at December 31, 2017). |
Reinsurance
Reinsurance | 6 Months Ended |
Jun. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | REINSURANCE The Company's insurance operations utilize reinsurance in the risk management process in order to limit losses, minimize exposure to large risks, provide additional capacity for future growth and effect business-sharing arrangements. Life reinsurance is placed through yearly renewable term coverage. Property and casualty reinsurance is placed on an excess of loss basis to cover losses from catastrophe events. Reinsurance ceded arrangements do not discharge the insurance subsidiaries as the primary insurer, except for cases involving a novation. Failure of re-insurers to honor their obligations could result in losses to the insurance subsidiaries. The insurance subsidiaries evaluate the financial conditions of their reinsurance companies and monitor concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the companies to minimize their exposure to significant losses from reinsurance insolvencies. In the normal course of business, NSFC seeks to reduce the loss that may arise from catastrophes or other individually significant large loss events that cause unfavorable underwriting results or have adverse impacts on regulatory capital levels by re-insuring certain levels of risk in various areas of exposure with reinsurance companies. NSFC maintains a catastrophe reinsurance agreement to cover losses from catastrophic events, primarily hurricanes and tropical storms. Under the catastrophe reinsurance program, the Company retains the first $4,000,000 in losses from each catastrophe event. Catastrophe reinsurance coverage is maintained in three layers as follows: Layer Reinsurers' Limits of Liability First Layer 100% of $13,500,000 in excess of $4,000,000 retention Second Layer 100% of $25,000,000 in excess of $17,500,000 Third Layer 100% of $30,000,000 in excess of $42,500,000 Each reinsurance layer covers events occurring from January 1 through December 31 of the contract year. All significant reinsurance companies under the program carry A.M. Best ratings of A- (Excellent) or higher, or equivalent ratings. The Company's catastrophe reinsurance contract allows for one reinstatement. The Company maintains reinstatement premium protection (RPP) to cover reinstatement premiums incurred. The RPP further reduces risk from a major catastrophe and serves to protect the Company's capital position by reducing the modeled 100 year event net cost. Amounts recoverable from re-insurers are estimated in a manner consistent with the claim liability associated with the underlying insurance policies. Amounts paid for prospective reinsurance contracts are reported as prepaid reinsurance premiums and amortized over the remaining contract period. In the normal course of business, NSIC seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to reinsurance companies under excess coverage contracts. NSIC retains a maximum of $50,000 of coverage per individual life. Cost is amortized over the reinsurance contract period. At June 30, 2018 , the largest reinsurance recoverable of a single reinsurer was $ 323,000 ($ 322,000 at December 31, 2017). Amounts reported as ceded incurred losses were related to development of losses from prior year catastrophes. |
Employee Benefit Plans
Employee Benefit Plans | 6 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS The Company and its subsidiaries have an established retirement savings plan (401K Plan). All full-time employees are eligible to participate, and all employer contributions are fully vested for employees who have completed 1,000 hours of service in the year of contribution. Company matching contributions for the six months ended June 30, 2018 and 2017 amounted to $88,000 and $99,000 , respectively. The Company contributes dollar-for-dollar matching contributions up to 5% of compensation subject to government limits. The Company established a non-qualified plan under which Company directors are allowed to defer all or a portion of directors' fees into various investment options. A supplemental executive retirement plan (SERP) covers named executive officers, with the Company contributing 15% of executive compensation to the plan. Contributions to the plan are fully vested upon the earlier of death, disability, change in control, or ten years of participation in the plan. Costs for amounts related to the non-qualified deferred compensation plans for the six months ended June 30, 2018 and 2017 amounted to an approximate increase of $16,000 and $143,000 in employee benefit related expenses, respectively. The Company and its subsidiaries established an Employee Stock Ownership Plan (ESOP) in January 2010, to enable eligible employees to acquire a proprietary interest in the Company's common stock and to provide retirement and other benefits to such employees. There were contributions of $232,000 during the six months ended June 30, 2018 and contributions of $268,000 during the six months ended June 30, 2017. All contributions were made in cash for purchase of Company shares in the open market. The Company has not allocated newly issued shares directly to the plan and the plan has no debt. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | SHAREHOLDERS' EQUITY During the six months ended June 30, 2018 and year ended December 31, 2017 , changes in shareholders' equity consisted of net income of $928,000 and net loss of $1,203,000 , respectively; dividends paid of $252,000 in 2018 and $504,000 in 2017; decreases in accumulated other comprehensive income, net of applicable taxes, of $1,980,000 in 2018 and increases in accumulated other comprehensive income, net of applicable taxes, of $1,204,000 in 2017. Other comprehensive gains and losses consisted of accumulated unrealized gains and losses on securities available-for-sale and unrealized loss on interest rate swaps. Preferred Stock Preferred Stock may be issued in one or more series as shall from time to time be determined and authorized by the Board of Directors. The directors may make specific provisions regarding (a) the voting rights, if any (b) whether such dividends are to be cumulative or noncumulative (c) the redemption provisions, if any (d) participating rights, if any (e) any sinking fund or other retirement provisions (f) dividend rates (g) the number of shares of such series and (h) liquidation preference. There is currently no Preferred Stock issued or outstanding. Common Stock The holders of the Class A Common Stock will have one-twentieth of one vote per share, and the holders of the common stock will have one vote per share. There is currently no Class A Common Stock issued or outstanding. In the event of any liquidation, dissolution or distribution of the assets of the Company remaining after the payments to the holders of the Preferred Stock of the full preferential amounts to which they may be entitled as provided in the resolution or resolutions creating any series thereof, the remaining assets of the Company shall be divided and distributed among the holders of both classes of common stock, except as may otherwise be provided in any such resolution or resolutions. The table below provides information regarding the Company's preferred and common stock as of June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 Authorized Issued Outstanding Authorized Issued Outstanding Preferred Stock, $1 par value 500,000 — — 500,000 — — Class A Common Stock, $1 par value 2,000,000 — — 2,000,000 — — Common Stock, $1 par value 3,000,000 2,527,136 2,527,136 3,000,000 2,522,312 2,522,312 On May 18, 2018, 4,824 shares of common stock were issued to directors as compensation under the 2009 Equity Incentive Plan previously approved by shareholders. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) ("AOCI") includes certain items that are reported directly within a separate component of shareholders' equity. The following table presents changes in AOCI balances (dollars in thousands): Six months ended 2018 2017 Gains and Losses on Cash Flow Hedges Balance at beginning of period $ (480 ) $ (679 ) Other comprehensive income for period: Other comprehensive gain before reclassifications 207 110 Net current period other comprehensive income 207 110 Balance at end of period $ (273 ) $ (569 ) Unrealized Gains and Losses on Available-for-Sale Securities Balance at beginning of period $ 3,126 $ 1,686 Other comprehensive income (loss) for period: Other comprehensive income (loss) before reclassifications (2,085 ) 1,001 Reclassification adjustment - gains on equity securities (2,107 ) — Amounts reclassified from accumulated other comprehensive income (loss) (102 ) (155 ) Net current period other comprehensive income (loss) (4,294 ) 846 Balance at end of period $ (1,168 ) $ 2,532 Total Accumulated Other Comprehensive Income (Loss) at end of period $ (1,441 ) $ 1,963 The following table presents the amounts reclassified out of AOCI for the six months ended June 30, 2018 (dollars in thousands): Details about Accumulated Other Comprehensive Income Components Amounts Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statement Where Net Income is Presented Unrealized Gains and Losses on Available-for-Sale Securities $ 129 Net realized investment gains 129 Total before tax (27 ) Tax (expense) or benefit $ 102 Net of Tax The following table presents the amounts reclassified out of AOCI for the six months ended June 30, 2017 (dollars in thousands): Details about Accumulated Other Comprehensive Income Components Amounts Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statement Where Net Income is Presented Unrealized Gains and Losses on Available-for-Sale Securities $ 235 Net realized investment gains 235 Total before tax (80 ) Tax (expense) or benefit $ 155 Net of Tax |
Segments
Segments | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |
Segments | SEGMENTS The Company’s property and casualty insurance operations comprise one business segment. The property and casualty insurance segment primarily underwrites home insurance coverage with primary lines of business consisting of dwelling fire and extended coverage, homeowners (including mobile homeowners) and other liability. Management organizes the business utilizing a niche strategy focusing on lower valued dwellings and older homes that can be difficult to insure in the standard insurance market. Our chief decision makers (Chief Executive Officer, Chief Financial Officer and President) review results and operating plans making decisions on resource allocations on a company-wide basis. The Company’s products are primarily produced through independent agents within the states in which we operate. The Company’s life and accident and health operations comprise the second business segment. The life and accident and health insurance segment consists of two lines of business: traditional life insurance and supplemental accident and health insurance. Total assets by industry segment at June 30, 2018 and at December 31, 2017 are summarized below ( dollars in thousands ): Assets by industry segment Total P&C Insurance Operations Life Insurance Operations Non-Insurance Operations June 30, 2018 $ 146,299 $ 82,255 $ 59,508 $ 4,536 December 31, 2017 $ 146,438 $ 80,241 $ 60,709 $ 5,488 Premium revenues and operating income by business segment for the three and six months ended June 30, 2018 and 2017 are summarized below ( dollars in thousands ): Three months ended June 30, 2018 Total P&C Insurance Operations Life Insurance Operations Non-Insurance Operations REVENUE Net premiums earned $ 15,260 $ 13,711 $ 1,549 $ — Net investment income 998 438 546 14 Net realized investment gains (losses) (203 ) (61 ) (142 ) — Other income 148 148 — — 16,203 14,236 1,953 14 BENEFITS AND EXPENSES Policyholder benefits paid 9,772 8,249 1,523 — Amortization of deferred policy acquisition costs 787 690 97 — Commissions 1,732 1,665 67 — General and administrative expenses 2,668 1,954 445 269 Taxes, licenses and fees 349 313 36 — Interest expense 309 — 13 296 15,617 12,871 2,181 565 Income (Loss) Before Income Taxes $ 586 $ 1,365 $ (228 ) $ (551 ) Three months ended June 30, 2017 Total P&C Insurance Operations Life Insurance Operations Non-Insurance Operations REVENUE Net premiums earned $ 15,331 $ 13,749 $ 1,582 $ — Net investment income 930 386 527 17 Net realized investment gains 77 60 17 — Other income 145 145 — — 16,483 14,340 2,126 17 BENEFITS AND EXPENSES Policyholder benefits paid 12,581 11,274 1,307 — Amortization of deferred policy acquisition costs 819 695 124 — Commissions 1,758 1,689 69 — General and administrative expenses 2,215 1,602 339 274 Taxes, licenses and fees 517 475 42 — Interest expense 326 — 20 306 18,216 15,735 1,901 580 Income (Loss) Before Income Taxes $ (1,733 ) $ (1,395 ) $ 225 $ (563 ) Six months ended June 30, 2018 Total P&C Insurance Operations Life Insurance Operations Non-Insurance Operations REVENUE Net premiums earned $ 30,319 $ 27,242 $ 3,077 $ — Net investment income 1,779 689 1,062 28 Net realized investment gains (losses) (328 ) (235 ) (93 ) — Other income 309 308 1 — 32,079 28,004 4,047 28 BENEFITS AND EXPENSES Policyholder benefits paid 19,199 16,227 2,972 — Amortization of deferred policy acquisition costs 1,590 1,380 210 — Commissions 3,792 3,677 115 — General and administrative expenses 4,671 3,406 952 313 Taxes, licenses and fees 998 866 132 — Interest expense 611 — 25 586 30,861 25,556 4,406 899 Income (Loss) Before Income Taxes $ 1,218 $ 2,448 $ (359 ) $ (871 ) Six months ended June 30, 2017 Total P&C Insurance Operations Life Insurance Operations Non-Insurance Operations REVENUE Net premiums earned $ 30,371 $ 27,238 $ 3,133 $ — Net investment income 1,856 778 1,046 32 Net realized investment gains 237 60 177 — Other income 297 295 2 — 32,761 28,371 4,358 32 BENEFITS AND EXPENSES Policyholder benefits paid 23,727 21,192 2,535 — Amortization of deferred policy acquisition costs 1,764 1,389 375 — Commissions 3,851 3,713 138 — General and administrative expenses 4,012 2,877 618 517 Taxes, licenses and fees 1,206 1,067 139 — Interest expense 649 — 39 610 35,209 30,238 3,844 1,127 Income (Loss) Before Income Taxes $ (2,448 ) $ (1,867 ) $ 514 $ (1,095 ) The following table presents the Company’s gross and net premiums written for the property and casualty segment and the life and accident and health segment for the three and six months ended June 30, 2018 and 2017, respectively: Three months ended Six months ended June 30, 2018 2017 2018 2017 Life, accident and health operations premiums written: Traditional life insurance $ 1,077 $ 1,093 $ 2,197 $ 2,238 Accident and health insurance 396 406 811 829 Gross life, accident and health 1,473 1,499 3,008 3,067 Reinsurance premium ceded (28 ) (13 ) (59 ) (42 ) Net life, accident and health premiums written $ 1,445 $ 1,486 $ 2,949 $ 3,025 Property and Casualty operations premiums written: Dwelling fire & extended coverage $ 10,113 $ 10,040 $ 19,666 $ 19,471 Homeowners (Including mobile homeowners) 6,064 6,409 11,376 12,036 Other liability 594 590 1,159 1,133 Gross property and casualty 16,771 17,039 32,201 32,640 Reinsurance premium ceded (1,735 ) (1,707 ) (2,889 ) (2,809 ) Net property and casualty written $ 15,036 $ 15,332 $ 29,312 $ 29,831 Consolidated gross premiums written $ 18,244 $ 18,538 $ 35,209 $ 35,707 Reinsurance premium ceded (1,763 ) (1,720 ) (2,948 ) (2,851 ) Consolidated net premiums written $ 16,481 $ 16,818 $ 32,261 $ 32,856 The following table presents the Company’s gross and net premiums earned for the property and casualty segment and the life and accident and health segment for the three and six months ended June 30, 2018 and 2017, respectively: Three months ended Six months ended June 30, 2018 2017 2018 2017 Life, accident and health operations premiums earned: Traditional life insurance $ 1,182 $ 1,188 $ 2,326 $ 2,346 Accident and health insurance 395 408 810 830 Gross life, accident and health 1,577 1,596 3,136 3,176 Reinsurance premium ceded (28 ) (14 ) (59 ) (43 ) Net life, accident and health premiums earned $ 1,549 $ 1,582 $ 3,077 $ 3,133 Property and Casualty operations premiums earned: Dwelling fire & extended coverage $ 9,273 $ 9,032 $ 18,389 $ 17,848 Homeowners (Including mobile homeowners) 5,474 5,744 10,971 11,464 Other liability 546 527 1,076 1,040 Gross property and casualty 15,293 15,303 30,436 30,352 Reinsurance premium ceded (1,582 ) (1,554 ) (3,194 ) (3,114 ) Net property and casualty earned $ 13,711 $ 13,749 $ 27,242 $ 27,238 Consolidated gross premiums earned $ 16,870 $ 16,899 $ 33,572 $ 33,528 Reinsurance premium ceded (1,610 ) (1,568 ) (3,253 ) (3,157 ) Consolidated net premiums earned $ 15,260 $ 15,331 $ 30,319 $ 30,371 |
Contingencies
Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | CONTINGENCIES In the ordinary course of business, the Company and its subsidiaries are routinely a defendant in or party to pending or threatened legal actions and proceedings related to the conduct of their insurance operations. These suits can involve alleged breaches of contracts, torts, including bad faith and fraud claims based on alleged wrongful or fraudulent acts of the Company's subsidiaries, and other miscellaneous causes of action. It is inherently difficult to predict the outcome of such matters, particularly when the claimant seeks very large or indeterminate damages or when the matters present novel legal theories or involve multiple parties. An accrued liability is established when loss contingencies are both probable and estimable. However, there is potential loss exposure in excess of any accrued amounts. The Company monitors pending matters for further development that could affect the amount of the accrued liability. The Company's property & casualty subsidiaries had one action remaining in Texas filed in the aftermath of Hurricane Ike at June 30, 2018. This is an individual action with allegations of underpayment of a hurricane-related claim. The suit seeks a variety of remedies, including actual and/or punitive damages in unspecified amounts and/or declaratory relief. The Company has reserves set up on litigated claims and the reserves are included in benefit and loss reserves. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest during the six months ended June 30, 2018 was $533,000 ( $546,000 in 2017). There was no cash paid for income taxes during the six months ended June 30, 2018 or 2017. During the six months ended June 30, 2018, non-cash changes in equity included $5,000 in common stock issued to Directors in lieu of cash compensation along with a corresponding $71,000 increase in additional paid-in capital. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Management has evaluated subsequent events and their potential effects on these consolidated financial statements through the filing date of this Form 10-Q. |
Significant Accounting Polici25
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | The accompanying consolidated financial statements include the accounts of The National Security Group, Inc. (the Company) and its wholly-owned subsidiaries: National Security Insurance Company (NSIC), National Security Fire and Casualty Company (NSFC) and NATSCO, Inc. (NATSCO). NSFC includes a wholly-owned subsidiary, Omega One Insurance Company (Omega). The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the consolidated financial statements have been included. All significant intercompany transactions and accounts have been eliminated. The financial information presented herein should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, which includes information and disclosures not presented herein. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among the more significant estimates included in these consolidated financial statements are reserves for future life insurance policy benefits, liabilities for losses and loss adjustment expenses, reinsurance recoverable associated with loss and loss adjustment expense liabilities, deferred policy acquisition costs, deferred income tax assets and liabilities, assessments of other-than-temporary impairments on investments and accruals for contingencies. Actual results could differ from these estimates. |
Earnings Per Share | Earnings per share of common stock is based on the weighted average number of shares outstanding during each year. The adjusted weighted average shares outstanding were 2,523,484 at June 30, 2018 and 2,518,520 at June 30, 2017. The Company did not have any dilutive securities as of June 30, 2018 and 2017. |
Reclassifications | Certain 2017 amounts have been reclassified from the prior year consolidated financial statements to conform to the 2018 presentation. |
Concentration of Credit Risk | The Company maintains cash balances which are generally held in non-interest bearing demand deposit accounts subject to FDIC insured limits of $250,000 per entity. At June 30, 2018 , the net amount exceeding FDIC insured limits was $ 2,903,000 at three financial institutions. The Company has not experienced any losses in such accounts. Management of the Company reviews financial information of financial institutions on a quarterly basis and believes the Company is not exposed to any significant credit risk on cash and cash equivalents. Policy receivables are reported at unpaid balances. Policy receivables are generally offset by associated unearned premium liabilities and are not subject to significant credit risk. Receivables from agents, less provision for credit losses, are composed of balances due from independent agents. At June 30, 2018 , the single largest balance due from one agent totaled $963,000 . Reinsurance contracts do not relieve the Company of its obligations to policyholders. A failure of a reinsurer to meet its obligation could result in losses to the insurance subsidiaries. Allowances for losses on reinsurance recoverables are established if amounts are believed to be uncollectible. At June 30, 2018 and December 31, 2017, no amounts were deemed uncollectible. The Company, at least annually, evaluates the financial condition of all reinsurers and evaluates any potential concentrations of credit risk. At June 30, 2018 , management does not believe the Company is exposed to any significant credit risk related to its reinsurance program. |
Accounting Changes Not Yet Adopted and Recently Adopted Accounting Standards | Accounting Changes Not Yet Adopted Improvements to Nonemployee Share-Based Payment Accounting In June 2018, the Financial Accounting Standards Board (FASB) issued guidance to simplify the accounting for nonemployee share-based payment awards. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year The Company does not make any material share-based payments and does not expect the adoption to have a material impact on its financial position or results of operations. Recognition and Measurement of Financial Assets and Financial Liabilities In February 2018, the FASB issued guidance to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years beginning after June 15, 2018. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Leases In February 2016, the FASB issued guidance that requires lessees (for capital and operating leases) to recognize the lease liability and right-of-use asset at the commencement date of the lease. Additional transition guidance was issued in 2018. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Contingent Put and Call Options in Debt Instruments In March 2016, the FASB issued guidance that clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Financial Instruments - Credit Losses In June 2016, the FASB issued guidance that replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those years. The Company does not expect the adoption to have a material impact on its financial position or results of operations. Receivables - Nonrefundable Fees and Other Costs In March 2017, the FASB issued guidance that shortens the amortization period for certain callable debt securities held at a premium and requires the premium to be amortized to the earliest call date. The guidance is effective for fiscal years beginning after December 15, 2018 and interim reporting periods within those fiscal years. The Company does not expect the adoption of this new guidance to have a significant impact on our financial position, results of operations or cash flows. Derivatives and Hedging In August 2017, the FASB issued guidance that amends and simplifies hedge accounting guidance in order to enable entities to better portray the economic results of their risk management activities. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those periods. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its consolidated financial statements and related disclosures. Recently Adopted Accounting Standards Income Statement - Reporting Comprehensive Income In February 2018, the Financial Accounting Standards Board (FASB) issued guidance that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The guidance eliminates the stranded tax effects resulting from the Tax Cuts and Jobs Act and improves the usefulness of information reported to financial statement users. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those periods. Early adoption is permitted. The Company adopted this guidance as of December 31, 2017. The adoption of this guidance resulted in a $435,000 reclassification to accumulated other comprehensive income from retained earnings related to stranded tax effects resulting from the Tax Cuts and Jobs Act. Revenue from Contracts with Customers In May 2014, FASB issued guidance on a comprehensive new revenue recognition standard. This standard will not impact accounting for insurance contracts, leases, financial instruments and guarantees. For those contracts that are impacted by the new guidance, the guidance will require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to, in exchange for those goods or services. The guidance requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued a deferral of the effective date by one year. This guidance is effective retrospectively for fiscal years beginning after December 15, 2017 and interim periods within those years. Early adoption of this standard is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Insurance contracts are specifically scoped out of this new guidance. The Company does not have policy fees or any material services that may be subject to the new revenue recognition guidance. The Company adopted this guidance as of January 1, 2018. The adoption of this guidance did not have an impact on its condensed consolidated financial statements. Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued guidance that requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The guidance requires entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset. The guidance eliminates the requirement for public companies to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company adopted this guidance as of January 1, 2018. The adoption of this guidance resulted in a $2,107,000 reclassification to retained earnings from accumulated other comprehensive income related to accumulated unrealized gains on equity securities as well as recognition of a $292,000 loss, net of tax, related to the change in value of equity securities. Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued guidance that clarifies how certain cash receipts and cash payments shall be presented and classified in the statement of cash flows. This guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017. The Company adopted this guidance as of January 1, 2018. The adoption of this guidance did not have a significant impact on our financial position, results of operations or cash flows. Compensation - Stock Compensation In May 2017, the FASB issued guidance to provide clarity and reduce diversity in practice as well as cost and complexity when there is a change in the terms or conditions of a share-based payment award. The guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company adopted this guidance as of January 1, 2018. The adoption of this guidance did not have a significant impact on our financial position, results of operations or cash flows. |
Consolidation, Variable Interest Entities | The Company holds a passive interest in a limited partnership that is considered to be a Variable Interest Entity (VIE) under the provisions of ASC 810 Consolidation . The Company is not the primary beneficiary of the entity and is not required to consolidate under ASC 810. The entity is a private placement investment fund formed for the purpose of investing in private equity investments. The Company owns less than 1% of the limited partnership. The carrying value of the investment totals $132,000 and is included as a component of Other Invested Assets in the accompanying consolidated balance sheets. |
Marketable Securities | In evaluating whether or not the equity loss positions were other-than-temporary impairments, Management evaluated financial information on each company and where available, reviewed analyst reports from at least two independent sources. For securities in an unrealized loss position, the Company assesses whether the Company has the intent to sell the security or more-likely-than-not will be required to sell the security before the anticipated recovery. If either of these conditions is met, the Company is required to recognize an other-than-temporary impairment with the entire unrealized loss reported in earnings. For securities in an unrealized loss position that do not meet these conditions, the Company assesses whether the impairment of a security is other-than-temporary. If the impairment is determined to be other-than-temporary, the Company is required to separate the other-than-temporary impairments into two components: the amount representing the credit loss and the amount related to all other factors. The credit loss is the portion of the amortized book value in excess of the net present value of the projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. The credit loss component of other-than-temporary impairments is reported in earnings, whereas the amount relating to factors other than credit losses are recorded in other comprehensive income, net of taxes. |
Fair Values of Financial Instruments | The following methods and assumptions were used to estimate fair value of each class of financial instrument for which it is practical to estimate that value: Cash and cash equivalents — the carrying amount is a reasonable estimate of fair value. Fixed maturities held-to-maturity — the carrying amount is amortized cost; the fair values of the Company’s public fixed maturity securities that are classified as held-to-maturity are generally based on prices obtained from independent pricing services. Mortgage loans — the carrying amount is a reasonable estimate of fair value due to the restrictive nature and limited marketability of the mortgage notes. Policy loans — the carrying amount is a reasonable estimate of fair value. Company owned life insurance — the carrying amount is a reasonable estimate of fair value. Other invested assets — the carrying amount is a reasonable estimate of fair value. Other policyholder funds — the carrying amount is a reasonable estimate of fair value. Debt — the carrying amount is a reasonable estimate of fair value. Our available-for-sale securities consists of fixed maturity and equity securities which are recorded at fair value in the accompanying consolidated balance sheets. The change in the fair value of these investments, unless deemed to be other-than-temporarily impaired, is recorded as a component of other comprehensive income. We are permitted to elect to measure financial instruments and certain other items at fair value, with the change in fair value recorded in earnings. We elected not to measure any eligible items using the fair value option. Accounting standards define fair value as the price that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market participants at the measurement date, and establishes a framework to make the measurement of fair value more consistent and comparable. In determining fair value, we primarily use prices and other relevant information generated by market transactions involving identical or comparable assets. The Company categorizes assets and liabilities carried at their fair value based upon a fair value hierarchy: Level 1 – Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 1 assets and liabilities consist of money market fund deposits and certain of our marketable debt and equity instruments, including equity instruments offsetting deferred compensation, that are traded in an active market with sufficient volume and frequency of transactions. Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets include certain of our marketable debt and equity instruments with quoted market prices that are traded in less active markets or priced using a quoted market price for similar instruments. Level 2 assets also include marketable equity instruments with security-specific restrictions that would transfer to the buyer, marketable debt instruments priced using indicator prices which represent non-binding market consensus prices that can be corroborated by observable market quotes, as well as derivative contracts and debt instruments priced using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Marketable debt instruments in this category generally include commercial paper, bank time deposits, repurchase agreements for fixed-income instruments, and a majority of floating-rate notes, corporate bonds, and municipal bonds. Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. Level 3 assets and liabilities include marketable debt instruments, non-marketable equity investments, derivative contracts, and company issued debt with values are determined using inputs that are both unobservable and significant to the values of the instruments being measured. Level 3 assets also include marketable debt instruments that are priced using indicator prices that we were unable to corroborate with observable market quotes. Marketable debt instruments in this category generally include asset-backed securities and certain floating-rate notes, corporate bonds, and municipal bonds. Fixed maturities available-for-sale — The fair values of the Company’s public fixed maturity securities are generally based on prices obtained from independent pricing services. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. Trading securities — Trading securities consist primarily of mutual funds whose fair values are determined consistent with similar instruments described above under “Fixed Maturities” and below under “Equity Securities.” Equity securities — Equity securities consist principally of investments in common and preferred stock of publicly traded companies and privately traded securities. The fair values of our publicly traded equity securities are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. Estimated fair values for our privately traded equity securities require a substantial level of judgment. Privately traded equity securities are classified within Level 3. Interest rate swaps — Interest rate swaps are recorded at fair value either as assets, within other assets or as liabilities, within other liabilities. The fair values of our interest rate swaps are provided by a third-party broker and are classified within Level 3. |
Derivatives | The Company is exposed to certain risks in the normal course of its business operations. The primary risk that is managed through the use of derivatives is interest rate risk on floating rate borrowings. This risk is managed through the use of interest rate swap agreements which are designated as cash flow hedges. For cash flow hedges, the effective portion of the gain or loss on the interest rate swap is included as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction is recognized in earnings. The Company does not hold or issue derivatives that are not designated as hedging instruments. We use dollar offset at the hedge's inception and for each reporting period thereafter to assess whether the derivative used in a hedging transaction is expected to be, and has been, effective in offsetting changes in the fair value of the hedged item. Since inception, no portion of the hedged item has been deemed ineffective. For all hedges, we discontinue hedge accounting if it is determined that a derivative is not expected to be, or has ceased to be, effective as a hedge. The swap liability is reported as a component of other liabilities on the consolidated balance sheets. |
Reinsurance | Amounts recoverable from re-insurers are estimated in a manner consistent with the claim liability associated with the underlying insurance policies. Amounts paid for prospective reinsurance contracts are reported as prepaid reinsurance premiums and amortized over the remaining contract period. In the normal course of business, NSIC seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to reinsurance companies under excess coverage contracts. NSIC retains a maximum of $50,000 of coverage per individual life. Cost is amortized over the reinsurance contract period. The Company's insurance operations utilize reinsurance in the risk management process in order to limit losses, minimize exposure to large risks, provide additional capacity for future growth and effect business-sharing arrangements. Life reinsurance is placed through yearly renewable term coverage. Property and casualty reinsurance is placed on an excess of loss basis to cover losses from catastrophe events. Reinsurance ceded arrangements do not discharge the insurance subsidiaries as the primary insurer, except for cases involving a novation. Failure of re-insurers to honor their obligations could result in losses to the insurance subsidiaries. The insurance subsidiaries evaluate the financial conditions of their reinsurance companies and monitor concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the companies to minimize their exposure to significant losses from reinsurance insolvencies. In the normal course of business, NSFC seeks to reduce the loss that may arise from catastrophes or other individually significant large loss events that cause unfavorable underwriting results or have adverse impacts on regulatory capital levels by re-insuring certain levels of risk in various areas of exposure with reinsurance companies. NSFC maintains a catastrophe reinsurance agreement to cover losses from catastrophic events, primarily hurricanes and tropical storms |
Business Segment | The Company’s life and accident and health operations comprise the second business segment. The life and accident and health insurance segment consists of two lines of business: traditional life insurance and supplemental accident and health insurance. The Company’s property and casualty insurance operations comprise one business segment. The property and casualty insurance segment primarily underwrites home insurance coverage with primary lines of business consisting of dwelling fire and extended coverage, homeowners (including mobile homeowners) and other liability. |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Investments [Abstract] | |
Schedule of Amortized Cost and Aggregate Fair Values of Investments in Available-for-Sale Securities | The amortized cost and aggregate fair values of investments in available-for-sale securities as of June 30, 2018 are as follows ( dollars in thousands ): Available-for-sale securities: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate debt securities $ 39,440 $ 439 $ 1,118 $ 38,761 Mortgage backed securities 13,773 89 576 13,286 Private label asset backed securities 14,007 205 24 14,188 Obligations of states and political subdivisions 11,954 201 144 12,011 U.S. Treasury securities and obligations of U.S. Government corporations and agencies 19,340 34 584 18,790 Total $ 98,514 $ 968 $ 2,446 $ 97,036 The amortized cost and aggregate fair values of investments in available-for-sale securities as of December 31, 2017 are as follows ( dollars in thousands ): Available-for-sale securities: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate debt securities $ 39,127 $ 1,103 $ 321 $ 39,909 Mortgage backed securities 12,892 177 274 12,795 Private label asset backed securities 10,128 382 — 10,510 Obligations of states and political subdivisions 13,758 389 54 14,093 U.S. Treasury securities and obligations of U.S. Government corporations and agencies 18,562 206 317 18,451 Total fixed maturities 94,467 2,257 966 95,758 Equity securities 1,842 2,667 — 4,509 Total $ 96,309 $ 4,924 $ 966 $ 100,267 |
Schedule of Amortized Cost and Aggregate Fair Values of Investments in Held-to-Maturity Securities | A summary of securities held-to-maturity with unrealized losses as of June 30, 2018 along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows: Less than 12 months 12 months or longer Total June 30, 2018 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Total Securities in a Loss Position Fixed maturities: Mortgage backed securities $ 1,091 $ 23 $ — $ — $ 1,091 $ 23 1 $ 1,091 $ 23 $ — $ — $ 1,091 $ 23 1 The amortized cost and aggregate fair values of investments in held-to-maturity securities as of December 31, 2017 are as follows ( dollars in thousands ): Held-to-maturity securities: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Mortgage backed securities $ 1,615 $ 29 $ — $ 1,644 U.S. Treasury securities and obligations of U.S. Government corporations and agencies 1 — — 1 Total $ 1,616 $ 29 $ — $ 1,645 The amortized cost and aggregate fair values of investments in held-to-maturity securities as of June 30, 2018 are as follows ( dollars in thousands ): Held-to-maturity securities: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Mortgage backed securities $ 1,523 $ 12 $ 23 $ 1,512 Total $ 1,523 $ 12 $ 23 $ 1,512 |
Schedule of Amortized Cost and Aggregate Fair Value of Debt Securities, by Contractual Maturity | The amortized cost and aggregate fair value of debt securities at June 30, 2018 , by contractual maturity, are presented in the following table ( dollars in thousands ). Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. (Dollars in Thousands) Amortized Cost Fair Value Available-for-sale securities: Due in one year or less $ 1,093 $ 1,100 Due after one year through five years 17,858 17,806 Due after five years through ten years 27,667 27,317 Due after ten years 51,896 50,813 Total $ 98,514 $ 97,036 Held-to-maturity securities: Due in one year or less $ — $ — Due after one year through five years 4 5 Due after five years through ten years 48 50 Due after ten years 1,471 1,457 Total $ 1,523 $ 1,512 |
Schedule of Securities Available-for-Sale with Unrealized Losses | A summary of securities available-for-sale with unrealized losses as of June 30, 2018 , along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows ( dollars in thousands ): Less than 12 months 12 months or longer Total June 30, 2018 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Total Securities in a Loss Position Fixed maturities Corporate debt securities $ 19,523 $ 676 $ 7,400 $ 442 $ 26,923 $ 1,118 47 Mortgage backed securities 6,380 164 4,869 412 11,249 576 25 Private asset backed securities 4,381 24 — — 4,381 24 5 Obligations of state and political subdivisions 4,366 62 2,516 82 6,882 144 14 U.S. Treasury securities and obligations of U.S. Government corporations and agencies 8,691 198 7,677 386 16,368 584 24 $ 43,341 $ 1,124 $ 22,462 $ 1,322 $ 65,803 $ 2,446 115 A summary of securities available-for-sale with unrealized losses as of December 31, 2017 , along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows ( dollars in thousands ): Less than 12 months 12 months or longer Total December 31, 2017 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Total Securities in a Loss Position Fixed maturities Corporate debt securities $ 6,567 $ 166 $ 5,607 $ 155 $ 12,174 $ 321 20 Mortgage backed securities 5,872 124 2,281 150 8,153 274 17 Obligations of state and political subdivisions 2,176 7 2,574 47 4,750 54 9 U.S. Treasury securities and obligations of U.S. Government corporations and agencies 4,878 111 6,667 206 11,545 317 18 $ 19,493 $ 408 $ 17,129 $ 558 $ 36,622 $ 966 64 |
Summary of Major Categories of Investment Income | Major categories of investment income are summarized as follows (dollars in thousands): Three months ended Six months ended 2018 2017 2018 2017 Fixed maturities $ 963 $ 841 $ 1,854 $ 1,658 Equity securities 20 24 40 48 Mortgage loans on real estate 2 3 4 5 Investment real estate — — 1 2 Policy loans 35 33 70 66 Company owned life insurance change in surrender value 3 14 (136 ) 57 Other 7 42 15 87 1,030 957 1,848 1,923 Less: Investment expenses 32 27 69 67 Net investment income $ 998 $ 930 $ 1,779 $ 1,856 |
Schedule of Realized Investments Gains (Losses) | Major categories of realized investment gains and losses are summarized as follows (dollars in thousands): Three months ended Six months ended 2018 2017 2018 2017 Fixed maturities $ 48 $ 75 $ 129 $ 235 Change in fair value of equity securities (163 ) — (369 ) — Other, principally real estate (88 ) 2 (88 ) 2 Net realized investment gains (losses) $ (203 ) $ 77 $ (328 ) $ 237 |
Schedule of Net Change in Unrealized Appreciation | An analysis of the net change in unrealized gains and losses on available-for-sale securities follows (dollars in thousands): June 30, December 31, 2017 Net change in unrealized gains (losses) on available-for-sale securities before deferred tax $ (2,768 ) $ 1,402 Deferred income tax 581 (476 ) Net change in unrealized gains (losses) on available-for-sale securities $ (2,187 ) $ 926 |
Fair Value of Financial Asset27
Fair Value of Financial Assets and Financial Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 are summarized in the following table by the type of inputs applicable to the fair value measurements (in thousands): Fair Value Measurements at Reporting Date Using Description Total Level 1 Level 2 Level 3 Financial Assets Fixed maturities available-for-sale Corporate debt securities $ 39,909 $ — $ 39,909 $ — Mortgage backed securities 12,795 — 12,795 — Private label asset backed securities 10,510 — 10,510 — Obligations of states and political subdivisions 14,093 — 14,093 — U.S. Treasury securities and obligations of U.S. Government corporations and agencies 18,451 18,451 — — Trading securities 107 107 — — Equity securities available-for-sale 4,509 3,436 — 1,073 Total Financial Assets $ 100,374 $ 21,994 $ 77,307 $ 1,073 Financial Liabilities Interest rate swap $ (608 ) $ — $ — $ (608 ) Total Financial Liabilities $ (608 ) $ — $ — $ (608 ) Financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2018 are summarized in the following table by the type of inputs applicable to the fair value measurements (in thousands): Fair Value Measurements at Reporting Date Using Description Total Level 1 Level 2 Level 3 Financial Assets Fixed maturities available-for-sale Corporate debt securities $ 38,761 $ — $ 38,761 $ — Mortgage backed securities 13,286 — 13,286 — Private label asset backed securities 14,188 — 14,188 — Obligations of states and political subdivisions 12,011 — 12,011 — U.S. Treasury securities and obligations of U.S. Government corporations and agencies 18,790 18,790 — — Trading securities 107 107 — — Equity securities 4,140 3,084 — 1,056 Total Financial Assets $ 101,283 $ 21,981 $ 78,246 $ 1,056 Financial Liabilities Interest rate swap $ (346 ) $ — $ — $ (346 ) Total Financial Liabilities $ (346 ) $ — $ — $ (346 ) |
Schedule of Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2018 (in thousands): For the six months ended June 30, 2018 Equity Securities Interest Rate Swap Beginning balance $ 1,073 $ (608 ) Total gains or losses (realized and unrealized): Included in earnings (17 ) — Included in other comprehensive income — 262 Purchases: — — Sales: — — Issuances: — — Settlements: — — Transfers in/(out) of Level 3 — — Ending balance $ 1,056 $ (346 ) The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held as of June 30, 2018: $ — $ — The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2017 (in thousands): For the year ended December 31, 2017 Equity Securities Available-for-Sale Interest Rate Swap Beginning balance $ 1,258 $ (1,030 ) Total gains or losses (realized and unrealized): Included in earnings — — Included in other comprehensive income 114 422 Purchases: 46 — Sales: (345 ) — Issuances: — — Settlements: — — Transfers in/(out) of Level 3 — — Ending balance $ 1,073 $ (608 ) The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held as of December 31, 2017: $ — $ — |
Schedule of Fair Value, by Balance Sheet Grouping | The carrying amount and estimated fair value of the Company’s financial instruments as of June 30, 2018 and December 31, 2017 are as follows (in thousands): June 30, 2018 December 31, 2017 Assets and related instruments Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Held-to-maturity securities $ 1,523 $ 1,512 $ 1,616 $ 1,645 Mortgage loans 160 160 162 162 Policy loans 1,851 1,851 1,810 1,810 Company owned life insurance 4,838 4,838 4,974 4,974 Other invested assets 2,346 2,346 2,574 2,574 Liabilities and related instruments Other policyholder funds 1,708 1,708 1,706 1,706 Short-term notes payable and current portion of long-term debt 800 800 1,300 1,300 Long-term debt 14,345 14,345 14,339 14,339 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Major categories of property and equipment are summarized as follows (dollars in thousands): June 30, 2018 December 31, 2017 Building and improvements $ 3,378 $ 3,378 Electronic data processing equipment 1,519 1,512 Furniture and fixtures 486 486 5,383 5,376 Less accumulated depreciation 3,671 3,595 Property and equipment, net $ 1,712 $ 1,781 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | The tax effect of significant differences representing deferred tax assets and liabilities are as follows (dollars in thousands): As of June 30, 2018 As of December 31, 2017 General expenses $ 1,071 $ 1,069 Unearned premiums 1,348 1,269 Claims liabilities 470 484 AMT credit 788 1,575 Impairment on real estate owned 116 116 Unrealized losses on securities available-for-sale 310 — Unrealized loss on interest rate swaps 72 128 Deferred tax assets 4,175 4,641 Depreciation (82 ) (88 ) Deferred policy acquisition costs (1,710 ) (1,706 ) Pre-1984 policyholder surplus account (496 ) (529 ) Unrealized gains on securities available-for-sale — (831 ) Unrealized gains on equity securities (482 ) — Deferred tax liabilities (2,770 ) (3,154 ) Net deferred tax asset $ 1,405 $ 1,487 |
Changes in Temporary Differences in Federal Income Tax | The appropriate income tax effects of changes in temporary differences are as follows (dollars in thousands): Six months ended 2018 2017 Deferred policy acquisition costs $ 4 $ 57 Unearned premiums (79 ) (163 ) General expenses (2 ) 30 Depreciation (6 ) (4 ) Claims liabilities 14 (109 ) AMT credit 787 (47 ) Impact of repeal of special provision on pre-1984 policyholder surplus (33 ) — Unrealized gains on equity securities (77 ) — Deferred income tax expense (benefit) $ 608 $ (236 ) |
Schedule of Effective Income Tax Rate Reconciliation | Total income tax expense (benefit) varies from amounts computed by applying current federal income tax rates to income or loss before income taxes. The reasons for these differences and the approximate tax effects are as follows: Six months ended 2018 2017 Federal income tax rate applied to pre-tax income/loss 21.0 % 34.0 % Dividends received deduction and tax-exempt interest (1.2 )% 1.4 % Company owned life insurance 2.3 % 0.8 % Small life deduction — % 11.5 % Other, net 1.7 % (1.4 )% Effective federal income tax rate 23.8 % 46.3 % |
Notes Payable and Long-Term D30
Notes Payable and Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Short-term Debt | Short-term debt and current portion of long-term debt consisted of the following as of June 30, 2018 and December 31, 2017 ( dollars in thousands) : June 30, December 31, 2018 2017 Current portion of installment note payable due in November with variable interest rate equal to the WSJ prime rate plus 0.5%. Unsecured. $ 800 $ 800 Line of credit with variable interest rate equal to the WSJ prime rate, subject to a 5.0% floor; maturity March 2020 (renewed March 2018). Interest payments due quarterly. Unsecured. — 500 $ 800 $ 1,300 |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following as of June 30, 2018 and December 31, 2017 ( dollars in thousands ): June 30, December 31, 2018 2017 Promissory note with variable interest rate equal to the WSJ prime rate plus 0.5%; maturity November 2019. Annual installment payments beginning November 2017 with final balloon payment due November 30, 2019. Unsecured. $ 2,200 $ 2,200 Subordinated debentures issued on December 15, 2005 with floating rate interest equal to 3-Month LIBOR plus 375 basis points; net of $164,000 in debt issuance cost ($168,000 in 2017); maturity December 2035. Interest payable quarterly. Redeemable prior to maturity. Unsecured. 9,115 9,111 Subordinated debentures issued on June 21, 2007 with floating rate interest equal to 3-Month LIBOR plus 340 basis points; net of $63,000 in debt issuance cost ($65,000 in 2017); maturity June 15, 2037. Interest payable quarterly. Redeemable prior to maturity. Unsecured. 3,030 3,028 $ 14,345 $ 14,339 |
Policy and Claim Reserves (Tabl
Policy and Claim Reserves (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Insurance [Abstract] | |
Reconciliation of Policy and Claim Reserves | The following table is a reconciliation of beginning and ending property and casualty reserve balances for claims and claim adjustment expense (dollars in thousands): Six months ended 2018 2017 Summary of claims and claim adjustment expense reserves Balance, beginning of year $ 7,075 $ 7,531 Less reinsurance recoverable on unpaid losses 327 1,184 Net balances at beginning of year 6,748 6,347 Net losses: Provision for claims and claim adjustment expenses for claims arising in current year 17,375 22,667 Estimated claims and claim adjustment expenses for claims arising in prior years (896 ) (1,202 ) Total increases 16,479 21,465 Claims and claim adjustment expense payments for claims arising in: Current year 13,424 18,033 Prior years 3,144 2,532 Total payments 16,568 20,565 Net balance at end of period 6,659 7,247 Plus reinsurance recoverable on unpaid losses 188 356 Claims and claim adjustment expense reserves at end of period $ 6,847 $ 7,603 |
Reinsurance (Tables)
Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Schedule of Reinsurance | Catastrophe reinsurance coverage is maintained in three layers as follows: Layer Reinsurers' Limits of Liability First Layer 100% of $13,500,000 in excess of $4,000,000 retention Second Layer 100% of $25,000,000 in excess of $17,500,000 Third Layer 100% of $30,000,000 in excess of $42,500,000 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Stock by Class | The table below provides information regarding the Company's preferred and common stock as of June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 Authorized Issued Outstanding Authorized Issued Outstanding Preferred Stock, $1 par value 500,000 — — 500,000 — — Class A Common Stock, $1 par value 2,000,000 — — 2,000,000 — — Common Stock, $1 par value 3,000,000 2,527,136 2,527,136 3,000,000 2,522,312 2,522,312 |
Accumulated Other Comprehensi34
Accumulated Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table presents changes in AOCI balances (dollars in thousands): Six months ended 2018 2017 Gains and Losses on Cash Flow Hedges Balance at beginning of period $ (480 ) $ (679 ) Other comprehensive income for period: Other comprehensive gain before reclassifications 207 110 Net current period other comprehensive income 207 110 Balance at end of period $ (273 ) $ (569 ) Unrealized Gains and Losses on Available-for-Sale Securities Balance at beginning of period $ 3,126 $ 1,686 Other comprehensive income (loss) for period: Other comprehensive income (loss) before reclassifications (2,085 ) 1,001 Reclassification adjustment - gains on equity securities (2,107 ) — Amounts reclassified from accumulated other comprehensive income (loss) (102 ) (155 ) Net current period other comprehensive income (loss) (4,294 ) 846 Balance at end of period $ (1,168 ) $ 2,532 Total Accumulated Other Comprehensive Income (Loss) at end of period $ (1,441 ) $ 1,963 |
Reclassification out of Accumulated Other Comprehensive Income | The following table presents the amounts reclassified out of AOCI for the six months ended June 30, 2018 (dollars in thousands): Details about Accumulated Other Comprehensive Income Components Amounts Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statement Where Net Income is Presented Unrealized Gains and Losses on Available-for-Sale Securities $ 129 Net realized investment gains 129 Total before tax (27 ) Tax (expense) or benefit $ 102 Net of Tax The following table presents the amounts reclassified out of AOCI for the six months ended June 30, 2017 (dollars in thousands): Details about Accumulated Other Comprehensive Income Components Amounts Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statement Where Net Income is Presented Unrealized Gains and Losses on Available-for-Sale Securities $ 235 Net realized investment gains 235 Total before tax (80 ) Tax (expense) or benefit $ 155 Net of Tax |
Segments (Tables)
Segments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Total assets by industry segment at June 30, 2018 and at December 31, 2017 are summarized below ( dollars in thousands ): Assets by industry segment Total P&C Insurance Operations Life Insurance Operations Non-Insurance Operations June 30, 2018 $ 146,299 $ 82,255 $ 59,508 $ 4,536 December 31, 2017 $ 146,438 $ 80,241 $ 60,709 $ 5,488 Premium revenues and operating income by business segment for the three and six months ended June 30, 2018 and 2017 are summarized below ( dollars in thousands ): Three months ended June 30, 2018 Total P&C Insurance Operations Life Insurance Operations Non-Insurance Operations REVENUE Net premiums earned $ 15,260 $ 13,711 $ 1,549 $ — Net investment income 998 438 546 14 Net realized investment gains (losses) (203 ) (61 ) (142 ) — Other income 148 148 — — 16,203 14,236 1,953 14 BENEFITS AND EXPENSES Policyholder benefits paid 9,772 8,249 1,523 — Amortization of deferred policy acquisition costs 787 690 97 — Commissions 1,732 1,665 67 — General and administrative expenses 2,668 1,954 445 269 Taxes, licenses and fees 349 313 36 — Interest expense 309 — 13 296 15,617 12,871 2,181 565 Income (Loss) Before Income Taxes $ 586 $ 1,365 $ (228 ) $ (551 ) Three months ended June 30, 2017 Total P&C Insurance Operations Life Insurance Operations Non-Insurance Operations REVENUE Net premiums earned $ 15,331 $ 13,749 $ 1,582 $ — Net investment income 930 386 527 17 Net realized investment gains 77 60 17 — Other income 145 145 — — 16,483 14,340 2,126 17 BENEFITS AND EXPENSES Policyholder benefits paid 12,581 11,274 1,307 — Amortization of deferred policy acquisition costs 819 695 124 — Commissions 1,758 1,689 69 — General and administrative expenses 2,215 1,602 339 274 Taxes, licenses and fees 517 475 42 — Interest expense 326 — 20 306 18,216 15,735 1,901 580 Income (Loss) Before Income Taxes $ (1,733 ) $ (1,395 ) $ 225 $ (563 ) Six months ended June 30, 2018 Total P&C Insurance Operations Life Insurance Operations Non-Insurance Operations REVENUE Net premiums earned $ 30,319 $ 27,242 $ 3,077 $ — Net investment income 1,779 689 1,062 28 Net realized investment gains (losses) (328 ) (235 ) (93 ) — Other income 309 308 1 — 32,079 28,004 4,047 28 BENEFITS AND EXPENSES Policyholder benefits paid 19,199 16,227 2,972 — Amortization of deferred policy acquisition costs 1,590 1,380 210 — Commissions 3,792 3,677 115 — General and administrative expenses 4,671 3,406 952 313 Taxes, licenses and fees 998 866 132 — Interest expense 611 — 25 586 30,861 25,556 4,406 899 Income (Loss) Before Income Taxes $ 1,218 $ 2,448 $ (359 ) $ (871 ) Six months ended June 30, 2017 Total P&C Insurance Operations Life Insurance Operations Non-Insurance Operations REVENUE Net premiums earned $ 30,371 $ 27,238 $ 3,133 $ — Net investment income 1,856 778 1,046 32 Net realized investment gains 237 60 177 — Other income 297 295 2 — 32,761 28,371 4,358 32 BENEFITS AND EXPENSES Policyholder benefits paid 23,727 21,192 2,535 — Amortization of deferred policy acquisition costs 1,764 1,389 375 — Commissions 3,851 3,713 138 — General and administrative expenses 4,012 2,877 618 517 Taxes, licenses and fees 1,206 1,067 139 — Interest expense 649 — 39 610 35,209 30,238 3,844 1,127 Income (Loss) Before Income Taxes $ (2,448 ) $ (1,867 ) $ 514 $ (1,095 ) |
Schedule of Gross and Net Premiums Written | The following table presents the Company’s gross and net premiums written for the property and casualty segment and the life and accident and health segment for the three and six months ended June 30, 2018 and 2017, respectively: Three months ended Six months ended June 30, 2018 2017 2018 2017 Life, accident and health operations premiums written: Traditional life insurance $ 1,077 $ 1,093 $ 2,197 $ 2,238 Accident and health insurance 396 406 811 829 Gross life, accident and health 1,473 1,499 3,008 3,067 Reinsurance premium ceded (28 ) (13 ) (59 ) (42 ) Net life, accident and health premiums written $ 1,445 $ 1,486 $ 2,949 $ 3,025 Property and Casualty operations premiums written: Dwelling fire & extended coverage $ 10,113 $ 10,040 $ 19,666 $ 19,471 Homeowners (Including mobile homeowners) 6,064 6,409 11,376 12,036 Other liability 594 590 1,159 1,133 Gross property and casualty 16,771 17,039 32,201 32,640 Reinsurance premium ceded (1,735 ) (1,707 ) (2,889 ) (2,809 ) Net property and casualty written $ 15,036 $ 15,332 $ 29,312 $ 29,831 Consolidated gross premiums written $ 18,244 $ 18,538 $ 35,209 $ 35,707 Reinsurance premium ceded (1,763 ) (1,720 ) (2,948 ) (2,851 ) Consolidated net premiums written $ 16,481 $ 16,818 $ 32,261 $ 32,856 |
Schedule of Gross and Net Premiums Earned | The following table presents the Company’s gross and net premiums earned for the property and casualty segment and the life and accident and health segment for the three and six months ended June 30, 2018 and 2017, respectively: Three months ended Six months ended June 30, 2018 2017 2018 2017 Life, accident and health operations premiums earned: Traditional life insurance $ 1,182 $ 1,188 $ 2,326 $ 2,346 Accident and health insurance 395 408 810 830 Gross life, accident and health 1,577 1,596 3,136 3,176 Reinsurance premium ceded (28 ) (14 ) (59 ) (43 ) Net life, accident and health premiums earned $ 1,549 $ 1,582 $ 3,077 $ 3,133 Property and Casualty operations premiums earned: Dwelling fire & extended coverage $ 9,273 $ 9,032 $ 18,389 $ 17,848 Homeowners (Including mobile homeowners) 5,474 5,744 10,971 11,464 Other liability 546 527 1,076 1,040 Gross property and casualty 15,293 15,303 30,436 30,352 Reinsurance premium ceded (1,582 ) (1,554 ) (3,194 ) (3,114 ) Net property and casualty earned $ 13,711 $ 13,749 $ 27,242 $ 27,238 Consolidated gross premiums earned $ 16,870 $ 16,899 $ 33,572 $ 33,528 Reinsurance premium ceded (1,610 ) (1,568 ) (3,253 ) (3,157 ) Consolidated net premiums earned $ 15,260 $ 15,331 $ 30,319 $ 30,371 |
Significant Accounting Polici36
Significant Accounting Policies (Earnings Per Share) (Details) - shares | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Accounting Policies [Abstract] | ||
Weighted average number of shares outstanding | 2,523,484 | 2,518,520 |
Significant Accounting Polici37
Significant Accounting Policies (Concentration of Credit Risk) (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Cash, uninsured amount | $ 2,903,000 | |
Concentration Risk [Line Items] | ||
Policy receivables and agents' balances, net | 12,870,000 | $ 11,653,000 |
Single Largest Agent Balance Due | ||
Concentration Risk [Line Items] | ||
Policy receivables and agents' balances, net | $ 963,000 |
Significant Accounting Polici38
Significant Accounting Policies (Recently Adopted Accounting Standards) (Details) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Accounting Policies [Abstract] | |
Reclassification from AOCI to retained earnings | $ 435,000 |
Equity securities, unrealized loss | (292,000) |
Accounting Standards Update 2016-01 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Reclassification adjustment - gains on equity securities | $ 2,107,000 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | |
Jun. 30, 2007 | Dec. 31, 2005 | Jun. 30, 2018 | |
Variable Interest Entity [Line Items] | |||
Carrying amount of investments | $ 132 | ||
Trust Preferred Security Offering, 2005 | |||
Variable Interest Entity [Line Items] | |||
Payments to acquire trust preferred securities | $ 9,000 | ||
Subordinated debt | 9,279 | ||
Proceeds from issuance of trust preferred securities | 9,005 | ||
Equity investment | $ 279 | ||
Trust Preferred Security Offering, 2007 | |||
Variable Interest Entity [Line Items] | |||
Payments to acquire trust preferred securities | $ 3,000 | ||
Proceeds from issuance of trust preferred securities | 2,995 | ||
Equity investment | 93 | ||
Trust Preferred Security Offering, 2007 | Unsecured Debt | |||
Variable Interest Entity [Line Items] | |||
Subordinated debt | $ 3,093 | ||
Maximum | |||
Variable Interest Entity [Line Items] | |||
Limited partnership, percent owned | 1.00% |
Investments (Narrative) (Detail
Investments (Narrative) (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Gain (Loss) on Investments [Line Items] | ||
Held-to-maturity securities, unrecognized holding loss | $ 0 | |
Other-than-temporary impairments, available-for-sale securities | $ 0 | 0 |
Single Largest Loss Position | 103,000 | 75,000 |
Second Largest Loss Position | 98,000 | 60,000 |
Third Largest Loss Position | $ 96,000 | $ 53,000 |
Maximum | ||
Gain (Loss) on Investments [Line Items] | ||
Percent of investment portfolio below investment grade | 5.79% |
Investments (Available-for-Sale
Investments (Available-for-Sale Securities) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 98,514 | $ 96,309 |
Gross Unrealized Gains | 968 | 4,924 |
Gross Unrealized Losses | 2,446 | 966 |
Fair Value | 97,036 | 100,267 |
Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 39,440 | 39,127 |
Gross Unrealized Gains | 439 | 1,103 |
Gross Unrealized Losses | 1,118 | 321 |
Fair Value | 38,761 | 39,909 |
Mortgage backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 13,773 | 12,892 |
Gross Unrealized Gains | 89 | 177 |
Gross Unrealized Losses | 576 | 274 |
Fair Value | 13,286 | 12,795 |
Private label asset backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 14,007 | 10,128 |
Gross Unrealized Gains | 205 | 382 |
Gross Unrealized Losses | 24 | 0 |
Fair Value | 14,188 | 10,510 |
Obligations of states and political subdivisions | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 11,954 | 13,758 |
Gross Unrealized Gains | 201 | 389 |
Gross Unrealized Losses | 144 | 54 |
Fair Value | 12,011 | 14,093 |
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 19,340 | 18,562 |
Gross Unrealized Gains | 34 | 206 |
Gross Unrealized Losses | 584 | 317 |
Fair Value | $ 18,790 | 18,451 |
Total fixed maturities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 94,467 | |
Gross Unrealized Gains | 2,257 | |
Gross Unrealized Losses | 966 | |
Fair Value | 95,758 | |
Equity securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 1,842 | |
Gross Unrealized Gains | 2,667 | |
Gross Unrealized Losses | 0 | |
Fair Value | $ 4,509 |
Investments (Held-to-Maturity S
Investments (Held-to-Maturity Securities) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | $ 1,523 | $ 1,616 |
Held-to-maturity securities, unrealized gains | 12 | 29 |
Held-to-maturity securities, unrealized losses | 23 | 0 |
Fair Value | 1,512 | 1,645 |
Mortgage backed securities | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 1,523 | 1,615 |
Held-to-maturity securities, unrealized gains | 12 | 29 |
Held-to-maturity securities, unrealized losses | 23 | 0 |
Fair Value | $ 1,512 | 1,644 |
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 1 | |
Held-to-maturity securities, unrealized gains | 0 | |
Held-to-maturity securities, unrealized losses | 0 | |
Fair Value | $ 1 |
Investments (Amortized Cost and
Investments (Amortized Cost and Aggregate Fair Value of Debt Securities, by Contractual Maturity) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Investments [Abstract] | ||
Available-for-sale Securities, Due in one year or less, Amortized Cost | $ 1,093 | |
Available-for-sale Securities, Due in one year or less, Fair Value | 1,100 | |
Available-for-sale Securities, Due after one year through five years, Amortized Cost | 17,858 | |
Available-for-sale Securities, Due after one year through five years, Fair Value | 17,806 | |
Available-for-sale Securities, Due after five years through ten years, Amortized Cost | 27,667 | |
Available-for-sale Securities, Due after five years through ten years, Fair Value | 27,317 | |
Available-for-sale Securities, Due after ten years, Amortized Cost | 51,896 | |
Available-for-sale Securities, Due after ten years, Fair Value | 50,813 | |
Available-for-sale securities, Amortized Cost | 98,514 | $ 94,467 |
Available-for-sale Securities, Fair Value | 97,036 | |
Held-to-maturity Securities, Due in one year or less, Amortized Cost | 0 | |
Held-to-maturity Securities, Due in one year or less, Fair Value | 0 | |
Held-to-maturity Securities, Due after one year through five years, Amortized Cost | 4 | |
Held-to-maturity Securities, Due after one year through five years, Fair Value | 5 | |
Held-to-maturity Securities, Due after five years through ten years, Amortized Cost | 48 | |
Held-to-maturity Securities, Due after five years through ten years, Fair Value | 50 | |
Held-to-maturity Securities, Due after ten years, Amortized Cost | 1,471 | |
Held-to-maturity Securities, Due after ten years, Fair Value | 1,457 | |
Held-to-maturity Securities, Amortized Cost | 1,523 | 1,616 |
Held-to-maturity Securities, Fair Value | $ 1,512 | $ 1,645 |
Investments (Schedule of Contin
Investments (Schedule of Continuous Losses) (Details) $ in Thousands | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Schedule of Available-for-sale Securities [Line Items] | ||
Less than 12 Months, Fair Value | $ 43,341 | $ 19,493 |
Less than 12 Months, Gross Unrealized Losses | 1,124 | 408 |
12 Months or Longer, Fair Value | 22,462 | 17,129 |
12 Months or Longer, Gross Unrealized Losses | 1,322 | 558 |
Total Fair Value | 65,803 | 36,622 |
Total Gross Unrealized Losses | $ 2,446 | $ 966 |
Total Securities in a Loss Position | 115 | 64 |
Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Less than 12 Months, Fair Value | $ 19,523 | $ 6,567 |
Less than 12 Months, Gross Unrealized Losses | 676 | 166 |
12 Months or Longer, Fair Value | 7,400 | 5,607 |
12 Months or Longer, Gross Unrealized Losses | 442 | 155 |
Total Fair Value | 26,923 | 12,174 |
Total Gross Unrealized Losses | $ 1,118 | $ 321 |
Total Securities in a Loss Position | 47 | 20 |
Mortgage backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Less than 12 Months, Fair Value | $ 6,380 | $ 5,872 |
Less than 12 Months, Gross Unrealized Losses | 164 | 124 |
12 Months or Longer, Fair Value | 4,869 | 2,281 |
12 Months or Longer, Gross Unrealized Losses | 412 | 150 |
Total Fair Value | 11,249 | 8,153 |
Total Gross Unrealized Losses | $ 576 | $ 274 |
Total Securities in a Loss Position | 25 | 17 |
Private label asset backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Less than 12 Months, Fair Value | $ 4,381 | |
Less than 12 Months, Gross Unrealized Losses | 24 | |
12 Months or Longer, Fair Value | 0 | |
12 Months or Longer, Gross Unrealized Losses | 0 | |
Total Fair Value | 4,381 | |
Total Gross Unrealized Losses | $ 24 | |
Total Securities in a Loss Position | 5 | |
Obligations of states and political subdivisions | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Less than 12 Months, Fair Value | $ 4,366 | $ 2,176 |
Less than 12 Months, Gross Unrealized Losses | 62 | 7 |
12 Months or Longer, Fair Value | 2,516 | 2,574 |
12 Months or Longer, Gross Unrealized Losses | 82 | 47 |
Total Fair Value | 6,882 | 4,750 |
Total Gross Unrealized Losses | $ 144 | $ 54 |
Total Securities in a Loss Position | 14 | 9 |
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Less than 12 Months, Fair Value | $ 8,691 | $ 4,878 |
Less than 12 Months, Gross Unrealized Losses | 198 | 111 |
12 Months or Longer, Fair Value | 7,677 | 6,667 |
12 Months or Longer, Gross Unrealized Losses | 386 | 206 |
Total Fair Value | 16,368 | 11,545 |
Total Gross Unrealized Losses | $ 584 | $ 317 |
Total Securities in a Loss Position | 24 | 18 |
Investments (Held-to-Maturity,
Investments (Held-to-Maturity, Unrealized Losses) (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Schedule of Held-to-maturity Securities [Line Items] | |
Less than 12 Months, Fair Value | $ 1,091 |
Less than 12 Months, Gross Unrealized Losses | 23 |
12 Months or Longer, Fair Value | 0 |
12 Months or Longer, Gross Unrealized Losses | 0 |
Total Fair Value | 1,091 |
Total Gross Unrealized Losses | $ 23 |
Total Securities in a Loss Position | 1 |
Mortgage backed securities | |
Schedule of Held-to-maturity Securities [Line Items] | |
Less than 12 Months, Fair Value | $ 1,091 |
Less than 12 Months, Gross Unrealized Losses | 23 |
12 Months or Longer, Fair Value | 0 |
12 Months or Longer, Gross Unrealized Losses | 0 |
Total Fair Value | 1,091 |
Total Gross Unrealized Losses | $ 23 |
Total Securities in a Loss Position | 1 |
Investments (Major Categories o
Investments (Major Categories of Investment Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||||
Gross investment income | $ 1,030 | $ 957 | $ 1,848 | $ 1,923 |
Less: Investment expenses | 32 | 27 | 69 | 67 |
Net investment income | 998 | 930 | 1,779 | 1,856 |
Fixed maturities | ||||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||||
Gross investment income | 963 | 841 | 1,854 | 1,658 |
Equity securities | ||||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||||
Gross investment income | 20 | 24 | 40 | 48 |
Mortgage loans on real estate | ||||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||||
Gross investment income | 2 | 3 | 4 | 5 |
Investment real estate | ||||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||||
Gross investment income | 0 | 0 | 1 | 2 |
Policy loans | ||||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||||
Gross investment income | 35 | 33 | 70 | 66 |
Company owned life insurance change in surrender value | ||||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||||
Gross investment income | 3 | 14 | (136) | 57 |
Other | ||||
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||||
Gross investment income | $ 7 | $ 42 | $ 15 | $ 87 |
Investments (Major Categories47
Investments (Major Categories of Investment Gains and Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Gain (Loss) on Investments [Line Items] | ||||
Net realized investment gains (losses) | $ (203) | $ 77 | $ (328) | $ 237 |
Fixed maturities | ||||
Gain (Loss) on Investments [Line Items] | ||||
Net realized investment gains (losses) | 48 | 75 | 129 | 235 |
Change in fair value of equity securities | ||||
Gain (Loss) on Investments [Line Items] | ||||
Net realized investment gains (losses) | (163) | 0 | (369) | 0 |
Other, principally real estate | ||||
Gain (Loss) on Investments [Line Items] | ||||
Net realized investment gains (losses) | $ (88) | $ 2 | $ (88) | $ 2 |
Investments (Schedule of Unreal
Investments (Schedule of Unrealized Appreciation) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Investments [Abstract] | ||
Net change in unrealized gains (losses) on available-for-sale securities before deferred tax | $ (2,768) | $ 1,402 |
Deferred income tax | 581 | (476) |
Net change in unrealized gains (losses) on available-for-sale securities | $ (2,187) | $ 926 |
Fair Value of Financial Asset49
Fair Value of Financial Assets and Financial Liabilities (Narrative) (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value Disclosures [Abstract] | ||
Fair value measurements of assets | $ 1,056,000 | |
Fair value measurements of liabilities | (346,000) | |
Assets measured at fair values on a nonrecurring basis | 0 | $ 0 |
Liabilities measured at fair values on a nonrecurring basis | $ 0 | $ 0 |
Fair Value of Financial Asset50
Fair Value of Financial Assets and Financial Liabilities (Assets/Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | $ 97,036 | $ 100,267 |
Trading securities | 107 | 107 |
Recurring Basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Financial Assets | 101,283 | 100,374 |
Total Financial Liabilities | (346) | (608) |
Recurring Basis | Financial Liabilities | Interest rate swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Financial Liabilities | (346) | (608) |
Recurring Basis | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 38,761 | 39,909 |
Recurring Basis | Mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 13,286 | 12,795 |
Recurring Basis | Private label asset backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 14,188 | 10,510 |
Recurring Basis | Obligations of states and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 12,011 | 14,093 |
Recurring Basis | U.S. Treasury securities and obligations of U.S. Government corporations and agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 18,790 | 18,451 |
Recurring Basis | Trading securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities | 107 | 107 |
Recurring Basis | Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 4,140 | 4,509 |
Recurring Basis | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Financial Assets | 21,981 | 21,994 |
Total Financial Liabilities | 0 | 0 |
Recurring Basis | Level 1 | Financial Liabilities | Interest rate swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Financial Liabilities | 0 | 0 |
Recurring Basis | Level 1 | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 0 | 0 |
Recurring Basis | Level 1 | Mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 0 | 0 |
Recurring Basis | Level 1 | Private label asset backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 0 | 0 |
Recurring Basis | Level 1 | Obligations of states and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 0 | 0 |
Recurring Basis | Level 1 | U.S. Treasury securities and obligations of U.S. Government corporations and agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 18,790 | 18,451 |
Recurring Basis | Level 1 | Trading securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities | 107 | 107 |
Recurring Basis | Level 1 | Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 3,084 | 3,436 |
Recurring Basis | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Financial Assets | 78,246 | 77,307 |
Total Financial Liabilities | 0 | 0 |
Recurring Basis | Level 2 | Financial Liabilities | Interest rate swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Financial Liabilities | 0 | 0 |
Recurring Basis | Level 2 | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 38,761 | 39,909 |
Recurring Basis | Level 2 | Mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 13,286 | 12,795 |
Recurring Basis | Level 2 | Private label asset backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 14,188 | 10,510 |
Recurring Basis | Level 2 | Obligations of states and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 12,011 | 14,093 |
Recurring Basis | Level 2 | U.S. Treasury securities and obligations of U.S. Government corporations and agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 0 | 0 |
Recurring Basis | Level 2 | Trading securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities | 0 | 0 |
Recurring Basis | Level 2 | Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 0 | 0 |
Recurring Basis | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Financial Assets | 1,056 | 1,073 |
Total Financial Liabilities | (346) | (608) |
Recurring Basis | Level 3 | Financial Liabilities | Interest rate swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Financial Liabilities | (346) | (608) |
Recurring Basis | Level 3 | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 0 | 0 |
Recurring Basis | Level 3 | Mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 0 | 0 |
Recurring Basis | Level 3 | Private label asset backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 0 | 0 |
Recurring Basis | Level 3 | Obligations of states and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 0 | 0 |
Recurring Basis | Level 3 | U.S. Treasury securities and obligations of U.S. Government corporations and agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | 0 | 0 |
Recurring Basis | Level 3 | Trading securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities | 0 | 0 |
Recurring Basis | Level 3 | Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities available-for-sale | $ 1,056 | $ 1,073 |
Fair Value of Financial Asset51
Fair Value of Financial Assets and Financial Liabilities (Level 3 Reconciliation) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Equity Securities | ||
Ending balance | $ 1,056 | |
Interest Rate Swap | ||
Ending balance | (346) | |
Recurring Basis | Interest rate swap | ||
Interest Rate Swap | ||
Beginning balance | (608) | $ (1,030) |
Included in earnings | 0 | 0 |
Included in other comprehensive income | 262 | 422 |
Purchases: | 0 | 0 |
Sales: | 0 | 0 |
Issuances: | 0 | 0 |
Settlements: | 0 | 0 |
Transfers in/(out) of Level 3 | 0 | 0 |
Ending balance | (346) | |
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held | 0 | 0 |
Recurring Basis | Total fixed maturities | ||
Equity Securities | ||
Beginning balance: | 1,073 | 1,258 |
Included in earnings | (17) | 0 |
Included in other comprehensive income | 0 | 114 |
Purchases: | 0 | 46 |
Sales: | 0 | (345) |
Issuances: | 0 | 0 |
Settlements: | 0 | 0 |
Transfers in/(out) of Level 3 | 0 | 0 |
Ending balance | 1,056 | |
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held | $ 0 | $ 0 |
Fair Value of Financial Asset52
Fair Value of Financial Assets and Financial Liabilities (Fair Value of Assets and Liabilities) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Other policyholder funds | ||
Liabilities and Related Instruments [Abstract] | ||
Carrying Value, Liabilities | $ 1,708 | $ 1,706 |
Estimated Fair Value, Liabilities | 1,708 | 1,706 |
Short-term notes payable and current portion of long-term debt | ||
Liabilities and Related Instruments [Abstract] | ||
Carrying Value, Liabilities | 800 | 1,300 |
Estimated Fair Value, Liabilities | 800 | 1,300 |
Long-term debt | ||
Liabilities and Related Instruments [Abstract] | ||
Carrying Value, Liabilities | 14,345 | 14,339 |
Estimated Fair Value, Liabilities | 14,345 | 14,339 |
Held-to-maturity securities | ||
Assets and Related Instruments [Abstract] | ||
Carrying Value, Assets | 1,523 | 1,616 |
Estimated Fair Value, Assets | 1,512 | 1,645 |
Mortgage loans on real estate | ||
Assets and Related Instruments [Abstract] | ||
Carrying Value, Assets | 160 | 162 |
Estimated Fair Value, Assets | 160 | 162 |
Policy loans | ||
Assets and Related Instruments [Abstract] | ||
Carrying Value, Assets | 1,851 | 1,810 |
Estimated Fair Value, Assets | 1,851 | 1,810 |
Company owned life insurance | ||
Assets and Related Instruments [Abstract] | ||
Carrying Value, Assets | 4,838 | 4,974 |
Estimated Fair Value, Assets | 4,838 | 4,974 |
Other invested assets | ||
Assets and Related Instruments [Abstract] | ||
Carrying Value, Assets | 2,346 | 2,574 |
Estimated Fair Value, Assets | $ 2,346 | $ 2,574 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 5,383 | $ 5,376 |
Less accumulated depreciation | 3,671 | 3,595 |
Property and equipment, net | 1,712 | 1,781 |
Depreciation expense | 76 | 121 |
Building and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 3,378 | 3,378 |
Electronic data processing equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,519 | 1,512 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 486 | $ 486 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net deferred tax asset position | $ 1,405 | $ 1,487 |
Income Taxes (Deferred Tax Asse
Income Taxes (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
General expenses | $ 1,071 | $ 1,069 |
Unearned premiums | 1,348 | 1,269 |
Claims liabilities | 470 | 484 |
AMT Credit | 788 | 1,575 |
Impairment on real estate owned | 116 | 116 |
Unrealized losses on securities available-for-sale | 310 | 0 |
Unrealized loss on interest rate swaps | 72 | 128 |
Deferred tax assets | 4,175 | 4,641 |
Depreciation | (82) | (88) |
Deferred policy acquisition costs | (1,710) | (1,706) |
Pre-1984 policyholder surplus account | (496) | (529) |
Unrealized gains on securities available-for-sale | 0 | (831) |
Unrealized gains on equity securities | (482) | 0 |
Deferred tax liabilities | (2,770) | (3,154) |
Net deferred tax asset | $ 1,405 | $ 1,487 |
Income Taxes (Schedule of Inco
Income Taxes (Schedule of Income Tax Effects of Changes in Temporary Differences) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Deferred policy acquisition costs | $ 4 | $ 57 | ||
Unearned premiums | (79) | (163) | ||
General expenses | (2) | 30 | ||
Depreciation | (6) | (4) | ||
Claims liabilities | 14 | (109) | ||
AMT credit | 787 | (47) | ||
Impact of repeal of special provision on pre-1984 policyholder surplus | (33) | 0 | ||
Unrealized gains on equity securities | (77) | 0 | ||
Deferred income tax expense (benefit) | $ (87) | $ (162) | $ 608 | $ (236) |
Income Taxes (Schedule of Effec
Income Taxes (Schedule of Effective Income Tax Rate Reconciliation) (Details) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||
Federal income tax rate applied to pre-tax income/loss | 21.00% | 34.00% |
Dividends received deduction and tax-exempt interest | (1.20%) | 1.40% |
Company owned life insurance | 2.30% | 0.80% |
Small life deduction | (0.00%) | 11.50% |
Other, net | 1.70% | (1.40%) |
Effective federal income tax rate | 23.80% | 46.30% |
Notes Payable and Long-Term D58
Notes Payable and Long-Term Debt (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2010 | May 26, 2010 | Dec. 31, 2009 | Mar. 19, 2009 | |
Debt Instrument [Line Items] | |||||||||
Derivative, notional amount | $ 9,000,000 | $ 3,000,000 | |||||||
Derivative, fixed interest rate | 8.49% | 7.02% | |||||||
Cash flow hedge, derivative instrument liabilities at fair value | $ 346,000 | $ 346,000 | $ 608,000 | ||||||
Unrealized gain on interest rate swap | 75,000 | $ 40,000 | 207,000 | $ 110,000 | 278,000 | ||||
Securities on deposit | 926,000 | 926,000 | |||||||
Available-for-sale securities pledged as collateral | $ 926,000 | $ 926,000 | $ 1,446,000 | ||||||
Interest rate swap | |||||||||
Debt Instrument [Line Items] | |||||||||
Cash flow hedge, liability at fair value | $ 26,000 | ||||||||
Cash flow hedging | |||||||||
Debt Instrument [Line Items] | |||||||||
Cash flow hedge, liability at fair value | $ 320,000 |
Notes Payable and Long-Term D59
Notes Payable and Long-Term Debt (Short-Term Debt) (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Short-term Debt [Line Items] | ||
Short-term notes payable and current portion of long-term debt | $ 800 | $ 1,300 |
Notes Payable to Banks | Unsecured Debt | ||
Short-term Debt [Line Items] | ||
Short-term notes payable and current portion of long-term debt | $ 800 | 800 |
Interest rate description | WSJ | |
Basis spread on variable rate | 0.50% | |
Line of Credit | Unsecured Debt | ||
Short-term Debt [Line Items] | ||
Short-term notes payable and current portion of long-term debt | $ 0 | $ 500 |
Interest rate description | WSJ | |
Basis spread on variable rate | 0.50% |
Notes Payable and Long-Term D60
Notes Payable and Long-Term Debt (Schedule of Long-Term Debt) (Details) - USD ($) $ in Thousands | Jun. 21, 2007 | Dec. 15, 2005 | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||||
Long-term debt | $ 14,345 | $ 14,339 | ||
Unsecured Debt | Promissory Note due November 2019 | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 2,200 | 2,200 | ||
Payment terms | Annual installment payments | |||
Unsecured Debt | Promissory Note due November 2019 | Prime Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 5.00% | |||
Unsecured Debt | Trust Preferred Security Offering, 2005 | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 9,115 | 9,111 | ||
Payment terms | Interest payments due quarterly | |||
Debt issuance costs, net | $ 164 | 168 | ||
Unsecured Debt | Trust Preferred Security Offering, 2005 | Three-month LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3.75% | |||
Unsecured Debt | Trust Preferred Security Offering, 2007 | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 3,030 | 3,028 | ||
Payment terms | Interest payments due quarterly | |||
Debt issuance costs, net | $ 63 | $ 65 | ||
Unsecured Debt | Trust Preferred Security Offering, 2007 | Three-month LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3.40% |
Policy and Claim Reserves (Narr
Policy and Claim Reserves (Narrative) (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Insurance [Abstract] | |||
Estimated claims and claim adjustment expenses for claims arising in prior years | $ 896,000 | $ 1,202,000 | |
Reserve for unpaid claims | 358,000 | $ 367,000 | |
Policy and contract claims | $ 942,000 | $ 903,000 |
Policy and Claim Reserves (Prop
Policy and Claim Reserves (Property and Casualty Reserve) (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Less reinsurance recoverable on unpaid losses | $ 278 | $ 366 | ||
Net losses: | ||||
Estimated claims and claim adjustment expenses for claims arising in prior years | (896) | $ (1,202) | ||
Consolidated Property and Casualty Insurance Entity | ||||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Balance, beginning of year | 6,847 | 7,603 | 7,075 | $ 7,531 |
Less reinsurance recoverable on unpaid losses | 188 | 356 | 327 | 1,184 |
Net balances at beginning of year | 6,659 | 7,247 | $ 6,748 | $ 6,347 |
Net losses: | ||||
Provision for claims and claim adjustment expenses for claims arising in current year | 17,375 | 22,667 | ||
Estimated claims and claim adjustment expenses for claims arising in prior years | (896) | (1,202) | ||
Total increases | 16,479 | 21,465 | ||
Claims and claim adjustment expense payments for claims arising in: | ||||
Current year | 13,424 | 18,033 | ||
Prior years | 3,144 | 2,532 | ||
Total payments | $ 16,568 | $ 20,565 |
Reinsurance (Reinsurers' Limits
Reinsurance (Reinsurers' Limits of Liability) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Reinsurance Maintained by Layers [Line Items] | ||
Catastrophe reinsurance retention | $ 4,000,000 | |
Life insurance policy reinsurance limit | 50,000 | |
Reinsurance recoverable | 278,000 | $ 366,000 |
Single Reinsurer | ||
Reinsurance Maintained by Layers [Line Items] | ||
Reinsurance recoverable | $ 323,000 | $ 322,000 |
First Layer | ||
Reinsurance Maintained by Layers [Line Items] | ||
Percent of reinsured losses covered by layer | 100.00% | |
Covered losses | $ 13,500,000 | |
Reinsurer's limit of liability | $ 17,500,000 | |
Second Layer | ||
Reinsurance Maintained by Layers [Line Items] | ||
Percent of reinsured losses covered by layer | 100.00% | |
Covered losses | $ 25,000,000 | |
Reinsurer's limit of liability | $ 42,500,000 | |
Third Layer | ||
Reinsurance Maintained by Layers [Line Items] | ||
Percent of reinsured losses covered by layer | 100.00% | |
Covered losses | $ 30,000,000 | |
Reinsurer's limit of liability | $ 72,500,000 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) | 6 Months Ended | |
Jun. 30, 2018USD ($)hours | Jun. 30, 2017USD ($) | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Minimum hours of service completed in year of contribution | hours | 1,000 | |
Matching contribution | $ 88,000 | $ 99,000 |
Employer matching contribution, percent | 5.00% | |
Cash contributions to ESOP | $ 232,000 | 268,000 |
ESOP debt structure | 0 | |
Non-Qualified Deferred Compensation Plans | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Deferred compensation arrangement | $ 16,000 | $ 143,000 |
Executive Officers | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Employer matching contribution, percent | 15.00% |
Shareholders' Equity (Narrative
Shareholders' Equity (Narrative) (Details) - USD ($) $ in Thousands | May 18, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Net income (loss) | $ 457 | $ (999) | $ 928 | $ (1,315) | $ 1,203 | |
Dividends paid | (252) | (504) | ||||
Other comprehensive income, net of tax | $ (736) | $ 542 | $ (1,980) | $ 956 | $ 1,204 | |
Common Stock | Directors | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Stock issued | 4,824 |
Shareholders' Equity (Preferred
Shareholders' Equity (Preferred and Common Stock) (Details) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Class of Stock [Line Items] | ||
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 3,000,000 | 3,000,000 |
Common stock, shares issued | 2,527,136 | 2,522,312 |
Common stock, shares outstanding | 2,527,136 | 2,522,312 |
Class A Common Stock | ||
Class of Stock [Line Items] | ||
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 2,000,000 | 2,000,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Accumulated Other Comprehensi67
Accumulated Other Comprehensive Income (Changes in AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||
Beginning balance | $ 2,646 | ||||
Other comprehensive income (loss), net of tax | $ (736) | $ 542 | (1,980) | $ 956 | $ 1,204 |
Ending balance | (1,441) | 1,963 | (1,441) | 1,963 | 2,646 |
Gains and Losses on Cash Flow Hedges | |||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||
Beginning balance | (480) | (679) | (679) | ||
Other comprehensive gain before reclassifications | 207 | 110 | |||
Other comprehensive income (loss), net of tax | 207 | 110 | |||
Ending balance | (273) | (569) | (273) | (569) | (480) |
Unrealized Gains and Losses on Available-for-Sale Securities | |||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||
Beginning balance | 3,126 | 1,686 | 1,686 | ||
Other comprehensive gain before reclassifications | (2,085) | 1,001 | |||
Reclassification adjustment - gains on equity securities | (2,107) | 0 | |||
Amounts reclassified from accumulated other comprehensive income (loss) | (102) | (155) | |||
Other comprehensive income (loss), net of tax | (4,294) | 846 | |||
Ending balance | $ (1,168) | $ 2,532 | $ (1,168) | $ 2,532 | $ 3,126 |
Accumulated Other Comprehensi68
Accumulated Other Comprehensive Income (Amounts reclassified out of AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | |||||
Net realized investment gains (losses) | $ (203) | $ 77 | $ (328) | $ 237 | |
Tax (expense) or benefit | (129) | 734 | (290) | 1,133 | |
Net Income (Loss) | $ 457 | $ (999) | 928 | (1,315) | $ 1,203 |
Amounts Reclassified from Accumulated Other Comprehensive Income | Unrealized Gains and Losses on Available-for-Sale Securities | |||||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | |||||
Net realized investment gains (losses) | 129 | 235 | |||
Total before tax | 129 | 235 | |||
Tax (expense) or benefit | (27) | (80) | |||
Net Income (Loss) | $ 102 | $ 155 |
Segments (Narrative) (Details)
Segments (Narrative) (Details) | 6 Months Ended |
Jun. 30, 2018Segments | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Segments (Schedule of Segment R
Segments (Schedule of Segment Reporting Information, by Segment) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||||
Assets | $ 146,299 | $ 146,299 | $ 146,438 | ||
Net premiums earned | 15,260 | $ 15,331 | 30,319 | $ 30,371 | |
Net investment income | 998 | 930 | 1,779 | 1,856 | |
Net realized investment gains (losses) | (203) | 77 | (328) | 237 | |
Other income | 148 | 145 | 309 | 297 | |
Total Revenues | 16,203 | 16,483 | 32,079 | 32,761 | |
Policyholder benefits paid | 9,772 | 12,581 | 19,199 | 23,727 | |
Amortization of deferred policy acquisition costs | 787 | 819 | 1,590 | 1,764 | |
Commissions | 1,732 | 1,758 | 3,792 | 3,851 | |
General and administrative expenses | 2,668 | 2,215 | 4,671 | 4,012 | |
Taxes, licenses and fees | 349 | 517 | 998 | 1,206 | |
Interest expense | 309 | 326 | 611 | 649 | |
Total Benefits, Losses and Expenses | 15,617 | 18,216 | 30,861 | 35,209 | |
Income (Loss) Before Income Taxes | 586 | (1,733) | 1,218 | (2,448) | |
P&C Insurance Operations | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 82,255 | 82,255 | 80,241 | ||
Net premiums earned | 13,711 | 13,749 | 27,242 | 27,238 | |
Net investment income | 438 | 386 | 689 | 778 | |
Net realized investment gains (losses) | (61) | 60 | (235) | 60 | |
Other income | 148 | 145 | 308 | 295 | |
Total Revenues | 14,236 | 14,340 | 28,004 | 28,371 | |
Policyholder benefits paid | 8,249 | 11,274 | 16,227 | 21,192 | |
Amortization of deferred policy acquisition costs | 690 | 695 | 1,380 | 1,389 | |
Commissions | 1,665 | 1,689 | 3,677 | 3,713 | |
General and administrative expenses | 1,954 | 1,602 | 3,406 | 2,877 | |
Taxes, licenses and fees | 313 | 475 | 866 | 1,067 | |
Interest expense | 0 | 0 | 0 | 0 | |
Total Benefits, Losses and Expenses | 12,871 | 15,735 | 25,556 | 30,238 | |
Income (Loss) Before Income Taxes | 1,365 | (1,395) | 2,448 | (1,867) | |
Life Insurance Operations | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 59,508 | 59,508 | 60,709 | ||
Net premiums earned | 1,549 | 1,582 | 3,077 | 3,133 | |
Net investment income | 546 | 527 | 1,062 | 1,046 | |
Net realized investment gains (losses) | (142) | 17 | (93) | 177 | |
Other income | 0 | 0 | 1 | 2 | |
Total Revenues | 1,953 | 2,126 | 4,047 | 4,358 | |
Policyholder benefits paid | 1,523 | 1,307 | 2,972 | 2,535 | |
Amortization of deferred policy acquisition costs | 97 | 124 | 210 | 375 | |
Commissions | 67 | 69 | 115 | 138 | |
General and administrative expenses | 445 | 339 | 952 | 618 | |
Taxes, licenses and fees | 36 | 42 | 132 | 139 | |
Interest expense | 13 | 20 | 25 | 39 | |
Total Benefits, Losses and Expenses | 2,181 | 1,901 | 4,406 | 3,844 | |
Income (Loss) Before Income Taxes | (228) | 225 | (359) | 514 | |
Non-Insurance Operations | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 4,536 | 4,536 | $ 5,488 | ||
Net premiums earned | 0 | 0 | 0 | 0 | |
Net investment income | 14 | 17 | 28 | 32 | |
Net realized investment gains (losses) | 0 | 0 | 0 | 0 | |
Other income | 0 | 0 | 0 | 0 | |
Total Revenues | 14 | 17 | 28 | 32 | |
Policyholder benefits paid | 0 | 0 | 0 | 0 | |
Amortization of deferred policy acquisition costs | 0 | 0 | 0 | 0 | |
Commissions | 0 | 0 | 0 | 0 | |
General and administrative expenses | 269 | 274 | 313 | 517 | |
Taxes, licenses and fees | 0 | 0 | 0 | 0 | |
Interest expense | 296 | 306 | 586 | 610 | |
Total Benefits, Losses and Expenses | 565 | 580 | 899 | 1,127 | |
Income (Loss) Before Income Taxes | $ (551) | $ (563) | $ (871) | $ (1,095) |
Segments (Schedule of Gross and
Segments (Schedule of Gross and Net Premiums Written) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Gross premiums written | $ 18,244 | $ 18,538 | $ 35,209 | $ 35,707 |
Reinsurance premium ceded | (1,763) | (1,720) | (2,948) | (2,851) |
Net premiums written | 16,481 | 16,818 | 32,261 | 32,856 |
Life Insurance Operations | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | 1,473 | 1,499 | 3,008 | 3,067 |
Reinsurance premium ceded | (28) | (13) | (59) | (42) |
Net premiums written | 1,445 | 1,486 | 2,949 | 3,025 |
Life Insurance Operations | Traditional life insurance | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | 1,077 | 1,093 | 2,197 | 2,238 |
Life Insurance Operations | Accident and health insurance | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | 396 | 406 | 811 | 829 |
P&C Insurance Operations | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | 16,771 | 17,039 | 32,201 | 32,640 |
Reinsurance premium ceded | (1,735) | (1,707) | (2,889) | (2,809) |
Net premiums written | 15,036 | 15,332 | 29,312 | 29,831 |
P&C Insurance Operations | Dwelling fire & extended coverage | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | 10,113 | 10,040 | 19,666 | 19,471 |
P&C Insurance Operations | Homeowners (Including mobile homeowners) | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | 6,064 | 6,409 | 11,376 | 12,036 |
P&C Insurance Operations | Other liability | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | $ 594 | $ 590 | $ 1,159 | $ 1,133 |
Segments (Schedule of Gross a72
Segments (Schedule of Gross and Net Premiums Earned) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | $ 16,870 | $ 16,899 | $ 33,572 | $ 33,528 |
Reinsurance premium ceded | (1,610) | (1,568) | (3,253) | (3,157) |
Net premiums earned | 15,260 | 15,331 | 30,319 | 30,371 |
Life Insurance Operations | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 1,577 | 1,596 | 3,136 | 3,176 |
Reinsurance premium ceded | (28) | (14) | (59) | (43) |
Net premiums earned | 1,549 | 1,582 | 3,077 | 3,133 |
Life Insurance Operations | Traditional life insurance | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 1,182 | 1,188 | 2,326 | 2,346 |
Life Insurance Operations | Accident and health insurance | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 395 | 408 | 810 | 830 |
P&C Insurance Operations | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 15,293 | 15,303 | 30,436 | 30,352 |
Reinsurance premium ceded | (1,582) | (1,554) | (3,194) | (3,114) |
Net premiums earned | 13,711 | 13,749 | 27,242 | 27,238 |
P&C Insurance Operations | Dwelling fire & extended coverage | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 9,273 | 9,032 | 18,389 | 17,848 |
P&C Insurance Operations | Homeowners (Including mobile homeowners) | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 5,474 | 5,744 | 10,971 | 11,464 |
P&C Insurance Operations | Other liability | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | $ 546 | $ 527 | $ 1,076 | $ 1,040 |
Contingencies (Details)
Contingencies (Details) | Jun. 30, 2018claim |
Hurricane | |
Loss Contingencies [Line Items] | |
Pending claims, number | 1 |
Supplemental Cash Flow Inform74
Supplemental Cash Flow Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Supplemental Cash Flow Elements [Abstract] | ||
Interest paid | $ 533,000 | $ 546,000 |
Income taxes paid | 0 | $ 0 |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||
Common stock issued | 76,000 | |
Common Stock | ||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||
Common stock issued | 5,000 | |
Additional Paid-in Capital | ||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||
Common stock issued | $ 71,000 |