Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 13, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 0-18649 | |
Entity Registrant Name | National Security Group, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 63-1020300 | |
Entity Address, Address Line One | 661 East Davis Street | |
Entity Address, City or Town | Elba, | |
Entity Address, State or Province | AL | |
Entity Address, Postal Zip Code | 36323 | |
City Area Code | 334 | |
Local Phone Number | 897-2273 | |
Title of 12(b) Security | Common Stock, par value $1.00 per share | |
Trading Symbol | NSEC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 2,532,632 | |
Entity Central Index Key | 0000865058 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Investments | ||
Fixed maturities held-to-maturity, at amortized cost (estimated fair value: 2021 - $754; 2020 - $946) | $ 697 | $ 873 |
Fixed maturities available-for-sale, at estimated fair value (cost: 2021 - $90,262; 2020 - $76,241) | 94,114 | 81,399 |
Equity securities, at estimated fair value (cost: 2021 - $1,761; 2020 - $1,918) | 4,790 | 4,750 |
Trading securities | 183 | 169 |
Receivable for securities sold | 0 | 3 |
Mortgage loans on real estate, at cost | 144 | 145 |
Investment real estate, at book value | 2,934 | 2,934 |
Policy loans | 1,788 | 1,846 |
Company owned life insurance | 5,059 | 4,998 |
Other invested assets | 1,839 | 2,033 |
Total Investments | 111,548 | 99,150 |
Cash and cash equivalents | 11,122 | 19,887 |
Accrued investment income | 693 | 575 |
Policy receivables and agents' balances, net | 15,243 | 12,345 |
Reinsurance recoverable | 1,881 | 6,874 |
Deferred policy acquisition costs | 7,685 | 7,408 |
Property and equipment, net | 1,526 | 1,572 |
Income tax recoverable | 1,703 | 1,311 |
Deferred income tax asset, net | 910 | 706 |
Other assets | 1,237 | 712 |
Total Assets | 153,548 | 150,540 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Property and casualty benefit and loss reserves | 8,679 | 10,177 |
Accident and health benefit and loss reserves | 4,188 | 4,144 |
Life and annuity benefit and loss reserves | 34,836 | 34,731 |
Unearned premiums | 36,126 | 31,166 |
Policy and contract claims | 1,029 | 1,309 |
Other policyholder funds | 1,368 | 1,342 |
Short-term notes payable and current portion of long-term debt | 500 | 500 |
Long-term debt | 13,183 | 13,177 |
Other liabilities | 9,410 | 8,628 |
Total Liabilities | 109,319 | 105,174 |
Contingencies | ||
Shareholders' equity | ||
Common stock | 2,535 | 2,533 |
Additional paid-in capital | 5,650 | 5,626 |
Accumulated other comprehensive income | 3,043 | 3,585 |
Retained earnings | 33,044 | 33,665 |
Treasury stock, at cost | (43) | (43) |
Total Shareholders' Equity | 44,229 | 45,366 |
Total Liabilities and Shareholders' Equity | $ 153,548 | $ 150,540 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Investments | ||
Fixed maturities held-to-maturity, at estimated fair value | $ 754 | $ 946 |
Fixed maturities available-for-sale, at cost | 90,262 | 76,241 |
Equity securities, at cost | $ 1,761 | $ 1,918 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
REVENUES | ||||
Net premiums earned | $ 14,814 | $ 15,172 | $ 29,876 | $ 30,127 |
Net investment income | 867 | 961 | 1,671 | 1,925 |
Investment gains (losses) | 431 | 548 | 741 | (442) |
Other income | 131 | 143 | 267 | 288 |
Total Revenues | 16,243 | 16,824 | 32,555 | 31,898 |
BENEFITS, LOSSES AND EXPENSES | ||||
Policyholder benefits and settlement expenses | 11,709 | 16,736 | 21,012 | 27,319 |
Amortization of deferred policy acquisition costs | 830 | 848 | 1,801 | 1,913 |
Commissions | 1,699 | 2,047 | 3,835 | 4,122 |
General and administrative expenses | 2,566 | 2,493 | 4,870 | 3,887 |
Taxes, licenses and fees | 628 | 594 | 1,164 | 1,315 |
Interest expense | 153 | 199 | 291 | 460 |
Total Benefits, Losses and Expenses | 17,585 | 22,917 | 32,973 | 39,016 |
Loss Before Income Taxes | (1,342) | (6,093) | (418) | (7,118) |
INCOME TAX BENEFIT | ||||
Current | (9) | (1,280) | (41) | (1,333) |
Deferred | (294) | (87) | (60) | (199) |
Total income tax expense | (303) | (1,367) | (101) | (1,532) |
Net Loss | $ (1,039) | $ (4,726) | $ (317) | $ (5,586) |
INCOME (LOSS) PER COMMON SHARE BASIC (in dollars per share) | $ (0.42) | $ (1.87) | $ (0.13) | $ (2.21) |
INCOME (LOSS) PER COMMON SHARE DILUTED (in dollars per share) | (0.13) | (2.21) | ||
DIVIDENDS DECLARED PER SHARE (in dollars per share) | $ 0.06 | $ 0.06 | $ 0.12 | $ 0.12 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (1,039) | $ (4,726) | $ (317) | $ (5,586) |
Other comprehensive income (loss), net of tax | ||||
Unrealized gains (losses) on securities, net of reclassification adjustment of $84 and $13 for 2021 and 2020, respectively | 604 | 3,435 | (1,031) | 1,495 |
Unrealized gain (loss) on interest rate swap | 0 | (74) | 489 | (619) |
Other comprehensive income (loss), net of tax | 604 | 3,361 | (542) | 876 |
Comprehensive loss | $ (435) | $ (1,365) | $ (859) | $ (4,710) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Reclassification adjustment | $ 84 | $ 13 |
CONDENSED CONSOLIDATED STATEM_4
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 | Treasury Stock |
Balance at Dec. 31, 2019 | $ 53,461 | $ 42,891 | $ 2,443 | $ 2,532 | $ 5,602 | $ (7) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Common stock reacquired | (21) | (21) | ||||
Comprehensive income (loss): | ||||||
Net loss | (5,586) | (5,586) | ||||
Other comprehensive income (loss), net of tax | 876 | 876 | ||||
Common stock issued | 25 | 1 | 24 | |||
Cash dividends | (304) | (304) | ||||
Balance at Jun. 30, 2020 | 48,451 | 37,001 | 3,319 | 2,533 | 5,626 | (28) |
Balance at Dec. 31, 2019 | 53,461 | 42,891 | 2,443 | 2,532 | 5,602 | (7) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Common stock reacquired | (36) | |||||
Comprehensive income (loss): | ||||||
Net loss | (8,619) | |||||
Other comprehensive income (loss), net of tax | 1,142 | |||||
Common stock issued | 25 | |||||
Cash dividends | (607) | |||||
Balance at Dec. 31, 2020 | 45,366 | 33,665 | 3,585 | 2,533 | 5,626 | (43) |
Balance at Mar. 31, 2020 | 49,958 | 41,879 | (42) | 2,532 | 5,602 | (13) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Common stock reacquired | (15) | (15) | ||||
Comprehensive income (loss): | ||||||
Net loss | (4,726) | (4,726) | ||||
Other comprehensive income (loss), net of tax | 3,361 | 3,361 | ||||
Common stock issued | 25 | 1 | 24 | |||
Cash dividends | (152) | (152) | ||||
Balance at Jun. 30, 2020 | 48,451 | 37,001 | 3,319 | 2,533 | 5,626 | (28) |
Balance at Dec. 31, 2020 | 45,366 | 33,665 | 3,585 | 2,533 | 5,626 | (43) |
Comprehensive income (loss): | ||||||
Net loss | (317) | (317) | ||||
Other comprehensive income (loss), net of tax | (542) | (542) | ||||
Common stock issued | 26 | 2 | 24 | |||
Cash dividends | (304) | (304) | ||||
Balance at Jun. 30, 2021 | 44,229 | 33,044 | 3,043 | 2,535 | 5,650 | (43) |
Balance at Mar. 31, 2021 | 44,790 | 34,235 | 2,439 | 2,533 | 5,626 | (43) |
Comprehensive income (loss): | ||||||
Net loss | (1,039) | (1,039) | ||||
Other comprehensive income (loss), net of tax | 604 | 604 | ||||
Common stock issued | 26 | 2 | 24 | |||
Cash dividends | (152) | (152) | ||||
Balance at Jun. 30, 2021 | $ 44,229 | $ 33,044 | $ 3,043 | $ 2,535 | $ 5,650 | $ (43) |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash Flows from Operating Activities | ||
Net loss | $ (317) | $ (5,586) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation expense and amortization/accretion, net | 143 | 123 |
Net (gains) losses on investments | (741) | 442 |
Deferred income taxes | (60) | (199) |
Amortization of deferred policy acquisition costs | 1,801 | 1,913 |
Changes in assets and liabilities: | ||
Change in receivable for securities sold | 3 | 54 |
Change in accrued investment income | (118) | 27 |
Change in reinsurance recoverable | 4,993 | (8) |
Policy acquisition costs deferred | (2,078) | (1,968) |
Change in accrued income taxes | (392) | (1,333) |
Change in net policy liabilities and claims | 421 | 1,527 |
Change in other assets/liabilities, net | 1,035 | (261) |
Other, net | 12 | (13) |
Net cash provided by (used in) operating activities | 4,702 | (5,282) |
Cash Flows from Investing Activities | ||
Available-for-sale securities | (27,942) | (13,194) |
Trading securities and short-term investments | (1) | (2) |
Property and equipment | (3) | (32) |
Held-to-maturity securities | 181 | 138 |
Available-for-sale securities | 14,510 | 15,739 |
Real estate held for investment | 0 | 3 |
Property and equipment | 7 | 0 |
Other invested assets, net | 59 | 9 |
Net cash provided by (used in) investing activities | (13,189) | 2,661 |
Cash Flows from Financing Activities | ||
Change in other policyholder funds | 26 | (24) |
Dividends paid | (304) | (304) |
Net cash used in financing activities | (278) | (328) |
Net change in cash and cash equivalents | (8,765) | (2,949) |
Cash and cash equivalents, beginning of period | 19,887 | 11,809 |
Cash and cash equivalents, end of period | $ 11,122 | $ 8,860 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES Principles of Consolidation and Basis of Presentation The accompanying condensed 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 condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the condensed consolidated financial statements have been included. All significant intercompany transactions and accounts have been eliminated in the condensed consolidated financial statements. 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, 2020, 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among the more significant estimates included in these condensed 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 the estimates used in preparing these condensed consolidated financial statements. 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 2,530,882 at June 30, 2021 and 2,530,745 at June 30, 2020. The Company did not have any dilutive securities as of June 30, 2021 and 2020. 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, 2021, the net amount exceeding FDIC insured limits was $6,759,000 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, 2021, the single largest balance due from one agent totaled $657,000. 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, 2021 and December 31, 2020, 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, 2021, management does not believe the Company is exposed to any significant credit risk related to its reinsurance program. Accounting Changes Not Yet Adopted Reference Rate Reform In March 2020, the Financial Accounting Standards Board (FASB) issued guidance that provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The Company has exposure to LIBOR based financial instruments through its subordinated debentures. The contracts with respect to these borrowings contain alternative reference rates that would automatically take effect upon the phasing out of LIBOR and would not materially change the liability exposure. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is evaluating the optional expedients and exceptions in the guidance but does not expect the adoption of this guidance to have a material impact on its financial position or results of operations. Targeted Improvements to the Accounting for Long-Duration Contracts In August 2018, the FASB issued guidance to improve the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The guidance improves timeliness of recognizing changes in the liability for future policy benefits and modifies the rate used to discount future cash flows. The guidance will simplify and improve accounting for certain market-based options or guarantees associated with deposit type contracts and simplify the amortization of deferred policy acquisition costs. The guidance also introduces certain financial statement presentation requirements, as well as significant additional quantitative and qualitative disclosures. The guidance is effective for fiscal years beginning after December 15, 2024 and interim periods within those fiscal years beginning after December 15, 2025. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. Due to the nature and extent of the changes required to the Company’s life insurance operations, the adoption of this standard is expected to have a material impact on the consolidated financial statements. 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. The FASB released additional guidance in November 2018 that provides scope clarification. This guidance is effective for fiscal years beginning after December 15, 2022, 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. Recently Adopted Accounting Standards Simplifying the Accounting for Income Taxes In December 2019, the FASB issued guidance to simplify the accounting for income taxes. The guidance removes certain exceptions to general principles in the income tax guidance and amends existing guidance to improve consistent application. The guidance is effective for fiscal years beginning after December 15, 2020. The Company adopted this guidance on January 1, 2021. The adoption of this guidance did not have a material impact on its financial position or results of operations. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 6 Months Ended |
Jun. 30, 2021 | |
Variable Interest Entities [Abstract] | |
VARIABLE INTEREST ENTITIES | VARIABLE INTEREST ENTITIES The Company holds passive interests in limited partnerships that are considered to be Variable Interest Entities (VIE) under the provisions of ASC 810 Consolidation . The Company is not the primary beneficiary of the entities and is not required to consolidate under ASC 810. The entities are private placement investment funds formed for the purpose of investing in private equity investments. The Company owns less than 1% of the limited partnerships. The carrying value of the investments totals $522,000 at June 30, 2021 ($460,000 at December 31, 2020) and is included as a component of Other Invested Assets in the accompanying condensed 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 condensed 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 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 of 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 $93,000 and are included in Other Assets in the accompanying condensed consolidated balance sheets. |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Jun. 30, 2020 | |
Investments [Abstract] | |
INVESTMENTS | INVESTMENTS Our investment in available-for-sale securities, which are reported at fair value, includes fixed maturity securities and equity securities. Net unrealized gains or losses on fixed maturities are reported after-tax as a component of other comprehensive income. Changes in fair value of equity securities are reported in investment gains/losses as a component of net income. The amortized cost and aggregate fair values of investments in available-for-sale securities as of June 30, 2021 are as follows: ($ in thousands) Available-for-sale securities: Amortized Gross Gross Fair U.S. Government corporations and agencies $ 5,169 $ 242 $ 3 $ 5,408 Agency mortgage backed securities 20,718 530 154 21,094 Asset backed securities 6,076 137 — 6,213 Private label mortgage backed securities 1,931 46 6 1,971 Corporate bonds 47,747 3,211 270 50,688 States, municipalities and political subdivisions 8,621 174 55 8,740 Total Fixed Maturities 90,262 4,340 488 94,114 Equity securities 1,761 3,029 — 4,790 Total $ 92,023 $ 7,369 $ 488 $ 98,904 The amortized cost and aggregate fair values of investments in held-to-maturity securities as of June 30, 2021 are as follows: ($ in thousands) Held-to-maturity securities: Amortized Gross Gross Fair Agency mortgage backed securities $ 697 $ 57 $ — $ 754 Total $ 697 $ 57 $ — $ 754 The amortized cost and aggregate fair values of investments in available-for-sale securities as of December 31, 2020 are as follows: ($ in thousands) Available-for-sale securities: Amortized Gross Gross Fair U.S. Government corporations and agencies $ 4,300 $ 323 $ 9 $ 4,614 Agency mortgage backed securities 19,773 919 63 20,629 Asset backed securities 8,233 137 27 8,343 Private label mortgage backed securities 1,418 50 55 1,413 Corporate bonds 35,930 3,771 50 39,651 States, municipalities and political subdivisions 6,587 189 27 6,749 Total Fixed Maturities 76,241 5,389 231 81,399 Equity securities 1,918 2,832 — 4,750 Total $ 78,159 $ 8,221 $ 231 $ 86,149 The amortized cost and aggregate fair values of investments in held-to-maturity securities as of December 31, 2020 are as follows: ($ in thousands) Held-to-maturity securities: Amortized Gross Gross Fair Agency mortgage backed securities $ 873 $ 73 $ — $ 946 Total $ 873 $ 73 $ — $ 946 The amortized cost and aggregate fair value of debt securities at June 30, 2021, by contractual maturity, are presented in the following table. 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. ($ in thousands) Amortized Fair Available-for-sale securities: Due in one year or less $ 1,204 $ 1,226 Due after one year through five years 20,913 21,993 Due after five years through ten years 24,563 25,654 Due after ten years 43,582 45,241 Total $ 90,262 $ 94,114 Held-to-maturity securities: Due after one year through five years $ 12 $ 12 Due after five years through ten years 3 4 Due after ten years 682 738 Total $ 697 $ 754 A summary of securities available-for-sale with unrealized losses as of June 30, 2021, 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: ($ in thousands) Less than 12 months 12 months or longer Total June 30, 2021 Fair Gross Fair Gross Fair Gross Total U.S. Government corporations and agencies $ 854 $ 3 $ — $ — $ 854 $ 3 1 Agency mortgage backed securities 8,264 154 — — 8,264 154 14 Private label mortgage backed securities 1,002 6 — — 1,002 6 1 Corporate bonds 7,243 269 499 1 7,742 270 13 States, municipalities and political subdivisions 3,009 55 — — 3,009 55 4 $ 20,372 $ 487 $ 499 $ 1 $ 20,871 $ 488 33 There were no securities held-to-maturity with unrealized losses as of June 30, 2021. A summary of securities available-for-sale with unrealized losses as of December 31, 2020, 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: ($ in thousands) Less than 12 months 12 months or longer Total December 31, 2020 Fair Gross Fair Gross Fair Gross Total U.S. Government corporations and agencies $ 666 $ 9 $ — $ — $ 666 $ 9 1 Agency mortgage backed securities 2,264 56 2 7 2,266 63 8 Asset backed securities 1,737 27 — — 1,737 27 2 Private label mortgage backed securities 891 55 — — 891 55 1 Corporate bonds 2,467 45 495 5 2,962 50 5 States, municipalities and political subdivisions 1,713 27 — — 1,713 27 3 $ 9,738 $ 219 $ 497 $ 12 $ 10,235 $ 231 20 There were no securities held-to-maturity with unrealized losses as of December 31, 2020. 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 the fixed maturity investment portfolio. The Company has no material exposure to sub-prime mortgage loans and approximately 7% of the fixed income investment portfolio is rated below investment grade. 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, 2021, the Company realized no other-than-temporary impairments. For the year ended December 31, 2020, the Company realized $180,000 other-than-temporary impairments. At June 30, 2021, the three largest losses not realized as an impairment in the fixed maturity portfolio totaled $104,000, $59,000 and $43,000. After evaluation by management, it was determined that each of these losses were driven by changes in market interest rates. Management currently has the intent and ability to hold these investments until recovery so no other-than-temporary impairments were recognized. At December 31, 2020, the three largest losses not realized as an impairment in the fixed maturity portfolio totaled $55,000, $37,000 and $27,000. Major categories of investment income are summarized as follows: ($ in thousands) Three months ended Six months ended 2021 2020 2021 2020 Fixed maturities $ 833 $ 956 $ 1,590 $ 1,872 Equity securities 21 31 70 72 Mortgage loans on real estate 2 2 4 4 Investment real estate — — — 1 Policy loans 35 36 69 72 Other 13 (26) 15 (22) 904 999 1,748 1,999 Less: Investment expenses 37 38 77 74 Net investment income $ 867 $ 961 $ 1,671 $ 1,925 Major categories of investment gains (losses) are summarized as follows: ($ in thousands) Three months ended Six months ended 2021 2020 2021 2020 Realized gains on fixed maturities $ 106 $ 133 $ 106 $ 16 Realized gains on equity securities — — 357 — Gains on trading securities 6 19 13 (6) Change in fair value of equity securities 195 104 198 (495) Change in surrender value of company owned life insurance 118 291 61 40 Other gains principally real estate 6 1 6 3 Net investment gains (losses) $ 431 $ 548 $ 741 $ (442) An analysis of the net change in unrealized gains (losses) on available-for-sale securities follows for the six month periods: ($ in thousands) June 30, June 30, Fixed maturities $ (1,305) $ 1,892 Deferred income tax 274 (397) Change in net unrealized gains on available-for-sale securities $ (1,031) $ 1,495 |
FAIR VALUE OF FINANCIAL ASSETS
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES | 6 Months Ended |
Jun. 30, 2021 | |
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 condensed consolidated balance sheets. 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 measured at fair value on a recurring basis as of June 30, 2021 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 U.S. Government corporations and agencies $ 5,408 $ 5,408 $ — $ — Agency mortgage backed securities 21,094 13,469 7,625 — Asset backed securities 6,213 3,098 3,115 — Corporate bonds 50,688 — 50,688 — Private label asset backed securities 1,971 — 1,971 — States, municipalities and political subdivisions 8,740 — 8,740 — Trading securities 183 183 — — Equity securities 4,790 3,238 — 1,552 Total Financial Assets $ 99,087 $ 25,396 $ 72,139 $ 1,552 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 quoted market prices in active markets for identical assets are reflected within Level 1 while 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, 2021, Level 3 fair value measurements of assets include $1,552,000 of equity securities in a local community bank whose value is based on an evaluation of the financial statements of the entity. The Company does not develop the unobservable inputs used in measuring fair value. As of June 30, 2021, there were no liabilities with Level 3 fair value measurements. In 2020, liabilities with Level 3 fair value measurements included various interest rate swap agreements whose value was based on analysis provided by a third party that utilizes financial modeling tools and assumptions on interest and other factors. The Company does not develop the unobservable inputs used in measuring fair value. Additional information regarding the interest rate swap agreements is provided in Note 7. The table below presents a reconciliation for all assets and for all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2021: ($ in thousands) For the six months ended June 30, 2021 Equity Securities Interest Rate Swap Beginning balance $ 1,502 $ (619) Total gains or losses (realized and unrealized): Included in earnings 50 — Included in other comprehensive income — 619 Purchases: — — Sales: — — Issuances: — — Settlements: — — Transfers in/(out) of Level 3 — — Ending balance $ 1,552 $ — 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, 2021: $ 50 $ — For the six months ended June 30, 2021, 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, 2020 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 U.S. Government corporations and agencies $ 4,614 $ 4,614 $ — $ — Agency mortgage backed securities 20,629 12,044 8,585 — Asset backed securities 8,343 2,343 6,000 — Corporate bonds 39,651 — 39,651 — Private label asset backed securities 1,413 891 522 — States, municipalities and political subdivisions 6,749 — 6,749 — Trading securities 169 169 — — Equity securities available-for-sale 4,750 3,248 — 1,502 Total Financial Assets $ 86,318 $ 23,309 $ 61,507 $ 1,502 Financial Liabilities Interest rate swap $ (619) $ — $ — $ (619) Total Financial Liabilities $ (619) $ — $ — $ (619) The table below presents a reconciliation for all assets and for all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2020: ($ in thousands) For the year ended December 31, 2020 Equity Securities Available-for-Sale Interest Rate Swap Beginning balance $ 1,315 $ (65) Total gains or losses (realized and unrealized): Included in earnings 187 — Included in other comprehensive income — (554) Purchases: — — Sales: — — Issuances: — — Settlements: — — Transfers in/(out) of Level 3 — — Ending balance $ 1,502 $ (619) 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, 2020: $ 187 $ — For the year ended December 31, 2020, 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, 2021 and December 31, 2020 are as follows: ($ in thousands) June 30, 2021 December 31, 2020 Assets and related instruments Carrying Estimated Carrying Estimated Held-to-maturity securities $ 697 $ 754 $ 873 $ 946 Mortgage loans 144 144 145 145 Policy loans 1,788 1,788 1,846 1,846 Company owned life insurance 5,059 5,059 4,998 4,998 Other invested assets 1,839 1,839 2,033 2,033 Liabilities and related instruments Other policyholder funds 1,368 1,368 1,342 1,342 Short-term notes payable and current portion of long-term debt 500 500 500 500 Long-term debt 13,183 13,183 13,177 13,177 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Major categories of property and equipment are summarized as follows: ($ in thousands) June 30, 2021 December 31, 2020 Building and improvements $ 3,491 $ 3,491 Electronic data processing equipment 1,502 1,498 Furniture and fixtures 478 483 5,471 5,472 Less accumulated depreciation 3,945 3,900 Property and equipment, net $ 1,526 $ 1,572 Depreciation expense for the six months ended June 30, 2021 was $48,000 ($109,000 for the year ended December 31, 2020). |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES 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 2015. Tax returns have been filed through the year 2019. Net deferred tax liabilities are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of the enacted tax laws. 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 $910,000 at June 30, 2021 and $706,000 at December 31, 2020. The tax effect of significant differences representing deferred tax assets and liabilities are as follows: ($ in thousands) As of June 30, As of December 31, General expenses $ 1,505 $ 1,448 Unearned premiums 1,518 1,313 Claims liabilities 694 698 NOL carryforward 497 632 Impairment on real estate owned 147 147 Unrealized loss on interest rate swaps — 130 Deferred tax assets 4,361 4,368 Unrealized gains on trading securities (3) (3) Depreciation (91) (95) Deferred policy acquisition costs (1,614) (1,555) Pre-1984 policyholder surplus account (298) (331) Unrealized gains on securities available-for-sale (809) (1,083) Unrealized gains on equity securities (636) (595) Deferred tax liabilities (3,451) (3,662) Net deferred tax asset $ 910 $ 706 The appropriate income tax effects of changes in temporary differences are as follows: ($ in thousands) Six months ended 2021 2020 Deferred policy acquisition costs $ 59 $ 20 Other-than-temporary impairments — 10 Trading securities — (2) Unearned premiums (205) (119) General expenses (57) 20 Depreciation (4) (3) Claims liabilities 4 12 Impact of repeal of special provision on pre-1984 policyholder surplus (33) (33) NOL carryforward 135 — Unrealized gains (losses) on equity securities 41 (104) Deferred income tax benefit $ (60) $ (199) 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 2021 2020 Federal income tax rate applied to pre-tax income (loss) 21.0 % 21.0 % Dividends received deduction and tax-exempt interest 1.1 % 0.1 % Company owned life insurance 3.0 % 0.1 % Other, net (0.9) % 0.3 % Effective federal income tax rate 24.2 % 21.5 % |
NOTES PAYABLE AND LONG-TERM DEB
NOTES PAYABLE AND LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2020 | |
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, 2021 and December 31, 2020: ($ in thousands) June 30, December 31, 2021 2020 Current portion of installment note payable due in November with variable interest rate equal to the WSJ prime rate plus 0.5%, with a 4.75% floor. Unsecured. $ 500 $ 500 $ 500 $ 500 Long-term debt consisted of the following as of June 30, 2021 and December 31, 2020: ($ in thousands) June 30, December 31, 2021 2020 Promissory note with variable interest rate equal to the WSJ prime rate plus 0.5%, with a 4.75% floor; maturity November 2023. Annual installment payments beginning November 2020. Unsecured. $ 1,000 $ 1,000 Subordinated debentures issued on December 15, 2005 with floating rate interest equal to 3-Month LIBOR plus 375 basis points; net of $136,000 in debt issuance cost ($140,000 in 2020); maturity December 15, 2035. Interest payable quarterly. Redeemable prior to maturity. Unsecured. 9,143 9,139 Subordinated debentures issued on June 21, 2007 with floating rate interest equal to 3-Month LIBOR plus 340 basis points; net of $53,000 in debt issuance cost ($55,000 in 2020); maturity June 15, 2037. Interest payable quarterly. Redeemable prior to maturity. Unsecured. 3,040 3,038 $ 13,183 $ 13,177 On February 26, 2020, the Company entered into a forward swap effective March 16, 2020, 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 June 15, 2020, under the terms of the forward swap, the Company pays interest at a fixed rate of 4.93% until March 15, 2030. On February 26, 2020, the Company entered into a forward swap with a notional amount of $9,000,000 effective March 16, 2020, which hedges against changes in cash flows following the termination of the fixed rate period. Quarterly, commencing June 15, 2020 under the terms of the forward swap, the Company pays interest at a fixed rate of 5.28% until March 15, 2030. These swaps were terminated on March 22, 2021. At December 31, 2020, the swaps had fair values of $155,000 (liability) and $464,000 (liability), respectively, |
POLICY AND CLAIM RESERVES
POLICY AND CLAIM RESERVES | 6 Months Ended |
Jun. 30, 2021 | |
Insurance [Abstract] | |
POLICY AND CLAIM RESERVES | POLICY AND CLAIM RESERVES The Company regularly updates its reserve estimates as new information becomes available and events occur that may impact the resolution of unsettled claims. Reserve estimation can be an inherently uncertain process and reserve estimates can be revised up or down depending on changes in circumstances. Changes in prior years' reserve estimates are reflected in the results of operations in the year such changes are determined. The following table is a reconciliation of beginning and ending property and casualty reserve balances for claims and claim adjustment expense: ($ in thousands) Six months ended 2021 2020 Summary of claims and claim adjustment expense reserves Balance, beginning of year $ 10,177 $ 7,199 Less reinsurance recoverable on unpaid losses 3,321 249 Net balances at beginning of year 6,856 6,950 Net losses: Provision for claims and claim adjustment expenses for claims arising in current year 19,571 25,956 Estimated claims and claim adjustment expenses for claims arising in prior years (907) (544) Total increases 18,664 25,412 Claims and claim adjustment expense payments for claims arising in: Current year 15,321 21,320 Prior years 3,329 3,889 Total payments 18,650 25,209 Net balance at end of period 6,870 7,153 Plus reinsurance recoverable on unpaid losses 1,809 230 Claims and claim adjustment expense reserves at end of period $ 8,679 $ 7,383 Claims and claim adjustment expense reserves before reinsurance recoverable at June 30, 2021 were down significantly compared to beginning of year due to a decline in claims outstanding stemming from hurricane activity in the third and fourth quarter of 2020. The estimate for claims arising in prior years was reduced $907,000 in 2021 (reduced $544,000 in 2020) due to favorable loss development during the year on claims arising in prior years. Accident and Health Claim Reserves |
REINSURANCE
REINSURANCE | 6 Months Ended |
Jun. 30, 2021 | |
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 contracts do not relieve the insurance subsidiaries of the obligation indemnify policyholders with respect to the underlying insurance contracts. Failure of re-insurers to honor their obligations could result in credit related 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 the first catastrophe event and $2,000,000 from a second 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 Catastrophe Aggregate 100% of $2,000,000 in excess of $2,000,000 after $2,000,000 aggregate deductible 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, 2021, the largest reinsurance recoverable of a single reinsurer was $36,000 ($1,263,000 at December 31, 2020). 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, 2021 | |
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, 2021 amounted to $90,000 ( $92,000 in 2020). The Company contributes dollar-for-dollar matching contributions up to 5% of compensation subject to government limits. The Company established a non-qualified deferred compensation 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, 2021 and 2020 amounted to an approximate increase of $205,000 and a decrease of $31,000 in employee benefit related expenses, respectively. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS' EQUITY During the six months ended June 30, 2021 and year ended December 31, 2020, changes in shareholders' equity consisted of net loss of $317,000 and a net loss of $8,619,000, respectively; dividends paid of $304,000 in 2021 and $607,000 in 2020; an other comprehensive loss of $542,000 in 2021 and other comprehensive income of $1,142,000 in 2020; common stock issued of $26,000 in 2021 and $25,000 in 2020; and the purchase of treasury shares of $36,000 in 2020. Other comprehensive income consisted of changes in accumulated unrealized gains/losses on securities available-for-sale and changes in accumulated unrealized losses 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, 2021 and December 31, 2020: June 30, 2021 Authorized Issued Treasury Outstanding Preferred Stock, $1 par value 500,000 — — — Class A Common Stock, $1 par value 2,000,000 — — — Common Stock, $1 par value 3,000,000 2,535,577 2,945 2,532,632 December 31, 2020 Authorized Issued Treasury Outstanding Preferred Stock, $1 par value 500,000 — — — Class A Common Stock, $1 par value 2,000,000 — — — Common Stock, $1 par value 3,000,000 2,533,315 2,945 2,530,370 On May 21, 2021, 2,262 shares of common stock were issued to directors as compensation under the 2019 Equity Incentive Plan previously approved by shareholders. Treasury Stock Treasury stock may be purchased pursuant to the share repurchase plan authorized by the Board of Directors in May 2020. Effective June 1, 2020, the Board authorized the repurchase of up to $500,000 of the Company's outstanding common stock. The plan expired May 31, 2021. During the six months ended June 30, 2021, the Company repurchased no shares of common stock. During the year ended December 31, 2020, the Company purchased 2,509 shares of common stock which were placed in treasury stock. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) ("AOCI") includes certain items that are reported directly within a separate component of shareholders' equity. The following table presents changes in AOCI balances: ($ in thousands) Six months ended 2021 2020 Unrealized Gains (Losses) on Cash Flow Hedges Balance at beginning of period $ (489) $ (51) Other comprehensive income (loss) for period: Other comprehensive gain (loss) before reclassifications 489 (619) Net current period other comprehensive income (loss) 489 (619) Balance at end of period $ — $ (670) Unrealized Gains (Losses) on Available-for-Sale Securities Balance at beginning of period $ 4,074 $ 2,494 Other comprehensive income (loss) for period: Other comprehensive income (loss) before reclassifications (947) 1,508 Amounts reclassified from accumulated other comprehensive loss (84) (13) Net current period other comprehensive income (loss) (1,031) 1,495 Balance at end of period $ 3,043 $ 3,989 Total Accumulated Other Comprehensive Income at end of period $ 3,043 $ 3,319 The following table presents the amounts reclassified out of AOCI for the six months ended June 30, 2021: ($ 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 $ 106 Net investment gains 106 Total before tax (22) Tax (expense) or benefit $ 84 Net of Tax The following table presents the amounts reclassified out of AOCI for the six months ended June 30, 2020: ($ 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 $ 16 Net investment gains 16 Total before tax (3) Tax (expense) or benefit $ 13 Net of Tax |
SEGMENTS
SEGMENTS | 6 Months Ended |
Jun. 30, 2021 | |
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 subsidiary 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, 2021 and December 31, 2020 are summarized below: ($ in thousands) Assets by industry segment Total P&C Insurance Operations Life Insurance Operations Non-Insurance Operations June 30, 2021 $ 153,548 $ 88,030 $ 59,744 $ 5,774 December 31, 2020 $ 150,540 $ 85,375 $ 59,394 $ 5,771 Net income (loss) by business segment for the three and six months ended June 30, 2021 and 2020 is summarized below: ($ in thousands) Three months ended June 30, 2021 P&C Insurance Operations Life Insurance Operations Non-Insurance Operations Inter- company Eliminations Total REVENUES Net premiums earned $ 13,319 $ 1,495 $ — $ — $ 14,814 Net investment income 418 575 9 (135) 867 Investment gains (losses) 137 306 (12) — 431 Other income 131 215 311 (526) 131 14,005 2,591 308 (661) 16,243 BENEFITS AND EXPENSES Policyholder benefits paid 10,708 1,116 — (115) 11,709 Amortization of deferred policy acquisition costs 687 143 — — 830 Commissions 1,619 80 — — 1,699 General and administrative expenses 2,217 505 390 (546) 2,566 Taxes, licenses and fees 589 39 — — 628 Interest expense — 10 143 — 153 15,820 1,893 533 (661) 17,585 Income (Loss) Before Income Taxes (1,815) 698 (225) — (1,342) INCOME TAX EXPENSE (BENEFIT) (403) (111) 211 — (303) Net Income (Loss) $ (1,412) $ 809 $ (436) $ — $ (1,039) ($ in thousands) Three months ended June 30, 2020 P&C Insurance Operations Life Insurance Operations Non-Insurance Operations Inter- company Eliminations Total REVENUES Net premiums earned $ 13,688 $ 1,484 $ — $ — $ 15,172 Net investment income 355 726 15 (135) 961 Investment gains 453 76 19 — 548 Other income 142 329 291 (619) 143 14,638 2,615 325 (754) 16,824 BENEFITS AND EXPENSES Policyholder benefits paid 15,822 1,124 — (210) 16,736 Amortization of deferred policy acquisition costs 681 167 — — 848 Commissions 1,990 57 — — 2,047 General and administrative expenses 2,065 442 530 (544) 2,493 Taxes, licenses and fees 557 37 — — 594 Interest expense — 10 189 — 199 21,115 1,837 719 (754) 22,917 Income (Loss) Before Income Taxes (6,477) 778 (394) — (6,093) INCOME TAX EXPENSE (BENEFIT) (1,422) 137 (82) — (1,367) Net Income (Loss) $ (5,055) $ 641 $ (312) $ — $ (4,726) ($ in thousands) Six months ended June 30, 2021 P&C Insurance Operations Life Insurance Operations Non-Insurance Operations Inter- company Eliminations Total REVENUES Net premiums earned $ 26,991 $ 2,885 $ — $ — $ 29,876 Net investment income 723 1,197 21 (270) 1,671 Investment gains (losses) 238 509 (6) — 741 Other income 267 419 551 (970) 267 28,219 5,010 566 (1,240) 32,555 BENEFITS AND EXPENSES Policyholder benefits paid 18,664 2,563 — (215) 21,012 Amortization of deferred policy acquisition costs 1,374 427 — — 1,801 Commissions 3,678 157 — — 3,835 General and administrative expenses 4,288 907 700 (1,025) 4,870 Taxes, licenses and fees 1,038 126 — — 1,164 Interest expense — 20 271 — 291 29,042 4,200 971 (1,240) 32,973 Income (Loss) Before Income Taxes (823) 810 (405) — (418) INCOME TAX EXPENSE (BENEFIT) (183) (88) 170 — (101) Net Income (Loss) $ (640) $ 898 $ (575) $ — $ (317) ($ in thousands) Six months ended June 30, 2020 P&C Insurance Operations Life Insurance Operations Non-Insurance Operations Inter-company Total REVENUES Net premiums earned $ 27,210 $ 2,917 $ — $ — $ 30,127 Net investment income 780 1,389 26 (270) 1,925 Investment gains (losses) 15 (451) (6) — (442) Other income 287 587 522 (1,108) 288 28,292 4,442 542 (1,378) 31,898 BENEFITS AND EXPENSES Policyholder benefits paid 25,413 2,262 — (356) 27,319 Amortization of deferred policy acquisition costs 1,362 551 — — 1,913 Commissions 3,980 142 — — 4,122 General and administrative expenses 3,886 842 181 (1,022) 3,887 Taxes, licenses and fees 1,176 139 — — 1,315 Interest expense — 19 441 — 460 35,817 3,955 622 (1,378) 39,016 Income (Loss) Before Income Taxes (7,525) 487 (80) — (7,118) INCOME TAX EXPENSE (BENEFIT) (1,590) 75 (17) — (1,532) Net Income (Loss) $ (5,935) $ 412 $ (63) $ — $ (5,586) 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, 2021 and 2020, respectively: ($ in thousands) Three months ended Six months ended 2021 2020 2021 2020 Life, accident and health operations premiums written: Traditional life insurance $ 1,013 $ 1,025 $ 2,031 $ 2,083 Accident and health insurance 394 385 786 792 Gross life, accident and health 1,407 1,410 2,817 2,875 Reinsurance premium ceded (16) (22) (59) (57) Net life, accident and health premiums written $ 1,391 $ 1,388 $ 2,758 $ 2,818 Property and Casualty operations premiums written: Dwelling fire & extended coverage $ 12,760 $ 11,142 $ 24,623 $ 21,394 Homeowners (Including mobile homeowners) 5,683 5,893 10,710 10,728 Other liability 544 612 1,078 1,191 Gross property and casualty 18,987 17,647 36,411 33,313 Reinsurance premium ceded (2,522) (1,783) (4,927) (3,548) Net property and casualty written $ 16,465 $ 15,864 $ 31,484 $ 29,765 Consolidated gross premiums written $ 20,394 $ 19,057 $ 39,228 $ 36,188 Reinsurance premium ceded (2,538) (1,805) (4,986) (3,605) Consolidated net premiums written $ 17,856 $ 17,252 $ 34,242 $ 32,583 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, 2021 and 2020, respectively: ($ in thousands) Three months ended Six months ended 2021 2020 2021 2020 Life, accident and health operations premiums earned: Traditional life insurance $ 1,119 $ 1,121 $ 2,161 $ 2,187 Accident and health insurance 392 385 783 787 Gross life, accident and health 1,511 1,506 2,944 2,974 Reinsurance premium ceded (16) (22) (59) (57) Net life, accident and health premiums earned $ 1,495 $ 1,484 $ 2,885 $ 2,917 Property and Casualty operations premiums earned: Dwelling fire & extended coverage $ 10,691 $ 9,836 $ 20,869 $ 19,488 Homeowners (Including mobile homeowners) 4,617 5,080 9,979 10,161 Other liability 533 555 1,070 1,109 Gross property and casualty 15,841 15,471 31,918 30,758 Reinsurance premium ceded (2,522) (1,783) (4,927) (3,548) Net property and casualty earned $ 13,319 $ 13,688 $ 26,991 $ 27,210 Consolidated gross premiums earned $ 17,352 $ 16,977 $ 34,862 $ 33,732 Reinsurance premium ceded (2,538) (1,805) (4,986) (3,605) Consolidated net premiums earned $ 14,814 $ 15,172 $ 29,876 $ 30,127 |
CONTINGENCIES
CONTINGENCIES | 6 Months Ended |
Jun. 30, 2021 | |
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 longstanding action remaining in Texas filed in the aftermath of Hurricane Ike which was favorably resolved in the second quarter of 2020 with no material impact on these consolidated financial statements. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 6 Months Ended |
Jun. 30, 2021 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest during the six months ended June 30, 2021 was $301,000 ($419,000 in 2020). Cash paid for income taxes during the six months ended June 30, 2021 was $350,000. There was no cash received or paid from income taxes during the six months ended June 30, 2020.During the six months ended June 30, 2021, non-cash changes in equity included $2,000 in common stock issued to Directors in lieu of cash compensation along with a corresponding $24,000 increase in additional paid-in capital. During the six months ended June 30, 2020, non-cash changes in equity included $1,000 in common stock issued to Directors in lieu of cash compensation along with a corresponding $24,000 increase in additional paid-in capital. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Management has evaluated subsequent events and their potential effects on these condensed consolidated financial statements through the filing date of this Form 10-Q. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | The accompanying condensed 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 condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP).  In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the condensed consolidated financial statements have been included. All significant intercompany transactions and accounts have been eliminated in the condensed consolidated financial statements. |
Basis of Presentation | 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, 2020, 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among the more significant estimates included in these condensed 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 the estimates used in preparing these condensed consolidated financial statements. |
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 2,530,882 at June 30, 2021 and 2,530,745 at June 30, 2020. The Company did not have any dilutive securities as of June 30, 2021 and 2020. |
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, 2021, the net amount exceeding FDIC insured limits was $6,759,000 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, 2021, the single largest balance due from one agent totaled $657,000. 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, 2021 and December 31, 2020, 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, 2021, 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 Reference Rate Reform In March 2020, the Financial Accounting Standards Board (FASB) issued guidance that provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The Company has exposure to LIBOR based financial instruments through its subordinated debentures. The contracts with respect to these borrowings contain alternative reference rates that would automatically take effect upon the phasing out of LIBOR and would not materially change the liability exposure. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is evaluating the optional expedients and exceptions in the guidance but does not expect the adoption of this guidance to have a material impact on its financial position or results of operations. Targeted Improvements to the Accounting for Long-Duration Contracts In August 2018, the FASB issued guidance to improve the existing recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. The guidance improves timeliness of recognizing changes in the liability for future policy benefits and modifies the rate used to discount future cash flows. The guidance will simplify and improve accounting for certain market-based options or guarantees associated with deposit type contracts and simplify the amortization of deferred policy acquisition costs. The guidance also introduces certain financial statement presentation requirements, as well as significant additional quantitative and qualitative disclosures. The guidance is effective for fiscal years beginning after December 15, 2024 and interim periods within those fiscal years beginning after December 15, 2025. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance. Due to the nature and extent of the changes required to the Company’s life insurance operations, the adoption of this standard is expected to have a material impact on the consolidated financial statements. 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. The FASB released additional guidance in November 2018 that provides scope clarification. This guidance is effective for fiscal years beginning after December 15, 2022, 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. Recently Adopted Accounting Standards Simplifying the Accounting for Income Taxes In December 2019, the FASB issued guidance to simplify the accounting for income taxes. The guidance removes certain exceptions to general principles in the income tax guidance and amends existing guidance to improve consistent application. The guidance is effective for fiscal years beginning after December 15, 2020. The Company adopted this guidance on January 1, 2021. The adoption of this guidance did not have a material impact on its financial position or results of operations. |
Variable Interest Entities | The Company holds passive interests in limited partnerships that are considered to be Variable Interest Entities (VIE) under the provisions of ASC 810 Consolidation . The Company is not the primary beneficiary of the entities and is not required to consolidate under ASC 810. The entities are private placement investment funds formed for the purpose of investing in private equity investments. The Company owns less than 1% of the limited partnerships. The carrying value of the investments totals $522,000 at June 30, 2021 ($460,000 at December 31, 2020) and is included as a component of Other Invested Assets in the accompanying condensed consolidated balance sheets. |
Marketable Securities | 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. |
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. The December 31, 2020 swap liability is reported as a component of other liabilities on the condensed consolidated balance sheets. |
Fair Values of Financial Instruments | Our available-for-sale securities consists of fixed maturity and equity securities which are recorded at fair value in the accompanying condensed consolidated balance sheets. 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 quoted market prices in active markets for identical assets are reflected within Level 1 while 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. 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. |
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 contracts do not relieve the insurance subsidiaries of the obligation indemnify policyholders with respect to the underlying insurance contracts. Failure of re-insurers to honor their obligations could result in credit related 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 stormsAmounts 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 $50,000 of coverage per individual life.  Cost is amortized over the reinsurance contract period. |
Business Segment | The Company’s property and casualty insurance operations comprise one business segment. The property and casualty insurance segment primarily underwrites home insurance coverage with primary lines of business consisting of dwelling fire and extended coverage, homeowners (including mobile homeowners) and other liability. The Company’s life and accident and health operations comprise the second business segment.  The life and accident and health insurance segment consists of two lines of business: traditional life insurance and supplemental accident and health insurance. |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Investments [Abstract] | |
Schedule of Amortized Cost and Aggregate Fair Values of Investments in Available-for-Sale Securities | The amortized cost and aggregate fair values of investments in available-for-sale securities as of June 30, 2021 are as follows: ($ in thousands) Available-for-sale securities: Amortized Gross Gross Fair U.S. Government corporations and agencies $ 5,169 $ 242 $ 3 $ 5,408 Agency mortgage backed securities 20,718 530 154 21,094 Asset backed securities 6,076 137 — 6,213 Private label mortgage backed securities 1,931 46 6 1,971 Corporate bonds 47,747 3,211 270 50,688 States, municipalities and political subdivisions 8,621 174 55 8,740 Total Fixed Maturities 90,262 4,340 488 94,114 Equity securities 1,761 3,029 — 4,790 Total $ 92,023 $ 7,369 $ 488 $ 98,904 The amortized cost and aggregate fair values of investments in available-for-sale securities as of December 31, 2020 are as follows: ($ in thousands) Available-for-sale securities: Amortized Gross Gross Fair U.S. Government corporations and agencies $ 4,300 $ 323 $ 9 $ 4,614 Agency mortgage backed securities 19,773 919 63 20,629 Asset backed securities 8,233 137 27 8,343 Private label mortgage backed securities 1,418 50 55 1,413 Corporate bonds 35,930 3,771 50 39,651 States, municipalities and political subdivisions 6,587 189 27 6,749 Total Fixed Maturities 76,241 5,389 231 81,399 Equity securities 1,918 2,832 — 4,750 Total $ 78,159 $ 8,221 $ 231 $ 86,149 |
Schedule of Held-to-Maturity Securities | The amortized cost and aggregate fair values of investments in held-to-maturity securities as of June 30, 2021 are as follows: ($ in thousands) Held-to-maturity securities: Amortized Gross Gross Fair Agency mortgage backed securities $ 697 $ 57 $ — $ 754 Total $ 697 $ 57 $ — $ 754 The amortized cost and aggregate fair values of investments in held-to-maturity securities as of December 31, 2020 are as follows: ($ in thousands) Held-to-maturity securities: Amortized Gross Gross Fair Agency mortgage backed securities $ 873 $ 73 $ — $ 946 Total $ 873 $ 73 $ — $ 946 |
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, 2021, by contractual maturity, are presented in the following table. 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. ($ in thousands) Amortized Fair Available-for-sale securities: Due in one year or less $ 1,204 $ 1,226 Due after one year through five years 20,913 21,993 Due after five years through ten years 24,563 25,654 Due after ten years 43,582 45,241 Total $ 90,262 $ 94,114 Held-to-maturity securities: Due after one year through five years $ 12 $ 12 Due after five years through ten years 3 4 Due after ten years 682 738 Total $ 697 $ 754 |
Schedule of Securities with Unrealized Losses | A summary of securities available-for-sale with unrealized losses as of June 30, 2021, 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: ($ in thousands) Less than 12 months 12 months or longer Total June 30, 2021 Fair Gross Fair Gross Fair Gross Total U.S. Government corporations and agencies $ 854 $ 3 $ — $ — $ 854 $ 3 1 Agency mortgage backed securities 8,264 154 — — 8,264 154 14 Private label mortgage backed securities 1,002 6 — — 1,002 6 1 Corporate bonds 7,243 269 499 1 7,742 270 13 States, municipalities and political subdivisions 3,009 55 — — 3,009 55 4 $ 20,372 $ 487 $ 499 $ 1 $ 20,871 $ 488 33 There were no securities held-to-maturity with unrealized losses as of June 30, 2021. A summary of securities available-for-sale with unrealized losses as of December 31, 2020, 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: ($ in thousands) Less than 12 months 12 months or longer Total December 31, 2020 Fair Gross Fair Gross Fair Gross Total U.S. Government corporations and agencies $ 666 $ 9 $ — $ — $ 666 $ 9 1 Agency mortgage backed securities 2,264 56 2 7 2,266 63 8 Asset backed securities 1,737 27 — — 1,737 27 2 Private label mortgage backed securities 891 55 — — 891 55 1 Corporate bonds 2,467 45 495 5 2,962 50 5 States, municipalities and political subdivisions 1,713 27 — — 1,713 27 3 $ 9,738 $ 219 $ 497 $ 12 $ 10,235 $ 231 20 There were no securities held-to-maturity with unrealized losses as of December 31, 2020. |
Summary of Major Categories of Investment Income | Major categories of investment income are summarized as follows: ($ in thousands) Three months ended Six months ended 2021 2020 2021 2020 Fixed maturities $ 833 $ 956 $ 1,590 $ 1,872 Equity securities 21 31 70 72 Mortgage loans on real estate 2 2 4 4 Investment real estate — — — 1 Policy loans 35 36 69 72 Other 13 (26) 15 (22) 904 999 1,748 1,999 Less: Investment expenses 37 38 77 74 Net investment income $ 867 $ 961 $ 1,671 $ 1,925 |
Schedule of Realized Investments Gains (Losses) | Major categories of investment gains (losses) are summarized as follows: ($ in thousands) Three months ended Six months ended 2021 2020 2021 2020 Realized gains on fixed maturities $ 106 $ 133 $ 106 $ 16 Realized gains on equity securities — — 357 — Gains on trading securities 6 19 13 (6) Change in fair value of equity securities 195 104 198 (495) Change in surrender value of company owned life insurance 118 291 61 40 Other gains principally real estate 6 1 6 3 Net investment gains (losses) $ 431 $ 548 $ 741 $ (442) |
Schedule of Net Change in Unrealized Appreciation | An analysis of the net change in unrealized gains (losses) on available-for-sale securities follows for the six month periods: ($ in thousands) June 30, June 30, Fixed maturities $ (1,305) $ 1,892 Deferred income tax 274 (397) Change in net unrealized gains on available-for-sale securities $ (1,031) $ 1,495 |
FAIR VALUE OF FINANCIAL ASSET_2
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Financial assets measured at fair value on a recurring basis as of June 30, 2021 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 U.S. Government corporations and agencies $ 5,408 $ 5,408 $ — $ — Agency mortgage backed securities 21,094 13,469 7,625 — Asset backed securities 6,213 3,098 3,115 — Corporate bonds 50,688 — 50,688 — Private label asset backed securities 1,971 — 1,971 — States, municipalities and political subdivisions 8,740 — 8,740 — Trading securities 183 183 — — Equity securities 4,790 3,238 — 1,552 Total Financial Assets $ 99,087 $ 25,396 $ 72,139 $ 1,552 Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 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 U.S. Government corporations and agencies $ 4,614 $ 4,614 $ — $ — Agency mortgage backed securities 20,629 12,044 8,585 — Asset backed securities 8,343 2,343 6,000 — Corporate bonds 39,651 — 39,651 — Private label asset backed securities 1,413 891 522 — States, municipalities and political subdivisions 6,749 — 6,749 — Trading securities 169 169 — — Equity securities available-for-sale 4,750 3,248 — 1,502 Total Financial Assets $ 86,318 $ 23,309 $ 61,507 $ 1,502 Financial Liabilities Interest rate swap $ (619) $ — $ — $ (619) Total Financial Liabilities $ (619) $ — $ — $ (619) |
Schedule of Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The table below presents a reconciliation for all assets and for all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2021: ($ in thousands) For the six months ended June 30, 2021 Equity Securities Interest Rate Swap Beginning balance $ 1,502 $ (619) Total gains or losses (realized and unrealized): Included in earnings 50 — Included in other comprehensive income — 619 Purchases: — — Sales: — — Issuances: — — Settlements: — — Transfers in/(out) of Level 3 — — Ending balance $ 1,552 $ — 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, 2021: $ 50 $ — The table below presents a reconciliation for all assets and for all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2020: ($ in thousands) For the year ended December 31, 2020 Equity Securities Available-for-Sale Interest Rate Swap Beginning balance $ 1,315 $ (65) Total gains or losses (realized and unrealized): Included in earnings 187 — Included in other comprehensive income — (554) Purchases: — — Sales: — — Issuances: — — Settlements: — — Transfers in/(out) of Level 3 — — Ending balance $ 1,502 $ (619) 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, 2020: $ 187 $ — |
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, 2021 and December 31, 2020 are as follows: ($ in thousands) June 30, 2021 December 31, 2020 Assets and related instruments Carrying Estimated Carrying Estimated Held-to-maturity securities $ 697 $ 754 $ 873 $ 946 Mortgage loans 144 144 145 145 Policy loans 1,788 1,788 1,846 1,846 Company owned life insurance 5,059 5,059 4,998 4,998 Other invested assets 1,839 1,839 2,033 2,033 Liabilities and related instruments Other policyholder funds 1,368 1,368 1,342 1,342 Short-term notes payable and current portion of long-term debt 500 500 500 500 Long-term debt 13,183 13,183 13,177 13,177 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Major categories of property and equipment are summarized as follows: ($ in thousands) June 30, 2021 December 31, 2020 Building and improvements $ 3,491 $ 3,491 Electronic data processing equipment 1,502 1,498 Furniture and fixtures 478 483 5,471 5,472 Less accumulated depreciation 3,945 3,900 Property and equipment, net $ 1,526 $ 1,572 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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: ($ in thousands) As of June 30, As of December 31, General expenses $ 1,505 $ 1,448 Unearned premiums 1,518 1,313 Claims liabilities 694 698 NOL carryforward 497 632 Impairment on real estate owned 147 147 Unrealized loss on interest rate swaps — 130 Deferred tax assets 4,361 4,368 Unrealized gains on trading securities (3) (3) Depreciation (91) (95) Deferred policy acquisition costs (1,614) (1,555) Pre-1984 policyholder surplus account (298) (331) Unrealized gains on securities available-for-sale (809) (1,083) Unrealized gains on equity securities (636) (595) Deferred tax liabilities (3,451) (3,662) Net deferred tax asset $ 910 $ 706 |
Changes in Temporary Differences in Federal Income Tax | The appropriate income tax effects of changes in temporary differences are as follows: ($ in thousands) Six months ended 2021 2020 Deferred policy acquisition costs $ 59 $ 20 Other-than-temporary impairments — 10 Trading securities — (2) Unearned premiums (205) (119) General expenses (57) 20 Depreciation (4) (3) Claims liabilities 4 12 Impact of repeal of special provision on pre-1984 policyholder surplus (33) (33) NOL carryforward 135 — Unrealized gains (losses) on equity securities 41 (104) Deferred income tax benefit $ (60) $ (199) |
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 2021 2020 Federal income tax rate applied to pre-tax income (loss) 21.0 % 21.0 % Dividends received deduction and tax-exempt interest 1.1 % 0.1 % Company owned life insurance 3.0 % 0.1 % Other, net (0.9) % 0.3 % Effective federal income tax rate 24.2 % 21.5 % |
NOTES PAYABLE AND LONG-TERM D_2
NOTES PAYABLE AND LONG-TERM DEBT (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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, 2021 and December 31, 2020: ($ in thousands) June 30, December 31, 2021 2020 Current portion of installment note payable due in November with variable interest rate equal to the WSJ prime rate plus 0.5%, with a 4.75% floor. Unsecured. $ 500 $ 500 $ 500 $ 500 |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following as of June 30, 2021 and December 31, 2020: ($ in thousands) June 30, December 31, 2021 2020 Promissory note with variable interest rate equal to the WSJ prime rate plus 0.5%, with a 4.75% floor; maturity November 2023. Annual installment payments beginning November 2020. Unsecured. $ 1,000 $ 1,000 Subordinated debentures issued on December 15, 2005 with floating rate interest equal to 3-Month LIBOR plus 375 basis points; net of $136,000 in debt issuance cost ($140,000 in 2020); maturity December 15, 2035. Interest payable quarterly. Redeemable prior to maturity. Unsecured. 9,143 9,139 Subordinated debentures issued on June 21, 2007 with floating rate interest equal to 3-Month LIBOR plus 340 basis points; net of $53,000 in debt issuance cost ($55,000 in 2020); maturity June 15, 2037. Interest payable quarterly. Redeemable prior to maturity. Unsecured. 3,040 3,038 $ 13,183 $ 13,177 |
POLICY AND CLAIM RESERVES (Tabl
POLICY AND CLAIM RESERVES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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: ($ in thousands) Six months ended 2021 2020 Summary of claims and claim adjustment expense reserves Balance, beginning of year $ 10,177 $ 7,199 Less reinsurance recoverable on unpaid losses 3,321 249 Net balances at beginning of year 6,856 6,950 Net losses: Provision for claims and claim adjustment expenses for claims arising in current year 19,571 25,956 Estimated claims and claim adjustment expenses for claims arising in prior years (907) (544) Total increases 18,664 25,412 Claims and claim adjustment expense payments for claims arising in: Current year 15,321 21,320 Prior years 3,329 3,889 Total payments 18,650 25,209 Net balance at end of period 6,870 7,153 Plus reinsurance recoverable on unpaid losses 1,809 230 Claims and claim adjustment expense reserves at end of period $ 8,679 $ 7,383 |
REINSURANCE (Tables)
REINSURANCE (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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 Catastrophe Aggregate 100% of $2,000,000 in excess of $2,000,000 after $2,000,000 aggregate deductible |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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, 2021 and December 31, 2020: June 30, 2021 Authorized Issued Treasury Outstanding Preferred Stock, $1 par value 500,000 — — — Class A Common Stock, $1 par value 2,000,000 — — — Common Stock, $1 par value 3,000,000 2,535,577 2,945 2,532,632 December 31, 2020 Authorized Issued Treasury Outstanding Preferred Stock, $1 par value 500,000 — — — Class A Common Stock, $1 par value 2,000,000 — — — Common Stock, $1 par value 3,000,000 2,533,315 2,945 2,530,370 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table presents changes in AOCI balances: ($ in thousands) Six months ended 2021 2020 Unrealized Gains (Losses) on Cash Flow Hedges Balance at beginning of period $ (489) $ (51) Other comprehensive income (loss) for period: Other comprehensive gain (loss) before reclassifications 489 (619) Net current period other comprehensive income (loss) 489 (619) Balance at end of period $ — $ (670) Unrealized Gains (Losses) on Available-for-Sale Securities Balance at beginning of period $ 4,074 $ 2,494 Other comprehensive income (loss) for period: Other comprehensive income (loss) before reclassifications (947) 1,508 Amounts reclassified from accumulated other comprehensive loss (84) (13) Net current period other comprehensive income (loss) (1,031) 1,495 Balance at end of period $ 3,043 $ 3,989 Total Accumulated Other Comprehensive Income at end of period $ 3,043 $ 3,319 |
Reclassification out of Accumulated Other Comprehensive Income | The following table presents the amounts reclassified out of AOCI for the six months ended June 30, 2021: ($ 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 $ 106 Net investment gains 106 Total before tax (22) Tax (expense) or benefit $ 84 Net of Tax The following table presents the amounts reclassified out of AOCI for the six months ended June 30, 2020: ($ 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 $ 16 Net investment gains 16 Total before tax (3) Tax (expense) or benefit $ 13 Net of Tax |
SEGMENTS (Tables)
SEGMENTS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Total assets by industry segment at June 30, 2021 and December 31, 2020 are summarized below: ($ in thousands) Assets by industry segment Total P&C Insurance Operations Life Insurance Operations Non-Insurance Operations June 30, 2021 $ 153,548 $ 88,030 $ 59,744 $ 5,774 December 31, 2020 $ 150,540 $ 85,375 $ 59,394 $ 5,771 Net income (loss) by business segment for the three and six months ended June 30, 2021 and 2020 is summarized below: ($ in thousands) Three months ended June 30, 2021 P&C Insurance Operations Life Insurance Operations Non-Insurance Operations Inter- company Eliminations Total REVENUES Net premiums earned $ 13,319 $ 1,495 $ — $ — $ 14,814 Net investment income 418 575 9 (135) 867 Investment gains (losses) 137 306 (12) — 431 Other income 131 215 311 (526) 131 14,005 2,591 308 (661) 16,243 BENEFITS AND EXPENSES Policyholder benefits paid 10,708 1,116 — (115) 11,709 Amortization of deferred policy acquisition costs 687 143 — — 830 Commissions 1,619 80 — — 1,699 General and administrative expenses 2,217 505 390 (546) 2,566 Taxes, licenses and fees 589 39 — — 628 Interest expense — 10 143 — 153 15,820 1,893 533 (661) 17,585 Income (Loss) Before Income Taxes (1,815) 698 (225) — (1,342) INCOME TAX EXPENSE (BENEFIT) (403) (111) 211 — (303) Net Income (Loss) $ (1,412) $ 809 $ (436) $ — $ (1,039) ($ in thousands) Three months ended June 30, 2020 P&C Insurance Operations Life Insurance Operations Non-Insurance Operations Inter- company Eliminations Total REVENUES Net premiums earned $ 13,688 $ 1,484 $ — $ — $ 15,172 Net investment income 355 726 15 (135) 961 Investment gains 453 76 19 — 548 Other income 142 329 291 (619) 143 14,638 2,615 325 (754) 16,824 BENEFITS AND EXPENSES Policyholder benefits paid 15,822 1,124 — (210) 16,736 Amortization of deferred policy acquisition costs 681 167 — — 848 Commissions 1,990 57 — — 2,047 General and administrative expenses 2,065 442 530 (544) 2,493 Taxes, licenses and fees 557 37 — — 594 Interest expense — 10 189 — 199 21,115 1,837 719 (754) 22,917 Income (Loss) Before Income Taxes (6,477) 778 (394) — (6,093) INCOME TAX EXPENSE (BENEFIT) (1,422) 137 (82) — (1,367) Net Income (Loss) $ (5,055) $ 641 $ (312) $ — $ (4,726) ($ in thousands) Six months ended June 30, 2021 P&C Insurance Operations Life Insurance Operations Non-Insurance Operations Inter- company Eliminations Total REVENUES Net premiums earned $ 26,991 $ 2,885 $ — $ — $ 29,876 Net investment income 723 1,197 21 (270) 1,671 Investment gains (losses) 238 509 (6) — 741 Other income 267 419 551 (970) 267 28,219 5,010 566 (1,240) 32,555 BENEFITS AND EXPENSES Policyholder benefits paid 18,664 2,563 — (215) 21,012 Amortization of deferred policy acquisition costs 1,374 427 — — 1,801 Commissions 3,678 157 — — 3,835 General and administrative expenses 4,288 907 700 (1,025) 4,870 Taxes, licenses and fees 1,038 126 — — 1,164 Interest expense — 20 271 — 291 29,042 4,200 971 (1,240) 32,973 Income (Loss) Before Income Taxes (823) 810 (405) — (418) INCOME TAX EXPENSE (BENEFIT) (183) (88) 170 — (101) Net Income (Loss) $ (640) $ 898 $ (575) $ — $ (317) ($ in thousands) Six months ended June 30, 2020 P&C Insurance Operations Life Insurance Operations Non-Insurance Operations Inter-company Total REVENUES Net premiums earned $ 27,210 $ 2,917 $ — $ — $ 30,127 Net investment income 780 1,389 26 (270) 1,925 Investment gains (losses) 15 (451) (6) — (442) Other income 287 587 522 (1,108) 288 28,292 4,442 542 (1,378) 31,898 BENEFITS AND EXPENSES Policyholder benefits paid 25,413 2,262 — (356) 27,319 Amortization of deferred policy acquisition costs 1,362 551 — — 1,913 Commissions 3,980 142 — — 4,122 General and administrative expenses 3,886 842 181 (1,022) 3,887 Taxes, licenses and fees 1,176 139 — — 1,315 Interest expense — 19 441 — 460 35,817 3,955 622 (1,378) 39,016 Income (Loss) Before Income Taxes (7,525) 487 (80) — (7,118) INCOME TAX EXPENSE (BENEFIT) (1,590) 75 (17) — (1,532) Net Income (Loss) $ (5,935) $ 412 $ (63) $ — $ (5,586) |
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, 2021 and 2020, respectively: ($ in thousands) Three months ended Six months ended 2021 2020 2021 2020 Life, accident and health operations premiums written: Traditional life insurance $ 1,013 $ 1,025 $ 2,031 $ 2,083 Accident and health insurance 394 385 786 792 Gross life, accident and health 1,407 1,410 2,817 2,875 Reinsurance premium ceded (16) (22) (59) (57) Net life, accident and health premiums written $ 1,391 $ 1,388 $ 2,758 $ 2,818 Property and Casualty operations premiums written: Dwelling fire & extended coverage $ 12,760 $ 11,142 $ 24,623 $ 21,394 Homeowners (Including mobile homeowners) 5,683 5,893 10,710 10,728 Other liability 544 612 1,078 1,191 Gross property and casualty 18,987 17,647 36,411 33,313 Reinsurance premium ceded (2,522) (1,783) (4,927) (3,548) Net property and casualty written $ 16,465 $ 15,864 $ 31,484 $ 29,765 Consolidated gross premiums written $ 20,394 $ 19,057 $ 39,228 $ 36,188 Reinsurance premium ceded (2,538) (1,805) (4,986) (3,605) Consolidated net premiums written $ 17,856 $ 17,252 $ 34,242 $ 32,583 |
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, 2021 and 2020, respectively: ($ in thousands) Three months ended Six months ended 2021 2020 2021 2020 Life, accident and health operations premiums earned: Traditional life insurance $ 1,119 $ 1,121 $ 2,161 $ 2,187 Accident and health insurance 392 385 783 787 Gross life, accident and health 1,511 1,506 2,944 2,974 Reinsurance premium ceded (16) (22) (59) (57) Net life, accident and health premiums earned $ 1,495 $ 1,484 $ 2,885 $ 2,917 Property and Casualty operations premiums earned: Dwelling fire & extended coverage $ 10,691 $ 9,836 $ 20,869 $ 19,488 Homeowners (Including mobile homeowners) 4,617 5,080 9,979 10,161 Other liability 533 555 1,070 1,109 Gross property and casualty 15,841 15,471 31,918 30,758 Reinsurance premium ceded (2,522) (1,783) (4,927) (3,548) Net property and casualty earned $ 13,319 $ 13,688 $ 26,991 $ 27,210 Consolidated gross premiums earned $ 17,352 $ 16,977 $ 34,862 $ 33,732 Reinsurance premium ceded (2,538) (1,805) (4,986) (3,605) Consolidated net premiums earned $ 14,814 $ 15,172 $ 29,876 $ 30,127 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Earnings Per Share, Concentration of Credit Risk) (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | |||
Weighted average number of shares outstanding | 2,530,882 | 2,530,745 | |
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 | |
Cash, uninsured amount | $ 6,759,000 | ||
Allowance for credit loss on reinsurance recoverable | 0 | $ 0 | |
Concentration Risk [Line Items] | |||
Policy receivables and agents' balances, net | 15,243,000 | $ 12,345,000 | |
Single Largest Agent Balance Due | |||
Concentration Risk [Line Items] | |||
Policy receivables and agents' balances, net | $ 657,000 |
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, 2021 | Dec. 31, 2020 | |
Variable Interest Entity [Line Items] | ||||
Investments | $ 111,548 | $ 99,150 | ||
Variable Interest Entity, Not Primary Beneficiary | ||||
Variable Interest Entity [Line Items] | ||||
Investments | $ 522 | $ 460 | ||
Variable Interest Entity, Not Primary Beneficiary | Maximum | ||||
Variable Interest Entity [Line Items] | ||||
Limited partnership, percent owned | 1.00% | |||
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 |
INVESTMENTS (Narrative) (Detail
INVESTMENTS (Narrative) (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Gain (Loss) on Securities [Line Items] | ||
Held-to-maturity securities, unrealized losses | $ 0 | $ 0 |
Other-than-temporary impairments, available-for-sale securities | 0 | 180,000 |
Single largest loss position | 104,000 | 55,000 |
Second largest loss position | 59,000 | 37,000 |
Third largest loss position | $ 43,000 | $ 27,000 |
Maximum | ||
Gain (Loss) on Securities [Line Items] | ||
Percent of investment portfolio below investment grade | 7.00% |
INVESTMENTS (Available-for-Sale
INVESTMENTS (Available-for-Sale Securities) (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities, Amortized Cost | $ 90,262 | $ 76,241 |
Fixed maturities, Gross Unrealized Gains | 4,340 | 5,389 |
Fixed maturities, Gross Unrealized Losses | 488 | 231 |
Fixed maturities, Fair Value | 94,114 | 81,399 |
Equity securities, Amortized Cost | 1,761 | 1,918 |
Equity securities, Gross Unrealized Gains | 3,029 | 2,832 |
Equity securities, Gross Unrealized Losses | 0 | 0 |
Equity securities, Fair Value | 4,790 | 4,750 |
Amortized Cost | 92,023 | 78,159 |
Gross Unrealized Gains | 7,369 | 8,221 |
Gross Unrealized Losses | 488 | 231 |
Fair Value | 98,904 | 86,149 |
U.S. Government corporations and agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities, Amortized Cost | 5,169 | 4,300 |
Fixed maturities, Gross Unrealized Gains | 242 | 323 |
Fixed maturities, Gross Unrealized Losses | 3 | 9 |
Fixed maturities, Fair Value | 5,408 | 4,614 |
Agency mortgage backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities, Amortized Cost | 20,718 | 19,773 |
Fixed maturities, Gross Unrealized Gains | 530 | 919 |
Fixed maturities, Gross Unrealized Losses | 154 | 63 |
Fixed maturities, Fair Value | 21,094 | 20,629 |
Asset backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities, Amortized Cost | 6,076 | 8,233 |
Fixed maturities, Gross Unrealized Gains | 137 | 137 |
Fixed maturities, Gross Unrealized Losses | 0 | 27 |
Fixed maturities, Fair Value | 6,213 | 8,343 |
Private label mortgage backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities, Amortized Cost | 1,931 | 1,418 |
Fixed maturities, Gross Unrealized Gains | 46 | 50 |
Fixed maturities, Gross Unrealized Losses | 6 | 55 |
Fixed maturities, Fair Value | 1,971 | 1,413 |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities, Amortized Cost | 47,747 | 35,930 |
Fixed maturities, Gross Unrealized Gains | 3,211 | 3,771 |
Fixed maturities, Gross Unrealized Losses | 270 | 50 |
Fixed maturities, Fair Value | 50,688 | 39,651 |
States, municipalities and political subdivisions | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities, Amortized Cost | 8,621 | 6,587 |
Fixed maturities, Gross Unrealized Gains | 174 | 189 |
Fixed maturities, Gross Unrealized Losses | 55 | 27 |
Fixed maturities, Fair Value | $ 8,740 | $ 6,749 |
INVESTMENTS (Held-to-Maturity S
INVESTMENTS (Held-to-Maturity Securities) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | $ 697,000 | $ 873,000 |
Held-to-maturity securities, unrealized gains | 57,000 | 73,000 |
Held-to-maturity securities, unrealized losses | 0 | 0 |
Fair Value | 754,000 | 946,000 |
Agency mortgage backed securities | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 697,000 | 873,000 |
Held-to-maturity securities, unrealized gains | 57,000 | 73,000 |
Held-to-maturity securities, unrealized losses | 0 | 0 |
Fair Value | $ 754,000 | $ 946,000 |
INVESTMENTS (Amortized Cost and
INVESTMENTS (Amortized Cost and Aggregate Fair Value of Debt Securities, by Contractual Maturity) (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Investments [Abstract] | ||
Available-for-sale Securities, Due in one year or less, Amortized Cost | $ 1,204 | |
Available-for-sale Securities, Due in one year or less, Fair Value | 1,226 | |
Available-for-sale Securities, Due after one year through five years, Amortized Cost | 20,913 | |
Available-for-sale Securities, Due after one year through five years, Fair Value | 21,993 | |
Available-for-sale Securities, Due after five years through ten years, Amortized Cost | 24,563 | |
Available-for-sale Securities, Due after five years through ten years, Fair Value | 25,654 | |
Available-for-sale Securities, Due after ten years, Amortized Cost | 43,582 | |
Available-for-sale Securities, Due after ten years, Fair Value | 45,241 | |
Fixed maturities, Amortized Cost | 90,262 | $ 76,241 |
Available-for-sale Securities, Fair Value | 94,114 | |
Held-to-maturity Securities, Due after one year through five years, Amortized Cost | 12 | |
Held-to-maturity Securities, Due after one year through five years, Fair Value | 12 | |
Held-to-maturity Securities, Due after five years through ten years, Amortized Cost | 3 | |
Held-to-maturity Securities, Due after five years through ten years, Fair Value | 4 | |
Held-to-maturity Securities, Due after ten years, Amortized Cost | 682 | |
Held-to-maturity Securities, Due after ten years, Fair Value | 738 | |
Held-to-maturity Securities, Amortized Cost | 697 | 873 |
Debt Securities, Held-to-maturity, Fair Value | $ 754 | $ 946 |
INVESTMENTS (Schedule of Contin
INVESTMENTS (Schedule of Continuous Losses) (Details) $ in Thousands | Jun. 30, 2021USD ($) | Dec. 31, 2020USD ($) |
Debt Securities, Available-for-sale [Line Items] | ||
Less than 12 Months, Fair Value | $ 20,372 | $ 9,738 |
Less than 12 Months, Gross Unrealized Losses | 487 | 219 |
12 Months or Longer, Fair Value | 499 | 497 |
12 Months or Longer, Gross Unrealized Losses | 1 | 12 |
Total Fair Value | 20,871 | 10,235 |
Total Gross Unrealized Losses | $ 488 | $ 231 |
Total Securities in a Loss Position | 33 | 20 |
U.S. Government corporations and agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Less than 12 Months, Fair Value | $ 854 | $ 666 |
Less than 12 Months, Gross Unrealized Losses | 3 | 9 |
12 Months or Longer, Fair Value | 0 | 0 |
12 Months or Longer, Gross Unrealized Losses | 0 | 0 |
Total Fair Value | 854 | 666 |
Total Gross Unrealized Losses | $ 3 | $ 9 |
Total Securities in a Loss Position | 1 | 1 |
Agency mortgage backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Less than 12 Months, Fair Value | $ 8,264 | $ 2,264 |
Less than 12 Months, Gross Unrealized Losses | 154 | 56 |
12 Months or Longer, Fair Value | 0 | 2 |
12 Months or Longer, Gross Unrealized Losses | 0 | 7 |
Total Fair Value | 8,264 | 2,266 |
Total Gross Unrealized Losses | $ 154 | $ 63 |
Total Securities in a Loss Position | 14 | 8 |
Asset backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Less than 12 Months, Fair Value | $ 1,737 | |
Less than 12 Months, Gross Unrealized Losses | 27 | |
12 Months or Longer, Fair Value | 0 | |
12 Months or Longer, Gross Unrealized Losses | 0 | |
Total Fair Value | 1,737 | |
Total Gross Unrealized Losses | $ 27 | |
Total Securities in a Loss Position | 2 | |
Private label mortgage backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Less than 12 Months, Fair Value | $ 1,002 | $ 891 |
Less than 12 Months, Gross Unrealized Losses | 6 | 55 |
12 Months or Longer, Fair Value | 0 | 0 |
12 Months or Longer, Gross Unrealized Losses | 0 | 0 |
Total Fair Value | 1,002 | 891 |
Total Gross Unrealized Losses | $ 6 | $ 55 |
Total Securities in a Loss Position | 1 | 1 |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Less than 12 Months, Fair Value | $ 7,243 | $ 2,467 |
Less than 12 Months, Gross Unrealized Losses | 269 | 45 |
12 Months or Longer, Fair Value | 499 | 495 |
12 Months or Longer, Gross Unrealized Losses | 1 | 5 |
Total Fair Value | 7,742 | 2,962 |
Total Gross Unrealized Losses | $ 270 | $ 50 |
Total Securities in a Loss Position | 13 | 5 |
States, municipalities and political subdivisions | ||
Debt Securities, Available-for-sale [Line Items] | ||
Less than 12 Months, Fair Value | $ 3,009 | $ 1,713 |
Less than 12 Months, Gross Unrealized Losses | 55 | 27 |
12 Months or Longer, Fair Value | 0 | 0 |
12 Months or Longer, Gross Unrealized Losses | 0 | 0 |
Total Fair Value | 3,009 | 1,713 |
Total Gross Unrealized Losses | $ 55 | $ 27 |
Total Securities in a Loss Position | 4 | 3 |
INVESTMENTS (Major Categories o
INVESTMENTS (Major Categories of Investment Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | ||||
Gross investment income | $ 904 | $ 999 | $ 1,748 | $ 1,999 |
Less: Investment expenses | 37 | 38 | 77 | 74 |
Net investment income | 867 | 961 | 1,671 | 1,925 |
Fixed maturities | ||||
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | ||||
Gross investment income | 833 | 956 | 1,590 | 1,872 |
Equity securities | ||||
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | ||||
Gross investment income | 21 | 31 | 70 | 72 |
Mortgage loans on real estate | ||||
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | ||||
Gross investment income | 2 | 2 | 4 | 4 |
Investment real estate | ||||
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | ||||
Gross investment income | 0 | 0 | 0 | 1 |
Policy loans | ||||
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | ||||
Gross investment income | 35 | 36 | 69 | 72 |
Other | ||||
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Line Items] | ||||
Gross investment income | $ 13 | $ (26) | $ 15 | $ (22) |
INVESTMENTS (Major Categories_2
INVESTMENTS (Major Categories of Investment Gains and Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Gain (Loss) on Securities [Line Items] | ||||
Investment gains (losses) | $ 431 | $ 548 | $ 741 | $ (442) |
Gains on trading securities | 6 | 19 | 13 | (6) |
Realized gains on fixed maturities | ||||
Gain (Loss) on Securities [Line Items] | ||||
Investment gains (losses) | 106 | 133 | 106 | 16 |
Realized gains on equity securities | ||||
Gain (Loss) on Securities [Line Items] | ||||
Investment gains (losses) | 0 | 0 | 357 | 0 |
Change in fair value of equity securities | ||||
Gain (Loss) on Securities [Line Items] | ||||
Investment gains (losses) | 195 | 104 | 198 | (495) |
Change in surrender value of company owned life insurance | ||||
Gain (Loss) on Securities [Line Items] | ||||
Investment gains (losses) | 118 | 291 | 61 | 40 |
Other gains principally real estate | ||||
Gain (Loss) on Securities [Line Items] | ||||
Investment gains (losses) | $ 6 | $ 1 | $ 6 | $ 3 |
INVESTMENTS (Schedule of Unreal
INVESTMENTS (Schedule of Unrealized Appreciation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Investments [Abstract] | ||||
Fixed maturities | $ (1,305) | $ 1,892 | ||
Deferred income tax | 274 | (397) | ||
Change in net unrealized gains on available-for-sale securities | $ 604 | $ 3,435 | $ (1,031) | $ 1,495 |
FAIR VALUE OF FINANCIAL ASSET_3
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Narrative) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value Disclosures [Abstract] | ||
Fair value measurements of assets | $ 1,552,000 | |
Fair value measurements of liabilities | 0 | |
Nonrecurring Basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | 0 | $ 0 |
Liabilities, fair value | $ 0 | $ 0 |
FAIR VALUE OF FINANCIAL ASSET_4
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Assets/Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | $ 94,114 | $ 81,399 |
Equity securities | 4,790 | 4,750 |
Recurring Basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities | 183 | 169 |
Equity securities | 4,790 | 4,750 |
Total Financial Assets | 99,087 | 86,318 |
Total Financial Liabilities | (619) | |
Recurring Basis | Financial Liabilities | Interest rate swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Financial Liabilities | (619) | |
Recurring Basis | U.S. Government corporations and agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 5,408 | 4,614 |
Recurring Basis | Agency mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 21,094 | 20,629 |
Recurring Basis | Asset backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 6,213 | 8,343 |
Recurring Basis | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 50,688 | 39,651 |
Recurring Basis | Private label mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 1,971 | 1,413 |
Recurring Basis | States, municipalities and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 8,740 | 6,749 |
Recurring Basis | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities | 183 | 169 |
Equity securities | 3,238 | 3,248 |
Total Financial Assets | 25,396 | 23,309 |
Total Financial Liabilities | 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 | |
Recurring Basis | Level 1 | U.S. Government corporations and agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 5,408 | 4,614 |
Recurring Basis | Level 1 | Agency mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 13,469 | 12,044 |
Recurring Basis | Level 1 | Asset backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 3,098 | 2,343 |
Recurring Basis | Level 1 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 0 | 0 |
Recurring Basis | Level 1 | Private label mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 0 | 891 |
Recurring Basis | Level 1 | States, municipalities and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 0 | 0 |
Recurring Basis | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities | 0 | 0 |
Equity securities | 0 | 0 |
Total Financial Assets | 72,139 | 61,507 |
Total Financial Liabilities | 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 | |
Recurring Basis | Level 2 | U.S. Government corporations and agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 0 | 0 |
Recurring Basis | Level 2 | Agency mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 7,625 | 8,585 |
Recurring Basis | Level 2 | Asset backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 3,115 | 6,000 |
Recurring Basis | Level 2 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 50,688 | 39,651 |
Recurring Basis | Level 2 | Private label mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 1,971 | 522 |
Recurring Basis | Level 2 | States, municipalities and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 8,740 | 6,749 |
Recurring Basis | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities | 0 | 0 |
Equity securities | 1,552 | 1,502 |
Total Financial Assets | 1,552 | 1,502 |
Total Financial Liabilities | (619) | |
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 | (619) | |
Recurring Basis | Level 3 | U.S. Government corporations and agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 0 | 0 |
Recurring Basis | Level 3 | Agency mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 0 | 0 |
Recurring Basis | Level 3 | Asset backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 0 | 0 |
Recurring Basis | Level 3 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 0 | 0 |
Recurring Basis | Level 3 | Private label mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | 0 | 0 |
Recurring Basis | Level 3 | States, municipalities and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed maturities, Fair Value | $ 0 | $ 0 |
FAIR VALUE OF FINANCIAL ASSET_5
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Level 3 Reconciliation) (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Equity Securities | ||
Ending balance | $ 1,552 | |
Interest Rate Swap | ||
Ending balance | 0 | |
Recurring Basis | Interest rate swap | ||
Interest Rate Swap | ||
Beginning balance | (619) | $ (65) |
Included in earnings | 0 | 0 |
Included in other comprehensive income | 619 | (554) |
Purchases: | 0 | 0 |
Sales: | 0 | 0 |
Issuances: | 0 | 0 |
Settlements: | 0 | 0 |
Transfers in/(out) of Level 3 | 0 | 0 |
Ending balance | 0 | (619) |
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: | 1,502 | 1,315 |
Included in earnings | 50 | 187 |
Included in other comprehensive income | 0 | 0 |
Purchases: | 0 | 0 |
Sales: | 0 | 0 |
Issuances: | 0 | 0 |
Settlements: | 0 | 0 |
Transfers in/(out) of Level 3 | 0 | 0 |
Ending balance | 1,552 | 1,502 |
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 | $ 50 | $ 187 |
FAIR VALUE OF FINANCIAL ASSET_6
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Fair Value of Assets and Liabilities) (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Other policyholder funds | ||
Liabilities and Related Instruments [Abstract] | ||
Carrying Value, Liabilities | $ 1,368 | $ 1,342 |
Estimated Fair Value, Liabilities | 1,368 | 1,342 |
Short-term notes payable and current portion of long-term debt | ||
Liabilities and Related Instruments [Abstract] | ||
Carrying Value, Liabilities | 500 | 500 |
Estimated Fair Value, Liabilities | 500 | 500 |
Long-term debt | ||
Liabilities and Related Instruments [Abstract] | ||
Carrying Value, Liabilities | 13,183 | 13,177 |
Estimated Fair Value, Liabilities | 13,183 | 13,177 |
Held-to-maturity securities | ||
Assets and Related Instruments [Abstract] | ||
Carrying Value, Assets | 697 | 873 |
Estimated Fair Value, Assets | 754 | 946 |
Mortgage loans on real estate | ||
Assets and Related Instruments [Abstract] | ||
Carrying Value, Assets | 144 | 145 |
Estimated Fair Value, Assets | 144 | 145 |
Policy loans | ||
Assets and Related Instruments [Abstract] | ||
Carrying Value, Assets | 1,788 | 1,846 |
Estimated Fair Value, Assets | 1,788 | 1,846 |
Company owned life insurance | ||
Assets and Related Instruments [Abstract] | ||
Carrying Value, Assets | 5,059 | 4,998 |
Estimated Fair Value, Assets | 5,059 | 4,998 |
Other invested assets | ||
Assets and Related Instruments [Abstract] | ||
Carrying Value, Assets | 1,839 | 2,033 |
Estimated Fair Value, Assets | $ 1,839 | $ 2,033 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 5,471 | $ 5,472 |
Less accumulated depreciation | 3,945 | 3,900 |
Property and equipment, net | 1,526 | 1,572 |
Depreciation expense | 48 | 109 |
Building and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 3,491 | 3,491 |
Electronic data processing equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,502 | 1,498 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 478 | $ 483 |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Deferred income tax asset | $ 910 | $ 706 |
INCOME TAXES (Deferred Tax Asse
INCOME TAXES (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
General expenses | $ 1,505 | $ 1,448 |
Unearned premiums | 1,518 | 1,313 |
Claims liabilities | 694 | 698 |
NOL carryforward | 497 | 632 |
Impairment on real estate owned | 147 | 147 |
Unrealized loss on interest rate swaps | 0 | 130 |
Deferred tax assets | 4,361 | 4,368 |
Unrealized losses on trading securities | (3) | (3) |
Depreciation | (91) | (95) |
Deferred policy acquisition costs | (1,614) | (1,555) |
Pre-1984 policyholder surplus account | (298) | (331) |
Unrealized gains on securities available-for-sale | (809) | (1,083) |
Unrealized gains on equity securities | (636) | (595) |
Deferred tax liabilities | (3,451) | (3,662) |
Net deferred tax asset | $ 910 | $ 706 |
INCOME TAXES (Schedule of Incom
INCOME TAXES (Schedule of Income Tax Effects of Changes in Temporary Differences) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Deferred policy acquisition costs | $ 59 | $ 20 | ||
Other-than-temporary impairments | 0 | 10 | ||
Trading securities | 0 | (2) | ||
Unearned premiums | (205) | (119) | ||
General expenses | (57) | 20 | ||
Depreciation | (4) | (3) | ||
Claims liabilities | 4 | 12 | ||
Impact of repeal of special provision on pre-1984 policyholder surplus | (33) | (33) | ||
NOL carryforward | 135 | 0 | ||
Unrealized gains (losses) on equity securities | 41 | (104) | ||
Deferred income tax benefit | $ (294) | $ (87) | $ (60) | $ (199) |
INCOME TAXES (Schedule of Effec
INCOME TAXES (Schedule of Effective Income Tax Rate Reconciliation) (Details) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||
Federal income tax rate applied to pre-tax income (loss) | 21.00% | 21.00% |
Dividends received deduction and tax-exempt interest | 1.10% | 0.10% |
Company owned life insurance | 3.00% | 0.10% |
Other, net | (0.90%) | 0.30% |
Effective federal income tax rate | 24.20% | 21.50% |
NOTES PAYABLE AND LONG-TERM D_3
NOTES PAYABLE AND LONG-TERM DEBT (Short-Term Debt) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Short-term Debt [Line Items] | ||
Short-term notes payable and current portion of long-term debt | $ 500 | $ 500 |
Notes Payable to Banks | Unsecured Debt | ||
Short-term Debt [Line Items] | ||
Interest rate description | WSJ | |
Basis spread on variable rate | 0.50% | |
Floor | 4.75% | |
Short-term notes payable and current portion of long-term debt | $ 500 | $ 500 |
NOTES PAYABLE AND LONG-TERM D_4
NOTES PAYABLE AND LONG-TERM DEBT (Schedule of Long-Term Debt) (Details) - USD ($) $ in Thousands | Jun. 21, 2007 | Dec. 15, 2005 | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||||
Long-term debt | $ 13,183 | $ 13,177 | ||
Unsecured Debt | Promissory Note | ||||
Debt Instrument [Line Items] | ||||
Interest rate description | WSJ | |||
Basis spread on variable rate | 0.50% | |||
Floor | 4.75% | |||
Long-term debt | $ 1,000 | 1,000 | ||
Unsecured Debt | Trust Preferred Security Offering, 2005 | ||||
Debt Instrument [Line Items] | ||||
Debt issuance costs, net | 136 | 140 | ||
Long-term debt | 9,143 | 9,139 | ||
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] | ||||
Debt issuance costs, net | 53 | 55 | ||
Long-term debt | $ 3,040 | $ 3,038 | ||
Unsecured Debt | Trust Preferred Security Offering, 2007 | Three-month LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3.40% |
NOTES PAYABLE AND LONG-TERM D_5
NOTES PAYABLE AND LONG-TERM DEBT (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Feb. 26, 2020 | |
Debt Instrument [Line Items] | ||||||
Cash flow hedge, derivative instrument liabilities at fair value | $ 619,000 | |||||
Unrealized gain (loss) on interest rate swap | $ 0 | $ (74,000) | $ 489,000 | $ (619,000) | 438,000 | |
Securities on deposit | 957,000 | |||||
Collateral Pledged [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Available-for-sale securities pledged as collateral | 957,000 | |||||
Interest rate swap | ||||||
Debt Instrument [Line Items] | ||||||
Derivative, notional amount | $ 3,000,000 | |||||
Derivative, fixed interest rate | 4.93% | |||||
Cash flow hedge, liability at fair value | 155,000 | |||||
Interest rate swap | ||||||
Debt Instrument [Line Items] | ||||||
Derivative, notional amount | $ 9,000,000 | |||||
Derivative, fixed interest rate | 5.28% | |||||
Cash flow hedge, liability at fair value | $ 464,000 |
POLICY AND CLAIM RESERVES (Prop
POLICY AND CLAIM RESERVES (Property and Casualty Reserve) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Less reinsurance recoverable on unpaid losses | $ 6,874 | |
Net losses: | ||
Estimated claims and claim adjustment expenses for claims arising in prior years | (907) | $ (544) |
Claims and claim adjustment expense payments for claims arising in: | ||
Plus reinsurance recoverable on unpaid losses | 1,881 | |
Consolidated Property and Casualty Insurance Entity | ||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Balance, beginning of year | 10,177 | 7,199 |
Less reinsurance recoverable on unpaid losses | 3,321 | 249 |
Net balances at beginning of year | 6,856 | 6,950 |
Net losses: | ||
Provision for claims and claim adjustment expenses for claims arising in current year | 19,571 | 25,956 |
Estimated claims and claim adjustment expenses for claims arising in prior years | (907) | (544) |
Total increases | 18,664 | 25,412 |
Claims and claim adjustment expense payments for claims arising in: | ||
Current year | 15,321 | 21,320 |
Prior years | 3,329 | 3,889 |
Total payments | 18,650 | 25,209 |
Net balances at end of period | 6,870 | 7,153 |
Plus reinsurance recoverable on unpaid losses | 1,809 | 230 |
Claims and claim adjustment expense reserves at end of period | $ 8,679 | $ 7,383 |
POLICY AND CLAIM RESERVES (Narr
POLICY AND CLAIM RESERVES (Narrative) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Insurance [Abstract] | |||
Estimated claims and claim adjustment expenses for claims arising in prior years | $ 907 | $ 544 | |
Reserve for unpaid claims | 384 | $ 426 | |
Policy and contract claims | $ 1,029 | $ 1,309 |
REINSURANCE (Details)
REINSURANCE (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Reinsurance Maintained by Layers [Line Items] | ||
Life insurance policy reinsurance limit | $ 50,000 | |
Reinsurance recoverable | 1,881,000 | $ 6,874,000 |
Single Reinsurer | ||
Reinsurance Maintained by Layers [Line Items] | ||
Reinsurance recoverable | 36,000 | $ 1,263,000 |
First Layer | ||
Reinsurance Maintained by Layers [Line Items] | ||
Catastrophe reinsurance retention | $ 4,000,000 | |
Percent of reinsured losses covered by layer | 100.00% | |
Covered losses | $ 13,500,000 | |
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 | $ 17,500,000 | |
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 | 42,500,000 | |
Catastrophe Aggregate | ||
Reinsurance Maintained by Layers [Line Items] | ||
Catastrophe reinsurance retention | $ 2,000,000 | |
Percent of reinsured losses covered by layer | 100.00% | |
Covered losses | $ 2,000,000 | |
First Catastrophe Event | ||
Reinsurance Maintained by Layers [Line Items] | ||
Catastrophe reinsurance retention | 4,000,000 | |
Second Catastrophe Event | ||
Reinsurance Maintained by Layers [Line Items] | ||
Catastrophe reinsurance retention | $ 2,000,000 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) | 6 Months Ended | |
Jun. 30, 2021USD ($)hours | Jun. 30, 2020USD ($) | |
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 | $ 90,000 | $ 92,000 |
Employer matching contribution, percent | 5.00% | |
Cash contributions to ESOP | $ 0 | 100,000 |
ESOP debt structure | 0 | |
Non-Qualified Deferred Compensation Plans | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Increase (decrease) in deferred compensation arrangement | $ 205,000 | $ (31,000) |
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 ($) | May 21, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Jun. 01, 2020 |
Stockholders' Equity Note [Abstract] | |||||||
Net loss | $ (1,039,000) | $ (4,726,000) | $ (317,000) | $ (5,586,000) | $ (8,619,000) | ||
Dividends paid | (152,000) | (152,000) | (304,000) | (304,000) | (607,000) | ||
Other comprehensive income, net of tax | 604,000 | 3,361,000 | (542,000) | 876,000 | 1,142,000 | ||
Common stock issued | $ 26,000 | 25,000 | $ 26,000 | 25,000 | 25,000 | ||
Treasury stock acquired | $ 15,000 | $ 21,000 | $ 36,000 | ||||
Shares of common stock repurchased and placed in treasury (in shares) | 0 | 2,509 | |||||
Maximum | |||||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||||
Stock repurchase program, authorized amount | $ 500,000 | ||||||
Directors | |||||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||||
Stock issued for compensation (in shares) | 2,262 |
SHAREHOLDERS' EQUITY (Preferred
SHAREHOLDERS' EQUITY (Preferred and Common Stock) (Details) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 |
Class of Stock [Line Items] | ||
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 3,000,000 | 3,000,000 |
Common stock, shares issued (in shares) | 2,535,577 | 2,533,315 |
Treasury (in shares) | 2,945 | 2,945 |
Common stock, shares outstanding (in shares) | 2,532,632 | 2,530,370 |
Class A Common Stock | ||
Class of Stock [Line Items] | ||
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Common stock, shares issued (in shares) | 0 | 0 |
Common stock, shares outstanding (in shares) | 0 | 0 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Changes in AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||
Beginning balance | $ 3,585 | ||||
Other comprehensive income (loss), net of tax | $ 604 | $ 3,361 | (542) | $ 876 | $ 1,142 |
Ending balance | 3,043 | 3,319 | 3,043 | 3,319 | 3,585 |
Unrealized Gains (Losses) on Cash Flow Hedges | |||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||
Beginning balance | (489) | (51) | (51) | ||
Other comprehensive gain (loss) before reclassifications | 489 | (619) | |||
Other comprehensive income (loss), net of tax | 489 | (619) | |||
Ending balance | 0 | (670) | 0 | (670) | (489) |
Unrealized Gains (Losses) on Available-for-Sale Securities | |||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||
Beginning balance | 4,074 | 2,494 | 2,494 | ||
Other comprehensive gain (loss) before reclassifications | (947) | 1,508 | |||
Amounts reclassified from accumulated other comprehensive loss | (84) | (13) | |||
Other comprehensive income (loss), net of tax | (1,031) | 1,495 | |||
Ending balance | $ 3,043 | $ 3,989 | $ 3,043 | $ 3,989 | $ 4,074 |
ACCUMULATED OTHER COMPREHENSI_4
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Amounts reclassified out of AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | |||||
Net investment gains | $ 431 | $ 548 | $ 741 | $ (442) | |
Tax (expense) or benefit | 303 | 1,367 | 101 | 1,532 | |
Net Loss | $ (1,039) | $ (4,726) | (317) | (5,586) | $ (8,619) |
Amounts Reclassified from Accumulated Other Comprehensive Income | Unrealized Gains (Losses) on Available-for-Sale Securities | |||||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | |||||
Net investment gains | 106 | 16 | |||
Total before tax | 106 | 16 | |||
Tax (expense) or benefit | (22) | (3) | |||
Net Loss | $ 84 | $ 13 |
SEGMENTS (Narrative) (Details)
SEGMENTS (Narrative) (Details) | 6 Months Ended |
Jun. 30, 2021Segments | |
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 | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | |||||
Assets | $ 153,548 | $ 153,548 | $ 150,540 | ||
Net premiums earned | 14,814 | $ 15,172 | 29,876 | $ 30,127 | |
Net investment income | 867 | 961 | 1,671 | 1,925 | |
Investment gains (losses) | 431 | 548 | 741 | (442) | |
Other income | 131 | 143 | 267 | 288 | |
Total Revenues | 16,243 | 16,824 | 32,555 | 31,898 | |
Policyholder benefits paid | 11,709 | 16,736 | 21,012 | 27,319 | |
Amortization of deferred policy acquisition costs | 830 | 848 | 1,801 | 1,913 | |
Commissions | 1,699 | 2,047 | 3,835 | 4,122 | |
General and administrative expenses | 2,566 | 2,493 | 4,870 | 3,887 | |
Taxes, licenses and fees | 628 | 594 | 1,164 | 1,315 | |
Interest expense | 153 | 199 | 291 | 460 | |
Total Benefits, Losses and Expenses | 17,585 | 22,917 | 32,973 | 39,016 | |
Loss Before Income Taxes | (1,342) | (6,093) | (418) | (7,118) | |
Total income tax expense | (303) | (1,367) | (101) | (1,532) | |
Net Loss | (1,039) | (4,726) | (317) | (5,586) | (8,619) |
Inter- company Eliminations | |||||
Segment Reporting Information [Line Items] | |||||
Net premiums earned | 0 | 0 | 0 | 0 | |
Net investment income | (135) | (135) | (270) | (270) | |
Investment gains (losses) | 0 | 0 | 0 | 0 | |
Other income | (526) | (619) | (970) | (1,108) | |
Total Revenues | (661) | (754) | (1,240) | (1,378) | |
Policyholder benefits paid | (115) | (210) | (215) | (356) | |
Amortization of deferred policy acquisition costs | 0 | 0 | 0 | 0 | |
Commissions | 0 | 0 | 0 | 0 | |
General and administrative expenses | (546) | (544) | (1,025) | (1,022) | |
Taxes, licenses and fees | 0 | 0 | 0 | 0 | |
Interest expense | 0 | 0 | 0 | 0 | |
Total Benefits, Losses and Expenses | (661) | (754) | (1,240) | (1,378) | |
Loss Before Income Taxes | 0 | 0 | 0 | 0 | |
Total income tax expense | 0 | 0 | 0 | 0 | |
Net Loss | 0 | 0 | 0 | 0 | |
P&C Insurance Operations | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 88,030 | 88,030 | 85,375 | ||
Net premiums earned | 13,319 | 13,688 | 26,991 | 27,210 | |
Net investment income | 418 | 355 | 723 | 780 | |
Investment gains (losses) | 137 | 453 | 238 | 15 | |
Other income | 131 | 142 | 267 | 287 | |
Total Revenues | 14,005 | 14,638 | 28,219 | 28,292 | |
Policyholder benefits paid | 10,708 | 15,822 | 18,664 | 25,413 | |
Amortization of deferred policy acquisition costs | 687 | 681 | 1,374 | 1,362 | |
Commissions | 1,619 | 1,990 | 3,678 | 3,980 | |
General and administrative expenses | 2,217 | 2,065 | 4,288 | 3,886 | |
Taxes, licenses and fees | 589 | 557 | 1,038 | 1,176 | |
Interest expense | 0 | 0 | 0 | 0 | |
Total Benefits, Losses and Expenses | 15,820 | 21,115 | 29,042 | 35,817 | |
Loss Before Income Taxes | (1,815) | (6,477) | (823) | (7,525) | |
Total income tax expense | (403) | (1,422) | (183) | (1,590) | |
Net Loss | (1,412) | (5,055) | (640) | (5,935) | |
Life Insurance Operations | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 59,744 | 59,744 | 59,394 | ||
Net premiums earned | 1,495 | 1,484 | 2,885 | 2,917 | |
Net investment income | 575 | 726 | 1,197 | 1,389 | |
Investment gains (losses) | 306 | 76 | 509 | (451) | |
Other income | 215 | 329 | 419 | 587 | |
Total Revenues | 2,591 | 2,615 | 5,010 | 4,442 | |
Policyholder benefits paid | 1,116 | 1,124 | 2,563 | 2,262 | |
Amortization of deferred policy acquisition costs | 143 | 167 | 427 | 551 | |
Commissions | 80 | 57 | 157 | 142 | |
General and administrative expenses | 505 | 442 | 907 | 842 | |
Taxes, licenses and fees | 39 | 37 | 126 | 139 | |
Interest expense | 10 | 10 | 20 | 19 | |
Total Benefits, Losses and Expenses | 1,893 | 1,837 | 4,200 | 3,955 | |
Loss Before Income Taxes | 698 | 778 | 810 | 487 | |
Total income tax expense | (111) | 137 | (88) | 75 | |
Net Loss | 809 | 641 | 898 | 412 | |
Non-Insurance Operations | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 5,774 | 5,774 | $ 5,771 | ||
Net premiums earned | 0 | 0 | 0 | 0 | |
Net investment income | 9 | 15 | 21 | 26 | |
Investment gains (losses) | (12) | 19 | (6) | (6) | |
Other income | 311 | 291 | 551 | 522 | |
Total Revenues | 308 | 325 | 566 | 542 | |
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 | 390 | 530 | 700 | 181 | |
Taxes, licenses and fees | 0 | 0 | 0 | 0 | |
Interest expense | 143 | 189 | 271 | 441 | |
Total Benefits, Losses and Expenses | 533 | 719 | 971 | 622 | |
Loss Before Income Taxes | (225) | (394) | (405) | (80) | |
Total income tax expense | 211 | (82) | 170 | (17) | |
Net Loss | $ (436) | $ (312) | $ (575) | $ (63) |
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, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Gross premiums written | $ 20,394 | $ 19,057 | $ 39,228 | $ 36,188 |
Reinsurance premium ceded | (2,538) | (1,805) | (4,986) | (3,605) |
Net premiums written | 17,856 | 17,252 | 34,242 | 32,583 |
Life Insurance Operations | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | 1,407 | 1,410 | 2,817 | 2,875 |
Reinsurance premium ceded | (16) | (22) | (59) | (57) |
Net premiums written | 1,391 | 1,388 | 2,758 | 2,818 |
Life Insurance Operations | Traditional life insurance | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | 1,013 | 1,025 | 2,031 | 2,083 |
Life Insurance Operations | Accident and health insurance | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | 394 | 385 | 786 | 792 |
P&C Insurance Operations | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | 18,987 | 17,647 | 36,411 | 33,313 |
Reinsurance premium ceded | (2,522) | (1,783) | (4,927) | (3,548) |
Net premiums written | 16,465 | 15,864 | 31,484 | 29,765 |
P&C Insurance Operations | Dwelling fire & extended coverage | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | 12,760 | 11,142 | 24,623 | 21,394 |
P&C Insurance Operations | Homeowners (Including mobile homeowners) | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | 5,683 | 5,893 | 10,710 | 10,728 |
P&C Insurance Operations | Other liability | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums written | $ 544 | $ 612 | $ 1,078 | $ 1,191 |
SEGMENTS (Schedule of Gross a_2
SEGMENTS (Schedule of Gross and Net Premiums Earned) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | $ 17,352 | $ 16,977 | $ 34,862 | $ 33,732 |
Reinsurance premium ceded | (2,538) | (1,805) | (4,986) | (3,605) |
Net premiums earned | 14,814 | 15,172 | 29,876 | 30,127 |
Life Insurance Operations | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 1,511 | 1,506 | 2,944 | 2,974 |
Reinsurance premium ceded | (16) | (22) | (59) | (57) |
Net premiums earned | 1,495 | 1,484 | 2,885 | 2,917 |
Life Insurance Operations | Traditional life insurance | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 1,119 | 1,121 | 2,161 | 2,187 |
Life Insurance Operations | Accident and health insurance | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 392 | 385 | 783 | 787 |
P&C Insurance Operations | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 15,841 | 15,471 | 31,918 | 30,758 |
Reinsurance premium ceded | (2,522) | (1,783) | (4,927) | (3,548) |
Net premiums earned | 13,319 | 13,688 | 26,991 | 27,210 |
P&C Insurance Operations | Dwelling fire & extended coverage | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 10,691 | 9,836 | 20,869 | 19,488 |
P&C Insurance Operations | Homeowners (Including mobile homeowners) | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | 4,617 | 5,080 | 9,979 | 10,161 |
P&C Insurance Operations | Other liability | ||||
Segment Reporting Information [Line Items] | ||||
Gross premiums earned | $ 533 | $ 555 | $ 1,070 | $ 1,109 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) $ in Thousands | Jun. 30, 2021USD ($)claim |
Commitments and Contingencies Disclosure [Abstract] | |
Current accruals for legal fees | $ | $ 625 |
Hurricane | Texas | |
Loss Contingencies [Line Items] | |
Pending claims, number | claim | 1 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |||||
Interest paid | $ 301,000 | $ 419,000 | |||
Income taxes (received) paid | 350,000 | 0 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Increase in equity | $ 26,000 | $ 25,000 | 26,000 | 25,000 | $ 25,000 |
Common Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Increase in equity | 2,000 | 1,000 | 2,000 | 1,000 | |
Common Stock | Directors | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock issued | 2,000 | 1,000 | |||
Additional Paid-in Capital | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Increase in equity | $ 24,000 | $ 24,000 | $ 24,000 | $ 24,000 |