☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Indiana
|
35-0160330
|
|
(State or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S. Employer Identification No.)
|
|
111 Congressional Boulevard,
Carmel, Indiana
|
46032
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
(Title of class)
|
Name of Each Exchange on which Registered
|
|
Class A Common Stock, No Par Value
|
The Nasdaq Stock Market LLC
|
|
Class B Common Stock, No Par Value
|
The Nasdaq Stock Market LLC
|
Large accelerated filer
☐
|
Accelerated filer
☒
|
Non-accelerated filer
☐
|
Smaller reporting company
☐
|
Emerging growth company
☐
|
Common Stock, No Par Value:
|
Class A (voting)
|
2,615,339
|
|
Class B (nonvoting)
|
12,234,130
|
||
14,849,469
|
● |
general economic conditions, including weakness of the financial markets, prevailing interest rate levels and stock and credit market performance, which may
affect or continue to affect (among other things) our ability to sell our products and to collect amounts due to us, our ability to access capital resources and the costs associated with such access to capital and the market value of
our investments;
|
● |
our ability to obtain adequate premium rates and manage our growth strategy;
|
● |
increasing competition in the sale of our insurance products and services resulting from the entrance of new competitors into, or the expansion of the
operations of existing competitors in, our markets and our ability to retain existing customers;
|
● |
other changes in the markets for our insurance products;
|
● |
the impact of technological advances, including those specific to the transportation industry;
|
● |
changes in the legal or regulatory environment, which may affect the manner in which claims are adjusted or litigated, including loss and loss adjustment
expense;
|
● |
legal or regulatory changes or actions, including those relating to the regulation of the sale, underwriting and pricing of insurance products and services
and capital requirements;
|
● |
the impact of a downgrade in our financial strength rating;
|
● |
technology or network security disruptions or breaches;
|
● |
adequacy of insurance reserves;
|
● |
availability of reinsurance and ability of reinsurers to pay their obligations;
|
● |
our ability to attract and retain qualified employees and to successfully complete our Chief Executive Officer transition;
|
● |
tax law and accounting changes; and
|
● |
legal actions brought against us.
|
1. |
Protective Insurance Company (referred to herein as "Protective Insurance Co."), which is licensed by insurance authorities in all 50 states, the District of
Columbia, all Canadian provinces and Puerto Rico;
|
2. |
Protective Specialty Insurance Company (referred to herein as "Protective Specialty"), which is currently approved for excess and surplus lines business by
insurance authorities in 48 states and the District of Columbia and licensed in Indiana;
|
3. |
Sagamore Insurance Company (referred to herein as "Sagamore"), which is licensed by insurance authorities in 49 states and the District of Columbia and
approved for excess and surplus lines business in one additional state;
|
4. |
B&L Brokerage Services, Inc. (referred to herein as "BLBS"), an Indiana-domiciled insurance broker licensed in all 50 states and the District of Columbia;
and
|
5. |
B&L Insurance, Ltd. (referred to herein as "BLI"), which is domiciled and licensed in Bermuda.
|
● |
Commercial motor vehicle liability, physical damage and general liability insurance;
|
● |
Workers' compensation insurance;
|
● |
Specialized accident (medical and indemnity) insurance for independent contractors in the trucking industry;
|
● |
Non-trucking motor vehicle liability insurance for independent contractors;
|
● |
Fidelity and surety bonds; and
|
● |
Inland Marine insurance consisting principally of cargo insurance.
|
● |
Reinsurance Assumptions
|
● |
Professional Liability
|
● |
$0.25 million to $1.3 million for policies written between July 3, 2016 and July 2, 2017, and
|
● |
$0.8 million to $4.1 million for policies written on or after July 3, 2017.
|
● |
$2.5 million for policies written between July 3, 2016 and July 2, 2017, and
|
● |
$8.0 million for policies written on or after July 3, 2017.
|
2018
|
2017
|
2016
|
||||||||||
Reserves, gross of reinsurance recoverable, at the beginning of the year
|
$
|
680,274
|
$
|
576,330
|
$
|
513,596
|
||||||
Reinsurance recoverable on unpaid losses at the beginning of the year
|
308,143
|
251,563
|
211,843
|
|||||||||
Reserves at the beginning of the year
|
372,131
|
324,767
|
301,753
|
|||||||||
Provision for losses and loss expenses:
|
||||||||||||
Claims occurring during the current year
|
329,078
|
228,303
|
172,645
|
|||||||||
Claims occurring during prior years
|
16,786
|
19,215
|
13,836
|
|||||||||
Total incurred losses and loss expenses
|
345,864
|
247,518
|
186,481
|
|||||||||
Loss and loss expense payments:
|
||||||||||||
Claims occurring during the current year
|
84,738
|
67,234
|
54,239
|
|||||||||
Claims occurring during prior years
|
143,853
|
132,920
|
109,228
|
|||||||||
Total paid
|
228,591
|
200,154
|
163,467
|
|||||||||
Reserves at the end of the year
|
489,404
|
372,131
|
324,767
|
|||||||||
Reinsurance recoverable on unpaid losses at the end of the year
|
375,935
|
308,143
|
251,563
|
|||||||||
Reserves, gross of reinsurance recoverable, at the end of the year
|
$
|
865,339
|
$
|
680,274
|
$
|
576,330
|
Years in Which Losses Were Incurred
|
Reserve at
December 31, 2017
|
(Savings) Deficiency
Recorded During 2018
(1)
|
% (Savings) Deficiency
|
|||||||||
2017
|
$
|
161,069
|
$
|
(8,902
|
)
|
(5.5
|
)%
|
|||||
2016
|
66,652
|
4,259
|
6.4
|
%
|
||||||||
2015
|
34,530
|
9,707
|
28.1
|
%
|
||||||||
2014
|
30,129
|
11,970
|
39.7
|
%
|
||||||||
2013
|
22,423
|
(1,382
|
)
|
(6.2
|
)%
|
|||||||
2012 and prior
|
57,328
|
1,134
|
2.0
|
%
|
||||||||
$
|
372,131
|
$
|
16,786
|
4.5
|
%
|
(1) |
Consists of development on cases known at December 31, 2017, losses reported which were previously unknown at December 31, 2017 (incurred but not reported),
unallocated loss expense paid related to accident years 2017 and prior changes in the reserves for incurred but not reported losses and loss expenses.
|
Year Ended December 31
|
||||||||||||||||||||||||||||||||||||||||||||
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
||||||||||||||||||||||||||||||||||
Liability for Unpaid Losses and Loss Adjustment Expenses
(1)
|
$
|
231,633
|
$
|
203,253
|
$
|
218,629
|
$
|
290,092
|
$
|
289,236
|
$
|
288,088
|
$
|
295,583
|
$
|
301,753
|
$
|
324,767
|
$
|
372,131
|
$
|
489,404
|
||||||||||||||||||||||
Liability Reestimated as of:
(2)
|
||||||||||||||||||||||||||||||||||||||||||||
One Year Later
|
222,049
|
194,430
|
208,933
|
280,217
|
283,673
|
277,734
|
285,521
|
315,589
|
343,982
|
388,917
|
||||||||||||||||||||||||||||||||||
Two Years Later
|
208,702
|
198,220
|
201,745
|
272,285
|
282,381
|
268,757
|
303,540
|
340,361
|
369,670
|
|||||||||||||||||||||||||||||||||||
Three Years Later
|
210,562
|
188,110
|
204,243
|
276,525
|
279,685
|
288,862
|
332,175
|
361,791
|
||||||||||||||||||||||||||||||||||||
Four Years Later
|
205,519
|
192,195
|
202,078
|
268,299
|
291,332
|
313,909
|
343,898
|
|||||||||||||||||||||||||||||||||||||
Five Years Later
|
208,398
|
187,792
|
198,518
|
275,517
|
298,861
|
313,662
|
||||||||||||||||||||||||||||||||||||||
Six Years Later
|
205,986
|
181,547
|
200,922
|
276,812
|
299,996
|
|||||||||||||||||||||||||||||||||||||||
Seven Years Later
|
200,460
|
181,998
|
203,692
|
279,598
|
||||||||||||||||||||||||||||||||||||||||
Eight Years Later
|
200,808
|
184,122
|
204,769
|
|||||||||||||||||||||||||||||||||||||||||
Nine Years Later
|
202,565
|
183,693
|
||||||||||||||||||||||||||||||||||||||||||
Ten Years Later
|
201,673
|
|||||||||||||||||||||||||||||||||||||||||||
Cumulative Redundancy (Deficiency)
(3)
|
$
|
29,960
|
$
|
19,560
|
$
|
13,860
|
$
|
10,494
|
$
|
(10,760
|
)
|
$
|
(25,574
|
)
|
$
|
(48,315
|
)
|
$
|
(60,038
|
)
|
$
|
(44,903
|
)
|
$
|
(16,786
|
)
|
||||||||||||||||||
Cumulative Amount of Liability Paid Through:
(4)
|
||||||||||||||||||||||||||||||||||||||||||||
One Year Later
|
$
|
84,777
|
$
|
74,182
|
$
|
72,393
|
$
|
94,003
|
$
|
103,941
|
$
|
92,275
|
$
|
92,870
|
$
|
109,228
|
$
|
132,920
|
$
|
143,853
|
||||||||||||||||||||||||
Two Years Later
|
120,628
|
107,413
|
109,382
|
156,271
|
162,087
|
159,282
|
166,642
|
195,951
|
217,376
|
|||||||||||||||||||||||||||||||||||
Three Years Later
|
142,731
|
125,038
|
133,507
|
193,566
|
205,452
|
166,642
|
222,295
|
250,924
|
||||||||||||||||||||||||||||||||||||
Four Years Later
|
152,679
|
137,460
|
147,462
|
214,873
|
202,803
|
234,158
|
258,576
|
|||||||||||||||||||||||||||||||||||||
Five Years Later
|
161,834
|
143,461
|
158,172
|
227,359
|
241,533
|
251,696
|
||||||||||||||||||||||||||||||||||||||
Six Years Later
|
166,290
|
148,101
|
166,112
|
234,578
|
252,648
|
|||||||||||||||||||||||||||||||||||||||
Seven Years Later
|
170,126
|
152,375
|
168,524
|
241,383
|
||||||||||||||||||||||||||||||||||||||||
Eight Years Later
|
173,867
|
153,999
|
173,015
|
|||||||||||||||||||||||||||||||||||||||||
Nine Years Later
|
174,902
|
157,297
|
||||||||||||||||||||||||||||||||||||||||||
Ten Years Later
|
177,677
|
(1) |
Represents the estimated liability for unpaid losses and LAE recorded at the balance sheet date for each of the indicated years. This liability represents
the estimated amount of losses and LAE for claims arising in all prior years that were unpaid at the respective balance sheet date, including incurred but not reported ("IBNR") losses, to the Company.
|
(2) |
Represents the re-estimated amount of the previously recorded liability based on additional information available to the Company as of the end of each
succeeding year. The estimate is increased or decreased as more information becomes known about the frequency and severity of individual claims and as claims are settled and paid.
|
(3) |
Represents the aggregate change in the estimates of each calendar year-end reserve through December 31, 2018.
|
(4) |
Represents the cumulative amount paid with respect to the previously recorded calendar year-end liability as of the end of each succeeding year. The payment
patterns shown in this table demonstrate the "long-tail" nature of much of the Company's business, whereby portions of claims, principally in workers' compensation coverages, do not fully pay out for more than ten years.
|
Year Ended December 31
|
||||||||||||||||||||||||||||||||||||||||||||
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
||||||||||||||||||||||||||||||||||
Direct and Assumed:
|
||||||||||||||||||||||||||||||||||||||||||||
Liability for Unpaid Losses and Loss Adjustment Expenses
|
$
|
389,558
|
$
|
359,030
|
$
|
344,520
|
$
|
421,556
|
$
|
455,454
|
$
|
474,470
|
$
|
506,102
|
$
|
513,596
|
$
|
576,330
|
$
|
680,274
|
$
|
865,339
|
||||||||||||||||||||||
Liability Reestimated as of December 31, 2018
|
312,965
|
289,679
|
301,700
|
395,271
|
450,713
|
519,189
|
599,457
|
633,660
|
647,807
|
709,523
|
||||||||||||||||||||||||||||||||||
Cumulative Redundancy (Deficiency)
|
$
|
76,593
|
$
|
69,351
|
$
|
42,820
|
$
|
26,285
|
$
|
4,741
|
$
|
(44,719
|
)
|
$
|
(93,355
|
)
|
$
|
(120,064
|
)
|
$
|
(71,477
|
)
|
$
|
(29,249
|
)
|
|||||||||||||||||||
Ceded:
|
||||||||||||||||||||||||||||||||||||||||||||
Liability for Unpaid Losses and Loss Adjustment Expenses
|
$
|
157,925
|
$
|
155,777
|
$
|
125,891
|
$
|
131,464
|
$
|
166,218
|
$
|
186,382
|
$
|
210,519
|
$
|
211,843
|
$
|
251,563
|
$
|
308,143
|
$
|
375,935
|
||||||||||||||||||||||
Liability Reestimated as of December 31, 2018
|
111,292
|
105,986
|
96,931
|
115,673
|
150,717
|
205,527
|
255,559
|
271,869
|
278,137
|
320,606
|
||||||||||||||||||||||||||||||||||
Cumulative Redundancy (Deficiency)
|
$
|
46,633
|
$
|
49,791
|
$
|
28,960
|
$
|
15,791
|
$
|
15,501
|
$
|
(19,145
|
)
|
$
|
(45,040
|
)
|
$
|
(60,026
|
)
|
$
|
(26,574
|
)
|
$
|
(12,463
|
)
|
|||||||||||||||||||
Net:
|
||||||||||||||||||||||||||||||||||||||||||||
Liability for Unpaid Losses and Loss Adjustment Expenses
|
$
|
231,633
|
$
|
203,253
|
$
|
218,629
|
$
|
290,092
|
$
|
289,236
|
$
|
288,088
|
$
|
295,583
|
$
|
301,753
|
$
|
324,767
|
$
|
372,131
|
$
|
489,404
|
||||||||||||||||||||||
Liability Reestimated as of December 31, 2018
|
201,673
|
183,693
|
204,769
|
279,598
|
299,996
|
313,662
|
343,898
|
361,791
|
369,670
|
388,917
|
||||||||||||||||||||||||||||||||||
Cumulative Redundancy (Deficiency)
|
$
|
29,960
|
$
|
19,560
|
$
|
13,860
|
$
|
10,494
|
$
|
(10,760
|
)
|
$
|
(25,574
|
)
|
$
|
(48,315
|
)
|
$
|
(60,038
|
)
|
$
|
(44,903
|
)
|
$
|
(16,786
|
)
|
2018
|
2017
|
|||||||
Fixed income securities
|
67.5
|
%
|
61.1
|
%
|
||||
Short-term
|
0.1
|
0.1
|
||||||
Cash equivalents
|
17.8
|
6.9
|
||||||
Total fixed income securities and short-term
|
85.4
|
68.1
|
||||||
Limited partnerships (equity basis)
|
6.3
|
8.3
|
||||||
Commercial mortgage loans (amortized cost basis)
|
0.8
|
0.0
|
||||||
Equity securities
|
7.5
|
23.6
|
||||||
100.0
|
%
|
100.0
|
%
|
2018
|
2017
|
|||||||
Before federal tax:
|
||||||||
Investment income
|
3.0
|
%
|
3.2
|
%
|
||||
Investment income plus investment gains (losses)
|
(0.1
|
)
|
6.2
|
|||||
After federal tax:
|
||||||||
Investment income
|
2.7
|
2.3
|
||||||
Investment income plus investment gains (losses)
|
(0.6
|
)
|
5.4
|
Period
|
Total number of shares purchased
|
Average price paid per share
|
Total number of shares purchased as part of publicly announced plans or programs
(1)
|
Maximum number of shares that may yet be purchased under the plans or programs
(1)
|
||||||||||||
October 1 - October 31, 2018
|
72,108
|
$
|
22.64
|
72,108
|
2,194,666
|
|||||||||||
November 1 - November 30, 2018
|
15,085
|
22.79
|
15,085
|
2,179,581
|
||||||||||||
December 1 - December 31, 2018
|
-
|
-
|
-
|
2,179,581
|
||||||||||||
Total
|
87,193
|
87,193
|
Year Ended December 31
|
||||||||||||||||||||||||
Index
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
||||||||||||||||||
Protective Insurance Corporation
|
$
|
100.00
|
$
|
98.17
|
$
|
95.51
|
$
|
104.38
|
$
|
103.91
|
$
|
75.93
|
||||||||||||
Russell 2000 Index
|
100.00
|
104.89
|
100.26
|
121.63
|
139.44
|
124.09
|
||||||||||||||||||
PTVCB Peer Group
|
100.00
|
104.36
|
113.12
|
136.57
|
148.11
|
154.20
|
PTVCB Peer Group
|
||
Amerisafe, Inc.
|
HCI Group, Inc.
|
|
Atlas Financial Holdings, Inc.
|
Heritage Insurance Holdings, Inc.
|
|
Donegal Group Inc.
|
James River Group Holdings, Ltd.
|
|
EMC Insurance Group Inc.
|
NMI Holdings, Inc.
|
|
Employers Holdings, Inc.
|
Safety Insurance Group, Inc.
|
|
FedNat Holding Company
|
United Insurance Holdings Corp.
|
|
Hallmark Financial Services, Inc.
|
Universal Insurance Holdings, Inc.
|
|
Year Ended December 31
|
||||||||||||||||||||
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||
(Dollars in thousands, except per share data)
|
||||||||||||||||||||
Gross premiums written
|
$
|
582,500
|
$
|
504,737
|
$
|
403,004
|
$
|
383,553
|
$
|
382,388
|
||||||||||
Net premiums earned
|
432,880
|
328,145
|
276,011
|
263,335
|
261,627
|
|||||||||||||||
Net investment income
|
22,048
|
18,095
|
14,483
|
12,498
|
9,055
|
|||||||||||||||
Net realized and unrealized gains (losses) on investments
|
(25,691
|
)
|
19,686
|
23,228
|
(1,261
|
)
|
14,930
|
|||||||||||||
Losses and loss expenses incurred
|
345,864
|
247,518
|
186,481
|
155,750
|
159,596
|
|||||||||||||||
Net income (loss)
|
(34,075
|
)
|
18,323
|
28,945
|
23,283
|
29,717
|
||||||||||||||
Earnings (loss) per share -- net income (loss)
(1)
|
(2.28
|
)
|
1.21
|
1.92
|
1.55
|
1.98
|
||||||||||||||
Cash dividends per share
|
1.12
|
1.08
|
1.04
|
1.00
|
1.00
|
|||||||||||||||
Investment portfolio
(2)
|
878,638
|
854,595
|
749,501
|
729,877
|
757,421
|
|||||||||||||||
Total assets
|
1,490,131
|
1,357,016
|
1,154,137
|
1,085,771
|
1,144,247
|
|||||||||||||||
Shareholders' equity
|
356,082
|
418,811
|
404,345
|
394,498
|
399,496
|
|||||||||||||||
Book value per share
|
23.95
|
27.83
|
26.81
|
26.25
|
26.67
|
(1) |
Earnings (loss) per share are adjusted for the dilutive effect of restricted stock outstanding for 2014-2017.
|
(2) |
Includes money market instruments classified as cash equivalents in the consolidated balance sheets.
|
2018
|
2017
|
2016
|
||||||||||
Income (loss) before federal income tax expense (benefit)
|
$
|
(43,872
|
)
|
$
|
10,122
|
$
|
43,054
|
|||||
Less: Net realized and unrealized gains (losses) on investments
|
(25,691
|
)
|
19,686
|
23,228
|
||||||||
Less: Net investment income
|
22,048
|
18,095
|
14,483
|
|||||||||
Less: Goodwill impairment charge included in other operating expenses (see below)
|
(3,152
|
)
|
–
|
–
|
||||||||
Underwriting income (loss)
|
$
|
(37,077
|
)
|
$
|
(27,659
|
)
|
$
|
5,343
|
||||
Other operating expenses
|
$
|
137,177
|
$
|
113,594
|
$
|
89,462
|
||||||
Less: Goodwill impairment charge
|
3,152
|
–
|
–
|
|||||||||
Other operating expenses, excluding goodwill impairment charge
|
$
|
134,025
|
$
|
113,594
|
$
|
89,462
|
||||||
Ratios
|
||||||||||||
Losses and loss expenses incurred
|
$
|
345,864
|
$
|
247,518
|
$
|
186,481
|
||||||
Net premiums earned
|
432,880
|
328,145
|
276,011
|
|||||||||
Loss ratio
|
79.9
|
%
|
75.4
|
%
|
67.6
|
%
|
||||||
Other operating expenses
|
$
|
137,177
|
$
|
113,594
|
$
|
89,462
|
||||||
Less: Commissions and other income
|
9,932
|
5,308
|
5,275
|
|||||||||
Other operating expenses, less commissions and other income
|
127,245
|
108,286
|
84,187
|
|||||||||
Net premiums earned
|
432,880
|
328,145
|
276,011
|
|||||||||
Expense ratio
|
29.4
|
%
|
33.0
|
%
|
30.5
|
%
|
||||||
Impact of goodwill impairment charge
|
(0.7
|
)%
|
–
|
–
|
||||||||
Expense ratio, excluding goodwill impairment charge
|
28.7
|
%
|
33.0
|
%
|
30.5
|
%
|
||||||
Combined ratio
|
109.3
|
%
|
108.4
|
%
|
98.1
|
%
|
||||||
Combined ratio, excluding goodwill impairment charge
|
108.6
|
%
|
108.4
|
%
|
98.1
|
%
|
2018
|
2017
|
Change
|
% Change
|
|||||||||||||
Gross premiums written
|
$
|
582,500
|
$
|
504,737
|
$
|
77,763
|
15.4
|
%
|
||||||||
Ceded premiums written
|
(138,102
|
)
|
(151,348
|
)
|
13,246
|
(8.8
|
)%
|
|||||||||
Net premiums written
|
$
|
444,398
|
$
|
353,389
|
$
|
91,009
|
25.8
|
%
|
||||||||
Net premiums earned
|
$
|
432,880
|
$
|
328,145
|
$
|
104,735
|
31.9
|
%
|
||||||||
Net investment income
|
22,048
|
18,095
|
3,953
|
21.8
|
%
|
|||||||||||
Commissions and other income
|
9,932
|
5,308
|
4,624
|
87.1
|
%
|
|||||||||||
Net realized and unrealized gains (losses) on investments
|
(25,691
|
)
|
19,686
|
(45,377
|
)
|
(230.5
|
)%
|
|||||||||
Total revenue
|
439,169
|
371,234
|
||||||||||||||
Losses and loss expenses incurred
|
345,864
|
247,518
|
98,346
|
39.7
|
%
|
|||||||||||
Other operating expenses
|
137,177
|
113,594
|
23,583
|
20.8
|
%
|
|||||||||||
Total expenses
|
483,041
|
361,112
|
||||||||||||||
Income (loss) before federal income tax benefit
|
(43,872
|
)
|
10,122
|
(53,994
|
)
|
|||||||||||
Federal income tax benefit
|
(9,797
|
)
|
(8,201
|
)
|
(1,596
|
)
|
||||||||||
Net income (loss)
|
$
|
(34,075
|
)
|
$
|
18,323
|
$
|
(52,398
|
)
|
||||||||
5% Increase in Ultimate Loss Ratio
|
10% Increase in Ultimate Loss Ratio
|
|||||||
Gross loss expense from further strengthening current reserve position
|
$
|
34.3
|
$
|
68.7
|
||||
Net financial loss
|
$
|
9.0
|
$
|
17.6
|
||||
$/share (after tax)
|
$
|
0.48
|
$
|
0.94
|
2017
|
2016
|
Change
|
% Change
|
|||||||||||||
Gross premiums written
|
$
|
504,737
|
$
|
403,004
|
$
|
101,733
|
25.2
|
%
|
||||||||
Ceded premiums written
|
(151,348
|
)
|
(131,252
|
)
|
(20,096
|
)
|
15.3
|
%
|
||||||||
Net premiums written
|
$
|
353,389
|
$
|
271,752
|
$
|
81,637
|
30.0
|
%
|
||||||||
Net premiums earned
|
$
|
328,145
|
$
|
276,011
|
$
|
52,134
|
18.9
|
%
|
||||||||
Net investment income
|
18,095
|
14,483
|
3,612
|
24.9
|
%
|
|||||||||||
Commissions and other income
|
5,308
|
5,275
|
33
|
0.6
|
%
|
|||||||||||
Net realized and unrealized gains (losses) on investments
|
19,686
|
23,228
|
(3,542
|
)
|
(15.2
|
)%
|
||||||||||
Total revenue
|
371,234
|
318,997
|
||||||||||||||
Losses and loss expenses incurred
|
247,518
|
186,481
|
61,037
|
32.7
|
%
|
|||||||||||
Other operating expenses
|
113,594
|
89,462
|
24,132
|
27.0
|
%
|
|||||||||||
Total expenses
|
361,112
|
275,943
|
||||||||||||||
Income before federal income tax expense (benefit)
|
10,122
|
43,054
|
(32,932
|
)
|
||||||||||||
Federal income tax expense (benefit)
|
(8,201
|
)
|
14,109
|
(22,310
|
)
|
|||||||||||
Net income
|
$
|
18,323
|
$
|
28,945
|
$
|
(10,622
|
)
|
|||||||||
2018
|
2017
|
2016
|
||||||||||
Reinsurance recoverable
|
$
|
392,436
|
$
|
318,331
|
$
|
255,024
|
||||||
Premium ceded (reduction to premium earned)
|
131,080
|
145,201
|
130,012
|
|||||||||
Losses ceded (reduction to losses incurred)
|
148,285
|
128,086
|
108,656
|
|||||||||
Reinsurance ceded credits (reduction to operating expenses)
|
23,124
|
23,187
|
33,512
|
● |
Consistency in the individual case reserving processes;
|
● |
The selection of loss development factors in the establishment of bulk reserves for incurred but not reported losses and loss expenses;
|
● |
Projected future loss trend; and
|
● |
Expected loss ratios for the current book of business, particularly the Company's commercial automobile products, where the number of accounts insured,
selected SIRs, policy limits and reinsurance structures may vary widely from period to period.
|
10% Loss Ratio Increase
|
10% Loss Ratio Decrease
|
20% Loss Ratio Increase
|
20% Loss Ratio Decrease
|
|||||||||||||
Gross Reserves
|
$
|
72.0
|
$
|
(72.0
|
)
|
$
|
144.1
|
$
|
(144.1
|
)
|
||||||
Net Reserves
|
$
|
18.0
|
$
|
(19.5
|
)
|
$
|
36.0
|
$
|
(49.5
|
)
|
||||||
Net premiums earned
|
$
|
(0.4
|
)
|
$
|
16.5
|
$
|
(0.4
|
)
|
$
|
41.1
|
||||||
Cumulative Net Underwriting Income (Loss)
|
$
|
(18.4
|
)
|
$
|
36.0
|
$
|
(36.4
|
)
|
$
|
90.6
|
2018
|
2017
|
|||||||
Total deferred tax liabilities
|
$
|
(12,906
|
)
|
$
|
(23,836
|
)
|
||
Total deferred tax assets
|
19,168
|
9,478
|
||||||
Net deferred tax assets (liabilities)
|
$
|
6,262
|
$
|
(14,358
|
)
|
Payments Due by Period
|
||||||||||||||||||||
Total
|
Less than 1 year
|
1 - 3 Years
|
3 - 5 Years
|
More Than 5 Years
|
||||||||||||||||
(dollars in millions)
|
||||||||||||||||||||
Loss and loss expense reserves
|
$
|
865.3
|
$
|
302.9
|
$
|
285.6
|
$
|
103.8
|
$
|
173.0
|
||||||||||
Investment commitment
|
1.3
|
1.3
|
–
|
–
|
–
|
|||||||||||||||
Operating leases
|
0.5
|
0.4
|
0.1
|
–
|
–
|
|||||||||||||||
Borrowings
|
20.0
|
20.0
|
–
|
–
|
–
|
|||||||||||||||
Total
|
$
|
887.1
|
$
|
324.6
|
$
|
285.7
|
$
|
103.8
|
$
|
173.0
|
● |
14% of the Company's consolidated investment portfolio of $878.6 million; and
|
● |
34% of the Company's shareholders' equity of $356.1 million.
|
Increase (Decrease)
|
||||||||||||
Fair
Value
|
Interest
Rate Risk
|
Equity
Risk
|
||||||||||
2018
|
||||||||||||
Fixed income securities
|
||||||||||||
Agency collateralized mortgage obligations
|
$
|
10,687
|
$
|
(404
|
)
|
$
|
–
|
|||||
Agency mortgage-backed securities
|
37,385
|
(2,012
|
)
|
–
|
||||||||
Asset-backed securities
|
64,422
|
(2,612
|
)
|
–
|
||||||||
Bank loans
|
9,750
|
(49
|
)
|
–
|
||||||||
Certificates of deposit
|
2,835
|
(48
|
)
|
–
|
||||||||
Collateralized mortgage obligations
|
5,423
|
(176
|
)
|
–
|
||||||||
Corporate securities
|
190,450
|
(5,417
|
)
|
–
|
||||||||
Mortgage-backed securities
|
38,540
|
(1,270
|
)
|
–
|
||||||||
Municipal obligations
|
29,155
|
(769
|
)
|
–
|
||||||||
Non-U.S. government obligations
|
25,180
|
(549
|
)
|
–
|
||||||||
U.S. government obligations
|
178,818
|
(5,864
|
)
|
–
|
||||||||
Total fixed income securities
|
592,645
|
(19,170
|
)
|
–
|
||||||||
Equity securities:
|
||||||||||||
Consumer
|
17,945
|
–
|
(1,795
|
)
|
||||||||
Energy
|
3,179
|
–
|
(318
|
)
|
||||||||
Financial
|
25,253
|
–
|
(2,525
|
)
|
||||||||
Industrial
|
6,920
|
–
|
(692
|
)
|
||||||||
Technology
|
2,303
|
–
|
(230
|
)
|
||||||||
Funds (e.g. mutual funds, closed end funds, ETFs)
|
5,489
|
–
|
(549
|
)
|
||||||||
Other
|
5,333
|
–
|
(533
|
)
|
||||||||
Total equity securities
|
66,422
|
–
|
(6,642
|
)
|
||||||||
Limited partnerships
|
55,044
|
–
|
(4,022
|
)
|
||||||||
Short-term
|
1,000
|
–
|
–
|
|||||||||
Total
|
$
|
715,111
|
$
|
(19,170
|
)
|
$
|
(10,664
|
)
|
||||
2017
|
||||||||||||
Fixed income securities
|
||||||||||||
Agency collateralized mortgage obligations
|
$
|
16,586
|
$
|
(820
|
)
|
$
|
–
|
|||||
Agency mortgage-backed securities
|
27,075
|
(1,103
|
)
|
–
|
||||||||
Asset-backed securities
|
43,469
|
(1,381
|
)
|
–
|
||||||||
Bank loans
|
19,488
|
(794
|
)
|
–
|
||||||||
Certificates of deposit
|
3,135
|
(83
|
)
|
–
|
||||||||
Collateralized mortgage obligations
|
6,492
|
(200
|
)
|
–
|
||||||||
Corporate securities
|
198,349
|
(5,126
|
)
|
–
|
||||||||
Mortgage-backed securities
|
24,204
|
(772
|
)
|
–
|
||||||||
Municipal obligations
|
96,650
|
(1,861
|
)
|
–
|
||||||||
Non-U.S. government obligations
|
37,394
|
(959
|
)
|
–
|
||||||||
U.S. government obligations
|
49,011
|
(886
|
)
|
–
|
||||||||
Total fixed income securities
|
521,853
|
(13,985
|
)
|
–
|
||||||||
Equity securities:
|
||||||||||||
Consumer
|
46,578
|
–
|
(4,658
|
)
|
||||||||
Energy
|
10,278
|
–
|
(1,028
|
)
|
||||||||
Financial
|
45,470
|
–
|
(4,547
|
)
|
||||||||
Industrial
|
25,402
|
–
|
(2,540
|
)
|
||||||||
Technology
|
13,061
|
–
|
(1,306
|
)
|
||||||||
Funds (e.g. mutual funds, closed end funds, ETFs)
|
50,291
|
–
|
(5,029
|
)
|
||||||||
Other
|
10,683
|
–
|
(1,068
|
)
|
||||||||
Total equity securities
|
201,763
|
–
|
(20,176
|
)
|
||||||||
Limited partnerships
|
70,806
|
–
|
(5,278
|
)
|
||||||||
Short-term
|
1,000
|
–
|
–
|
|||||||||
Total
|
$
|
795,422
|
$
|
(13,985
|
)
|
$
|
(25,454
|
)
|
Increase (Decrease)
|
||||||||||||
Fair
Value
|
Interest
Rate Risk
|
Equity
Risk
|
||||||||||
2018
|
||||||||||||
Fixed income securities
|
||||||||||||
Agency collateralized mortgage obligations
|
$
|
10,687
|
$
|
(607
|
)
|
$
|
–
|
|||||
Agency mortgage-backed securities
|
37,385
|
(3,021
|
)
|
–
|
||||||||
Asset-backed securities
|
64,422
|
(3,917
|
)
|
–
|
||||||||
Bank loans
|
9,750
|
(73
|
)
|
–
|
||||||||
Certificates of deposit
|
2,835
|
(71
|
)
|
–
|
||||||||
Collateralized mortgage obligations
|
5,423
|
(263
|
)
|
–
|
||||||||
Corporate securities
|
190,450
|
(8,125
|
)
|
–
|
||||||||
Mortgage-backed securities
|
38,540
|
(1,904
|
)
|
–
|
||||||||
Municipal obligations
|
29,155
|
(1,154
|
)
|
–
|
||||||||
Non-U.S. government obligations
|
25,180
|
(824
|
)
|
–
|
||||||||
U.S. government obligations
|
178,818
|
(8,794
|
)
|
–
|
||||||||
Total fixed income securities
|
592,645
|
(28,753
|
)
|
–
|
||||||||
Equity securities:
|
||||||||||||
Consumer
|
17,945
|
–
|
(2,692
|
)
|
||||||||
Energy
|
3,179
|
–
|
(477
|
)
|
||||||||
Financial
|
25,253
|
–
|
(3,788
|
)
|
||||||||
Industrial
|
6,920
|
–
|
(1,038
|
)
|
||||||||
Technology
|
2,303
|
–
|
(345
|
)
|
||||||||
Funds (e.g. mutual funds, closed end funds, ETFs)
|
5,489
|
–
|
(823
|
)
|
||||||||
Other
|
5,333
|
–
|
(800
|
)
|
||||||||
Total equity securities
|
66,422
|
–
|
(9,963
|
)
|
||||||||
Limited partnerships
|
55,044
|
–
|
(6,034
|
)
|
||||||||
Short-term
|
1,000
|
–
|
–
|
|||||||||
Total
|
$
|
715,111
|
$
|
(28,753
|
)
|
$
|
(15,997
|
)
|
||||
2017
|
||||||||||||
Fixed income securities
|
||||||||||||
Agency collateralized mortgage obligations
|
$
|
16,586
|
$
|
(1,229
|
)
|
$
|
–
|
|||||
Agency mortgage-backed securities
|
27,075
|
(1,657
|
)
|
–
|
||||||||
Asset-backed securities
|
43,469
|
(2,072
|
)
|
–
|
||||||||
Bank loans
|
19,488
|
(1,192
|
)
|
–
|
||||||||
Certificates of deposit
|
3,135
|
(125
|
)
|
–
|
||||||||
Collateralized mortgage obligations
|
6,492
|
(299
|
)
|
–
|
||||||||
Corporate securities
|
198,349
|
(7,690
|
)
|
–
|
||||||||
Mortgage-backed securities
|
24,204
|
(1,158
|
)
|
–
|
||||||||
Municipal obligations
|
96,650
|
(2,791
|
)
|
–
|
||||||||
Non-U.S. government obligations
|
37,394
|
(1,438
|
)
|
–
|
||||||||
U.S. government obligations
|
49,011
|
(1,329
|
)
|
–
|
||||||||
Total fixed income securities
|
521,853
|
(20,980
|
)
|
–
|
||||||||
Equity securities:
|
||||||||||||
Consumer
|
46,578
|
–
|
(6,987
|
)
|
||||||||
Energy
|
10,278
|
–
|
(1,542
|
)
|
||||||||
Financial
|
45,470
|
–
|
(6,821
|
)
|
||||||||
Industrial
|
25,402
|
–
|
(3,810
|
)
|
||||||||
Technology
|
13,061
|
–
|
(1,959
|
)
|
||||||||
Funds (e.g. mutual funds, closed end funds, ETFs)
|
50,291
|
–
|
(7,544
|
)
|
||||||||
Other
|
10,683
|
–
|
(1,602
|
)
|
||||||||
Total equity securities
|
201,763
|
–
|
(30,265
|
)
|
||||||||
Limited partnerships
|
70,806
|
–
|
(7,916
|
)
|
||||||||
Short-term
|
1,000
|
–
|
–
|
|||||||||
Total
|
$
|
795,422
|
$
|
(20,980
|
)
|
$
|
(38,181
|
)
|
Report of Independent Registered Public Accounting Firm
|
December 31
|
||||||||
2018
|
2017
|
|||||||
Assets
|
||||||||
Investments:
|
||||||||
Fixed income securities (Amortized cost: 2018, $600,504; 2017, $521,017)
|
$
|
592,645
|
$
|
521,853
|
||||
Equity securities
|
66,422
|
201,763
|
||||||
Limited partnerships (Affiliated: 2018, $32,028; 2017, $43,586)
|
55,044
|
70,806
|
||||||
Commercial mortgage loans
|
6,672
|
–
|
||||||
Short-term and other
|
1,000
|
1,000
|
||||||
721,783
|
795,422
|
|||||||
Cash and cash equivalents
|
163,996
|
64,680
|
||||||
Restricted cash and cash equivalents
|
6,815
|
4,033
|
||||||
Accounts receivable--less allowance (2018, $403; 2017, $484)
|
102,972
|
87,551
|
||||||
Accrued investment income
|
4,358
|
4,159
|
||||||
Reinsurance recoverable
|
392,436
|
318,331
|
||||||
Prepaid reinsurance premiums
|
6,095
|
4,578
|
||||||
Deferred policy acquisition costs
|
6,568
|
5,608
|
||||||
Property and equipment--less accumulated depreciation (2018, $19,531; 2017, $16,614)
|
46,645
|
47,317
|
||||||
Other assets
|
24,760
|
18,399
|
||||||
Current federal income taxes recoverable
|
7,441
|
6,938
|
||||||
Deferred federal income taxes
|
6,262
|
–
|
||||||
$
|
1,490,131
|
$
|
1,357,016
|
|||||
Liabilities and Shareholders' Equity
|
||||||||
Reserves:
|
||||||||
Losses and loss expenses
|
$
|
865,339
|
$
|
680,274
|
||||
Unearned premiums
|
71,625
|
53,085
|
||||||
936,964
|
733,359
|
|||||||
Reinsurance payable
|
66,632
|
62,308
|
||||||
Short-term borrowings
|
20,000
|
20,000
|
||||||
Depository liabilities
|
173
|
3,050
|
||||||
Accounts payable and other liabilities
|
110,280
|
105,130
|
||||||
Deferred federal income taxes
|
–
|
14,358
|
||||||
1,134,049
|
938,205
|
|||||||
Shareholders' equity:
|
||||||||
Common stock:
|
||||||||
Class A voting -- authorized 3,000,000 shares; outstanding -- 2018 - 2,615,339; 2017 -
2,623,109 shares
|
112
|
112
|
||||||
Class B non-voting -- authorized 20,000,000 shares; outstanding -- 2018 - 12,253,922; 2017 -
12,423,518 shares
|
522
|
530
|
||||||
Additional paid-in capital
|
54,720
|
55,078
|
||||||
Accumulated other comprehensive income (loss)
|
(7,347
|
)
|
46,391
|
|||||
Retained earnings
|
308,075
|
316,700
|
||||||
356,082
|
418,811
|
|||||||
$
|
1,490,131
|
$
|
1,357,016
|
Year Ended December 31
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Revenue:
|
||||||||||||
Net premiums earned
|
$
|
432,880
|
$
|
328,145
|
$
|
276,011
|
||||||
Net investment income
|
22,048
|
18,095
|
14,483
|
|||||||||
Commissions and other income
|
9,932
|
5,308
|
5,275
|
|||||||||
Net realized gains (losses) on investments, excluding impairment losses
|
(6,632
|
)
|
7,366
|
26,498
|
||||||||
Other-than-temporary impairment losses on investments
|
(19
|
)
|
(149
|
)
|
(5,743
|
)
|
||||||
Net unrealized gains (losses) on equity securities and limited partnership investments
|
(19,040
|
)
|
12,469
|
2,473
|
||||||||
Net realized and unrealized gains (losses) on investments
|
(25,691
|
)
|
19,686
|
23,228
|
||||||||
439,169
|
371,234
|
318,997
|
||||||||||
Expenses:
|
||||||||||||
Losses and loss expenses incurred
|
345,864
|
247,518
|
186,481
|
|||||||||
Other operating expenses
|
137,177
|
113,594
|
89,462
|
|||||||||
483,041
|
361,112
|
275,943
|
||||||||||
Income (loss) before federal income tax expense (benefit)
|
(43,872
|
)
|
10,122
|
43,054
|
||||||||
Federal income tax expense (benefit)
|
(9,797
|
)
|
(8,201
|
)
|
14,109
|
|||||||
Net income (loss)
|
$
|
(34,075
|
)
|
$
|
18,323
|
$
|
28,945
|
|||||
Per share data:
|
||||||||||||
Basic and diluted earnings (loss)
|
$
|
(2.28
|
)
|
$
|
1.21
|
$
|
1.92
|
|||||
Dividends paid to shareholders
|
$
|
$ 1.12
|
$
|
$ 1.08
|
$
|
$ 1.04
|
Year Ended December 31
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Net income (loss)
|
$
|
(34,075
|
)
|
$
|
18,323
|
$
|
28,945
|
|||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Unrealized net gains (losses) on fixed income securities:
|
||||||||||||
Unrealized net gains (losses) arising during the period
|
(9,680
|
)
|
17,340
|
8,618
|
||||||||
Less: reclassification adjustment for net gains (losses) included in net income (loss)
|
(2,812
|
)
|
4,691
|
13,491
|
||||||||
(6,868
|
)
|
12,649
|
(4,873
|
)
|
||||||||
Foreign currency translation adjustments
|
(830
|
)
|
522
|
235
|
||||||||
Other comprehensive income (loss)
|
(7,698
|
)
|
13,171
|
(4,638
|
)
|
|||||||
Comprehensive income (loss)
|
$
|
(41,773
|
)
|
$
|
31,494
|
$
|
24,307
|
Common Stock
|
Additional
|
Accumulated
Other
|
||||||||||||||||||||||||||||||
Class A
|
Class B
|
Paid-In
|
Comprehensive
|
Retained
|
Total
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Income (Loss)
|
Earnings
|
Equity
|
|||||||||||||||||||||||||
Balance at January 1, 2016
|
2,623
|
$
|
112
|
12,403
|
$
|
529
|
$
|
52,946
|
$
|
37,858
|
$
|
303,053
|
$
|
394,498
|
||||||||||||||||||
Net income
|
–
|
–
|
–
|
–
|
–
|
–
|
28,945
|
28,945
|
||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax
|
–
|
–
|
–
|
–
|
–
|
235
|
–
|
235
|
||||||||||||||||||||||||
Change in unrealized gain (loss) on investments, net of tax
|
–
|
–
|
–
|
–
|
–
|
(4,873
|
)
|
–
|
(4,873
|
)
|
||||||||||||||||||||||
Common stock dividends
|
–
|
–
|
–
|
–
|
–
|
–
|
(15,803
|
)
|
(15,803
|
)
|
||||||||||||||||||||||
Repurchase of common stock
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||||||||
Restricted stock grants
|
–
|
–
|
58
|
3
|
1,340
|
–
|
–
|
1,343
|
||||||||||||||||||||||||
Balance at December 31, 2016
|
2,623
|
112
|
12,461
|
532
|
54,286
|
33,220
|
316,195
|
404,345
|
||||||||||||||||||||||||
Net income
|
–
|
–
|
–
|
–
|
–
|
–
|
18,323
|
18,323
|
||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax
|
–
|
–
|
–
|
–
|
–
|
522
|
–
|
522
|
||||||||||||||||||||||||
Change in unrealized gain (loss) on investments, net of tax
|
–
|
–
|
–
|
–
|
–
|
12,649
|
–
|
12,649
|
||||||||||||||||||||||||
Common stock dividends
|
–
|
–
|
–
|
–
|
–
|
–
|
(16,302
|
)
|
(16,302
|
)
|
||||||||||||||||||||||
Repurchase of common stock
|
–
|
–
|
(85
|
)
|
(4
|
)
|
(360
|
)
|
–
|
(1,516
|
)
|
(1,880
|
)
|
|||||||||||||||||||
Restricted stock grants
|
–
|
–
|
48
|
2
|
1,152
|
–
|
–
|
1,154
|
||||||||||||||||||||||||
Balance at December 31, 2017
|
2,623
|
112
|
12,424
|
530
|
55,078
|
46,391
|
316,700
|
418,811
|
||||||||||||||||||||||||
Cumulative effect of adoption of ASU 2016-01, net of tax
|
–
|
–
|
–
|
–
|
–
|
(46,157
|
)
|
46,157
|
–
|
|||||||||||||||||||||||
Cumulative effect of adoption of ASU 2018-02
|
–
|
–
|
–
|
–
|
–
|
117
|
(117
|
)
|
–
|
|||||||||||||||||||||||
Net loss
|
–
|
–
|
–
|
–
|
–
|
–
|
(34,075
|
)
|
(34,075
|
)
|
||||||||||||||||||||||
Foreign currency translation adjustment, net of tax
|
–
|
–
|
–
|
–
|
–
|
(830
|
)
|
–
|
(830
|
)
|
||||||||||||||||||||||
Change in unrealized gain (loss) on investments, net of tax
|
–
|
–
|
–
|
–
|
–
|
(6,868
|
)
|
–
|
(6,868
|
)
|
||||||||||||||||||||||
Common stock dividends
|
–
|
–
|
–
|
–
|
–
|
–
|
(16,835
|
)
|
(16,835
|
)
|
||||||||||||||||||||||
Repurchase of common stock
|
(8
|
)
|
–
|
(192
|
)
|
(9
|
)
|
(832
|
)
|
–
|
(3,755
|
)
|
(4,596
|
)
|
||||||||||||||||||
Restricted stock grants
|
–
|
–
|
22
|
1
|
474
|
–
|
–
|
475
|
||||||||||||||||||||||||
Balance at December 31, 2018
|
2,615
|
$
|
112
|
12,254
|
$
|
522
|
$
|
54,720
|
$
|
(7,347
|
)
|
$
|
308,075
|
$
|
356,082
|
Year Ended December 31
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Operating activities
|
||||||||||||
Net income (loss)
|
$
|
(34,075
|
)
|
$
|
18,323
|
$
|
28,945
|
|||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||||||
Change in accounts receivable and unearned premium
|
(3,904
|
)
|
2,678
|
(2,721
|
)
|
|||||||
Change in accrued investment income
|
(199
|
)
|
(278
|
)
|
108
|
|||||||
Change in reinsurance recoverable on paid losses
|
956
|
(446
|
)
|
692
|
||||||||
Change in losses and loss expenses reserves, net of reinsurance
|
117,027
|
47,229
|
23,568
|
|||||||||
Change in other assets, other liabilities and current income taxes
|
8,204
|
49,221
|
(8,063
|
)
|
||||||||
Amortization of net policy acquisition costs
|
54,981
|
47,387
|
18,085
|
|||||||||
Net policy acquisition costs deferred
|
(55,940
|
)
|
(51,824
|
)
|
(17,813
|
)
|
||||||
Provision for deferred income tax expense (benefit)
|
(18,794
|
)
|
(3,866
|
)
|
2,838
|
|||||||
Bond amortization
|
184
|
1,865
|
3,030
|
|||||||||
Loss on sale of property and equipment
|
–
|
235
|
63
|
|||||||||
Depreciation
|
6,102
|
5,752
|
5,521
|
|||||||||
Net realized (gains) losses on investments
|
25,691
|
(19,686
|
)
|
(23,228
|
)
|
|||||||
Compensation expense related to restricted stock
|
475
|
1,154
|
1,343
|
|||||||||
Net cash provided by operating activities
|
100,708
|
97,744
|
32,368
|
|||||||||
Investing activities
|
||||||||||||
Purchases of fixed maturities and equity securities
|
(415,326
|
)
|
(436,932
|
)
|
(400,670
|
)
|
||||||
Purchases of limited partnership interests
|
(450
|
)
|
(1,097
|
)
|
–
|
|||||||
Distributions from limited partnerships
|
6,869
|
19,230
|
1,462
|
|||||||||
Proceeds from maturities
|
64,035
|
131,623
|
78,691
|
|||||||||
Proceeds from sales of fixed maturities
|
241,429
|
148,652
|
199,790
|
|||||||||
Proceeds from sales of equity securities
|
149,195
|
69,756
|
88,773
|
|||||||||
Net sales of short-term investments
|
–
|
500
|
11,258
|
|||||||||
Purchase of insurance company-owned life insurance
|
(10,000
|
)
|
–
|
–
|
||||||||
Purchase of commercial mortgage loans
|
(6,672
|
)
|
–
|
–
|
||||||||
Purchases of property and equipment
|
(5,439
|
)
|
(6,661
|
)
|
(7,725
|
)
|
||||||
Proceeds from disposals of property and equipment
|
10
|
582
|
1,059
|
|||||||||
Net cash provided by (used in) investing activities
|
23,651
|
(74,347
|
)
|
(27,362
|
)
|
|||||||
Financing activities
|
||||||||||||
Dividends paid to shareholders
|
(16,835
|
)
|
(16,302
|
)
|
(15,803
|
)
|
||||||
Repurchase of common shares
|
(4,596
|
)
|
(1,880
|
)
|
–
|
|||||||
Net cash used in financing activities
|
(21,431
|
)
|
(18,182
|
)
|
(15,803
|
)
|
||||||
Effect of foreign exchange rates on cash and cash equivalents
|
(830
|
)
|
522
|
235
|
||||||||
Increase (decrease) in cash, cash equivalents and restricted cash and cash
equivalents
|
102,098
|
5,737
|
(10,562
|
)
|
||||||||
Cash, cash equivalents and restricted cash and cash equivalents at beginning of year
|
68,713
|
62,976
|
73,538
|
|||||||||
Cash, cash equivalents and restricted cash and cash equivalents at end of
year
|
$
|
170,811
|
$
|
68,713
|
$
|
62,976
|
||||||
Supplemental Disclosures of Cash Flow Information
|
||||||||||||
Cash paid for income taxes, net of refunds
|
$
|
9,500
|
$
|
–
|
$
|
10,173
|
||||||
Cash paid for interest
|
$
|
504
|
$
|
456
|
$
|
309
|
Fair
Value
|
Cost or
Amortized Cost
|
Gross
Unrealized Gains
|
Gross
Unrealized Losses
|
Net Unrealized
Gains (Losses)
|
||||||||||||||||
December 31, 2018
(1)
|
||||||||||||||||||||
Fixed income securities
|
||||||||||||||||||||
Agency collateralized mortgage obligations
|
$
|
10,687
|
$
|
10,636
|
$
|
145
|
$
|
(94
|
)
|
$
|
51
|
|||||||||
Agency mortgage-backed securities
|
37,385
|
37,168
|
371
|
(154
|
)
|
217
|
||||||||||||||
Asset-backed securities
|
64,422
|
66,241
|
14
|
(1,833
|
)
|
(1,819
|
)
|
|||||||||||||
Bank loans
|
9,750
|
10,208
|
27
|
(485
|
)
|
(458
|
)
|
|||||||||||||
Certificates of deposit
|
2,835
|
2,835
|
–
|
–
|
–
|
|||||||||||||||
Collateralized mortgage obligations
|
5,423
|
5,095
|
376
|
(48
|
)
|
328
|
||||||||||||||
Corporate securities
|
190,450
|
196,925
|
127
|
(6,602
|
)
|
(6,475
|
)
|
|||||||||||||
Mortgage-backed securities
|
38,540
|
38,586
|
377
|
(423
|
)
|
(46
|
)
|
|||||||||||||
Municipal obligations
|
29,155
|
29,102
|
239
|
(186
|
)
|
53
|
||||||||||||||
Non-U.S. government obligations
|
25,180
|
25,339
|
6
|
(165
|
)
|
(159
|
)
|
|||||||||||||
U.S. government obligations
|
178,818
|
178,369
|
1,252
|
(803
|
)
|
449
|
||||||||||||||
Total fixed income securities
|
$
|
592,645
|
$
|
600,504
|
$
|
2,934
|
$
|
(10,793
|
)
|
$
|
(7,859
|
)
|
Fair
Value
|
Cost or
Amortized Cost
|
Gross
Unrealized Gains
|
Gross
Unrealized Losses
|
Net Unrealized
Gains (Losses)
|
||||||||||||||||
December 31, 2017
|
||||||||||||||||||||
Fixed income securities
|
||||||||||||||||||||
Agency collateralized mortgage obligations
|
$
|
16,586
|
$
|
15,839
|
$
|
818
|
$
|
(71
|
)
|
$
|
747
|
|||||||||
Agency mortgage-backed securities
|
27,075
|
27,180
|
47
|
(152
|
)
|
(105
|
)
|
|||||||||||||
Asset-backed securities
|
43,469
|
42,861
|
749
|
(141
|
)
|
608
|
||||||||||||||
Bank loans
|
19,488
|
19,271
|
266
|
(49
|
)
|
217
|
||||||||||||||
Certificates of deposit
|
3,135
|
3,124
|
11
|
–
|
11
|
|||||||||||||||
Collateralized mortgage obligations
|
6,492
|
6,079
|
451
|
(38
|
)
|
413
|
||||||||||||||
Corporate securities
|
198,349
|
198,419
|
1,602
|
(1,672
|
)
|
(70
|
)
|
|||||||||||||
Mortgage-backed securities
|
24,204
|
23,656
|
933
|
(385
|
)
|
548
|
||||||||||||||
Municipal obligations
|
96,650
|
97,059
|
322
|
(731
|
)
|
(409
|
)
|
|||||||||||||
Non-U.S. government obligations
|
37,394
|
37,971
|
475
|
(1,052
|
)
|
(577
|
)
|
|||||||||||||
U.S. government obligations
|
49,011
|
49,558
|
–
|
(547
|
)
|
(547
|
)
|
|||||||||||||
Total fixed income securities
|
521,853
|
521,017
|
5,674
|
(4,838
|
)
|
836
|
||||||||||||||
Equity securities:
|
||||||||||||||||||||
Consumer
|
46,578
|
23,565
|
24,031
|
(1,018
|
)
|
23,013
|
||||||||||||||
Energy
|
10,278
|
6,763
|
3,602
|
(87
|
)
|
3,515
|
||||||||||||||
Financial
|
45,470
|
31,859
|
13,937
|
(326
|
)
|
13,611
|
||||||||||||||
Industrial
|
25,402
|
8,949
|
16,793
|
(340
|
)
|
16,453
|
||||||||||||||
Technology
|
13,061
|
5,768
|
7,401
|
(108
|
)
|
7,293
|
||||||||||||||
Funds (e.g. mutual funds, closed end funds, ETFs)
|
50,291
|
46,177
|
4,153
|
(39
|
)
|
4,114
|
||||||||||||||
Other
|
10,683
|
7,670
|
3,313
|
(300
|
)
|
3,013
|
||||||||||||||
Total equity securities
|
201,763
|
130,751
|
73,230
|
(2,218
|
)
|
71,012
|
||||||||||||||
Total
|
$
|
723,616
|
$
|
651,768
|
$
|
78,904
|
$
|
(7,056
|
)
|
$
|
71,848
|
(1) |
Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities
are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note A – Summary of Significant Accounting Policies — Recently Adopted Accounting Pronouncements for
further discussion.
|
2018
|
2017
|
|||||||||||||||||||||||
Number of
Securities
|
Fair
Value
|
Gross
Unrealized Loss
|
Number of
Securities
|
Fair
Value
|
Gross
Unrealized Loss
|
|||||||||||||||||||
Fixed income securities:
|
||||||||||||||||||||||||
12 months or less
|
275
|
$
|
282,646
|
$
|
(7,296
|
)
|
459
|
$
|
313,421
|
$
|
(2,683
|
)
|
||||||||||||
Greater than 12 months
|
217
|
131,001
|
(3,497
|
)
|
112
|
75,638
|
(2,155
|
)
|
||||||||||||||||
Total fixed income securities
|
492
|
413,647
|
(10,793
|
)
|
571
|
389,059
|
(4,838
|
)
|
||||||||||||||||
Equity securities
(1)
:
|
||||||||||||||||||||||||
12 months or less
|
–
|
–
|
–
|
65
|
46,654
|
(2,218
|
)
|
|||||||||||||||||
Greater than 12 months
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||
Total equity securities
|
–
|
–
|
–
|
65
|
46,654
|
(2,218
|
)
|
|||||||||||||||||
Total
|
492
|
$
|
413,647
|
$
|
(10,793
|
)
|
636
|
$
|
435,713
|
$
|
(7,056
|
)
|
(1) |
Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities
are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note A – Summary of Significant Accounting Policies — Recently Adopted Accounting Pronouncements for
further discussion.
|
Fair Value
|
Cost or Amortized Cost
|
|||||||||||||||
One year or less
|
$
|
45,858
|
7.7
|
%
|
$
|
46,150
|
7.7
|
%
|
||||||||
Excess of one year to five years
|
287,506
|
48.5
|
290,743
|
48.4
|
||||||||||||
Excess of five years to ten years
|
101,605
|
17.1
|
104,571
|
17.4
|
||||||||||||
Excess of ten years
|
6,641
|
1.2
|
6,410
|
1.1
|
||||||||||||
Total contractual maturities
|
441,610
|
74.5
|
447,874
|
74.6
|
||||||||||||
Asset-backed securities
|
151,035
|
25.5
|
152,630
|
25.4
|
||||||||||||
Total
|
$
|
592,645
|
100.0
|
%
|
$
|
600,504
|
100.0
|
2018
|
2017
|
2016
|
||||||||||
Interest on fixed income securities
|
$
|
19,092
|
$
|
15,340
|
$
|
13,254
|
||||||
Dividends on equity securities
|
4,380
|
4,611
|
3,598
|
|||||||||
Money market funds, Short-term and other
|
1,529
|
471
|
128
|
|||||||||
25,001
|
20,422
|
16,980
|
||||||||||
Investment expenses
|
(2,953
|
)
|
(2,327
|
)
|
(2,497
|
)
|
||||||
Net investment income
|
$
|
22,048
|
$
|
18,095
|
$
|
14,483
|
2018
|
2017
|
2016
|
||||||||||
Gross gains on available-for-sale investments sold during the period:
|
||||||||||||
Fixed income securities
|
$
|
10,807
|
$
|
9,135
|
$
|
11,628
|
||||||
Equity securities
(1)
|
–
|
10,481
|
28,742
|
|||||||||
Total gains
|
10,807
|
19,616
|
40,370
|
|||||||||
Gross losses on available-for-sale investments sold during the period:
|
||||||||||||
Fixed income securities
|
(14,367
|
)
|
(9,882
|
)
|
(10,940
|
)
|
||||||
Equity securities
(1)
|
–
|
(2,368
|
)
|
(2,932
|
)
|
|||||||
Total losses
|
(14,367
|
)
|
(12,250
|
)
|
(13,872
|
)
|
||||||
Other-than-temporary impairments
|
(19
|
)
|
(149
|
)
|
(5,743
|
)
|
||||||
Change in value of limited partnership investments
|
(9,343
|
)
|
12,469
|
2,473
|
||||||||
Losses on equity securities:
|
||||||||||||
Realized losses on equity securities sold during the period
(2)
|
(3,072
|
)
|
–
|
–
|
||||||||
Unrealized losses on equity securities held at the end of the period
|
(9,697
|
)
|
–
|
–
|
||||||||
Realized and unrealized losses on equity securities held at the end of the period
|
(12,769
|
)
|
–
|
–
|
||||||||
Net realized and unrealized gains (losses) on investments
|
$
|
(25,691
|
)
|
$
|
19,686
|
$
|
23,228
|
(1) |
Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities
are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note A – Summary of Significant Accounting Policies — Recently Adopted Accounting Pronouncements for
further discussion.
|
(2) |
During 2018,
the Company sold $149,195 in equity securities, resulting in a gain
on sale of $51,900. The majority of these gains were included in unrealized gains within other comprehensive income (loss) at December 31, 2017 and, as a result of the adoption of ASU 2016-01, were reclassified to retained earnings
as of January 1, 2018 and were therefore not recognized in the consolidated statements of operations for the year ended December 31, 2018.
|
2018
|
2017
|
2016
|
||||||||||
Cumulative charges to income at beginning of year
|
$
|
4,209
|
$
|
5,650
|
$
|
10,513
|
||||||
Writedowns based on objective and subjective criteria
|
19
|
149
|
5,743
|
|||||||||
Recovery of prior writedowns upon sale or disposal
|
(3,298
|
)
|
(1,590
|
)
|
(10,606
|
)
|
||||||
Net pre-tax realized gain
|
3,279
|
1,441
|
4,863
|
|||||||||
Cumulative charges to income at end of year
|
$
|
930
|
$
|
4,209
|
$
|
5,650
|
2018
|
2017
|
2016
|
||||||||||
Investment income (loss)
|
$
|
4,298
|
$
|
623
|
$
|
(5
|
)
|
|||||
Partnership expenses
|
6,874
|
2,206
|
2,426
|
|||||||||
Net investment loss
|
(2,576
|
)
|
(1,583
|
)
|
(2,431
|
)
|
||||||
Realized gain on investments
|
12,314
|
8,723
|
7,754
|
|||||||||
Unrealized appreciation (depreciation) on investments
|
(65,250
|
)
|
133,807
|
(21,002
|
)
|
|||||||
Net increase (decrease) in partners' capital resulting from operations
|
$
|
(55,512
|
)
|
$
|
140,947
|
$
|
(15,679
|
)
|
||||
Total assets
|
$
|
462,058
|
$
|
566,629
|
$
|
448,263
|
||||||
Total liabilities
|
45,483
|
30,976
|
39,988
|
|||||||||
Total partners' capital
|
416,575
|
535,653
|
408,275
|
2018
|
2017
|
2016
|
||||||||||
Investment income
|
$
|
19,507
|
$
|
14,524
|
$
|
13,534
|
||||||
Partnership expenses
|
9,132
|
12,861
|
10,628
|
|||||||||
Net investment income
|
10,375
|
1,663
|
2,906
|
|||||||||
Realized gain (loss) on investments
|
(37,143
|
)
|
(15,073
|
)
|
830
|
|||||||
Unrealized appreciation (depreciation) on investments
|
(48,132
|
)
|
49,847
|
46,685
|
||||||||
Net increase (decrease) in partners' capital resulting from operations
|
$
|
(74,900
|
)
|
$
|
36,437
|
$
|
50,421
|
|||||
Total assets
|
$
|
241,174
|
$
|
354,709
|
$
|
464,184
|
||||||
Total liabilities
|
20,020
|
2,000
|
14,555
|
|||||||||
Total partners' capital
|
221,154
|
352,709
|
449,629
|
2018
|
2017
|
2016
|
||||||||||
Reserves, gross of reinsurance recoverable, at the beginning of the year
|
$
|
680,274
|
$
|
576,330
|
$
|
513,596
|
||||||
Reinsurance recoverable on unpaid losses at the beginning of the year
|
308,143
|
251,563
|
211,843
|
|||||||||
Reserves at the beginning of the year
|
372,131
|
324,767
|
301,753
|
|||||||||
Provision for losses and loss expenses:
|
||||||||||||
Claims occurring during the current year
|
329,078
|
228,303
|
172,645
|
|||||||||
Claims occurring during prior years
|
16,786
|
19,215
|
13,836
|
|||||||||
Total incurred losses and loss expenses
|
345,864
|
247,518
|
186,481
|
|||||||||
Loss and loss expense payments:
|
||||||||||||
Claims occurring during the current year
|
84,738
|
67,234
|
54,239
|
|||||||||
Claims occurring during prior years
|
143,853
|
132,920
|
109,228
|
|||||||||
Total paid
|
228,591
|
200,154
|
163,467
|
|||||||||
Reserves at the end of the year
|
489,404
|
372,131
|
324,767
|
|||||||||
Reinsurance recoverable on unpaid losses at the end of the year
|
375,935
|
308,143
|
251,563
|
|||||||||
Reserves, gross of reinsurance recoverable, at the end of the year
|
$
|
865,339
|
$
|
680,274
|
$
|
576,330
|
As of December 31, 2018
|
||||||||||||||||||||||||||||||||||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
Total of
Incurred-but-Not-
Reported Liabilities Plus
Expected Development
on Reported Claims
|
Number of
Reported
Claims
Per Year
|
||||||||||||||||||||||||||||||||||||||||||||||
Accident Year
|
For the Years Ended December 31 (2009-2017 is Supplementary Information and Unaudited)
|
|||||||||||||||||||||||||||||||||||||||||||||||
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
|||||||||||||||||||||||||||||||||||||||
2009
|
$
|
17,270
|
$
|
20,931
|
$
|
21,447
|
$
|
21,261
|
$
|
21,268
|
$
|
20,767
|
$
|
20,641
|
$
|
20,817
|
$
|
20,946
|
$
|
21,153
|
$
|
985
|
3,784
|
|||||||||||||||||||||||||
2010
|
20,644
|
20,111
|
19,400
|
19,300
|
18,849
|
18,344
|
19,195
|
19,541
|
19,819
|
1,098
|
4,223
|
|||||||||||||||||||||||||||||||||||||
2011
|
26,057
|
26,628
|
26,958
|
26,767
|
25,515
|
27,293
|
26,617
|
26,631
|
2,179
|
4,546
|
||||||||||||||||||||||||||||||||||||||
2012
|
23,965
|
25,544
|
24,887
|
24,485
|
25,616
|
27,020
|
26,775
|
2,824
|
4,481
|
|||||||||||||||||||||||||||||||||||||||
2013
|
27,619
|
30,638
|
29,913
|
32,121
|
32,553
|
31,131
|
3,780
|
5,275
|
||||||||||||||||||||||||||||||||||||||||
2014
|
36,768
|
36,968
|
34,009
|
33,427
|
31,031
|
4,482
|
5,406
|
|||||||||||||||||||||||||||||||||||||||||
2015
|
26,277
|
23,115
|
25,889
|
24,948
|
5,328
|
6,308
|
||||||||||||||||||||||||||||||||||||||||||
2016
|
35,240
|
29,757
|
29,317
|
6,740
|
6,059
|
|||||||||||||||||||||||||||||||||||||||||||
2017
|
42,387
|
37,731
|
13,918
|
16,106
|
||||||||||||||||||||||||||||||||||||||||||||
2018
|
62,973
|
36,250
|
12,893
|
|||||||||||||||||||||||||||||||||||||||||||||
Total
|
$
|
311,509
|
$
|
77,584
|
Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
|
||||||||||||||||||||||||||||||||||||||||
For the Years Ended December 31 (2009-2017 is Supplementary Information and Unaudited)
|
||||||||||||||||||||||||||||||||||||||||
Accident Year
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
||||||||||||||||||||||||||||||
2009
|
$
|
4,186
|
$
|
10,073
|
$
|
13,343
|
$
|
15,576
|
$
|
16,592
|
$
|
17,448
|
$
|
18,028
|
$
|
18,514
|
$
|
18,982
|
$
|
19,261
|
||||||||||||||||||||
2010
|
3,974
|
9,134
|
11,963
|
13,845
|
14,966
|
15,835
|
16,590
|
16,789
|
17,062
|
|||||||||||||||||||||||||||||||
2011
|
4,916
|
11,912
|
15,973
|
18,884
|
20,617
|
21,622
|
22,569
|
22,991
|
||||||||||||||||||||||||||||||||
2012
|
4,597
|
11,004
|
14,834
|
17,415
|
18,946
|
20,276
|
21,157
|
|||||||||||||||||||||||||||||||||
2013
|
4,880
|
12,792
|
18,065
|
21,655
|
23,643
|
24,968
|
||||||||||||||||||||||||||||||||||
2014
|
5,328
|
13,665
|
19,075
|
22,387
|
23,968
|
|||||||||||||||||||||||||||||||||||
2015
|
2,918
|
10,128
|
15,020
|
17,487
|
||||||||||||||||||||||||||||||||||||
2016
|
5,784
|
13,377
|
18,461
|
|||||||||||||||||||||||||||||||||||||
2017
|
6,150
|
15,811
|
||||||||||||||||||||||||||||||||||||||
2018
|
10,987
|
|||||||||||||||||||||||||||||||||||||||
Total
|
$
|
192,153
|
||||||||||||||||||||||||||||||||||||||
Outstanding liabilities prior to 2009 net of reinsurance
|
12,640
|
|||||||||||||||||||||||||||||||||||||||
Liabilities for claims and claims adjustment expenses, net of reinsurance
|
$
|
131,996
|
As of December 31, 2018
|
||||||||||||||||||||||||||||||||||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
Total of
Incurred-but-Not-
Reported Liabilities Plus
Expected Development
on Reported Claims
|
Number of
Reported
Claims
Per Year
|
||||||||||||||||||||||||||||||||||||||||||||||
For the Years Ended December 31 (2009-2017 is Supplementary Information and Unaudited)
|
||||||||||||||||||||||||||||||||||||||||||||||||
Accident Year
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
||||||||||||||||||||||||||||||||||||||
2009
|
$
|
29,707
|
$
|
30,406
|
$
|
30,203
|
$
|
26,280
|
$
|
27,259
|
$
|
25,872
|
$
|
25,373
|
$
|
25,320
|
$
|
25,485
|
$
|
25,761
|
$
|
190
|
899
|
|||||||||||||||||||||||||
2010
|
31,124
|
22,161
|
21,899
|
19,139
|
20,300
|
19,764
|
19,377
|
19,081
|
19,985
|
112
|
2,403
|
|||||||||||||||||||||||||||||||||||||
2011
|
46,829
|
43,832
|
31,633
|
36,894
|
35,805
|
37,122
|
36,076
|
37,852
|
131
|
2,901
|
||||||||||||||||||||||||||||||||||||||
2012
|
49,743
|
54,269
|
49,743
|
51,367
|
48,708
|
51,475
|
51,648
|
135
|
3,130
|
|||||||||||||||||||||||||||||||||||||||
2013
|
53,817
|
39,143
|
37,701
|
36,371
|
46,690
|
48,857
|
663
|
3,749
|
||||||||||||||||||||||||||||||||||||||||
2014
|
49,971
|
52,254
|
52,483
|
52,964
|
64,372
|
307
|
3,320
|
|||||||||||||||||||||||||||||||||||||||||
2015
|
61,420
|
70,174
|
64,323
|
71,088
|
2,785
|
3,185
|
||||||||||||||||||||||||||||||||||||||||||
2016
|
61,638
|
68,974
|
77,362
|
7,048
|
3,707
|
|||||||||||||||||||||||||||||||||||||||||||
2017
|
103,126
|
103,611
|
25,527
|
5,261
|
||||||||||||||||||||||||||||||||||||||||||||
2018
|
179,589
|
70,070
|
6,870
|
|||||||||||||||||||||||||||||||||||||||||||||
Total
|
$
|
680,125
|
$
|
106,968
|
Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
|
||||||||||||||||||||||||||||||||||||||||
For the Years Ended December 31 (2009-2017 is Supplementary Information and Unaudited)
|
||||||||||||||||||||||||||||||||||||||||
Accident Year
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
||||||||||||||||||||||||||||||
2009
|
$
|
928
|
$
|
17,880
|
$
|
19,718
|
$
|
23,521
|
$
|
24,866
|
$
|
25,066
|
$
|
25,114
|
$
|
25,125
|
$
|
25,199
|
$
|
25,391
|
||||||||||||||||||||
2010
|
1,649
|
7,166
|
11,635
|
16,052
|
18,627
|
18,517
|
18,866
|
18,662
|
18,791
|
|||||||||||||||||||||||||||||||
2011
|
1,809
|
11,350
|
23,615
|
30,795
|
33,255
|
34,009
|
35,561
|
36,400
|
||||||||||||||||||||||||||||||||
2012
|
3,086
|
23,252
|
32,942
|
45,303
|
47,601
|
50,036
|
50,750
|
|||||||||||||||||||||||||||||||||
2013
|
5,167
|
15,772
|
25,270
|
34,481
|
44,865
|
46,084
|
||||||||||||||||||||||||||||||||||
2014
|
4,023
|
9,046
|
28,393
|
45,075
|
57,692
|
|||||||||||||||||||||||||||||||||||
2015
|
10,923
|
27,582
|
49,267
|
63,133
|
||||||||||||||||||||||||||||||||||||
2016
|
6,843
|
30,377
|
52,764
|
|||||||||||||||||||||||||||||||||||||
2017
|
11,415
|
46,529
|
||||||||||||||||||||||||||||||||||||||
2018
|
18,689
|
|||||||||||||||||||||||||||||||||||||||
Total
|
$
|
416,223
|
||||||||||||||||||||||||||||||||||||||
Outstanding liabilities prior to 2009 net of reinsurance
|
4,621
|
|||||||||||||||||||||||||||||||||||||||
Liabilities for claims and claims adjustment expenses, net of reinsurance
|
$
|
268,523
|
As of December 31, 2018
|
||||||||||||||||||||||||||||||||||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
Total of
Incurred-but-Not-
Reported Liabilities Plus
Expected Development
on Reported Claims
|
Number of
Reported
Claims
Per Year
|
||||||||||||||||||||||||||||||||||||||||||||||
Accident Year
|
For the Years Ended December 31 (2009-2017 is Supplementary Information and Unaudited)
|
|||||||||||||||||||||||||||||||||||||||||||||||
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
|||||||||||||||||||||||||||||||||||||||
2009
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
N/A
|
|||||||||||||||||||||||||
2010
|
2,196
|
4,277
|
7,827
|
7,946
|
9,733
|
10,740
|
11,689
|
11,893
|
11,677
|
24
|
N/A
|
|||||||||||||||||||||||||||||||||||||
2011
|
10,492
|
8,314
|
9,017
|
9,859
|
10,779
|
12,735
|
12,744
|
12,725
|
116
|
N/A
|
||||||||||||||||||||||||||||||||||||||
2012
|
10,041
|
9,276
|
5,569
|
10,157
|
14,605
|
16,555
|
14,949
|
706
|
N/A
|
|||||||||||||||||||||||||||||||||||||||
2013
|
14,370
|
13,034
|
11,618
|
17,694
|
23,256
|
22,213
|
1,847
|
N/A
|
||||||||||||||||||||||||||||||||||||||||
2014
|
12,675
|
8,825
|
7,259
|
9,837
|
12,749
|
2,297
|
N/A
|
|||||||||||||||||||||||||||||||||||||||||
2015
|
11,638
|
7,859
|
7,147
|
10,422
|
5,422
|
N/A
|
||||||||||||||||||||||||||||||||||||||||||
2016
|
6,368
|
2,482
|
1,522
|
1,035
|
N/A
|
|||||||||||||||||||||||||||||||||||||||||||
2017
|
–
|
–
|
–
|
N/A
|
||||||||||||||||||||||||||||||||||||||||||||
2018
|
–
|
–
|
N/A
|
|||||||||||||||||||||||||||||||||||||||||||||
Total
|
$
|
86,257
|
$
|
11,447
|
Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
|
||||||||||||||||||||||||||||||||||||||||
For the Years Ended December 31 (2009-2017 is Supplementary Information and Unaudited)
|
||||||||||||||||||||||||||||||||||||||||
Accident Year
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
||||||||||||||||||||||||||||||
2009
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
||||||||||||||||||||
2010
|
41
|
729
|
3,505
|
5,844
|
7,758
|
9,904
|
11,132
|
11,334
|
11,334
|
|||||||||||||||||||||||||||||||
2011
|
50
|
637
|
2,061
|
4,983
|
8,104
|
10,404
|
11,679
|
12,280
|
||||||||||||||||||||||||||||||||
2012
|
103
|
992
|
2,388
|
5,077
|
8,355
|
11,239
|
13,091
|
|||||||||||||||||||||||||||||||||
2013
|
123
|
1,135
|
5,088
|
10,988
|
14,779
|
18,229
|
||||||||||||||||||||||||||||||||||
2014
|
723
|
761
|
2,241
|
3,999
|
6,627
|
|||||||||||||||||||||||||||||||||||
2015
|
10
|
390
|
1,899
|
3,207
|
||||||||||||||||||||||||||||||||||||
2016
|
–
|
5
|
99
|
|||||||||||||||||||||||||||||||||||||
2017
|
–
|
–
|
||||||||||||||||||||||||||||||||||||||
2018
|
–
|
|||||||||||||||||||||||||||||||||||||||
Total
|
$
|
64,867
|
||||||||||||||||||||||||||||||||||||||
Outstanding liabilities prior to 2009 net of reinsurance
|
–
|
|||||||||||||||||||||||||||||||||||||||
Liabilities for claims and claims adjustment expenses, net of reinsurance
|
$
|
21,390
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
As of December 31, 2018
|
|||||||||||||||||||
For the Years Ended December 31 (2016-2017 is Supplementary Information and Unaudited)
|
Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims
|
Number of Reported Claims Per Year
|
||||||||||||||||||
Accident Year
|
2016
|
2017
|
2018
|
|||||||||||||||||
2016 and prior
|
$
|
40,651
|
$
|
39,477
|
$
|
39,658
|
$
|
5
|
9,619
|
|||||||||||
2017
|
48,440
|
47,193
|
512
|
10,517
|
||||||||||||||||
2018
|
53,726
|
4,221
|
10,186
|
|||||||||||||||||
Total
|
$
|
140,577
|
$
|
4,738
|
Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
|
||||||||||||
For the Years Ended December 31 (2016-2017 is Supplementary Information and Unaudited)
|
||||||||||||
Accident Year
|
2016
|
2017
|
2018
|
|||||||||
2016 and prior
|
$
|
34,114
|
$
|
39,354
|
$
|
39,073
|
||||||
2017
|
39,517
|
46,554
|
||||||||||
2018
|
41,631
|
|||||||||||
Total
|
$
|
127,258
|
||||||||||
Outstanding liabilities prior to 2016 net of reinsurance
|
10
|
|||||||||||
Liabilities for claims and claims adjustment expenses, net of reinsurance
|
$
|
13,329
|
2018
|
2017
|
|||||||
Net
outstanding liabilities
|
||||||||
Commercial Liability
|
$
|
268,523
|
$
|
162,581
|
||||
Workers' Compensation
|
131,996
|
113,751
|
||||||
Physical Damage
|
13,329
|
9,087
|
||||||
Professional Liability Assumed
|
21,390
|
28,980
|
||||||
Other short-duration insurance lines
|
33,716
|
39,883
|
||||||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance
|
468,954
|
354,282
|
||||||
Reinsurance
recoverable on unpaid claims
|
||||||||
Commercial Liability
|
194,483
|
124,695
|
||||||
Workers' Compensation
|
172,869
|
170,394
|
||||||
Physical Damage
|
1,851
|
51
|
||||||
Other short-duration insurance lines
|
6,732
|
13,002
|
||||||
Reinsurance recoverable on unpaid losses at the end of the year
|
375,935
|
308,142
|
||||||
Unallocated claims adjustment expenses
|
20,450
|
17,850
|
||||||
Total gross liability for unpaid claims and claims adjustment expense
|
$
|
865,339
|
$
|
680,274
|
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
(Supplementary Information and Unaudited)
|
||||||||||||||||||||||||||||||||||||||||
Years
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
|
||||||||||||||||||||||||||||||
Commercial Liability
|
8.5
|
%
|
30.5
|
%
|
23.7
|
%
|
20.6
|
%
|
9.9
|
%
|
1.9
|
%
|
1.9
|
%
|
0.5
|
%
|
0.5
|
%
|
0.7
|
%
|
||||||||||||||||||||
Workers' Compensation
|
17.3
|
%
|
26.3
|
%
|
16.3
|
%
|
10.4
|
%
|
5.7
|
%
|
4.3
|
%
|
3.3
|
%
|
1.6
|
%
|
1.8
|
%
|
1.3
|
%
|
||||||||||||||||||||
Physical Damage
|
80.6
|
%
|
14.1
|
%
|
2.0
|
%
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||||||||||||||||||
Professional Liability Assumed
|
1.1
|
%
|
3.6
|
%
|
13.5
|
%
|
19.0
|
%
|
18.3
|
%
|
17.8
|
%
|
11.0
|
%
|
1.7
|
%
|
–
|
N/A
|
Premiums Written
|
Premiums Earned
|
|||||||||||||||||||||||
2018
|
2017
|
2016
|
2018
|
2017
|
2016
|
|||||||||||||||||||
Direct
|
$
|
581,070
|
$
|
504,033
|
$
|
395,625
|
$
|
562,364
|
$
|
470,158
|
$
|
394,679
|
||||||||||||
Ceded on direct
|
(138,102
|
)
|
(151,348
|
)
|
(131,166
|
)
|
(131,080
|
)
|
(145,201
|
)
|
(129,926
|
)
|
||||||||||||
Net direct
|
442,968
|
352,685
|
264,459
|
431,284
|
324,957
|
264,753
|
||||||||||||||||||
Assumed
|
1,430
|
704
|
7,379
|
1,596
|
3,188
|
11,344
|
||||||||||||||||||
Ceded on assumed
|
–
|
–
|
(86
|
)
|
–
|
–
|
(86
|
)
|
||||||||||||||||
Net assumed
|
1,430
|
704
|
7,293
|
1,596
|
3,188
|
11,258
|
||||||||||||||||||
Net
|
$
|
444,398
|
$
|
353,389
|
$
|
271,752
|
$
|
432,880
|
$
|
328,145
|
$
|
276,011
|
2018
|
2017
|
|||||||
Case unpaid losses, net of valuation allowance
|
$
|
163,011
|
$
|
119,615
|
||||
Incurred but not reported unpaid losses and loss expenses
|
211,805
|
187,163
|
||||||
Paid losses and loss expenses
|
1,250
|
2,206
|
||||||
Unearned premiums
|
16,370
|
9,347
|
||||||
$
|
392,436
|
$
|
318,331
|
2018
|
2017
|
|||||||
Deferred
tax liabilities:
|
||||||||
Unrealized gain on fixed income and equity security investments
|
$
|
4,572
|
$
|
15,086
|
||||
Deferred acquisition costs
|
2,552
|
1,804
|
||||||
Loss and loss expense reserves
|
3,583
|
2,623
|
||||||
Limited partnership investments
|
–
|
3,826
|
||||||
Accelerated depreciation
|
690
|
492
|
||||||
Other
|
1,509
|
1,791
|
||||||
Total deferred tax liabilities
|
12,906
|
25,622
|
||||||
Deferred
tax assets:
|
||||||||
Loss and loss expense reserves
|
9,999
|
6,761
|
||||||
Limited partnership investments
|
3,498
|
–
|
||||||
Unearned premiums discount
|
2,321
|
1,837
|
||||||
Other-than-temporary investment declines
|
625
|
815
|
||||||
Deferred compensation
|
580
|
885
|
||||||
Deferred ceding commission
|
1,173
|
627
|
||||||
Other
|
972
|
339
|
||||||
Total deferred tax assets
|
19,168
|
11,264
|
||||||
Net deferred tax (assets) liabilities
|
$
|
(6,262
|
)
|
$
|
14,358
|
2018
|
2017
|
2016
|
||||||||||
Statutory federal income rate applied to pre-tax income (loss)
|
$
|
(9,213
|
)
|
$
|
3,543
|
$
|
15,069
|
|||||
Tax effect of (deduction):
|
||||||||||||
Tax-exempt investment income
|
(253
|
)
|
(968
|
)
|
(938
|
)
|
||||||
Change in enacted tax rates
|
–
|
(9,572
|
)
|
–
|
||||||||
Other
|
(331
|
)
|
(1,204
|
)
|
(22
|
)
|
||||||
Federal income tax expense (benefit)
|
$
|
(9,797
|
)
|
$
|
(8,201
|
)
|
$
|
14,109
|
2018
|
2017
|
2016
|
||||||||||
Tax expense (benefit) on pre-tax income (loss):
|
||||||||||||
Current
|
$
|
8,997
|
$
|
(4,335
|
)
|
$
|
11,271
|
|||||
Deferred
|
(18,794
|
)
|
(3,866
|
)
|
2,838
|
|||||||
$
|
(9,797
|
)
|
$
|
(8,201
|
)
|
$
|
14,109
|
2018
|
2017
|
2016
|
||||||||||
Limited partnerships
|
$
|
(2,383
|
)
|
$
|
4,099
|
$
|
503
|
|||||
Discounts of loss and loss expense reserves
|
(2,704
|
)
|
1,315
|
(114
|
)
|
|||||||
Reserves - salvage and subrogation and other
|
427
|
56
|
(1,110
|
)
|
||||||||
Unearned premium discount
|
(484
|
)
|
(1,767
|
)
|
298
|
|||||||
Deferred compensation
|
305
|
(168
|
)
|
595
|
||||||||
Other-than-temporary investment declines
|
695
|
(127
|
)
|
2,320
|
||||||||
Deferred acquisitions costs and ceding commission
|
201
|
1,553
|
(95
|
)
|
||||||||
Change in enacted tax rates
|
–
|
(9,572
|
)
|
–
|
||||||||
Unrealized gains / losses
|
(13,876
|
)
|
–
|
–
|
||||||||
Other
|
(975
|
)
|
745
|
441
|
||||||||
Provision for deferred federal income taxes
|
$
|
(18,794
|
)
|
$
|
(3,866
|
)
|
$
|
2,838
|
2018
|
2017
|
|||||||
Investments:
|
||||||||
Total unrealized gain (loss) before federal income tax expense (benefit)
|
$
|
(7,859
|
)
|
$
|
71,848
|
|||
Deferred tax benefit (liability)
|
1,651
|
(25,148
|
)
|
|||||
Net unrealized gains (losses) on investments
|
(6,208
|
)
|
46,700
|
|||||
Foreign exchange adjustment:
|
||||||||
Total unrealized losses
|
(1,442
|
)
|
(475
|
)
|
||||
Deferred tax benefit
|
303
|
166
|
||||||
Net unrealized losses on foreign exchange adjustment
|
(1,139
|
)
|
(309
|
)
|
||||
Accumulated other comprehensive income (loss)
|
$
|
(7,347
|
)
|
$
|
46,391
|
2018
|
2017
|
2016
|
||||||||||
Investments:
|
||||||||||||
Pre-tax holding gains (losses) on debt and equity securities arising during period
(1)
|
$
|
(12,253
|
)
|
$
|
26,677
|
$
|
13,259
|
|||||
Less: applicable federal income tax expense (benefit)
|
(2,573
|
)
|
9,337
|
4,641
|
||||||||
(9,680
|
)
|
17,340
|
8,618
|
|||||||||
Pre-tax gains (losses) on debt and equity securities included in net income (loss) during
period
(1)
|
(3,560
|
)
|
7,217
|
20,755
|
||||||||
Less: applicable federal income tax expense (benefit)
|
(748
|
)
|
2,526
|
7,264
|
||||||||
(2,812
|
)
|
4,691
|
13,491
|
|||||||||
Change in unrealized gains (losses) on investments
|
$
|
(6,868
|
)
|
$
|
12,649
|
$
|
(4,873
|
)
|
2018
|
2017
|
2016
|
||||||||||
Amortization of gross deferred policy acquisition costs
|
$
|
78,105
|
$
|
70,574
|
$
|
51,597
|
||||||
Other underwriting expenses
|
46,638
|
37,230
|
41,692
|
|||||||||
Reinsurance ceded credits
|
(23,124
|
)
|
(23,187
|
)
|
(33,512
|
)
|
||||||
Total underwriting expenses
|
101,619
|
84,617
|
59,777
|
|||||||||
Operating expenses of non-insurance companies
|
32,406
|
28,977
|
29,685
|
|||||||||
Goodwill impairment charge
|
3,152
|
–
|
–
|
|||||||||
Total other operating expenses
|
$
|
137,177
|
$
|
113,594
|
$
|
89,462
|
Grant Date
|
Number of
Shares Issued
|
Vesting Date
|
Service Period
|
Grant Date Fair
Value Per Share
|
||||||
5/10/2016
|
17,677
|
5/10/2017
|
7/1/2016 - 6/30/2017
|
$
|
24.89
|
|||||
5/9/2017
|
18,183
|
5/9/2018
|
7/1/2017 - 6/30/2018
|
$
|
24.20
|
|||||
8/31/2017
|
1,257
|
5/9/2018
|
8/31/2017 - 6/30/2018
|
$
|
21.90
|
|||||
2/9/2018
|
408
|
5/9/2018
|
2/9/2018 - 6/30/2018
|
$
|
24.20
|
|||||
5/8/2018
|
19,085
|
5/8/2019
|
7/1/2018 - 6/30/2019
|
$
|
23.05
|
2018
|
2017
|
2016
|
||||||||||
Revenues:
|
||||||||||||
Net premiums earned
|
$
|
432,880
|
$
|
328,145
|
$
|
276,011
|
||||||
Net investment income
|
22,048
|
18,095
|
14,483
|
|||||||||
Net realized and unrealized gains (losses) on investments
|
(25,691
|
)
|
19,686
|
23,228
|
||||||||
Commissions and other income
|
9,932
|
5,308
|
5,275
|
|||||||||
Total revenues
|
$
|
439,169
|
$
|
371,234
|
$
|
318,997
|
2018
|
2017
|
2016
|
||||||||||
Average shares outstanding for basic earnings (loss) per share
|
14,964,812
|
15,065,216
|
15,071,900
|
|||||||||
Dilutive effect of share equivalents
|
–
|
42,220
|
12,108
|
|||||||||
Average shares outstanding for diluted earnings (loss) per share
|
14,964,812
|
15,107,436
|
15,084,008
|
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Fixed income securities:
|
||||||||||||||||
Agency collateralized mortgage obligations
|
$
|
10,687
|
$
|
–
|
$
|
10,687
|
$
|
–
|
||||||||
Agency mortgage-backed securities
|
37,385
|
–
|
37,385
|
–
|
||||||||||||
Asset-backed securities
|
64,422
|
–
|
64,422
|
–
|
||||||||||||
Bank loans
|
9,750
|
–
|
9,750
|
–
|
||||||||||||
Certificates of deposit
|
2,835
|
2,835
|
–
|
–
|
||||||||||||
Collateralized mortgage obligations
|
5,423
|
–
|
5,423
|
–
|
||||||||||||
Corporate securities
|
186,651
|
–
|
186,651
|
–
|
||||||||||||
Options embedded in convertible securities
|
3,799
|
–
|
3,799
|
–
|
||||||||||||
Mortgage-backed securities
|
38,540
|
–
|
38,540
|
–
|
||||||||||||
Municipal obligations
|
29,155
|
–
|
29,155
|
–
|
||||||||||||
Non-U.S. government obligations
|
25,180
|
–
|
25,180
|
–
|
||||||||||||
U.S. government obligations
|
178,818
|
–
|
178,818
|
–
|
||||||||||||
Total fixed income securities
|
592,645
|
2,835
|
589,810
|
–
|
||||||||||||
Equity securities:
|
||||||||||||||||
Consumer
|
17,945
|
17,945
|
–
|
–
|
||||||||||||
Energy
|
3,179
|
3,179
|
–
|
–
|
||||||||||||
Financial
|
25,253
|
25,253
|
–
|
–
|
||||||||||||
Industrial
|
6,920
|
6,920
|
–
|
–
|
||||||||||||
Technology
|
2,303
|
2,303
|
–
|
–
|
||||||||||||
Funds (e.g. mutual funds, closed end funds, ETFs)
|
5,489
|
5,489
|
–
|
–
|
||||||||||||
Other
|
5,333
|
5,333
|
–
|
–
|
||||||||||||
Total equity securities
|
66,422
|
66,422
|
–
|
–
|
||||||||||||
Short-term
|
1,000
|
1,000
|
–
|
–
|
||||||||||||
Cash equivalents
|
156,855
|
–
|
156,855
|
–
|
||||||||||||
Total
|
$
|
816,922
|
$
|
70,257
|
$
|
746,665
|
$
|
–
|
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Fixed income securities:
|
||||||||||||||||
Agency collateralized mortgage obligations
|
$
|
16,586
|
$
|
–
|
$
|
16,586
|
$
|
–
|
||||||||
Agency mortgage-backed securities
|
27,075
|
–
|
27,075
|
–
|
||||||||||||
Asset-backed securities
|
43,469
|
–
|
43,469
|
–
|
||||||||||||
Bank loans
|
19,488
|
–
|
19,488
|
–
|
||||||||||||
Certificates of deposit
|
3,135
|
3,135
|
–
|
–
|
||||||||||||
Collateralized mortgage obligations
|
6,492
|
–
|
6,492
|
–
|
||||||||||||
Corporate securities
|
193,058
|
–
|
193,058
|
–
|
||||||||||||
Options embedded in convertible securities
|
5,291
|
–
|
5,291
|
–
|
||||||||||||
Mortgage-backed securities
|
24,204
|
–
|
24,204
|
–
|
||||||||||||
Municipal obligations
|
96,650
|
–
|
96,650
|
–
|
||||||||||||
Non-U.S. government obligations
|
37,394
|
–
|
37,394
|
–
|
||||||||||||
U.S. government obligations
|
49,011
|
–
|
49,011
|
–
|
||||||||||||
Total fixed income securities
|
521,853
|
3,135
|
518,718
|
–
|
||||||||||||
Equity securities:
|
||||||||||||||||
Consumer
|
46,578
|
46,578
|
–
|
–
|
||||||||||||
Energy
|
10,278
|
10,278
|
–
|
–
|
||||||||||||
Financial
|
45,470
|
45,470
|
–
|
–
|
||||||||||||
Industrial
|
25,402
|
25,402
|
–
|
–
|
||||||||||||
Technology
|
13,061
|
13,061
|
–
|
–
|
||||||||||||
Funds (e.g. mutual funds, closed end funds, ETFs)
|
50,291
|
45,276
|
5,015
|
–
|
||||||||||||
Other
|
10,683
|
10,683
|
–
|
–
|
||||||||||||
Total equity securities
|
201,763
|
196,748
|
5,015
|
–
|
||||||||||||
Short-term
|
1,000
|
1,000
|
–
|
–
|
||||||||||||
Cash equivalents
|
59,173
|
–
|
59,173
|
–
|
||||||||||||
Total
|
$
|
783,789
|
$
|
200,883
|
$
|
582,906
|
$
|
–
|
Level
Input:
|
Input Definition:
|
|
Level 1
|
Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
|
|
Level 2
|
Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market
data at the measurement date.
|
|
Level 3
|
Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability
at the measurement date.
|
2018
|
2017
|
|||||||
Beginning of period balance
|
$
|
–
|
$
|
25,218
|
||||
Total gains or losses (realized) included in income
|
–
|
406
|
||||||
Purchases
|
–
|
81
|
||||||
Settlements
|
–
|
(9,123
|
)
|
|||||
Transfers into Level 3
|
–
|
144
|
||||||
Transfers out of Level 3
|
–
|
(16,726
|
)
|
|||||
End of period balance
|
$
|
–
|
$
|
–
|
2018:
|
Carrying
|
Fair Value
|
||||||||||||||||||
Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
Assets:
|
||||||||||||||||||||
Limited partnerships
|
$
|
55,044
|
$
|
–
|
$
|
–
|
$
|
55,044
|
$
|
55,044
|
||||||||||
Commercial mortgage loans
|
6,672
|
–
|
–
|
6,672
|
6,672
|
|||||||||||||||
Liabilities:
|
||||||||||||||||||||
Short-term borrowings
|
20,000
|
–
|
20,000
|
–
|
20,000
|
|||||||||||||||
2017:
|
||||||||||||||||||||
Assets:
|
||||||||||||||||||||
Limited partnerships
|
$
|
70,806
|
$
|
–
|
$
|
–
|
$
|
70,806
|
$
|
70,806
|
||||||||||
Commercial mortgage loans
|
–
|
–
|
–
|
–
|
–
|
|||||||||||||||
Liabilities:
|
||||||||||||||||||||
Short-term borrowings
|
20,000
|
–
|
20,000
|
–
|
20,000
|
2018
|
2017
|
|||||||||||||||||||||||||||||||
1st
|
2nd
|
3rd
|
4th
|
1st
|
2nd
|
3rd
|
4th
|
|||||||||||||||||||||||||
Net premiums earned
|
$
|
105,462
|
$
|
111,940
|
$
|
96,807
|
$
|
118,671
|
$
|
73,974
|
$
|
67,996
|
$
|
89,100
|
$
|
97,075
|
||||||||||||||||
Net investment income
|
4,636
|
5,796
|
5,578
|
6,038
|
3,692
|
4,716
|
4,027
|
5,661
|
||||||||||||||||||||||||
Net realized and unrealized gains (losses) on investments
|
(4,533
|
)
|
(3,435
|
)
|
2,373
|
(20,096
|
)
|
6,294
|
3,296
|
5,944
|
4,152
|
|||||||||||||||||||||
Losses and loss expenses incurred
|
72,298
|
77,488
|
94,540
|
101,537
|
48,599
|
71,754
|
60,673
|
66,492
|
||||||||||||||||||||||||
Net income (loss)
|
330
|
2,487
|
(12,325
|
)
|
(24,567
|
)
|
6,756
|
(12,343
|
)
|
7,434
|
16,476
|
|||||||||||||||||||||
Net income (loss) per share
|
$
|
0.02
|
$
|
0.17
|
$
|
(0.82
|
)
|
$
|
(1.65
|
)
|
$
|
0.45
|
$
|
(0.82
|
)
|
$
|
0.49
|
$
|
1.10
|
2019
|
$
|
342
|
||
2020
|
114
|
|||
2021
|
15
|
|||
2022 and thereafter
|
1
|
|||
Total minimum payments required
|
$
|
472
|
Report of Independent Registered Public Accounting Firm
|
To the Shareholders and the Board of Directors of Protective Insurance Corporation
|
Opinion on Internal Control over Financial Reporting
We have audited Protective Insurance Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2018,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Protective Insurance Corporation and
subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
consolidated balance sheets of Protective Insurance Corporation and subsidiaries as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each
of the three years in the period ended December 31, 2018, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”) and our report dated
March 7, 2019 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
|
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
|
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
|
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
|
Indianapolis, Indiana
March 7, 2019
|
Name
|
Age
|
Title
|
Served in Such Capacity Since
|
|||
John D. Nichols Jr.
|
58
|
Interim Chief Executive Officer and Chairman of the Board of Directors
|
2018
(1)
|
|||
William C. Vens
|
47
|
Chief Financial Officer
|
2016
(2)
|
|||
Matthew A. Thompson
|
54
|
Executive Vice President
|
2016
(3)
|
|||
Jeremy F. Goldstein
|
47
|
Executive Vice President
|
2017
(4)
|
|||
Patrick S. Schmiedt
|
38
|
Chief Underwriting Officer
|
2018
(5)
|
(1) |
Mr. Nichols was appointed Interim Chief Executive Officer and elected Chairman of the Board of Directors in October 2018. Mr. Nichols joined the Company's
Board of Directors in May 2017, most recently serving as the Chairman of the Audit Committee from March 2017 until October 2018. Mr. Nichols served as Chief Executive Officer of AXIS Re, a leading reinsurer to global property and
casualty insurance companies, from 2012 until February 2017. Prior to joining Axis Re, Mr. Nichols served as President of RenaissanceRe Ventures Ltd. from 2001 until 2010, where he was responsible for business development and
management of joint venture and venture capital business. Mr. Nichols is also a director of Delaware North Companies and National General Holdings Corp.
|
(2) |
Mr. Vens was elected Chief Financial Officer in August 2016. Mr. Vens joined the Company in June 2014 as Managing Director – Finance and after that served as
Vice President of Strategy and Planning from June 2016 until August 2016. Prior to joining the Company, Mr. Vens served as Chief Financial Officer of HighWave Energy, Inc. from 2011 to May 2014.
|
(3) |
Mr. Thompson was elected Executive Vice President in November 2016. He previously served as Senior Vice President of the Company from 2015 to 2016 and as
Vice President of Sales from 2011 to 2015.
|
(4) |
Mr. Goldstein was elected Executive Vice President in November 2017. He previously served as Senior Vice President of the Company from 2015 to 2017, as Vice
President from 2011 to 2015 and as Corporate Secretary from 2016 to 2018.
|
(5) |
Mr. Schmiedt was elected Chief Underwriting Officer in October 2018. He previously served as Senior Vice President of Underwriting from 2016 to 2018, as Vice
President of Underwriting from 2015 to 2016 and as Assistant Vice President of Underwriting from 2013 to 2015.
|
(a) 1. |
List of Financial Statements
--The following consolidated financial
statements of the registrant and its subsidiaries (including the Report of Independent Registered Public Accounting Firm) are submitted in Item 8 of this Annual Report on Form 10-K.
|
2. |
List of Financial Statement Schedules
--The following consolidated
financial statement schedules of Protective Insurance Corporation and subsidiaries are included in this Annual Report on Form 10-K:
|
Exhibit No.
|
Description
|
|
Amended and Restated Articles of Incorporation of Protective Insurance Corporation
(Incorporated as an exhibit by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed
on August 8, 2018)
|
||
10.1
|
1981 Employee Stock Purchase Plan (Incorporated as an exhibit by reference to Exhibit A to the Company's definitive Proxy Statement
for its Annual Meeting held May 5, 1981) (SEC File No. 000-05534)*
|
|
Baldwin & Lyons, Inc. Restricted Stock Compensation Plan
(Incorporated as an exhibit by reference to Exhibit A to the Company's definitive Proxy Statement filed on April 1, 2010 for its
Annual Meeting held May 4, 2010)(SEC File No. 000-05534)*
|
||
Baldwin & Lyons, Inc. Annual Incentive Plan
(Incorporated as an exhibit by reference to Appendix A to the Company's definitive Proxy Statement filed on April 7, 2017 for its Annual Meeting held
May 9, 2017)*
|
||
Baldwin & Lyons, Inc. Long-Term Incentive Plan
(Incorporated as an exhibit by reference to Appendix B to the Company's definitive Proxy Statement filed on April 7, 2017 for its Annual Meeting
held May 9, 2017)*
|
||
Severance, Confidentiality, Non-Competition and Non-Solicitation Agreement, dated May 10, 2018, by and between the Company and W. Randall Birchfield
(Incorporated as an exhibit by reference
to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 8, 2018)*
|
||
Severance, Confidentiality, Non-Competition and Non-Solicitation Agreement, dated June 22, 2018, by and between the Company and Matthew A. Thompson
(Incorporated as an exhibit by reference to
Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 8, 2018)*
|
||
Severance Pay, Release and Waiver of Rights, dated February 15, 2018, by and between the Company and Michael J. Case
(Incorporated as an exhibit by reference to Exhibit 10.3 to the Company’s
Quarterly Report on Form 10-Q filed on August 8, 2018)*
|
||
Employment Agreement, dated as of August 13, 2018, by and between the Company and W. Randall Birchfield
(Incorporated as an exhibit by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on August 22, 2018)*
|
||
Employment Agreement, dated as of November 13, 2018, by and between the Company and John D. Nichols, Jr.
(Incorporated as an exhibit by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K/A filed on November 16, 2018)*
|
||
101
|
The following materials
from Protective Insurance Corporation's Annual Report on Form 10-K for the year ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of
Operations, (3) the Consolidated Statements of Comprehensive Income (Loss), (4) the Consolidated Statements of Shareholders' Equity, (5) the Consolidated Statements of Cash Flows, and (6) the Notes to Consolidated Financial Statements.
|
Type of Investment
|
Cost
|
Fair Value
|
Amount at
Which Shown in
the Consolidated Balance Sheet
(1)
|
|||||||||
Fixed Income Securities:
|
||||||||||||
Bonds:
|
||||||||||||
Agency collateralized mortgage obligations
|
$
|
10,636
|
$
|
10,687
|
$
|
10,687
|
||||||
Agency mortgage-backed securities
|
37,168
|
37,385
|
37,385
|
|||||||||
Asset-backed securities
|
66,241
|
64,422
|
64,422
|
|||||||||
Bank loans
|
10,208
|
9,750
|
9,750
|
|||||||||
Certificates of deposit
|
2,835
|
2,835
|
2,835
|
|||||||||
Collateralized mortgage obligations
|
5,095
|
5,423
|
5,423
|
|||||||||
Corporate securities
|
196,925
|
190,450
|
190,450
|
|||||||||
Mortgage-backed securities
|
38,586
|
38,540
|
38,540
|
|||||||||
Municipal obligations
|
29,102
|
29,155
|
29,155
|
|||||||||
Non-U.S. government obligations
|
25,339
|
25,180
|
25,180
|
|||||||||
U.S. government obligations
|
178,369
|
178,818
|
178,818
|
|||||||||
Total fixed income securities
|
600,504
|
592,645
|
592,645
|
|||||||||
Equity Securities:
|
||||||||||||
Common Stocks:
|
||||||||||||
Consumer
|
15,963
|
17,945
|
17,945
|
|||||||||
Energy
|
3,981
|
3,179
|
3,179
|
|||||||||
Financial
|
23,111
|
25,253
|
25,253
|
|||||||||
Industrial
|
3,287
|
6,920
|
6,920
|
|||||||||
Technology
|
1,259
|
2,303
|
2,303
|
|||||||||
Funds (e.g. mutual funds, closed end funds, ETFs)
|
6,797
|
5,489
|
5,489
|
|||||||||
Other
|
5,032
|
5,333
|
5,333
|
|||||||||
Total equity securities
|
59,430
|
66,422
|
66,422
|
|||||||||
Commercial mortgage loans
|
6,672
|
6,672
|
6,672
|
|||||||||
Short-term:
|
||||||||||||
Certificates of deposit
|
1,000
|
1,000
|
1,000
|
|||||||||
Total short-term and other
|
1,000
|
1,000
|
1,000
|
|||||||||
Total investments
|
$
|
667,606
|
$
|
666,739
|
$
|
666,739
|
(1) |
Amounts presented above do not include investments of $156,855 classified as cash and cash equivalents in the consolidated balance sheet.
|
December 31
|
||||||||
2018
|
2017
|
|||||||
Assets
|
||||||||
Investment in subsidiaries
|
$
|
401,260
|
$
|
436,879
|
||||
Due from affiliates
|
1,152
|
1,191
|
||||||
Investments other than subsidiaries:
|
||||||||
Fixed income securities
|
22,302
|
22,306
|
||||||
Limited partnerships
|
215
|
222
|
||||||
22,517
|
22,528
|
|||||||
Cash and cash equivalents
|
15,185
|
26,496
|
||||||
Accounts receivable
|
2,276
|
6,833
|
||||||
Other assets
|
28,794
|
24,772
|
||||||
Total assets
|
$
|
471,184
|
$
|
518,699
|
||||
Liabilities and shareholders' equity
|
||||||||
Liabilities:
|
||||||||
Premiums payable
|
$
|
22,964
|
$
|
14,046
|
||||
Deposits from insureds
|
58,748
|
60,893
|
||||||
Short-term borrowings
|
20,000
|
20,000
|
||||||
Other liabilities
|
13,390
|
4,949
|
||||||
115,102
|
99,888
|
|||||||
Shareholders' equity:
|
||||||||
Common stock:
|
||||||||
Class A
|
112
|
112
|
||||||
Class B
|
522
|
530
|
||||||
Additional paid-in capital
|
54,720
|
55,078
|
||||||
Accumulated other comprehensive income (loss)
|
(7,347
|
)
|
46,391
|
|||||
Retained earnings
|
308,075
|
316,700
|
||||||
356,082
|
418,811
|
|||||||
Total liabilities and shareholders' equity
|
$
|
471,184
|
$
|
518,699
|
Year Ended December 31
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Revenue:
|
||||||||||||
Commissions and service fees
|
$
|
17,456
|
$
|
18,863
|
$
|
27,736
|
||||||
Cash dividends from subsidiaries
|
5,000
|
10,000
|
20,000
|
|||||||||
Net investment income
|
569
|
348
|
134
|
|||||||||
Net realized gains (losses) on investments
|
(192
|
)
|
308
|
(3
|
)
|
|||||||
Other
|
51
|
(106
|
)
|
(24
|
)
|
|||||||
22,884
|
29,413
|
47,843
|
||||||||||
Expenses:
|
||||||||||||
Salary and related items
|
20,158
|
18,140
|
17,462
|
|||||||||
Other
|
11,724
|
9,686
|
10,808
|
|||||||||
31,882
|
27,826
|
28,270
|
||||||||||
Income (loss) before federal income tax benefit and equity in
undistributed income of subsidiaries
|
(8,998
|
)
|
1,587
|
19,573
|
||||||||
Federal income tax benefit
|
(2,862
|
)
|
(2,971
|
)
|
(69
|
)
|
||||||
(6,136
|
)
|
4,558
|
19,642
|
|||||||||
Equity in undistributed income of subsidiaries
|
(27,939
|
)
|
13,765
|
9,303
|
||||||||
Net income (loss)
|
$
|
(34,075
|
)
|
$
|
18,323
|
$
|
28,945
|
Year Ended December 31
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Net income (loss)
|
$
|
(34,075
|
)
|
$
|
18,323
|
$
|
28,945
|
|||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Unrealized net gains (losses) on fixed income securities:
|
||||||||||||
Unrealized net gains (losses) arising during the period
|
(9,680
|
)
|
17,340
|
8,618
|
||||||||
Less: reclassification adjustment for net gains (losses) included in net income (loss)
|
(2,812
|
)
|
4,691
|
13,491
|
||||||||
(6,868
|
)
|
12,649
|
(4,873
|
)
|
||||||||
Foreign currency translation adjustments
|
(830
|
)
|
522
|
235
|
||||||||
Other comprehensive income (loss)
|
(7,698
|
)
|
13,171
|
(4,638
|
)
|
|||||||
Comprehensive income (loss)
|
$
|
(41,773
|
)
|
$
|
31,494
|
$
|
24,307
|
Year Ended December 31
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Net cash provided by operating activities
|
$
|
14,019
|
$
|
44,998
|
$
|
15,484
|
||||||
Investing activities:
|
||||||||||||
Purchases of investments
|
(11,435
|
)
|
(21,365
|
)
|
(4,000
|
)
|
||||||
Sales or maturities of investments
|
11,213
|
9,146
|
3,493
|
|||||||||
Net sales of short-term investments
|
–
|
–
|
2,165
|
|||||||||
Distributions from limited partnerships
|
–
|
298
|
–
|
|||||||||
Net purchases of property and equipment
|
(3,677
|
)
|
(3,394
|
)
|
(4,278
|
)
|
||||||
Net cash used in investing activities
|
(3,899
|
)
|
(15,315
|
)
|
(2,620
|
)
|
||||||
Financing activities:
|
||||||||||||
Dividends paid to shareholders
|
(16,835
|
)
|
(16,302
|
)
|
(15,803
|
)
|
||||||
Repurchase of common shares
|
(4,596
|
)
|
(1,880
|
)
|
–
|
|||||||
Net cash used in financing activities
|
(21,431
|
)
|
(18,182
|
)
|
(15,803
|
)
|
||||||
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents
|
(11,311
|
)
|
11,501
|
(2,939
|
)
|
|||||||
Cash, cash equivalents and restricted cash and cash equivalents at beginning of year
|
26,496
|
14,995
|
17,934
|
|||||||||
Cash, cash equivalents and restricted cash and cash equivalents at end of year
|
$
|
15,185
|
$
|
26,496
|
$
|
14,995
|
As of December 31
|
Year Ended December 31
|
|||||||||||||||||||||||||||||||||||||||
Segment
|
Deferred Policy
Acquisition Costs
|
Reserves for Unpaid
Claims and Claim
Adjustment Expenses
|
Unearned
Premiums
|
Other Policy
Claims and
Benefits Payable
|
Net
Premium
Earned
|
Net
Investment
Income
|
Benefits, Claims,
Losses and
Settlement Expenses
|
Amortization of
Deferred Policy
Acquisition Costs
|
Other
Operating
Expenses
|
Net
Premiums
Written
|
||||||||||||||||||||||||||||||
(A)
|
(A)
|
(A) (B)
|
||||||||||||||||||||||||||||||||||||||
Property/Casualty Insurance
|
||||||||||||||||||||||||||||||||||||||||
2018
|
$
|
6,568
|
$
|
865,339
|
$
|
71,625
|
–
|
$
|
432,880
|
$
|
22,048
|
$
|
345,864
|
$
|
78,105
|
$
|
23,514
|
$
|
444,398
|
|||||||||||||||||||||
2017
|
5,608
|
680,274
|
53,085
|
–
|
328,145
|
18,095
|
247,518
|
70,574
|
14,043
|
353,389
|
||||||||||||||||||||||||||||||
2016
|
1,172
|
576,330
|
21,694
|
–
|
276,011
|
14,483
|
186,481
|
51,597
|
8,180
|
271,752
|
(A) |
Allocations of certain expenses have been made to investment income, settlement expenses and other operating expenses and are based on a number of assumptions
and estimates. Results among these categories would change if different methods were applied.
|
(B) |
Commission allowances relating to reinsurance ceded are offset against other operating expenses.
|
Direct
Premiums
|
Ceded to
Other Companies
|
Assumed from
Other Companies
|
Net
Amount
|
% of Amount
Assumed to Net
|
||||||||||||||||
Premiums Earned -
|
||||||||||||||||||||
Years Ended December 31:
|
||||||||||||||||||||
2018
|
$
|
562,364
|
$
|
131,080
|
$
|
1,596
|
$
|
432,880
|
0.4
|
%
|
||||||||||
2017
|
470,158
|
145,201
|
3,188
|
328,145
|
1.0
|
%
|
||||||||||||||
2016
|
394,679
|
130,012
|
11,344
|
276,011
|
4.1
|
%
|
Note: |
Included in Ceded to Other Companies is $0, $0 and $86 for 2018, 2017 and 2016, respectively, relating to retrocessions associated with premiums assumed from
other companies. Percentage of Amount Assumed to Net above considers the impact of this retrocession.
|
As of December 31
|
Year Ended December 31
|
|||||||||||||||||||||||||||||||||||||||||||
Deferred
Policy
|
Reserves for
Unpaid Claims
|
Discount,
if any Deducted
|
Net
|
Claims and Claim Adjustment
Expenses Incurred Related to
|
Amortization of
Deferred Policy
|
Paid Claims
and Claims
|
Net
|
|||||||||||||||||||||||||||||||||||||
Affiliation with Registrant
|
Acquisition
Costs
|
Adjustment
Expenses
|
from Reserves
|
Unearned
Premiums
|
Earned
Premiums
|
Investment
Income
|
Current
Year
|
Prior
Years
|
Acquisition
Costs
|
Adjustment
Expenses
|
Premiums
Written
|
|||||||||||||||||||||||||||||||||
Consolidated Property/Casualty Subsidiaries:
|
||||||||||||||||||||||||||||||||||||||||||||
2018
|
$
|
6,568
|
$
|
865,339
|
$
|
–
|
$
|
71,625
|
$
|
432,880
|
$
|
22,048
|
$
|
329,078
|
$
|
16,786
|
$
|
78,105
|
$
|
228,591
|
$
|
444,398
|
||||||||||||||||||||||
2017
|
5,608
|
680,274
|
–
|
53,085
|
328,145
|
18,095
|
228,303
|
19,215
|
70,574
|
200,154
|
353,389
|
|||||||||||||||||||||||||||||||||
2016
|
1,172
|
576,330
|
–
|
21,694
|
276,011
|
14,483
|
172,645
|
13,836
|
51,597
|
163,467
|
271,752
|
PROTECTIVE INSURANCE CORPORATION
|
||
March 7, 2019
|
By:
|
/s/ John D. Nichols, Jr.
|
John D. Nichols, Jr.
|
||
Interim Chief Executive Officer and Chairman of the Board of Directors
|
Signatures
|
Title
|
Date
|
||
/s/ John D. Nichols, Jr.
|
Interim Chief Executive Officer and Chairman of the Board of Directors
|
March 7, 2019
|
||
John D. Nichols, Jr.
|
(Principal Executive Officer)
|
|||
/s/ William C. Vens
|
Chief Financial Officer
|
March 7, 2019
|
||
William C. Vens
|
(Principal Financial Officer and Principal Accounting Officer)
|
|||
/s/ Steven J. Bensinger
|
Director
|
March 7, 2019
|
||
Steven J. Bensinger
|
||||
/s/ Stuart D. Bilton
|
Director
|
March 7, 2019
|
||
Stuart D. Bilton
|
||||
/s/ Otto N. Frenzel IV
|
Director
|
March 7, 2019
|
||
Otto N. Frenzel IV
|
||||
/s/ LoriAnn Lowery-Biggers
|
Director
|
March 7, 2019
|
||
LoriAnn Lowery-Biggers
|
||||
/s/ David W. Michelson
|
Director
|
March 7, 2019
|
||
David W. Michelson
|
||||
/s/ James A. Porcari III
|
Director
|
March 7, 2019
|
||
James A. Porcari III
|
||||
/s/ Nathan Shapiro
|
Director
|
March 7, 2019
|
||
Nathan Shapiro
|
||||
/s/ Robert Shapiro
|
Director
|
March 7, 2019
|
||
Robert Shapiro
|
|
(i) |
by reason of his being or having been an Eligible Person, or
|
|
(ii) |
by reason of any action taken or not taken by him in his capacity as an Eligible Person, whether or not he continued in such capacity at the time such
Liability or Expense shall have been incurred.
|
1)
|
Definitions
.
Capitalized terms that are used but not defined in this Agreement shall have the meanings ascribed to such terms in the
Employment Agreement.
|
3)
|
Consideration
.
The Company hereby waives any right it may otherwise have to recoup a pro-rata portion of the Retention Bonus. The Company
acknowledges its continuing obligation to provide Executive with the benefits described in Section 8(e) of the Employment Agreement that are payable upon a resignation without Good Reason.
|
4)
|
a)
|
General Release
.
Executive, for and on behalf of himself and each of his heirs, executors, administrators, personal representatives, successors and assigns, to the maximum extent permitted by law, hereby acknowledges full and complete satisfaction of and
ABSOLUTELY AND IRREVOCABLY AND UNCONDITIONALLY FULLY AND FOREVER RELEASES, ACQUITS AND DISCHARGES Protective Insurance Corporation together with its subsidiaries, parents, affiliates, owners and shareholders, including but not limited to
each of such entities’ past and present direct and indirect shareholders, directors, members, partners, officers, employees, attorneys, agents and representatives, and their respective heirs, executors, administrators, personal
representatives, successors and assigns (collectively, the “
Released Parties
”), from any and all claims, demands, suits, causes of action,
liabilities, obligations, judgments, orders, debts, liens, contracts, agreements, covenants and causes of action of every kind and nature, whether known or unknown, suspected or unsuspected, concealed or hidden, vested or contingent, in
law or equity, existing by statute, common law, contract or otherwise, which have existed, may exist or do exist, through and including the execution and delivery by Executive of this Agreement (but not including Executive’s or the
Company’s performance under this Agreement) (“
Claims
”), including, without limitation, any of the foregoing arising out of or in any way
related to or based upon:
|
(1)
|
Executive’s application for and employment with the Company, his being an officer or employee of the Company, or the
termination of such employment;
|
(2)
|
any and all claims in tort or contract, and any and all claims alleging breach of an express or implied, or oral or
written, contract, policy manual or employee handbook;
|
(3)
|
any alleged misrepresentation, defamation, interference with contract, intentional or negligent infliction of emotional
distress, sexual harassment, negligence or wrongful discharge; or
|
(4)
|
any federal, state or local law, statute, ordinance or regulation, including but not limited to all labor and employment
discrimination laws, and including specifically the Age Discrimination in Employment Act of 1987, as amended by the Older Workers Benefit Protection Act and otherwise (the “
ADEA
”).
|
b)
|
Acknowledgment of Waiver;
Disclaimer of Benefits
. Executive acknowledges and agrees that he is waiving all rights to sue or obtain equitable, remedial or punitive relief from any or all Released Parties of any kind whatsoever concerning any Claims,
including, without limitation, reinstatement, back pay, front pay, attorneys’ fees and any form of injunctive relief. Notwithstanding the foregoing, Executive further acknowledges that he is not waiving and is not being required to waive
(i) any rights that are provided under (or preserved by) this Agreement, or (ii) any right that cannot be waived by law, including the right to file a charge or participate in an administrative investigation or proceeding of the Equal
Employment Opportunity Commission or any other government agency prohibiting waiver of such right;
provided, however
, that
Executive hereby disclaims and waives any right to share or participate in any monetary award resulting from the prosecution of such charge or investigation, excepting only any benefit or remedy to which Executive is or becomes entitled
pursuant to Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
|
c)
|
Effect of Release and Waiver
.
Executive understands and intends that this
Section 5
constitutes a general release of all claims except as otherwise explicitly provided
in this Agreement, and that no reference herein to a specific form of claim, statute or type of relief is intended to limit the scope of such general release and waiver.
|
d)
|
Waiver of Unknown Claims
.
Executive expressly waives all rights afforded by any statute which limits the effect of a release with respect to unknown claims. Executive understands the significance of his release of unknown claims and his waiver of statutory
protection against a release of unknown claims.
|
6)
|
Executive’s
Representations and Covenants Regarding Actions
. Executive represents, warrants and covenants to each of the Released Parties that at no time prior to or contemporaneous with his
execution of this Agreement has he
knowingly engaged in
any wrongful conduct against, on behalf of or as the representative or agent of the Company. Executive further represents, warrants and covenants to each of the Released Parties that at no time prior to or contemporaneous with his
execution of this Agreement has he
filed or caused or knowingly permitted the filing or maintenance, in any state, federal or
foreign court, or before any local, state, federal or foreign administrative agency or other tribunal, any Claim, known or unknown, suspected or unsuspected, which he
may now have or has ever had against the Released Parties which is based in whole or in part on any matter referred to in
Section 5
above. Executive hereby grants the Company his perpetual and irrevocable power of attorney with full right, power and authority to take all actions necessary to dismiss or discharge any
such Claim. Executive further covenants and agrees that he
will not encourage any person or entity, including but not limited
to any current or former employee, officer, director or stockholder of the Company, to institute any Claim against the Released Parties or any of them.
|
7)
|
No Conflict of
Interest
. Executive hereby covenants and agrees that he
will
not,
directly or indirectly, incur any obligation or commitment, or enter into any contract, agreement or understanding, whether express or implied, and whether written or oral, which would be in conflict with his obligations, covenants or
agreements hereunder or that could cause any of his representations or warranties herein to be untrue or inaccurate.
|
8)
|
Remedies
.
Executive acknowledges and affirms that in the event of any breach by Executive of any of his covenants, agreements or obligations hereunder, monetary damages would be inadequate to compensate the Released Parties or any of them.
Accordingly, in addition to other remedies which may be available to the Released Parties hereunder or otherwise at law or in equity, any Released Party will be entitled to specifically enforce such covenants, obligations and restrictions
through injunctive and/or equitable relief, in each case without the posting of any bond or other security with respect thereto. Should any provision of this Agreement be adjudged to any extent invalid by any court or tribunal of
competent jurisdiction, each provision will be deemed modified to the minimum extent necessary to render it enforceable.
|
9)
|
Acknowledgment
of Voluntary Agreement; ADEA Compliance
. Executive acknowledges that he has entered into this Agreement freely and without coercion, that he has been advised by the Company to consult with counsel of his choice, that he
has had adequate opportunity to so consult, and that he has been given all time periods required by law to consider this Agreement, including but not limited to the 21-day period required by the ADEA (the “
Consideration Period
”). Executive understands that he may execute this Agreement less than 21 days from its receipt from the Company, but agrees that such execution
will represent his knowing waiver of such Consideration Period. Executive further acknowledges that within the 7-day period following his execution of this Agreement (the “
Revocation Period
”), he will have the unilateral right to revoke this Agreement, and that the Company’s obligations hereunder will become effective only upon the expiration of the Revocation
Period without Executive’s revocation hereof. In order to be effective, notice of Executive’s revocation of this Agreement must be received by the Company in writing on or before the last day of the Revocation Period.
|
10)
|
Incorporation of
Employment Agreement
. The following provisions of the Employment Agreement shall be deemed to be incorporated into this Agreement as if set forth verbatim into this Agreement: Section 8(g) (relating to no mitigation or
offset); Section 10 (relating to indemnification and liability insurance); Section 11 (relating to restrictive covenants); Section 12 (relating to assignments); Section 13 (relating to representations); Section 14 (relating to resolution
of disputes); Section 15 (relating to certain tax matters); Section 17(c) (relating to inconsistencies); Section 17(e) (relating to beneficiaries); Section 17(h) (relating to withholding taxes); and Section 17(i) (relating to
cooperation).
|
11)
|
Complete
Agreement
. This Agreement constitutes the complete and entire agreement and understanding of the Parties with respect to the subject matter hereof, and supersedes in its entirety any and all prior understandings,
commitments, obligations and/or agreements, whether written or oral, with respect thereto, except as expressly provided herein.
|
12)
|
No Strict
Construction
. The language used in this Agreement will be deemed to be the language mutually chosen by the Parties to reflect their mutual intent, and no doctrine of strict construction will be applied against any Party.
|
13)
|
No Admission of
Liability
. Nothing herein will be deemed or construed to represent an admission by the Company or the Released Parties of any violation of law, breach of contract, or other wrongdoing of any kind whatsoever.
|
14)
|
Third Party
Beneficiaries
. The Released Parties are intended third-party beneficiaries of this Agreement, and this Agreement may be enforced by each of them in accordance with the terms hereof in respect of the rights granted to such
Released Parties hereunder. Except and to the extent set forth in the preceding sentence (or in Section 10), this Agreement is not intended for the benefit of any person other than the Parties, and no such other person will be deemed to
be a third-party beneficiary hereof. Without limiting the generality of the foregoing, it is not the intention of the Company to establish any policy, procedure, course of dealing or plan of general application for the benefit of or
otherwise in respect of any other employee, officer, director or stockholder, irrespective of any similarity between any contract, agreement, commitment or understanding between the Company and such other employee, officer, director or
stockholder, on the one hand, and any contract, agreement, commitment or understanding between the Company and Executive, on the other hand, and irrespective of any similarity in facts or circumstances involving such other employee,
officer, director or stockholder, on the one hand, and Executive, on the other hand.
|
15)
|
Notices
.
All notices, consents, waivers and other communications required or permitted by this Agreement will be in writing and will be
deemed given to a Party when: (a) delivered to the appropriate address by hand or overnight delivery; (b) sent by facsimile or e-mail with confirmation of transmission by the transmitting equipment; or (c) three (3) days following mailing
by certified or registered mail, postage prepaid and return receipt requested, in each case to the following addresses, facsimile numbers or e-mail addresses and marked to the attention of the Party (by name or title) designated below (or
to such other address, facsimile number, e-mail address or person as a Party may hereafter designate by written notice to the other Parties):
|
16)
|
Governing Law
.
All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement will be governed by, and construed in accordance with, the laws of the State of Indiana, without giving effect to any choice
of law or conflict of law rules or provisions that would cause the application hereto of the laws of any jurisdiction other than the State of Indiana. In furtherance of the foregoing, the internal law of the State of Indiana will control
the interpretation and construction of this Agreement, even though under any other jurisdiction’s choice of law or conflict of law analysis the substantive law of some other jurisdiction may ordinarily apply.
|
17)
|
Severability
.
The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, which will otherwise remain in full force and effect.
|
18)
|
Counterparts
.
This Agreement may be executed in separate counterparts, each of which will be deemed to be an original and all of which taken together will constitute one and the same agreement. Signatures delivered by facsimile (including, without
limitation, by “pdf”) shall be effective for all purposes.
|
19)
|
Amendments and
Waivers
. Except with respect to any non-competition or similar post-employment restrictive covenants, which will be subject to modification by a court of competent jurisdiction pursuant to their express terms (as may be
modified herein), no amendment to or waiver of this Agreement or any of its terms will be binding upon any Party unless consented to in writing by such Party.
|
20)
|
DATED:_________________ |
By:_____________________________
W. Randall Birchfield |
DATED:_________________ |
PROTECTIVE INSURANCE CORPORATION
|
|
(a) |
The assignment to Executive of duties lasting more than sixty (60) days that are materially inconsistent with Employee’s then current position or a material
change in his reporting relationship to the CEO or his/her successor;
|
|
(b) |
The assignment of Executive of duties or association with activities which, if performed, could create a material risk to the professional reputation of the
Executive, subject the Executive to personal liability under state or federal law, violate any applicable code of professional conduct, or create an untenable employment environment.
|
|
(c) |
The failure of the Company to continue to provide Executive with office space, related facilities and support personnel (including, but not limited to,
administrative and secretarial assistance) within the Company’s principal executive offices commensurate with his/her responsibilities to, and position within, the Company;
|
|
(d) |
A reduction by the Company in the amount of Executive’s base salary or the discontinuation or reduction by the Company of Executive’s participation at the
same level of eligibility as compared to other peer employees in any incentive compensation, additional compensation, benefits, policies or perquisites subject to Executive understanding that such reduction(s) shall be permissible if
the change applies in a similar way to other peer level employees;
|
|
(e) |
The relocation of the Company’s principal executive offices or Executive’s place of work to a location requiring a change of more than fifty (50) miles in
Executive’s daily commute;
|
|
(f) |
A failure by the Company to perform its obligations under this Agreement; or
|
|
(g) |
If Executive terminates employment on or before the two (2) year anniversary of the Occurrence of a Change in Control. “
Change in Control
”
shall mean the occurrence of any of the following events.
|
(1)
|
Any Person acquires ownership of the Class A Common Stock that, together with Class A Common
Stock previously held by the acquirer, constitutes more than fifty percent (50%) of the total Fair Market Value or total voting power of the Company’s stock. If any Person is considered to own more than fifty percent (50%) of the total
Fair Market Value or total voting power of the Company’s stock, the acquisition of additional stock by the same Person does not cause a change in ownership. An increase in the percentage of stock owned by any Person as a result of a
transaction in which the Company acquires its stock in exchange for property, is treated as an acquisition of stock;
|
(2)
|
Any Person acquires (or has acquired during the twelve (12) month period ending on the date of
the most recent acquisition by that Person) ownership of the Company’s stock possessing at least thirty percent (30%) of the total voting power of the stock;
|
(3)
|
A majority of the members of the Board is replaced during any twelve (12) month period by
Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of appointment or election; or
|
(4)
|
Any Person acquires (or has acquired during the twelve (12) month period ending on a date of the
most recent acquisition by that Person) assets from a corporation that have a total gross fair market value equal to at least forty percent (40%) of the total gross fair market value of all the Company’s assets immediately prior to the
acquisition or acquisitions. Gross fair market value means the value of the Company’s assets, or the value of the assets being disposed of, without regard to any liabilities associated with these assets.
|
|
The United States of America, Canada, Puerto Rico, and Bermuda;
|
|
Each state, province, commonwealth, territory, and other political subdivision of the United States of
America, Canada, Puerto Rico, and Bermuda;
|
|
Indiana and any state, province, commonwealth, territory, or other political subdivision in which the
Executive performed any services for the Company Group at any time in the two (2) year period immediately preceding the Separation Date; and
|
|
Within one hundred (100) miles of any office or facility of the Company Group.
|
|
(a) |
The assignment to Executive of duties lasting more than sixty (60) days that are materially inconsistent with Employee’s then current position;
|
|
(b) |
The assignment of Executive of duties which, if performed, would create a material risk to the professional reputation of the Executive or subject the
Executive to personal liability under state or federal law.
|
|
(d) |
A reduction by the Company in the amount of Executive’s base salary or the discontinuation or reduction by the Company of Executive’s participation at the
same level of eligibility as compared to other peer employees in any incentive compensation, additional compensation, benefits, policies or perquisites subject to Executive understanding that such reduction(s) shall be permissible if
the change applies in a similar way to other peer level employees;
|
|
(e) |
The relocation of the Company’s principal executive offices or Executive’s place of work to a location requiring a change of more than fifty (50) miles in
Executive’s daily commute; or
|
|
(f) |
A failure by the Company to perform its obligations under this Agreement; or
|
|
(g) |
If Executive terminates employment on or before the two (2) year anniversary of the Occurrence of a Change in Control. “
Change in Control
”
shall mean the occurrence of any of the following events.
|
(1)
|
Any Person acquires ownership of the Class A Common Stock that, together with Class A Common
Stock previously held by the acquirer, constitutes more than fifty percent (50%) of the total Fair Market Value or total voting power of the Company’s stock. If any Person is considered to own more than fifty percent (50%) of the total
Fair Market Value or total voting power of the Company’s stock, the acquisition of additional stock by the same Person does not cause a change in ownership. An increase in the percentage of stock owned by any Person as a result of a
transaction in which the Company acquires its stock in exchange for property, is treated as an acquisition of stock;
|
(2)
|
Any Person acquires (or has acquired during the twelve (12) month period ending on the date of
the most recent acquisition by that Person) ownership of the Company’s stock possessing at least thirty percent (30%) of the total voting power of the stock;
|
(3)
|
A majority of the members of the Board is replaced during any twelve (12) month period by
Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of appointment or election; or
|
(4)
|
Any Person acquires (or has acquired during the twelve (12) month period ending on a date of the
most recent acquisition by that Person) assets from a corporation that have a total gross fair market value equal to at least forty percent (40%) of the total gross fair market value of all the Company’s assets immediately prior to the
acquisition or acquisitions. Gross fair market value means the value of the Company’s assets, or the value of the assets being disposed of, without regard to any liabilities associated with these assets.
|
|
The United States of America, Canada, Puerto Rico, and Bermuda;
|
|
Each state, province, commonwealth, territory, and other political subdivision of the United States of
America, Canada, Puerto Rico, and Bermuda;
|
|
Indiana and any state, province, commonwealth, territory, or other political subdivision in which the
Executive performed any services for the Company Group at any time in the two (2) year period immediately preceding the Separation Date; and
|
|
Within one hundred (100) miles of any office or facility of the Company Group.
|
NAME
|
|
STATE OR JURISDICTION OF ORGANIZATION OR INCORPORATION
|
Protective Insurance Company
|
|
Indiana
|
Sagamore Insurance Company
(1)
|
|
Indiana
|
Protective Specialty Insurance Company
(1)
|
|
Indiana
|
B&L Insurance, Ltd.
|
|
Bermuda
|
B&L Brokerage Services, Inc.
|
|
Indiana
|
B&L Management, Inc.
|
|
Indiana
|
(1) |
Wholly-owned subsidiary of Protective Insurance Company
|
Signature and Title
|
Date
|
||
/s/ John D. Nichols, Jr.
|
March 7, 2019
|
||
John D. Nichols, Jr., Interim Chief Executive Officer and Chairman of the Board of Directors
|
|||
/s/ Steven J. Bensinger
|
March 7, 2019
|
||
Steven J. Bensinger, Director
|
|||
/s/ Stuart D. Bilton
|
March 7, 2019
|
||
Stuart D. Bilton, Director
|
|||
/s/ Otto N. Frenzel IV
|
March 7, 2019
|
||
Otto N. Frenzel IV, Director
|
|||
/s/ LoriAnn Lowery-Biggers
|
March 7, 2019
|
||
LoriAnn Lowery-Biggers, Director
|
|||
/s/ David W. Michelson
|
March 7, 2019
|
||
David W. Michelson, Director
|
|||
/s/ James A. Porcari III
|
March 7, 2019
|
||
James A. Porcari III, Director
|
|||
/s/ Nathan Shapiro
|
March 7, 2019
|
||
Nathan Shapiro, Director
|
|||
/s/ Robert Shapiro
|
March 7, 2019
|
||
Robert Shapiro, Director
|
|||
1. |
I have reviewed this annual report on Form 10-K of Protective Insurance Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.
|
/s/ John D. Nichols, Jr.
|
|
John D. Nichols, Jr., Interim Chief Executive Officer and Chairman of the Board of Directors
|
1. |
I have reviewed this annual report on Form 10-K of Protective Insurance Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over
financial reporting.
|
/s/
William C. Vens
|
|
William C. Vens
|
|
Chief Financial Officer
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ John D. Nichols, Jr.
|
|
John D. Nichols, Jr.
|
|
Interim Chief Executive Officer and Chairman of the Board of Directors
|
/s/
William C. Vens
|
|
William C. Vens
|
|
Chief Financial Officer
|