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Florida
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65-0248866
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(State or Other Jurisdiction of Incorporation or Organization)
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(IRS Employer Identification Number)
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14050 N.W. 14
th
Street, Suite 180, Sunrise, FL
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33323
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
800-293-2532
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Securities registered pursuant to Section 12(b) of the Exchange Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $0.01 per share
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NASDAQ Global Market
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Large accelerated filer ☐
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Accelerated filer
þ
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Non‑accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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(Do not check if a smaller reporting company)
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PART I
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ITEM 1
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BUSINESS
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ITEM 1A
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RISK FACTORS
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ITEM 1B
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UNRESOLVED STAFF COMMENTS
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ITEM 2
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PROPERTIES
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ITEM 3
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LEGAL PROCEEDINGS
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ITEM 4
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MINE SAFETY DISCLOSURES
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PART II
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ITEM 5
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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ITEM 6
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SELECTED FINANCIAL DATA
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ITEM 7
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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ITEM 7A
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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ITEM 8
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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ITEM 9
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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ITEM 9A
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CONTROLS AND PROCEDURES
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ITEM 9B
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OTHER INFORMATION
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PART III
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ITEM 10
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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ITEM 11
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EXECUTIVE COMPENSATION
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ITEM 12
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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ITEM 13
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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ITEM 14
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PRINCIPAL ACCOUNTING FEES AND SERVICES
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PART IV
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ITEM 15
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||
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ITEM 16
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FORM 10-K SUMMARY
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Year Ended December 31,
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||||||||||
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2018
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2017
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2016
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||||||
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(In thousands)
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||||||||||
Gross Premiums Written
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||||||
Homeowners:
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||||||
Florida
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$
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458,652
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$
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482,039
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$
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477,489
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Louisiana
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36,063
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31,312
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25,385
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|||
Texas
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22,492
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8,491
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—
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|||
South C
arolina
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17,592
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10,803
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6,531
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|||
Alaba
ma
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4,890
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4,110
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3,332
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|||
Total homeowners
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539,689
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536,755
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512,737
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|||
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||||||
Personal automobile:
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||||||
Texas
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5,141
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19,324
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34,239
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|||
Georgia
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3,078
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22,479
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31,831
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|||
Florida
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384
|
|
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1,265
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1,745
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|||
Alabama
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—
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437
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1,664
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|||
Total personal automobile
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8,603
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43,505
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69,479
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|||
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||||||
Commercial general liability
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5,384
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11,048
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13,256
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|||
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||||||
Federal flood
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14,088
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12,109
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10,013
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|||
Gross premiums written total
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$
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567,764
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$
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603,417
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$
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605,485
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•
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completing our announced pending acquisition of the Maison Companies, subject to regulatory approvals;
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•
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successfully integrating the operations of the Maison Companies into those of the Company in pursuit of geographic diversification as well as operational and expense synergies upon closing of this acquisition;
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•
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focusing on our core operations, the Homeowners line of business, while furthering our withdrawal from our non-core Automobile and commercial general liability coverages;
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•
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leveraging MNIC by developing and implementing a plan to expand upon MNIC’s pricing and product offerings in 2019 to increase market share in the risk-adjusted portion of the Florida homeowners market;
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•
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focusing on operational efficiencies in our homeowners operations to reduce expenses in conjunction with our continued investment in, and use of, technology;
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•
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enhancing our property analytical metrics, such as an increased geographical dispersion of risks, while managing our underwriting appetite, whether new or renewal, to ensure a balanced book of business;
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•
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continued growth in our existing markets plus expansion of our homeowners products into other southeastern states, with an initial focus on Mississippi and Georgia;
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•
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maintaining a commitment to provide high quality customer service to our agents and insureds;
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•
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strengthening of our marketing efforts by retaining key personnel and implementing direct marketing technologies;
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•
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offering attractive incentives to our agents to place a high volume of quality business with our companies;
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•
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continuing with our strong catastrophe reinsurance programs; and
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•
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additional strategies that may include possible mergers, acquisitions and joint ventures or dispositions of assets.
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•
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In 2018, FNIC applied for a statewide average rate increase of 4.6% for Florida homeowners multiple-peril insurance policies, which was approved by the Florida OIR and is expected to be become effective for new and renewal policies on April 20, 2019.
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•
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In 2017, FNIC applied for a statewide average rate increase of 6.5% for Florida homeowners multiple-peril insurance policies only, which was subsequently, increased and approved by the Florida OIR to a statewide average rate increase of 10.0% and became effective for new and renewal policies on August 1, 2017.
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•
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In 2016, FNIC applied for a rate increase of 5.6% for Florida homeowners multiple-peril insurance policies, which was approved by the Florida OIR and became effective for new and renewal policies on August 1, 2016.
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•
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In 2017, MNIC applied for a statewide rate increase of 2.0% for Florida homeowners multiple-peril insurance policies, which was approved by the Florida OIR and became effective for new and renewal policies on October 1, 2017.
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•
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Lastly, in 2016, MNIC applied for a statewide rate decrease of 11.9% for Florida homeowners multiple-peril insurance policies, which was approved by the Florida OIR and became effective for new and renewal policies on April 15, 2016.
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•
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Traditional local and global reinsurance markets including those in the United States (“U.S.”), Bermuda, London and Europe, accessed directly and through reinsurance intermediaries;
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•
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Capital markets through insurance-linked securities and collateralized reinsurance transactions, such as catastrophe bonds, sidecars and similar vehicles; and
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•
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Other insurers that engage in both direct and assumed reinsurance.
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•
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Proportional reinsurance, whereby we cede a specified percentage of premium and losses to reinsurers;
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•
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Non-proportional or excess of loss reinsurance, whereby we cede all or a specified portion of losses in excess of a specified amount on a per risk, per occurrence (including catastrophe reinsurance) or aggregate basis; or
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•
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Facultative contracts that reinsure individual policies.
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•
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per-claim information;
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•
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company and industry historical loss experience, including the impact of trends such as the assignment of benefits (“AOB”) by insureds;
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•
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legislative enactments, judicial decisions, legal developments in the awarding of damages, and changes in political attitudes; and
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•
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trends in general economic conditions, including the effects of inflation.
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•
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the availability of sufficient reliable data and our ability to properly analyze available data;
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•
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the uncertainties that inherently characterize estimates and assumptions;
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•
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our selection and application of appropriate rating and pricing techniques;
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•
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changes in legal standards, claim settlement practices, medical care expenses and restoration costs;
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•
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regulatory restrictions, including, without limitation regulatory approval of rates sought; and
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•
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legislatively imposed consumer initiatives.
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•
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our operating results, including a shortfall in operating revenue or net income from that expected by securities analysts and investors;
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•
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recognition of large unanticipated accounting charges, such as related to a loss reserve enhancement;
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•
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changes in securities analysts’ estimates of our financial performance or the financial performance of our competitors or companies in our industry generally;
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•
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Failure to successfully integrate the operations of the Maison Companies into those of the Company;
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•
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Demotech downgrade;
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•
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the announcement of a material event or anticipated event involving us or our industry or the markets in which we operate;
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•
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the issuance of a significant number of shares; and
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•
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the other risk factors described in this Annual Report, the accompanying notes and the documents incorporated by reference herein.
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Equity Compensation Plan Information
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|||||||||
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Number of securities
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|||
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|
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remaining available for
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|||
|
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Number of securities to
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Weighted-average
|
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future issuance under
|
|||
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be issued upon exercise of
|
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exercise price of
|
|
equity compensation plans
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|||
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outstanding options,
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outstanding options,
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(excluding securities
|
|||
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warrants and rights
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|
warrants and rights
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reflected in column (a))
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|||
Plan category
|
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(a)
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(b)
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(c)
|
|||
Equity compensation plans approved by shareholders
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|
39,017
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|
3.80
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|
262,334
|
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FedNat Holding Company
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Period Ending
|
||||||||||||||||
|
|
12/31/2013
|
|
12/31/2014
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|
12/31/2015
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|
12/31/2016
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|
12/31/2017
|
|
12/31/2018
|
||||||
Index
|
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|
||||||
FedNat Holding Company
|
|
100.00
|
|
|
165.73
|
|
|
203.99
|
|
|
130.61
|
|
|
118.07
|
|
|
144.41
|
|
NASDAQ Composite
|
|
100.00
|
|
|
114.75
|
|
|
122.74
|
|
|
133.62
|
|
|
173.22
|
|
|
168.30
|
|
SNL Insurance P&C
|
|
100.00
|
|
|
114.85
|
|
|
118.80
|
|
|
140.21
|
|
|
160.30
|
|
|
154.12
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||
Statement of Operations Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums earned
|
$
|
355,257
|
|
|
$
|
333,481
|
|
|
$
|
261,369
|
|
|
$
|
213,020
|
|
|
$
|
173,774
|
|
Net investment income
|
12,460
|
|
|
10,254
|
|
|
9,063
|
|
|
7,226
|
|
|
5,385
|
|
|||||
Net realized and unrealized investment gains (losses)
|
(4,144
|
)
|
|
8,548
|
|
|
3,045
|
|
|
3,616
|
|
|
4,426
|
|
|||||
Direct written policy fees
|
13,366
|
|
|
17,173
|
|
|
16,619
|
|
|
9,740
|
|
|
7,728
|
|
|||||
Other income
|
19,154
|
|
|
22,206
|
|
|
17,429
|
|
|
9,869
|
|
|
7,303
|
|
|||||
Total revenues
|
396,093
|
|
|
391,662
|
|
|
307,525
|
|
|
243,471
|
|
|
198,616
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss adjustment expenses
|
228,416
|
|
|
247,557
|
|
|
197,810
|
|
|
112,710
|
|
|
81,224
|
|
|||||
Commissions and other underwriting expenses
|
121,109
|
|
|
114,867
|
|
|
90,378
|
|
|
52,862
|
|
|
48,294
|
|
|||||
General and administrative expenses
|
22,183
|
|
|
19,963
|
|
|
17,186
|
|
|
14,698
|
|
|
10,797
|
|
|||||
Interest expense
|
4,177
|
|
|
348
|
|
|
348
|
|
|
256
|
|
|
—
|
|
|||||
Total costs and expenses
|
375,885
|
|
|
382,735
|
|
|
305,722
|
|
|
180,526
|
|
|
140,315
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes
|
20,208
|
|
|
8,927
|
|
|
1,803
|
|
|
62,945
|
|
|
58,301
|
|
|||||
Income tax expense (benefit)
|
5,498
|
|
|
3,585
|
|
|
542
|
|
|
24,089
|
|
|
20,491
|
|
|||||
Net income (loss)
|
14,710
|
|
|
5,342
|
|
|
1,261
|
|
|
38,856
|
|
|
37,810
|
|
|||||
Net income (loss) attributable to non-controlling interest
|
(218
|
)
|
|
(2,647
|
)
|
|
246
|
|
|
(445
|
)
|
|
—
|
|
|||||
Net income (loss) attributable to FedNat Holding Company shareholders
|
$
|
14,928
|
|
|
$
|
7,989
|
|
|
$
|
1,015
|
|
|
$
|
39,301
|
|
|
$
|
37,810
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income (loss) per share attributable to FedNat Holding Company shareholders
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
1.17
|
|
|
$
|
0.61
|
|
|
$
|
0.07
|
|
|
$
|
2.86
|
|
|
$
|
3.13
|
|
Diluted
|
1.16
|
|
|
0.60
|
|
|
0.07
|
|
|
2.81
|
|
|
3.04
|
|
|||||
Dividends
|
0.24
|
|
|
0.32
|
|
|
0.27
|
|
|
0.18
|
|
|
0.13
|
|
|
December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and invested assets
|
$
|
515,948
|
|
|
$
|
530,249
|
|
|
$
|
484,275
|
|
|
$
|
437,369
|
|
|
$
|
370,920
|
|
Total assets
|
925,371
|
|
|
904,873
|
|
|
815,390
|
|
|
701,373
|
|
|
506,828
|
|
|||||
Loss and loss adjustment expense reserves
|
296,230
|
|
|
230,515
|
|
|
158,110
|
|
|
97,706
|
|
|
78,587
|
|
|||||
Total liabilities
|
710,112
|
|
|
677,414
|
|
|
580,925
|
|
|
455,216
|
|
|
317,267
|
|
|||||
Total shareholders' equity
|
215,259
|
|
|
227,459
|
|
|
234,465
|
|
|
246,157
|
|
|
189,561
|
|
|||||
Book value per share, excluding non-controlling interest
|
16.84
|
|
|
16.29
|
|
|
16.01
|
|
|
16.52
|
|
|
13.91
|
|
|
Year Ended December 31,
|
|||||||||
|
2018
|
|
% Change
|
|
2017
|
|||||
|
(Dollars in thousands)
|
|||||||||
Revenues:
|
|
|||||||||
Gross premiums written
|
$
|
567,764
|
|
|
(5.9
|
)%
|
|
$
|
603,417
|
|
Gross premiums earned
|
580,020
|
|
|
(3.8
|
)%
|
|
603,193
|
|
||
Ceded premiums
|
(224,763
|
)
|
|
(16.7
|
)%
|
|
(269,712
|
)
|
||
Net premiums earned
|
355,257
|
|
|
6.5
|
%
|
|
333,481
|
|
||
Net investment income
|
12,460
|
|
|
21.5
|
%
|
|
10,254
|
|
||
Net realized and unrealized investment gains (losses)
|
(4,144
|
)
|
|
(148.5
|
)%
|
|
8,548
|
|
||
Direct written policy fees
|
13,366
|
|
|
(22.2
|
)%
|
|
17,173
|
|
||
Other income
|
19,154
|
|
|
(13.7
|
)%
|
|
22,206
|
|
||
Total revenues
|
396,093
|
|
|
1.1
|
%
|
|
391,662
|
|
||
|
|
|
|
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|||||
Losses and loss adjustment expenses
|
228,416
|
|
|
(7.7
|
)%
|
|
247,557
|
|
||
Commissions and other underwriting expenses
|
121,109
|
|
|
5.4
|
%
|
|
114,867
|
|
||
General and administrative expenses
|
22,183
|
|
|
11.1
|
%
|
|
19,963
|
|
||
Interest expense
|
4,177
|
|
|
1,100.3
|
%
|
|
348
|
|
||
Total costs and expenses
|
375,885
|
|
|
(1.8
|
)%
|
|
382,735
|
|
||
|
|
|
|
|
|
|||||
Income (loss) before income taxes
|
20,208
|
|
|
126.4
|
%
|
|
8,927
|
|
||
Income tax expense (benefit)
|
5,498
|
|
|
53.4
|
%
|
|
3,585
|
|
||
Net income (loss)
|
14,710
|
|
|
175.4
|
%
|
|
5,342
|
|
||
Net income (loss) attributable to non-controlling interest
|
(218
|
)
|
|
(91.8
|
)%
|
|
(2,647
|
)
|
||
Net income (loss) attributable to FNHC shareholders
|
$
|
14,928
|
|
|
86.9
|
%
|
|
$
|
7,989
|
|
|
|
|
|
|
|
|||||
Ratios to net premiums earned:
|
|
|
|
|
|
|
||||
Net loss ratio
|
64.3
|
%
|
|
|
|
74.2
|
%
|
|||
Net expense ratio
|
40.3
|
%
|
|
|
|
40.5
|
%
|
|||
Combined ratio
|
104.6
|
%
|
|
|
|
114.7
|
%
|
(1)
|
Net loss ratio is calculated as losses and loss adjustment expenses divided by net premiums earned.
|
(2)
|
Net expense ratio is calculated as all operating expenses less interest expense divided by net premiums earned.
|
(3)
|
Combined ratio is calculated as the sum of losses and loss adjustment expenses and all operating expenses less interest expense divided by net premiums earned.
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||
|
|
Homeowners
|
|
Automobile
|
|
Other
|
|
Consolidated
|
|
Homeowners
|
|
Automobile
|
|
Other
|
|
Consolidated
|
||||||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||
Revenues:
|
|
|
||||||||||||||||||||||||||||||
Gross premiums written
|
|
$
|
539,689
|
|
|
$
|
8,603
|
|
|
$
|
19,472
|
|
|
$
|
567,764
|
|
|
$
|
536,755
|
|
|
$
|
43,505
|
|
|
$
|
23,157
|
|
|
$
|
603,417
|
|
Gross premiums earned
|
|
539,692
|
|
|
18,402
|
|
|
21,926
|
|
|
580,020
|
|
|
525,524
|
|
|
54,679
|
|
|
22,990
|
|
|
603,193
|
|
||||||||
Ceded premiums
|
|
(197,445
|
)
|
|
(13,744
|
)
|
|
(13,574
|
)
|
|
(224,763
|
)
|
|
(227,269
|
)
|
|
(31,037
|
)
|
|
(11,406
|
)
|
|
(269,712
|
)
|
||||||||
Net premiums earned
|
|
342,247
|
|
|
4,658
|
|
|
8,352
|
|
|
355,257
|
|
|
298,255
|
|
|
23,642
|
|
|
11,584
|
|
|
333,481
|
|
||||||||
Net investment income
|
|
—
|
|
|
—
|
|
|
12,460
|
|
|
12,460
|
|
|
—
|
|
|
—
|
|
|
10,254
|
|
|
10,254
|
|
||||||||
Net realized and unrealized investment gains (losses)
|
|
—
|
|
|
—
|
|
|
(4,144
|
)
|
|
(4,144
|
)
|
|
—
|
|
|
—
|
|
|
8,548
|
|
|
8,548
|
|
||||||||
Direct written policy fees
|
|
8,484
|
|
|
4,322
|
|
|
560
|
|
|
13,366
|
|
|
8,715
|
|
|
7,846
|
|
|
612
|
|
|
17,173
|
|
||||||||
Other income
|
|
14,021
|
|
|
1,148
|
|
|
3,985
|
|
|
19,154
|
|
|
13,662
|
|
|
3,277
|
|
|
5,267
|
|
|
22,206
|
|
||||||||
Total revenues
|
|
364,752
|
|
|
10,128
|
|
|
21,213
|
|
|
396,093
|
|
|
320,632
|
|
|
34,765
|
|
|
36,265
|
|
|
391,662
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
|
206,062
|
|
|
11,617
|
|
|
10,737
|
|
|
228,416
|
|
|
206,842
|
|
|
32,752
|
|
|
7,963
|
|
|
247,557
|
|
||||||||
Commissions and other underwriting expenses
|
|
111,103
|
|
|
5,751
|
|
|
4,255
|
|
|
121,109
|
|
|
97,111
|
|
|
12,976
|
|
|
4,780
|
|
|
114,867
|
|
||||||||
General and administrative expenses
|
|
18,079
|
|
|
325
|
|
|
3,779
|
|
|
22,183
|
|
|
15,403
|
|
|
650
|
|
|
3,910
|
|
|
19,963
|
|
||||||||
Interest expense
|
|
100
|
|
|
—
|
|
|
4,077
|
|
|
4,177
|
|
|
348
|
|
|
—
|
|
|
—
|
|
|
348
|
|
||||||||
Total costs and expenses
|
|
335,344
|
|
|
17,693
|
|
|
22,848
|
|
|
375,885
|
|
|
319,704
|
|
|
46,378
|
|
|
16,653
|
|
|
382,735
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Income (loss) before income taxes
|
|
29,408
|
|
|
(7,565
|
)
|
|
(1,635
|
)
|
|
20,208
|
|
|
928
|
|
|
(11,613
|
)
|
|
19,612
|
|
|
8,927
|
|
||||||||
Income tax expense (benefit)
|
|
7,451
|
|
|
(1,917
|
)
|
|
(36
|
)
|
|
5,498
|
|
|
360
|
|
|
(4,481
|
)
|
|
7,706
|
|
|
3,585
|
|
||||||||
Net income (loss)
|
|
21,957
|
|
|
(5,648
|
)
|
|
(1,599
|
)
|
|
14,710
|
|
|
568
|
|
|
(7,132
|
)
|
|
11,906
|
|
|
5,342
|
|
||||||||
Net income (loss) attributable to non-controlling interest
|
|
(218
|
)
|
|
—
|
|
|
—
|
|
|
(218
|
)
|
|
(2,647
|
)
|
|
—
|
|
|
—
|
|
|
(2,647
|
)
|
||||||||
Net income (loss) attributable to FNHC shareholders
|
|
$
|
22,175
|
|
|
$
|
(5,648
|
)
|
|
$
|
(1,599
|
)
|
|
$
|
14,928
|
|
|
$
|
3,215
|
|
|
$
|
(7,132
|
)
|
|
$
|
11,906
|
|
|
$
|
7,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ratios to net premiums earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net loss ratio
|
|
60.2
|
%
|
|
249.4
|
%
|
|
128.6
|
%
|
|
64.3
|
%
|
|
69.4
|
%
|
|
138.5
|
%
|
|
68.7
|
%
|
|
74.2
|
%
|
||||||||
Net expense ratio
|
|
37.8
|
%
|
|
|
|
|
|
40.3
|
%
|
|
37.7
|
%
|
|
|
|
|
|
40.5
|
%
|
||||||||||||
Combined ratio
|
|
98.0
|
%
|
|
|
|
|
|
104.6
|
%
|
|
107.1
|
%
|
|
|
|
|
|
114.7
|
%
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
Gross premiums written:
|
|
|
||||||
Homeowners Florida
|
|
$
|
458,652
|
|
|
$
|
482,039
|
|
Homeowners non-Florida
|
|
81,037
|
|
|
54,716
|
|
||
Automobile
|
|
8,603
|
|
|
43,505
|
|
||
Commercial general liability
|
|
5,384
|
|
|
11,048
|
|
||
Federal flood
|
|
14,088
|
|
|
12,109
|
|
||
Total gross premiums written
|
|
$
|
567,764
|
|
|
$
|
603,417
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
Gross premiums earned:
|
|
|
||||||
Homeowners Florida
|
|
$
|
473,121
|
|
|
$
|
481,541
|
|
Homeowners non-Florida
|
|
66,571
|
|
|
43,983
|
|
||
Automobile
|
|
18,402
|
|
|
54,679
|
|
||
Commercial general liability
|
|
8,794
|
|
|
12,216
|
|
||
Federal flood
|
|
13,132
|
|
|
10,774
|
|
||
Total gross premiums earned
|
|
$
|
580,020
|
|
|
$
|
603,193
|
|
|
|
Year Ended December 31,
|
|||||||||
|
|
2018
|
|
% Change
|
|
2017
|
|||||
|
|
(Dollars in thousands)
|
|||||||||
Other income:
|
|
|
|
|
|
|
|||||
Commission income
|
|
$
|
4,649
|
|
|
(25.3
|
)%
|
|
$
|
6,227
|
|
Brokerage
|
|
12,305
|
|
|
4.4
|
%
|
|
11,781
|
|
||
Financing and other revenue
|
|
2,200
|
|
|
(47.6
|
)%
|
|
4,198
|
|
||
Total other income
|
|
$
|
19,154
|
|
|
(13.7
|
)%
|
|
$
|
22,206
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
Commissions and other underwriting expenses:
|
|
|
|
|
||||
Homeowners Florida
|
|
$
|
56,693
|
|
|
$
|
57,151
|
|
All others
|
|
19,948
|
|
|
20,135
|
|
||
Ceding commissions
|
|
(12,743
|
)
|
|
(16,299
|
)
|
||
Total commissions
|
|
63,898
|
|
|
60,987
|
|
||
|
|
|
|
|
||||
Automobile
|
|
4,322
|
|
|
7,847
|
|
||
Homeowners non-Florida
|
|
2,147
|
|
|
1,223
|
|
||
Total fees
|
|
6,469
|
|
|
9,070
|
|
||
|
|
|
|
|
||||
Salaries and wages
|
|
14,279
|
|
|
14,521
|
|
||
Other underwriting expenses
|
|
36,463
|
|
|
30,289
|
|
||
Total commissions and other underwriting expenses
|
|
$
|
121,109
|
|
|
$
|
114,867
|
|
|
|
Year Ended December 31,
|
|||||||||
|
|
2017
|
|
% Change
|
|
2016
|
|||||
|
|
(Dollars in thousands)
|
|||||||||
Revenues:
|
|
|
|
|
|
|
|||||
Gross premiums written
|
|
$
|
603,417
|
|
|
(0.3
|
)%
|
|
$
|
605,485
|
|
Gross premiums earned
|
|
603,193
|
|
|
6.7
|
%
|
|
565,423
|
|
||
Ceded premiums
|
|
(269,712
|
)
|
|
(11.3
|
)%
|
|
(304,054
|
)
|
||
Net premiums earned
|
|
333,481
|
|
|
27.6
|
%
|
|
261,369
|
|
||
Net investment income
|
|
10,254
|
|
|
13.1
|
%
|
|
9,063
|
|
||
Net realized and unrealized investment gains (losses)
|
|
8,548
|
|
|
180.7
|
%
|
|
3,045
|
|
||
Direct written policy fees
|
|
17,173
|
|
|
3.3
|
%
|
|
16,619
|
|
||
Other income
|
|
22,206
|
|
|
27.4
|
%
|
|
17,429
|
|
||
Total revenues
|
|
391,662
|
|
|
27.4
|
%
|
|
307,525
|
|
||
|
|
|
|
|
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|||||
Losses and loss adjustment expenses
|
|
247,557
|
|
|
25.1
|
%
|
|
197,810
|
|
||
Commissions and other underwriting expenses
|
|
114,867
|
|
|
27.1
|
%
|
|
90,378
|
|
||
General and administrative expenses
|
|
19,963
|
|
|
16.2
|
%
|
|
17,186
|
|
||
Interest expense
|
|
348
|
|
|
—
|
%
|
|
348
|
|
||
Total costs and expenses
|
|
382,735
|
|
|
25.2
|
%
|
|
305,722
|
|
||
|
|
|
|
|
|
|
|||||
Income (loss) before income taxes
|
|
8,927
|
|
|
395.1
|
%
|
|
1,803
|
|
||
Income tax expense (benefit)
|
|
3,585
|
|
|
561.4
|
%
|
|
542
|
|
||
Net income (loss)
|
|
5,342
|
|
|
323.6
|
%
|
|
1,261
|
|
||
Net income (loss) attributable to non-controlling interest
|
|
(2,647
|
)
|
|
(1,176.0
|
)%
|
|
246
|
|
||
Net income (loss) attributable to FNHC shareholders
|
|
$
|
7,989
|
|
|
687.1
|
%
|
|
$
|
1,015
|
|
|
|
|
|
|
|
|
|
||||
Ratios to net premiums earned:
|
|
|
|
|
|
|
|
|
|
||
Net loss ratio
|
|
74.2
|
%
|
|
|
|
75.7
|
%
|
|||
Net expense ratio
|
|
40.4
|
%
|
|
|
|
41.2
|
%
|
|||
Combined ratio
|
|
114.6
|
%
|
|
|
|
116.9
|
%
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||||||||||||||||||
|
|
Homeowners
|
|
Automobile
|
|
Other
|
|
Consolidated
|
|
Homeowners
|
|
Automobile
|
|
Other
|
|
Consolidated
|
||||||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gross premiums written
|
|
$
|
536,755
|
|
|
$
|
43,505
|
|
|
$
|
23,157
|
|
|
$
|
603,417
|
|
|
$
|
512,737
|
|
|
$
|
69,479
|
|
|
$
|
23,269
|
|
|
$
|
605,485
|
|
Gross premiums earned
|
|
525,524
|
|
|
54,679
|
|
|
22,990
|
|
|
603,193
|
|
|
484,353
|
|
|
58,312
|
|
|
22,758
|
|
|
565,423
|
|
||||||||
Ceded premiums
|
|
(227,269
|
)
|
|
(31,037
|
)
|
|
(11,406
|
)
|
|
(269,712
|
)
|
|
(249,972
|
)
|
|
(44,291
|
)
|
|
(9,791
|
)
|
|
(304,054
|
)
|
||||||||
Net premiums earned
|
|
298,255
|
|
|
23,642
|
|
|
11,584
|
|
|
333,481
|
|
|
234,381
|
|
|
14,021
|
|
|
12,967
|
|
|
261,369
|
|
||||||||
Net investment income
|
|
—
|
|
|
—
|
|
|
10,254
|
|
|
10,254
|
|
|
—
|
|
|
—
|
|
|
9,063
|
|
|
9,063
|
|
||||||||
Net realized and unrealized investment gains (losses)
|
|
—
|
|
|
—
|
|
|
8,548
|
|
|
8,548
|
|
|
—
|
|
|
—
|
|
|
3,045
|
|
|
3,045
|
|
||||||||
Direct written policy fees
|
|
8,715
|
|
|
7,846
|
|
|
612
|
|
|
17,173
|
|
|
7,844
|
|
|
8,171
|
|
|
604
|
|
|
16,619
|
|
||||||||
Other income
|
|
13,662
|
|
|
3,277
|
|
|
5,267
|
|
|
22,206
|
|
|
9,106
|
|
|
5,479
|
|
|
2,844
|
|
|
17,429
|
|
||||||||
Total revenues
|
|
320,632
|
|
|
34,765
|
|
|
36,265
|
|
|
391,662
|
|
|
251,331
|
|
|
27,671
|
|
|
28,523
|
|
|
307,525
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
|
206,842
|
|
|
32,752
|
|
|
7,963
|
|
|
247,557
|
|
|
169,920
|
|
|
14,885
|
|
|
13,005
|
|
|
197,810
|
|
||||||||
Commissions and other underwriting expenses
|
|
97,111
|
|
|
12,976
|
|
|
4,780
|
|
|
114,867
|
|
|
73,215
|
|
|
12,471
|
|
|
4,692
|
|
|
90,378
|
|
||||||||
General and administrative expenses
|
|
15,403
|
|
|
650
|
|
|
3,910
|
|
|
19,963
|
|
|
13,079
|
|
|
600
|
|
|
3,507
|
|
|
17,186
|
|
||||||||
Interest expense
|
|
348
|
|
|
—
|
|
|
—
|
|
|
348
|
|
|
348
|
|
|
—
|
|
|
—
|
|
|
348
|
|
||||||||
Total costs and expenses
|
|
319,704
|
|
|
46,378
|
|
|
16,653
|
|
|
382,735
|
|
|
256,562
|
|
|
27,956
|
|
|
21,204
|
|
|
305,722
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Income (loss) before income taxes
|
|
928
|
|
|
(11,613
|
)
|
|
19,612
|
|
|
8,927
|
|
|
(5,231
|
)
|
|
(285
|
)
|
|
7,319
|
|
|
1,803
|
|
||||||||
Income tax expense (benefit)
|
|
360
|
|
|
(4,481
|
)
|
|
7,706
|
|
|
3,585
|
|
|
(2,015
|
)
|
|
(111
|
)
|
|
2,668
|
|
|
542
|
|
||||||||
Net income (loss)
|
|
568
|
|
|
(7,132
|
)
|
|
11,906
|
|
|
5,342
|
|
|
(3,216
|
)
|
|
(174
|
)
|
|
4,651
|
|
|
1,261
|
|
||||||||
Net income (loss) attributable to non-controlling interest
|
|
(2,647
|
)
|
|
—
|
|
|
—
|
|
|
(2,647
|
)
|
|
246
|
|
|
—
|
|
|
—
|
|
|
246
|
|
||||||||
Net income (loss) attributable to FNHC shareholders
|
|
$
|
3,215
|
|
|
$
|
(7,132
|
)
|
|
$
|
11,906
|
|
|
$
|
7,989
|
|
|
$
|
(3,462
|
)
|
|
$
|
(174
|
)
|
|
$
|
4,651
|
|
|
$
|
1,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ratios to net premiums earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net loss ratio
|
|
69.4
|
%
|
|
138.5
|
%
|
|
68.7
|
%
|
|
74.2
|
%
|
|
72.5
|
%
|
|
106.2
|
%
|
|
100.3
|
%
|
|
75.7
|
%
|
||||||||
Net expense ratio
|
|
37.7
|
%
|
|
|
|
|
|
40.5
|
%
|
|
36.8
|
%
|
|
|
|
|
|
41.1
|
%
|
||||||||||||
Combined ratio
|
|
107.1
|
%
|
|
|
|
|
|
114.7
|
%
|
|
109.3
|
%
|
|
|
|
|
|
116.8
|
%
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(In thousands)
|
||||||
Gross premiums written:
|
|
|
|
|
||||
Homeowners Florida
|
|
$
|
482,039
|
|
|
$
|
477,489
|
|
Homeowners non-Florida
|
|
54,716
|
|
|
35,248
|
|
||
Automobile
|
|
43,505
|
|
|
69,479
|
|
||
Commercial general liability
|
|
11,048
|
|
|
13,256
|
|
||
Federal flood
|
|
12,109
|
|
|
10,013
|
|
||
Total gross premiums written
|
|
$
|
603,417
|
|
|
$
|
605,485
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(In thousands)
|
||||||
Gross premiums earned:
|
|
|
|
|
||||
Homeowners Florida
|
|
$
|
481,541
|
|
|
$
|
455,252
|
|
Homeowners non-Florida
|
|
43,983
|
|
|
29,101
|
|
||
Automobile
|
|
54,679
|
|
|
58,312
|
|
||
Commercial general liability
|
|
12,216
|
|
|
13,675
|
|
||
Federal flood
|
|
10,774
|
|
|
9,083
|
|
||
Total gross premiums earned
|
|
$
|
603,193
|
|
|
$
|
565,423
|
|
|
|
Year Ended December 31,
|
|||||||||
|
|
2017
|
|
% Change
|
|
2016
|
|||||
|
|
(Dollars in thousands)
|
|||||||||
Other income:
|
|
|
|
|
|
|
|||||
Commission income
|
|
$
|
6,227
|
|
|
(19.4
|
)%
|
|
$
|
7,730
|
|
Brokerage
|
|
11,781
|
|
|
61.0
|
%
|
|
7,316
|
|
||
Financing and other revenue
|
|
4,198
|
|
|
76.2
|
%
|
|
2,383
|
|
||
Total other income
|
|
$
|
22,206
|
|
|
27.4
|
%
|
|
$
|
17,429
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(In thousands)
|
||||||
Commissions and other underwriting expenses:
|
|
|
|
|
||||
Homeowners Florida
|
|
$
|
57,151
|
|
|
$
|
55,370
|
|
All others
|
|
20,135
|
|
|
19,640
|
|
||
Ceding commissions
|
|
(16,299
|
)
|
|
(36,445
|
)
|
||
Total commissions and other fees
|
|
60,987
|
|
|
38,565
|
|
||
|
|
|
|
|
||||
Automobile
|
|
7,847
|
|
|
8,171
|
|
||
Homeowners non-Florida
|
|
1,223
|
|
|
909
|
|
||
Total fees
|
|
9,070
|
|
|
9,080
|
|
||
|
|
|
|
|
||||
Salaries and wages
|
|
14,521
|
|
|
13,748
|
|
||
Other underwriting expenses
|
|
30,289
|
|
|
28,985
|
|
||
Total commissions and other underwriting expenses
|
|
$
|
114,867
|
|
|
$
|
90,378
|
|
|
|
Payments Due By Period
|
||||||||||||||||||
|
|
|
|
Less
|
|
|
|
|
|
More
|
||||||||||
|
|
|
|
than
|
|
1 - 3
|
|
3 - 5
|
|
than
|
||||||||||
|
|
Total
|
|
1 Year
|
|
Years
|
|
Years
|
|
5 Years
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Loss and loss adjustment expense reserves (1)
|
|
$
|
296,230
|
|
|
$
|
174,775
|
|
|
$
|
88,869
|
|
|
$
|
17,774
|
|
|
$
|
14,812
|
|
Long-term debt (2)
|
|
45,000
|
|
|
—
|
|
|
—
|
|
|
20,000
|
|
|
25,000
|
|
|||||
Operating leases
|
|
10,297
|
|
|
802
|
|
|
1,939
|
|
|
2,056
|
|
|
5,500
|
|
|||||
Total long-term contractual obligations
|
|
$
|
351,527
|
|
|
$
|
175,577
|
|
|
$
|
90,808
|
|
|
$
|
39,830
|
|
|
$
|
45,312
|
|
(1)
|
Loss and loss adjustment expense reserves do not have contractual maturity dates; however, based on historical payment patterns, the amount presented is our estimate of the expected timing of these payments. The timing of payments is subject to significant uncertainty. We maintain a portfolio of marketable investments with varying maturities and a substantial amount of cash and cash equivalents intended to provide adequate cash flows for such payments.
|
(2)
|
Long-term debt payments on notes payable, excludes deferred financing costs. During the first quarter of 2019, the Company will retire these Notes, in connection with the offering of the 2029 Notes. Refer to Note 17 of the notes to our Consolidated Financial Statements set forth in Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report, for additional information regarding the 2029 Notes as well as the pending acquisition of the Maison Companies.
|
•
|
Reported Loss Development Method
: A reported loss development pattern is calculated based on historical loss development data, and this pattern is then used to project the latest evaluation of cumulative reported losses for each accident year or underwriting year, as appropriate, to ultimate levels;
|
•
|
Paid Development Method
: A paid loss development pattern is calculated based on historical paid loss development data, and this pattern is then used to project the latest evaluation of cumulative paid losses for each accident year or underwriting year, as appropriate, to ultimate levels;
|
•
|
Expected Loss Ratio Method
: Expected loss ratios are applied to premiums earned, based on historical company experience, or historical insurance industry results when company experience is deemed not to be sufficient; and
|
•
|
Bornhuetter-Ferguson Method
: The results from the Expected Loss Ratio Method are essentially blended with either the Reported Loss Development Method or the Paid Development Method.
|
•
|
Expected loss ratios
represent management’s expectation of losses, in relation to earned premium, at the time business is written, before any actual claims experience has emerged. This expectation is a significant determinant of the estimate of loss reserves for recently written business where there is little paid or incurred loss data to consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost trends and known changes in the type of risks underwritten. For certain longer-tailed reinsurance business that are typically lower frequency, high severity classes, expected loss ratios are often used for the last several accident years or underwriting years, as appropriate.
|
•
|
Rate of loss
cost inflation (or deflation) represents management’s expectation of the inflation associated with the costs we may incur in the future to settle claims. Expected loss cost inflation is particularly important for longer-tailed classes.
|
•
|
Reported and paid loss
emergence patterns represent management’s expectation of how losses will be reported and ultimately paid in the future based on the historical emergence patterns of reported and paid losses and are derived from past experience of our subsidiaries, modified for current trends. These emergence patterns are used to project current reported or paid loss amounts to their ultimate settlement value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
||||||||||||||||
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
|
Amount
|
||||||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||
Principal amount by expected maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
United States government obligations and authorities
|
|
$
|
1,105
|
|
|
$
|
7,975
|
|
|
$
|
125
|
|
|
$
|
14,425
|
|
|
$
|
7,360
|
|
|
$
|
17,420
|
|
|
$
|
48,410
|
|
|
$
|
47,878
|
|
Obligations of states and political subdivisions
|
|
1,575
|
|
|
1,500
|
|
|
—
|
|
|
4,800
|
|
|
310
|
|
|
1,490
|
|
|
9,675
|
|
|
9,767
|
|
||||||||
Corporate
|
|
13,298
|
|
|
23,309
|
|
|
26,150
|
|
|
61,818
|
|
|
26,323
|
|
|
98,941
|
|
|
249,839
|
|
|
245,264
|
|
||||||||
International
|
|
2,138
|
|
|
3,181
|
|
|
3,434
|
|
|
5,813
|
|
|
1,015
|
|
|
7,181
|
|
|
22,762
|
|
|
22,330
|
|
||||||||
Collateralized mortgage obligations
|
|
2,746
|
|
|
1,309
|
|
|
1,242
|
|
|
3,504
|
|
|
4,230
|
|
|
93,522
|
|
|
106,553
|
|
|
108,528
|
|
||||||||
Total investments
|
|
$
|
20,862
|
|
|
$
|
37,274
|
|
|
$
|
30,951
|
|
|
$
|
90,360
|
|
|
$
|
39,238
|
|
|
$
|
218,554
|
|
|
$
|
437,239
|
|
|
$
|
433,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Weighted average interest rate by
expected maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
United States government
obligations and authorities
|
|
2.60
|
%
|
|
1.93
|
%
|
|
2.53
|
%
|
|
1.66
|
%
|
|
2.65
|
%
|
|
2.32
|
%
|
|
2.12
|
%
|
|
|
|||||||||
Obligations of states and
political subdivisions
|
|
5.32
|
%
|
|
2.35
|
%
|
|
—
|
%
|
|
3.17
|
%
|
|
3.54
|
%
|
|
3.56
|
%
|
|
3.47
|
%
|
|
|
|||||||||
Corporate securities
|
|
4.24
|
%
|
|
3.12
|
%
|
|
3.71
|
%
|
|
3.28
|
%
|
|
3.79
|
%
|
|
3.78
|
%
|
|
3.62
|
%
|
|
|
|||||||||
International securities
|
|
5.61
|
%
|
|
3.35
|
%
|
|
2.91
|
%
|
|
3.10
|
%
|
|
3.41
|
%
|
|
4.20
|
%
|
|
3.70
|
%
|
|
|
|||||||||
Collateralized mortgage obligations
|
|
2.92
|
%
|
|
3.24
|
%
|
|
3.30
|
%
|
|
3.51
|
%
|
|
3.75
|
%
|
|
3.90
|
%
|
|
3.84
|
%
|
|
|
|||||||||
Total investments
|
|
4.20
|
%
|
|
2.86
|
%
|
|
3.60
|
%
|
|
3.02
|
%
|
|
3.56
|
%
|
|
3.73
|
%
|
|
3.51
|
%
|
|
|
|
|
|
PAGE
|
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
Investments:
|
|
|
|
|
||||
Debt securities, available-for-sale, at fair value (amortized cost of $433,664 and $422,300, respectively)
|
|
$
|
428,641
|
|
|
$
|
423,238
|
|
Debt securities, held-to-maturity, at amortized cost
|
|
5,126
|
|
|
5,349
|
|
||
Equity securities, at fair value
|
|
17,758
|
|
|
15,434
|
|
||
Total investments (including $0 and $26,284 related to the VIE, respectively)
|
|
451,525
|
|
|
444,021
|
|
||
Cash and cash equivalents (including $0 and $14,211 related to the VIE, respectively)
|
|
64,423
|
|
|
86,228
|
|
||
Prepaid reinsurance premiums
|
|
108,577
|
|
|
135,492
|
|
||
Premiums receivable, net of allowance of $77 and $70, respectively (including $0 and $1,184 related to the VIE, respectively)
|
|
29,791
|
|
|
46,393
|
|
||
Reinsurance recoverable, net
|
|
211,424
|
|
|
124,601
|
|
||
Deferred acquisition costs, net
|
|
39,436
|
|
|
40,893
|
|
||
Income taxes, net
|
|
5,220
|
|
|
9,817
|
|
||
Property and equipment, net
|
|
4,819
|
|
|
4,025
|
|
||
Other assets (including $0 and $2,322 related to the VIE, respectively)
|
|
10,156
|
|
|
13,403
|
|
||
Total assets
|
|
$
|
925,371
|
|
|
$
|
904,873
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
Loss and loss adjustment expense reserves
|
|
$
|
296,230
|
|
|
$
|
230,515
|
|
Unearned premiums
|
|
281,992
|
|
|
294,423
|
|
||
Reinsurance payable
|
|
63,599
|
|
|
71,944
|
|
||
Long-term debt, net of deferred financing costs of $596 and $749, respectively
|
|
44,404
|
|
|
49,251
|
|
||
Deferred revenue
|
|
4,585
|
|
|
6,222
|
|
||
Other liabilities
|
|
19,302
|
|
|
25,059
|
|
||
Total liabilities
|
|
710,112
|
|
|
677,414
|
|
||
|
|
|
|
|
||||
Commitments and contingencies (see Note 9)
|
|
|
|
|
||||
|
|
|
|
|
||||
Shareholders' Equity
|
|
|
|
|
||||
Preferred stock, $0.01 par value: 1,000,000 shares authorized
|
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value: 25,000,000 shares authorized; 12,784,444 and 12,988,247 shares issued and outstanding, respectively
|
|
128
|
|
|
130
|
|
||
Additional paid-in capital
|
|
141,128
|
|
|
139,728
|
|
||
Accumulated other comprehensive income (loss)
|
|
(3,750
|
)
|
|
1,770
|
|
||
Retained earnings
|
|
77,753
|
|
|
70,009
|
|
||
Total shareholders’ equity attributable to FedNat Holding Company shareholders
|
|
215,259
|
|
|
211,637
|
|
||
Non-controlling interest
|
|
—
|
|
|
15,822
|
|
||
Total shareholders’ equity
|
|
215,259
|
|
|
227,459
|
|
||
Total liabilities and shareholders' equity
|
|
$
|
925,371
|
|
|
$
|
904,873
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Net premiums earned
|
|
$
|
355,257
|
|
|
$
|
333,481
|
|
|
$
|
261,369
|
|
Net investment income
|
|
12,460
|
|
|
10,254
|
|
|
9,063
|
|
|||
Net realized and unrealized investment gains (losses)
|
|
(4,144
|
)
|
|
8,548
|
|
|
3,045
|
|
|||
Direct written policy fees
|
|
13,366
|
|
|
17,173
|
|
|
16,619
|
|
|||
Other income
|
|
19,154
|
|
|
22,206
|
|
|
17,429
|
|
|||
Total revenues
|
|
396,093
|
|
|
391,662
|
|
|
307,525
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses:
|
|
|
|
|
|
|
||||||
Losses and loss adjustment expenses
|
|
228,416
|
|
|
247,557
|
|
|
197,810
|
|
|||
Commissions and other underwriting expenses
|
|
121,109
|
|
|
114,867
|
|
|
90,378
|
|
|||
General and administrative expenses
|
|
22,183
|
|
|
19,963
|
|
|
17,186
|
|
|||
Interest expense
|
|
4,177
|
|
|
348
|
|
|
348
|
|
|||
Total costs and expenses
|
|
375,885
|
|
|
382,735
|
|
|
305,722
|
|
|||
|
|
|
|
|
|
|
||||||
Income (loss) before income taxes
|
|
20,208
|
|
|
8,927
|
|
|
1,803
|
|
|||
Income tax expense (benefit)
|
|
5,498
|
|
|
3,585
|
|
|
542
|
|
|||
Net income (loss)
|
|
14,710
|
|
|
5,342
|
|
|
1,261
|
|
|||
Net income (loss) attributable to non-controlling interest
|
|
(218
|
)
|
|
(2,647
|
)
|
|
246
|
|
|||
Net income (loss) attributable to FedNat Holding Company shareholders
|
|
$
|
14,928
|
|
|
$
|
7,989
|
|
|
$
|
1,015
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net Income (Loss) Per Common Share
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
1.17
|
|
|
$
|
0.61
|
|
|
$
|
0.07
|
|
Diluted
|
|
$
|
1.16
|
|
|
$
|
0.60
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
||||||
Weighted Average Number of Shares of Common Stock Outstanding
|
|
|
|
|
|
|
||||||
Basic
|
|
12,775
|
|
|
13,170
|
|
|
13,758
|
|
|||
Diluted
|
|
12,867
|
|
|
13,250
|
|
|
13,922
|
|
|||
|
|
|
|
|
|
|
||||||
Dividends Declared Per Common Share
|
|
$
|
0.24
|
|
|
$
|
0.32
|
|
|
$
|
0.27
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
14,710
|
|
|
$
|
5,342
|
|
|
$
|
1,261
|
|
|
|
|
|
|
|
|
||||||
Change in net unrealized gains (losses) on investments, available-for-sale, net of tax
|
|
(5,444
|
)
|
|
(429
|
)
|
|
(1,740
|
)
|
|||
Comprehensive income (loss)
|
|
9,266
|
|
|
4,913
|
|
|
(479
|
)
|
|||
|
|
|
|
|
|
|
||||||
Less: comprehensive income (loss) attributable to non-controlling interest, net of tax
|
|
(447
|
)
|
|
(2,905
|
)
|
|
550
|
|
|||
Comprehensive income (loss) attributable to FedNat Holding Company shareholders
|
|
$
|
9,713
|
|
|
$
|
7,818
|
|
|
$
|
(1,029
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
Attributable to
|
|
|
|
|
|||||||||||||||||
|
|
|
|
Common Stock
|
|
Additional
|
|
Other
|
|
|
|
FedNat Holding
|
|
Non-
|
|
Total
|
|||||||||||||||||||
|
|
Preferred
|
|
Issued
|
|
|
|
Paid-in
|
|
Comprehensive
|
|
Retained
|
|
Company
|
|
Controlling
|
|
Shareholders'
|
|||||||||||||||||
|
|
Stock
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Income (Loss)
|
|
Earnings
|
|
Shareholders
|
|
Interest
|
|
Equity
|
|||||||||||||||||
Balance as of January 1, 2016
|
|
$
|
—
|
|
|
13,798,773
|
|
|
$
|
138
|
|
|
$
|
131,998
|
|
|
$
|
3,985
|
|
|
$
|
91,859
|
|
|
$
|
227,980
|
|
|
18,177
|
|
|
$
|
246,157
|
|
|
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,015
|
|
|
1,015
|
|
|
246
|
|
|
1,261
|
|
||||||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,044
|
)
|
|
—
|
|
|
(2,044
|
)
|
|
304
|
|
|
(1,740
|
)
|
||||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,677
|
)
|
|
(4,677
|
)
|
|
—
|
|
|
(4,677
|
)
|
||||||||
Shares issued under share-based compensation plans
|
|
—
|
|
|
299,165
|
|
|
—
|
|
|
361
|
|
|
—
|
|
|
—
|
|
|
361
|
|
|
—
|
|
|
361
|
|
||||||||
Tax benefits from share-based compensation awards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
589
|
|
|
—
|
|
|
—
|
|
|
589
|
|
|
—
|
|
|
589
|
|
||||||||
Repurchases of common stock
|
|
|
|
(624,818
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(11,313
|
)
|
|
(11,317
|
)
|
|
—
|
|
|
(11,317
|
)
|
|||||||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,831
|
|
|
—
|
|
|
—
|
|
|
3,831
|
|
|
—
|
|
|
3,831
|
|
||||||||
Balance as of December 31, 2016
|
|
—
|
|
|
13,473,120
|
|
|
134
|
|
|
136,779
|
|
|
1,941
|
|
|
76,884
|
|
|
215,738
|
|
|
18,727
|
|
|
234,465
|
|
||||||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,989
|
|
|
7,989
|
|
|
(2,647
|
)
|
|
5,342
|
|
||||||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(171
|
)
|
|
—
|
|
|
(171
|
)
|
|
(258
|
)
|
|
(429
|
)
|
||||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,251
|
)
|
|
(4,251
|
)
|
|
—
|
|
|
(4,251
|
)
|
||||||||
Shares issued under share-based compensation plans
|
|
—
|
|
|
169,647
|
|
|
—
|
|
|
103
|
|
|
—
|
|
|
—
|
|
|
103
|
|
|
—
|
|
|
103
|
|
||||||||
Repurchases of common stock
|
|
—
|
|
|
(654,520
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(10,613
|
)
|
|
(10,617
|
)
|
|
—
|
|
|
(10,617
|
)
|
||||||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,846
|
|
|
—
|
|
|
—
|
|
|
2,846
|
|
|
—
|
|
|
2,846
|
|
||||||||
Balance as of December 31, 2017
|
|
—
|
|
|
12,988,247
|
|
|
130
|
|
|
139,728
|
|
|
1,770
|
|
|
70,009
|
|
|
211,637
|
|
|
15,822
|
|
|
227,459
|
|
||||||||
Cumulative effect of new accounting standards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(994
|
)
|
|
994
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,928
|
|
|
14,928
|
|
|
(218
|
)
|
|
14,710
|
|
||||||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,221
|
)
|
|
—
|
|
|
(4,221
|
)
|
|
(229
|
)
|
|
(4,450
|
)
|
||||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,120
|
)
|
|
(3,120
|
)
|
|
—
|
|
|
(3,120
|
)
|
||||||||
Acquisition of non-controlling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,005
|
)
|
|
(305
|
)
|
|
—
|
|
|
(1,310
|
)
|
|
(15,375
|
)
|
|
(16,685
|
)
|
||||||||
Shares issued under share-based compensation plans
|
|
—
|
|
|
122,905
|
|
|
1
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
||||||||
Repurchases of common stock
|
|
—
|
|
|
(326,708
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(5,058
|
)
|
|
(5,061
|
)
|
|
—
|
|
|
(5,061
|
)
|
||||||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,367
|
|
|
—
|
|
|
—
|
|
|
2,367
|
|
|
—
|
|
|
2,367
|
|
||||||||
Balance as of December 31, 2018
|
|
$
|
—
|
|
|
12,784,444
|
|
|
$
|
128
|
|
|
$
|
141,128
|
|
|
$
|
(3,750
|
)
|
|
$
|
77,753
|
|
|
$
|
215,259
|
|
|
$
|
—
|
|
|
$
|
215,259
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flow from operating activities:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
14,710
|
|
|
$
|
5,342
|
|
|
$
|
1,261
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
||||||
Net realized and unrealized investment (gains) losses
|
|
4,144
|
|
|
(8,548
|
)
|
|
(3,045
|
)
|
|||
Amortization of investment premium or discount, net
|
|
1,546
|
|
|
3,909
|
|
|
5,346
|
|
|||
Depreciation and amortization
|
|
1,385
|
|
|
1,166
|
|
|
869
|
|
|||
Share-based compensation
|
|
2,367
|
|
|
2,846
|
|
|
4,420
|
|
|||
Tax impact related to share-based compensation
|
|
(44
|
)
|
|
(193
|
)
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Prepaid reinsurance premiums
|
|
26,915
|
|
|
21,440
|
|
|
24,908
|
|
|||
Premiums receivable, net
|
|
16,602
|
|
|
8,461
|
|
|
(16,260
|
)
|
|||
Reinsurance recoverable, net
|
|
(86,823
|
)
|
|
(76,738
|
)
|
|
(35,149
|
)
|
|||
Deferred acquisition costs
|
|
1,457
|
|
|
999
|
|
|
(24,226
|
)
|
|||
Income taxes, net
|
|
6,153
|
|
|
4,596
|
|
|
(16,485
|
)
|
|||
Deferred revenue
|
|
(1,637
|
)
|
|
(612
|
)
|
|
1,074
|
|
|||
Loss and loss adjustment expense reserves
|
|
65,715
|
|
|
72,405
|
|
|
60,404
|
|
|||
Unearned premiums
|
|
(12,431
|
)
|
|
401
|
|
|
40,062
|
|
|||
Reinsurance payable
|
|
(8,345
|
)
|
|
(7,210
|
)
|
|
18,085
|
|
|||
Other
|
|
(1,444
|
)
|
|
(15,158
|
)
|
|
8,486
|
|
|||
Net cash provided by (used in) operating activities
|
|
30,270
|
|
|
13,106
|
|
|
69,750
|
|
|||
Cash flow from investing activities:
|
|
|
|
|
|
|
||||||
Proceeds from sales of equity securities
|
|
10,639
|
|
|
57,125
|
|
|
30,621
|
|
|||
Proceeds from sales of debt securities
|
|
228,777
|
|
|
249,584
|
|
|
198,676
|
|
|||
Purchases of equity securities
|
|
(13,542
|
)
|
|
(35,811
|
)
|
|
(16,716
|
)
|
|||
Purchases of debt securities
|
|
(337,776
|
)
|
|
(339,667
|
)
|
|
(325,397
|
)
|
|||
Maturities and redemptions of debt securities
|
|
92,744
|
|
|
38,038
|
|
|
81,812
|
|
|||
Purchases of property and equipment
|
|
(2,026
|
)
|
|
(976
|
)
|
|
(2,147
|
)
|
|||
Net cash provided by (used in) investing activities
|
|
(21,184
|
)
|
|
(31,707
|
)
|
|
(33,151
|
)
|
|||
Cash flow from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
|
—
|
|
|
45,000
|
|
|
—
|
|
|||
Payment of long-term debt
|
|
(5,000
|
)
|
|
—
|
|
|
—
|
|
|||
Purchase of non-controlling interest
|
|
(16,685
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of FedNat Holding Company common stock
|
|
(5,061
|
)
|
|
(10,616
|
)
|
|
(11,317
|
)
|
|||
Issuance of common stock for share-based awards
|
|
39
|
|
|
103
|
|
|
361
|
|
|||
Tax impact related to share-based compensation
|
|
—
|
|
|
—
|
|
|
589
|
|
|||
Dividends paid
|
|
(4,184
|
)
|
|
(4,251
|
)
|
|
(4,677
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
(30,891
|
)
|
|
30,236
|
|
|
(15,044
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
(21,805
|
)
|
|
11,635
|
|
|
21,555
|
|
|||
Cash and cash equivalents at beginning-of-period
|
|
86,228
|
|
|
74,593
|
|
|
53,038
|
|
|||
Cash and cash equivalents at end-of-period
|
|
$
|
64,423
|
|
|
$
|
86,228
|
|
|
$
|
74,593
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
||||||
Cash paid (received) during the period for interest
|
|
$
|
4,266
|
|
|
$
|
308
|
|
|
$
|
313
|
|
Cash paid (received) during the period for income taxes
|
|
$
|
(1,104
|
)
|
|
$
|
(354
|
)
|
|
$
|
14,360
|
|
•
|
Level 1 — Quoted market prices (unadjusted) for identical assets or liabilities in active markets is defined as a market where transactions for the financial statement occur with sufficient frequency and volume to provide pricing information on an ongoing basis, or observable inputs.
|
•
|
Level 2 — Quoted market prices for similar assets or liabilities and valuations, using models or other valuation techniques using observable market data. Significant other observable that can be corroborated by observable market data; and
|
•
|
Level 3 — Instruments that use non-binding broker quotes or model driven valuations that do not have observable market data or those that are estimated based on an ownership interest to which a proportionate share of net assets is attributed.
|
|
|
December 31, 2018
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Debt securities - available-for-sale, at fair value:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
$
|
43,918
|
|
|
$
|
83,950
|
|
|
$
|
—
|
|
|
$
|
127,868
|
|
Obligations of states and political subdivisions
|
|
—
|
|
|
9,767
|
|
|
—
|
|
|
9,767
|
|
||||
Corporate securities
|
|
—
|
|
|
268,731
|
|
|
—
|
|
|
268,731
|
|
||||
International securities
|
|
—
|
|
|
22,275
|
|
|
—
|
|
|
22,275
|
|
||||
Debt securities, at fair value
|
|
43,918
|
|
|
384,723
|
|
|
—
|
|
|
428,641
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Equity securities, at fair value
|
|
16,037
|
|
|
1,721
|
|
|
—
|
|
|
17,758
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total investments, at fair value
|
|
$
|
59,955
|
|
|
$
|
386,444
|
|
|
$
|
—
|
|
|
$
|
446,399
|
|
|
|
December 31, 2017
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Debt securities - available-for-sale, at fair value:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
$
|
51,219
|
|
|
$
|
46,918
|
|
|
$
|
—
|
|
|
$
|
98,137
|
|
Obligations of states and political subdivisions
|
|
—
|
|
|
66,266
|
|
|
—
|
|
|
66,266
|
|
||||
Corporate securities
|
|
—
|
|
|
240,919
|
|
|
—
|
|
|
240,919
|
|
||||
International securities
|
|
—
|
|
|
17,916
|
|
|
—
|
|
|
17,916
|
|
||||
Debt securities, at fair value
|
|
51,219
|
|
|
372,019
|
|
|
—
|
|
|
423,238
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Equity securities, at fair value
|
|
15,434
|
|
|
—
|
|
|
—
|
|
|
15,434
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total investments, at fair value
|
|
$
|
66,653
|
|
|
$
|
372,019
|
|
|
$
|
—
|
|
|
$
|
438,672
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
(In thousands)
|
||||||||||||||
December 31, 2018
|
|
$
|
3,809
|
|
|
$
|
1,155
|
|
|
$
|
—
|
|
|
$
|
4,964
|
|
December 31, 2017
|
|
3,936
|
|
|
1,338
|
|
|
—
|
|
|
5,274
|
|
•
|
United States Government Obligations and Authorities:
In determining the fair value for United States government securities in Level 1, the Company uses quoted prices (unadjusted) in active markets for identical or similar assets. In determining the fair value for United States government securities in Level 2, the Company uses the market approach utilizing primary valuation inputs including reported trades, dealer quotes for identical or similar assets in markets that are not active, benchmark yields, credit spreads, reference data and industry and economic events.
|
•
|
Obligations of States and Political Subdivisions:
In determining the fair value for state and municipal securities, the Company uses the market approach utilizing primary valuation inputs including reported trades, dealer quotes for identical or similar assets in markets that are not active, benchmark yields, credit spreads, reference data and industry and economic events.
|
•
|
Corporate and International Securities:
In determining the fair value for corporate securities the Company uses the market approach utilizing primary valuation inputs including reported trades, dealer quotes for identical or similar assets in markets that are not active, benchmark yields, credit spreads (for investment grade securities), observations of equity and credit default swap curves (for high-yield corporates), reference data and industry and economic events.
|
•
|
Equity Securities:
In determining the fair value for equity securities in Level 1, the Company uses quoted prices (unadjusted) in active markets for identical or similar assets. In determining the fair value for equity securities in Level 2, the Company uses the market approach utilizing primary valuation inputs including reported trades, dealer quotes for identical or similar assets in markets that are not active, benchmark yields, credit spreads, reference data and industry and economic events.
|
|
|
Amortized
|
|
Gross
|
|
Gross
|
|
|
||||||||
|
|
Cost
|
|
Unrealized
|
|
Unrealized
|
|
|
||||||||
|
|
or Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
||||||||
|
|
(In thousands)
|
||||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
$
|
127,928
|
|
|
$
|
1,091
|
|
|
$
|
1,151
|
|
|
$
|
127,868
|
|
Obligations of states and political subdivisions
|
|
9,870
|
|
|
27
|
|
|
130
|
|
|
9,767
|
|
||||
Corporate
|
|
273,192
|
|
|
510
|
|
|
4,971
|
|
|
268,731
|
|
||||
International
|
|
22,674
|
|
|
12
|
|
|
411
|
|
|
22,275
|
|
||||
|
|
433,664
|
|
|
1,640
|
|
|
6,663
|
|
|
428,641
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
4,085
|
|
|
1
|
|
|
158
|
|
|
3,928
|
|
||||
Corporate
|
|
986
|
|
|
2
|
|
|
6
|
|
|
982
|
|
||||
International
|
|
55
|
|
|
—
|
|
|
1
|
|
|
54
|
|
||||
|
|
5,126
|
|
|
3
|
|
|
165
|
|
|
4,964
|
|
||||
Total investments, excluding equity securities (1)
|
|
$
|
438,790
|
|
|
$
|
1,643
|
|
|
$
|
6,828
|
|
|
$
|
433,605
|
|
(1)
|
As a result of the adoption of ASU 2016-01 on January 1, 2018 (see additional details in Note
2
above) for our equity securities we now recongnize changes in unrealized gains or losses within our statements of operations; therefore they are not included as of
December 31, 2018
.
|
|
|
Amortized
|
|
Gross
|
|
Gross
|
|
|
||||||||
|
|
Cost
|
|
Unrealized
|
|
Unrealized
|
|
|
||||||||
|
|
or Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
||||||||
|
|
(In thousands)
|
||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
$
|
98,739
|
|
|
$
|
244
|
|
|
$
|
846
|
|
|
$
|
98,137
|
|
Obligations of states and political subdivisions
|
|
66,319
|
|
|
325
|
|
|
378
|
|
|
66,266
|
|
||||
Corporate
|
|
239,435
|
|
|
2,233
|
|
|
749
|
|
|
240,919
|
|
||||
International
|
|
17,807
|
|
|
136
|
|
|
27
|
|
|
17,916
|
|
||||
|
|
422,300
|
|
|
2,938
|
|
|
2,000
|
|
|
423,238
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
$
|
4,160
|
|
|
$
|
9
|
|
|
$
|
106
|
|
|
$
|
4,063
|
|
Corporate
|
|
1,123
|
|
|
21
|
|
|
—
|
|
|
1,144
|
|
||||
International
|
|
66
|
|
|
1
|
|
|
—
|
|
|
67
|
|
||||
|
|
5,349
|
|
|
31
|
|
|
106
|
|
|
5,274
|
|
||||
Equity securities
|
|
14,085
|
|
|
1,628
|
|
|
279
|
|
|
15,434
|
|
||||
Total investments
|
|
$
|
441,734
|
|
|
$
|
4,597
|
|
|
$
|
2,385
|
|
|
$
|
443,946
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Gross realized and unrealized gains:
|
|
|
|
|
|
|
||||||
Debt securities
|
|
$
|
423
|
|
|
$
|
1,814
|
|
|
$
|
3,208
|
|
Equity securities
|
|
2,374
|
|
|
9,944
|
|
|
4,264
|
|
|||
Total gross realized and unrealized gains
|
|
2,797
|
|
|
11,758
|
|
|
7,472
|
|
|||
|
|
|
|
|
|
|
||||||
Gross realized and unrealized losses:
|
|
|
|
|
|
|
||||||
Debt securities
|
|
(3,990
|
)
|
|
(1,671
|
)
|
|
(1,614
|
)
|
|||
Equity securities
|
|
(2,951
|
)
|
|
(1,539
|
)
|
|
(2,813
|
)
|
|||
Total gross realized and unrealized losses
|
|
(6,941
|
)
|
|
(3,210
|
)
|
|
(4,427
|
)
|
|||
Net realized and unrealized gains (losses) on investments
|
|
$
|
(4,144
|
)
|
|
$
|
8,548
|
|
|
$
|
3,045
|
|
|
|
December 31, 2018
|
||||||
|
|
Amortized
|
|
|
||||
|
|
Cost
|
|
Fair Value
|
||||
|
|
(In thousands)
|
||||||
Securities with Maturity Dates
|
|
|
|
|
||||
Debt securities, available-for-sale:
|
|
|
|
|
||||
One year or less
|
|
$
|
20,349
|
|
|
$
|
20,285
|
|
Over one through five years
|
|
194,166
|
|
|
192,491
|
|
||
Over five through ten years
|
|
216,543
|
|
|
213,427
|
|
||
Over ten years
|
|
2,606
|
|
|
2,438
|
|
||
|
|
433,664
|
|
|
428,641
|
|
||
Debt securities, held-to-maturity:
|
|
|
|
|
||||
One year or less
|
|
650
|
|
|
650
|
|
||
Over one through five years
|
|
4,088
|
|
|
3,935
|
|
||
Over five through ten years
|
|
388
|
|
|
379
|
|
||
|
|
5,126
|
|
|
4,964
|
|
||
Total
|
|
$
|
438,790
|
|
|
$
|
433,605
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Interest income
|
|
$
|
12,253
|
|
|
$
|
9,776
|
|
|
$
|
7,920
|
|
Dividends income
|
|
207
|
|
|
478
|
|
|
1,143
|
|
|||
Net investment income
|
|
$
|
12,460
|
|
|
$
|
10,254
|
|
|
$
|
9,063
|
|
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
|
|
|
Gross
|
|
|
|
Gross
|
|
|
|
Gross
|
||||||||||||
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
||||||||||||
|
|
Value
|
|
Losses
|
|
Value
|
|
Losses
|
|
Value
|
|
Losses
|
||||||||||||
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
||||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States government obligations and authorities
|
|
$
|
22,673
|
|
|
$
|
246
|
|
|
$
|
29,727
|
|
|
$
|
905
|
|
|
$
|
52,400
|
|
|
$
|
1,151
|
|
Obligations of states and political subdivisions
|
|
3,254
|
|
|
18
|
|
|
4,786
|
|
|
112
|
|
|
8,040
|
|
|
130
|
|
||||||
Corporate
|
|
160,361
|
|
|
3,058
|
|
|
53,232
|
|
|
1,913
|
|
|
213,593
|
|
|
4,971
|
|
||||||
International
|
|
15,608
|
|
|
217
|
|
|
4,678
|
|
|
194
|
|
|
20,286
|
|
|
411
|
|
||||||
|
|
201,896
|
|
|
3,539
|
|
|
92,423
|
|
|
3,124
|
|
|
294,319
|
|
|
6,663
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt securities, held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States government obligations and authorities
|
|
229
|
|
|
1
|
|
|
3,113
|
|
|
157
|
|
|
3,342
|
|
|
158
|
|
||||||
Corporate
|
|
591
|
|
|
6
|
|
|
90
|
|
|
—
|
|
|
681
|
|
|
6
|
|
||||||
International
|
|
54
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
54
|
|
|
1
|
|
||||||
|
|
874
|
|
|
8
|
|
|
3,203
|
|
|
157
|
|
|
4,077
|
|
|
165
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
$
|
202,770
|
|
|
$
|
3,547
|
|
|
$
|
95,626
|
|
|
$
|
3,281
|
|
|
$
|
298,396
|
|
|
$
|
6,828
|
|
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
|
|
|
Gross
|
|
|
|
Gross
|
|
|
|
Gross
|
||||||||||||
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
||||||||||||
|
|
Value
|
|
Losses
|
|
Value
|
|
Losses
|
|
Value
|
|
Losses
|
||||||||||||
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
United States government obligations and authorities
|
|
$
|
52,368
|
|
|
$
|
517
|
|
|
$
|
19,287
|
|
|
$
|
329
|
|
|
$
|
71,655
|
|
|
$
|
846
|
|
Obligations of states and political subdivisions
|
|
32,030
|
|
|
221
|
|
|
5,676
|
|
|
157
|
|
|
37,706
|
|
|
378
|
|
||||||
Corporate
|
|
109,780
|
|
|
625
|
|
|
6,452
|
|
|
124
|
|
|
116,232
|
|
|
749
|
|
||||||
International
|
|
8,935
|
|
|
27
|
|
|
25
|
|
|
—
|
|
|
8,960
|
|
|
27
|
|
||||||
|
|
203,113
|
|
|
1,390
|
|
|
31,440
|
|
|
610
|
|
|
234,553
|
|
|
2,000
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt securities, held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States government obligations and authorities
|
|
523
|
|
|
4
|
|
|
2,730
|
|
|
102
|
|
|
3,253
|
|
|
106
|
|
||||||
Corporate
|
|
211
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
211
|
|
|
—
|
|
||||||
|
|
734
|
|
|
4
|
|
|
2,730
|
|
|
102
|
|
|
3,464
|
|
|
106
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities
|
|
4,312
|
|
|
279
|
|
|
—
|
|
|
—
|
|
|
4,312
|
|
|
279
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
$
|
208,159
|
|
|
$
|
1,673
|
|
|
$
|
34,170
|
|
|
$
|
712
|
|
|
$
|
242,329
|
|
|
$
|
2,385
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
Reinsurance recoverable on paid losses
|
|
$
|
45,028
|
|
|
$
|
26,256
|
|
Reinsurance recoverable on unpaid losses
|
|
166,396
|
|
|
98,345
|
|
||
Reinsurance recoverable, net
|
|
$
|
211,424
|
|
|
$
|
124,601
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Net Premiums Written
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
567,764
|
|
|
$
|
603,417
|
|
|
$
|
605,485
|
|
Ceded
|
|
(202,732
|
)
|
|
(260,524
|
)
|
|
(285,986
|
)
|
|||
|
|
$
|
365,032
|
|
|
$
|
342,893
|
|
|
$
|
319,499
|
|
|
|
|
|
|
|
|
||||||
Net Premiums Earned
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
580,020
|
|
|
$
|
603,193
|
|
|
$
|
565,423
|
|
Ceded
|
|
(224,763
|
)
|
|
(269,712
|
)
|
|
(304,054
|
)
|
|||
|
|
$
|
355,257
|
|
|
$
|
333,481
|
|
|
$
|
261,369
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Gross reserves, beginning-of-period
|
|
$
|
230,515
|
|
|
$
|
158,110
|
|
|
$
|
97,706
|
|
Less: reinsurance recoverable (1)
|
|
(98,345
|
)
|
|
(40,412
|
)
|
|
(7,496
|
)
|
|||
Net reserves, beginning-of-period
|
|
132,170
|
|
|
117,698
|
|
|
90,210
|
|
|||
|
|
|
|
|
|
|
||||||
Incurred loss, net of reinsurance, related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
231,133
|
|
|
245,545
|
|
|
201,704
|
|
|||
Prior year loss development (2)
|
|
2,166
|
|
|
13,926
|
|
|
13,156
|
|
|||
Ceded losses subject to offsetting experience account adjustments (3)
|
|
(4,883
|
)
|
|
(11,914
|
)
|
|
(17,050
|
)
|
|||
Prior years
|
|
(2,717
|
)
|
|
2,012
|
|
|
(3,894
|
)
|
|||
Total incurred loss and LAE, net of reinsurance
|
|
228,416
|
|
|
247,557
|
|
|
197,810
|
|
|||
|
|
|
|
|
|
|
||||||
Paid loss, net of reinsurance, related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
155,462
|
|
|
160,945
|
|
|
123,364
|
|
|||
Prior years
|
|
75,290
|
|
|
72,140
|
|
|
46,958
|
|
|||
Total paid loss and LAE, net of reinsurance
|
|
230,752
|
|
|
233,085
|
|
|
170,322
|
|
|||
|
|
|
|
|
|
|
||||||
Net reserves, end-of-period
|
|
129,834
|
|
|
132,170
|
|
|
117,698
|
|
|||
Plus: reinsurance recoverable (1)
|
|
166,396
|
|
|
98,345
|
|
|
40,412
|
|
|||
Gross reserves, end-of-period
|
|
$
|
296,230
|
|
|
$
|
230,515
|
|
|
$
|
158,110
|
|
(1)
|
Reinsurance recoverable in this table includes only ceded loss and LAE reserves.
|
(2)
|
Reflects loss development from prior accident years impacting pre-tax net income. Excludes losses ceded under retrospective reinsurance treaties to the extent there is an offsetting experience account adjustment.
|
(3)
|
Reflects losses ceded under retrospective reinsurance treaties to the extent there is an offsetting experience account adjustment, such that there is no impact on pre-tax net income (loss).
|
|
|
IBNR & Expected
|
|
Cumulative
|
||||||||||||||||||||||||||||||||||||||||||||
|
|
Homeowners Incurred Losses and ALAE, Net of Reinsurance
|
|
Development on
|
|
Number of
|
||||||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
|
Reported Claims
|
|
Reported Claims (1)
|
||||||||||||||||||||||||||||||||||||||||||
|
|
(Unaudited)
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2018
|
|
2018
|
||||||||||||||||||||||||
2009
|
|
$
|
26,228
|
|
|
$
|
25,618
|
|
|
$
|
25,955
|
|
|
$
|
26,482
|
|
|
$
|
27,015
|
|
|
$
|
27,041
|
|
|
$
|
27,119
|
|
|
$
|
27,163
|
|
|
$
|
27,173
|
|
|
$
|
27,159
|
|
|
$
|
141
|
|
|
$
|
2,334
|
|
2010
|
|
|
|
24,825
|
|
|
25,056
|
|
|
26,151
|
|
|
27,895
|
|
|
28,968
|
|
|
29,407
|
|
|
29,945
|
|
|
30,459
|
|
|
30,602
|
|
|
30
|
|
|
2,391
|
|
|||||||||||||
2011
|
|
|
|
|
|
20,492
|
|
|
21,344
|
|
|
23,007
|
|
|
23,932
|
|
|
24,582
|
|
|
25,957
|
|
|
26,143
|
|
|
26,394
|
|
|
25
|
|
|
2,428
|
|
||||||||||||||
2012
|
|
|
|
|
|
|
|
23,032
|
|
|
23,301
|
|
|
24,186
|
|
|
24,468
|
|
|
25,889
|
|
|
26,356
|
|
|
26,836
|
|
|
38
|
|
|
2,691
|
|
|||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
43,807
|
|
|
42,021
|
|
|
35,834
|
|
|
35,859
|
|
|
37,185
|
|
|
37,880
|
|
|
139
|
|
|
3,427
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
64,312
|
|
|
63,300
|
|
|
61,770
|
|
|
62,206
|
|
|
61,817
|
|
|
636
|
|
|
7,621
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,497
|
|
|
92,411
|
|
|
95,129
|
|
|
94,760
|
|
|
2,232
|
|
|
13,137
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
171,264
|
|
|
162,043
|
|
|
158,764
|
|
|
11,832
|
|
|
23,982
|
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
202,844
|
|
|
192,769
|
|
|
62,363
|
|
|
62,200
|
|
||||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
210,158
|
|
|
91,887
|
|
|
28,532
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
867,139
|
|
|
|
|
|
(1)
|
The cumulative number of reported claims is measured by individual claimant at a coverage level.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Homeowners Cumulative Paid Losses and ALAE, Net of Reinsurance
|
||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||||||||
|
|
(Unaudited)
|
|
|
||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||||||||||
2009
|
|
$
|
15,047
|
|
|
$
|
23,095
|
|
|
$
|
24,657
|
|
|
$
|
26,007
|
|
|
$
|
26,462
|
|
|
$
|
26,831
|
|
|
$
|
26,927
|
|
|
$
|
26,982
|
|
|
$
|
27,049
|
|
|
$
|
27,015
|
|
2010
|
|
|
|
14,052
|
|
|
21,350
|
|
|
24,730
|
|
|
26,886
|
|
|
27,984
|
|
|
29,092
|
|
|
29,739
|
|
|
30,376
|
|
|
30,449
|
|
|||||||||||
2011
|
|
|
|
|
|
11,119
|
|
|
19,250
|
|
|
21,323
|
|
|
22,723
|
|
|
24,047
|
|
|
25,580
|
|
|
25,982
|
|
|
26,287
|
|
||||||||||||
2012
|
|
|
|
|
|
|
|
|
13,693
|
|
|
20,728
|
|
|
23,120
|
|
|
23,923
|
|
|
25,186
|
|
|
26,113
|
|
|
26,777
|
|
||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
19,986
|
|
|
31,606
|
|
|
33,867
|
|
|
35,123
|
|
|
35,803
|
|
|
37,473
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
37,033
|
|
|
53,831
|
|
|
57,891
|
|
|
59,722
|
|
|
60,555
|
|
||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,214
|
|
|
79,359
|
|
|
86,647
|
|
|
90,415
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,556
|
|
|
142,716
|
|
|
148,274
|
|
||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,589
|
|
|
176,580
|
|
||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
141,173
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
764,998
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
All outstanding liabilities for unpaid claims and ALAE prior to 2009, net of reinsurance
|
|
|
138
|
|
||||||||||||||||||||||||||||||||||||
Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance
|
|
|
$
|
102,279
|
|
|
|
Average Annual Payout of Losses and ALAE, Net of Reinsurance
|
||||||||||||||||||||||||||||
|
|
(Unaudited)
|
||||||||||||||||||||||||||||
|
|
Year 1
|
|
Year 2
|
|
Year 3
|
|
Year 4
|
|
Year 5
|
|
Year 6
|
|
Year 7
|
|
Year 8
|
|
Year 9
|
|
Year 10
|
||||||||||
Homeowners
|
|
57.8
|
%
|
|
23.5
|
%
|
|
5.7
|
%
|
|
3.8
|
%
|
|
2.5
|
%
|
|
3.5
|
%
|
|
1.5
|
%
|
|
1.1
|
%
|
|
0.2
|
%
|
|
—
|
%
|
|
|
IBNR & Expected
|
|
Cumulative
|
||||||||||||||||||||||||||||||||||||||||||||
|
|
Commercial General Liability Incurred Losses and ALAE, Net of Reinsurance
|
|
Development on
|
|
Number of
|
||||||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
|
Reported Claims
|
|
Reported Claims
|
||||||||||||||||||||||||||||||||||||||||||
|
|
(Unaudited)
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2018
|
|
2018
|
||||||||||||||||||||||||
2009
|
|
$
|
13,297
|
|
|
$
|
12,397
|
|
|
$
|
12,220
|
|
|
$
|
11,943
|
|
|
$
|
9,270
|
|
|
$
|
10,192
|
|
|
$
|
10,466
|
|
|
$
|
11,081
|
|
|
$
|
11,621
|
|
|
$
|
12,872
|
|
|
$
|
5
|
|
|
$
|
988
|
|
2010
|
|
|
|
8,552
|
|
|
7,582
|
|
|
7,474
|
|
|
7,045
|
|
|
7,535
|
|
|
7,597
|
|
|
7,645
|
|
|
7,809
|
|
|
8,252
|
|
|
72
|
|
|
691
|
|
|||||||||||||
2011
|
|
|
|
|
|
6,436
|
|
|
5,854
|
|
|
4,749
|
|
|
4,603
|
|
|
4,760
|
|
|
5,409
|
|
|
6,254
|
|
|
6,828
|
|
|
63
|
|
|
1,058
|
|
||||||||||||||
2012
|
|
|
|
|
|
|
|
5,279
|
|
|
4,952
|
|
|
4,801
|
|
|
4,700
|
|
|
4,658
|
|
|
4,346
|
|
|
4,509
|
|
|
121
|
|
|
538
|
|
|||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
7,095
|
|
|
5,069
|
|
|
5,221
|
|
|
5,502
|
|
|
5,704
|
|
|
5,580
|
|
|
219
|
|
|
573
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
7,475
|
|
|
7,709
|
|
|
6,384
|
|
|
6,620
|
|
|
6,348
|
|
|
161
|
|
|
673
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,082
|
|
|
7,008
|
|
|
6,020
|
|
|
5,377
|
|
|
215
|
|
|
713
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,727
|
|
|
5,809
|
|
|
6,561
|
|
|
402
|
|
|
695
|
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,289
|
|
|
7,853
|
|
|
4,634
|
|
|
530
|
|
||||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,553
|
|
|
5,254
|
|
|
313
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
70,733
|
|
|
|
|
|
|
|
Commercial General Liability Cumulative Paid Losses and ALAE, Net of Reinsurance
|
||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||||||||
|
|
(Unaudited)
|
|
|
||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||||||||||
2009
|
|
$
|
2,253
|
|
|
$
|
4,236
|
|
|
$
|
6,466
|
|
|
$
|
7,384
|
|
|
$
|
8,046
|
|
|
$
|
8,593
|
|
|
$
|
10,130
|
|
|
$
|
10,454
|
|
|
$
|
11,308
|
|
|
$
|
12,377
|
|
2010
|
|
|
|
|
1,187
|
|
|
2,279
|
|
|
3,855
|
|
|
5,553
|
|
|
6,363
|
|
|
7,238
|
|
|
7,382
|
|
|
7,631
|
|
|
7,918
|
|
||||||||||
2011
|
|
|
|
|
|
|
|
764
|
|
|
2,763
|
|
|
3,366
|
|
|
3,673
|
|
|
4,246
|
|
|
4,866
|
|
|
5,831
|
|
|
6,349
|
|
||||||||||
2012
|
|
|
|
|
|
|
|
|
|
|
871
|
|
|
1,714
|
|
|
2,632
|
|
|
3,342
|
|
|
3,686
|
|
|
3,841
|
|
|
4,098
|
|
||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
882
|
|
|
2,233
|
|
|
3,366
|
|
|
3,867
|
|
|
4,606
|
|
|
5,033
|
|
|||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
717
|
|
|
2,593
|
|
|
3,855
|
|
|
4,375
|
|
|
5,130
|
|
|||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
798
|
|
|
2,296
|
|
|
3,249
|
|
|
3,827
|
|
|||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,515
|
|
|
3,657
|
|
|
5,088
|
|
|||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,592
|
|
|
2,478
|
|
|||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
963
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
53,261
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
All outstanding liabilities for unpaid claims and ALAE prior to 2009, net of reinsurance
|
|
|
1,416
|
|
||||||||||||||||||||||||||||||||||||
Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance
|
|
|
$
|
18,888
|
|
|
|
Average Annual Payout of Losses and ALAE, Net of Reinsurance
|
||||||||||||||||||||||||||||
|
|
(Unaudited)
|
||||||||||||||||||||||||||||
|
|
Year 1
|
|
Year 2
|
|
Year 3
|
|
Year 4
|
|
Year 5
|
|
Year 6
|
|
Year 7
|
|
Year 8
|
|
Year 9
|
|
Year 10
|
||||||||||
Commercial general liability
|
|
14.1
|
%
|
|
18.5
|
%
|
|
18.5
|
%
|
|
9.1
|
%
|
|
7.6
|
%
|
|
6.0
|
%
|
|
7.7
|
%
|
|
3.4
|
%
|
|
4.7
|
%
|
|
9.6
|
%
|
|
|
IBNR & Expected
|
|
Cumulative
|
||||||||||||||||||||||||||||||||||||||||||||
|
|
Automobile Incurred Losses and ALAE, Net of Reinsurance
|
|
Development on
|
|
Number of
|
||||||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
|
Reported Claims
|
|
Reported Claims
|
||||||||||||||||||||||||||||||||||||||||||
|
|
(Unaudited)
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2018
|
|
2018
|
||||||||||||||||||||||||
2009
|
|
$
|
272
|
|
|
$
|
267
|
|
|
$
|
259
|
|
|
$
|
264
|
|
|
$
|
258
|
|
|
$
|
243
|
|
|
$
|
243
|
|
|
$
|
243
|
|
|
$
|
243
|
|
|
$
|
242
|
|
|
$
|
—
|
|
|
$
|
57
|
|
2010
|
|
|
|
2,823
|
|
|
2,963
|
|
|
3,111
|
|
|
3,088
|
|
|
3,044
|
|
|
3,035
|
|
|
3,059
|
|
|
3,041
|
|
|
3,042
|
|
|
—
|
|
|
969
|
|
|||||||||||||
2011
|
|
|
|
|
|
3,580
|
|
|
3,350
|
|
|
2,954
|
|
|
2,912
|
|
|
2,762
|
|
|
2,848
|
|
|
2,796
|
|
|
2,756
|
|
|
—
|
|
|
789
|
|
||||||||||||||
2012
|
|
|
|
|
|
|
|
1,735
|
|
|
1,741
|
|
|
1,717
|
|
|
1,424
|
|
|
1,455
|
|
|
1,491
|
|
|
1,448
|
|
|
2
|
|
|
822
|
|
|||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
1,517
|
|
|
1,863
|
|
|
1,826
|
|
|
1,829
|
|
|
2,161
|
|
|
2,123
|
|
|
9
|
|
|
3,468
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
2,038
|
|
|
3,213
|
|
|
3,551
|
|
|
4,315
|
|
|
4,379
|
|
|
14
|
|
|
6,006
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,045
|
|
|
2,882
|
|
|
2,781
|
|
|
2,878
|
|
|
62
|
|
|
6,498
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,414
|
|
|
20,205
|
|
|
24,346
|
|
|
482
|
|
|
45,423
|
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,411
|
|
|
22,472
|
|
|
2,222
|
|
|
31,169
|
|
||||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,513
|
|
|
2,230
|
|
|
6,241
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
67,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Automobile Cumulative Paid Losses and ALAE, Net of Reinsurance
|
||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||||||||
|
|
(Unaudited)
|
|
|
||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||||||||||
2009
|
|
$
|
61
|
|
|
$
|
218
|
|
|
$
|
220
|
|
|
$
|
225
|
|
|
$
|
241
|
|
|
$
|
243
|
|
|
$
|
243
|
|
|
$
|
243
|
|
|
$
|
243
|
|
|
$
|
242
|
|
2010
|
|
|
|
|
1,713
|
|
|
2,482
|
|
|
2,715
|
|
|
2,863
|
|
|
2,942
|
|
|
2,978
|
|
|
2,984
|
|
|
3,035
|
|
|
3,037
|
|
||||||||||
2011
|
|
|
|
|
|
|
|
1,417
|
|
|
2,381
|
|
|
2,562
|
|
|
2,644
|
|
|
2,726
|
|
|
2,755
|
|
|
2,755
|
|
|
2,755
|
|
||||||||||
2012
|
|
|
|
|
|
|
|
|
|
|
867
|
|
|
1,293
|
|
|
1,333
|
|
|
1,384
|
|
|
1,393
|
|
|
1,430
|
|
|
1,444
|
|
||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
907
|
|
|
1,609
|
|
|
1,906
|
|
|
2,069
|
|
|
2,109
|
|
|
2,112
|
|
|||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,455
|
|
|
3,120
|
|
|
3,678
|
|
|
4,122
|
|
|
4,291
|
|
|||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,393
|
|
|
2,293
|
|
|
2,670
|
|
|
2,807
|
|
|||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,084
|
|
|
17,258
|
|
|
23,053
|
|
|||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,821
|
|
|
20,762
|
|
|||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,331
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
62,834
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
All outstanding liabilities for unpaid claims and ALAE prior to 2009, net of reinsurance
|
|
|
9
|
|
||||||||||||||||||||||||||||||||||||
Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance
|
|
|
$
|
4,374
|
|
|
|
Average Annual Payout of Losses and ALAE, Net of Reinsurance
|
||||||||||||||||||||||||||||
|
|
(Unaudited)
|
||||||||||||||||||||||||||||
|
|
Year 1
|
|
Year 2
|
|
Year 3
|
|
Year 4
|
|
Year 5
|
|
Year 6
|
|
Year 7
|
|
Year 8
|
|
Year 9
|
|
Year 10
|
||||||||||
Automobile
|
|
41.7
|
%
|
|
32.2
|
%
|
|
16.4
|
%
|
|
5.5
|
%
|
|
2.5
|
%
|
|
1.0
|
%
|
|
0.2
|
%
|
|
0.5
|
%
|
|
—
|
%
|
|
—
|
%
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
Liabilities for unpaid losses and ALAE:
|
|
|
|
|
||||
Homeowners
|
|
$
|
102,279
|
|
|
$
|
99,650
|
|
Commercial general liability
|
|
18,888
|
|
|
17,111
|
|
||
Automobile
|
|
4,374
|
|
|
11,030
|
|
||
Flood
|
|
—
|
|
|
—
|
|
||
Total liabilities for unpaid losses and ALAE, net of reinsurance
|
|
125,541
|
|
|
127,791
|
|
||
|
|
|
|
|
||||
Reinsurance recoverables:
|
|
|
|
|
||||
Homeowners
|
|
158,043
|
|
|
81,852
|
|
||
Commercial general liability
|
|
—
|
|
|
—
|
|
||
Automobile
|
|
8,275
|
|
|
15,360
|
|
||
Flood
|
|
78
|
|
|
1,133
|
|
||
Total reinsurance recoverables
|
|
166,396
|
|
|
98,345
|
|
||
|
|
|
|
|
||||
Unallocated loss adjustment expenses
|
|
4,293
|
|
|
4,379
|
|
||
Gross liability for unpaid losses and LAE
|
|
$
|
296,230
|
|
|
$
|
230,515
|
|
•
|
Reported Loss Development Method
: A reported loss development pattern is calculated based on historical loss development data, and this pattern is then used to project the latest evaluation of cumulative reported losses for each accident year or underwriting year, as appropriate, to ultimate levels;
|
•
|
Paid Development Method
: A paid loss development pattern is calculated based on historical paid loss development data, and this pattern is then used to project the latest evaluation of cumulative paid losses for each accident year or underwriting year, as appropriate, to ultimate levels;
|
•
|
Expected Loss Ratio Method
: Expected loss ratios are applied to premiums earned, based on historical company experience, or historical insurance industry results when company experience is deemed not to be sufficient; and
|
•
|
Bornhuetter-Ferguson Method
: The results from the Expected Loss Ratio Method are essentially blended with either the Reported Loss Development Method or the Paid Development Method.
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Senior unsecured floating rate notes, due December 31, 2027, net of deferred financing costs of $348 and $377, respectively
|
$
|
24,652
|
|
|
$
|
24,623
|
|
Senior unsecured fixed rate notes, due December 31, 2022, net of deferred financing costs of $248 and $302, respectively
|
19,752
|
|
|
19,698
|
|
||
Debt from consolidated VIE, due March 17, 2021, net of deferred financing costs of $0 and $70, respectively
|
—
|
|
|
4,930
|
|
||
Total long-term debt, net
|
$
|
44,404
|
|
|
$
|
49,251
|
|
|
|
Aggregate
|
||
|
|
Debt
|
||
For the Years Ending December 31,
|
|
Maturities
|
||
|
|
(In thousands)
|
||
2019
|
|
$
|
—
|
|
2020
|
|
—
|
|
|
2021
|
|
—
|
|
|
2022
|
|
20,000
|
|
|
2023
|
|
—
|
|
|
Thereafter
|
|
25,000
|
|
|
Total debt maturities
|
|
45,000
|
|
|
Less: deferred financing costs
|
|
596
|
|
|
Total debt maturities, net
|
|
$
|
44,404
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Federal:
|
|
|
|
|
|
|
||||||
Current
|
|
$
|
5,162
|
|
|
$
|
2,431
|
|
|
$
|
5,076
|
|
Deferred
|
|
(751
|
)
|
|
810
|
|
|
(4,714
|
)
|
|||
Federal income tax expense (benefit)
|
|
4,411
|
|
|
3,241
|
|
|
362
|
|
|||
State:
|
|
|
|
|
|
|
||||||
Current
|
|
1,383
|
|
|
494
|
|
|
674
|
|
|||
Deferred
|
|
(296
|
)
|
|
(150
|
)
|
|
(494
|
)
|
|||
State income tax expense (benefit)
|
|
1,087
|
|
|
344
|
|
|
180
|
|
|||
Total income tax expense (benefit)
|
|
$
|
5,498
|
|
|
$
|
3,585
|
|
|
$
|
542
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Computed expected tax expense provision, at federal rate
|
|
$
|
4,244
|
|
|
$
|
3,124
|
|
|
$
|
631
|
|
State tax, net of federal tax benefit
|
|
761
|
|
|
187
|
|
|
50
|
|
|||
Tax-exempt interest
|
|
(134
|
)
|
|
(429
|
)
|
|
(571
|
)
|
|||
Income subject to dividends-received deduction
|
|
(13
|
)
|
|
(76
|
)
|
|
(219
|
)
|
|||
Return to provision
|
|
158
|
|
|
329
|
|
|
145
|
|
|||
Rate changes
|
|
—
|
|
|
297
|
|
|
—
|
|
|||
Executive compensation
|
|
436
|
|
|
185
|
|
|
382
|
|
|||
Meals and entertainment
|
|
28
|
|
|
76
|
|
|
130
|
|
|||
Other
|
|
18
|
|
|
(108
|
)
|
|
(6
|
)
|
|||
Total income tax expense (benefit)
|
|
$
|
5,498
|
|
|
$
|
3,585
|
|
|
$
|
542
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Balance at January 1
|
|
$
|
585
|
|
|
$
|
585
|
|
|
$
|
203
|
|
Increases (decreases) for tax positions taken during the current year
|
|
—
|
|
|
—
|
|
|
382
|
|
|||
|
|
$
|
585
|
|
|
$
|
585
|
|
|
$
|
585
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
Deferred income tax assets:
|
|
|
|
|
||||
Unearned premiums
|
|
$
|
9,977
|
|
|
$
|
9,543
|
|
Unpaid losses and loss adjustment expenses
|
|
958
|
|
|
1,050
|
|
||
Accrued expenses
|
|
832
|
|
|
689
|
|
||
Net operating loss carryforwards
|
|
1,714
|
|
|
1,567
|
|
||
Deferred revenue
|
|
236
|
|
|
—
|
|
||
Share-based compensation
|
|
255
|
|
|
255
|
|
||
Unrealized gains on investment securities
|
|
1,254
|
|
|
—
|
|
||
Other
|
|
21
|
|
|
123
|
|
||
Total deferred income tax assets
|
|
15,247
|
|
|
13,227
|
|
||
|
|
|
|
|
||||
Deferred income tax liabilities:
|
|
|
|
|
||||
Deferred acquisition costs
|
|
(11,198
|
)
|
|
(11,742
|
)
|
||
Depreciation and amortization
|
|
(577
|
)
|
|
(548
|
)
|
||
Unrealized gains on investment securities
|
|
—
|
|
|
(600
|
)
|
||
Other
|
|
(273
|
)
|
|
(30
|
)
|
||
Total deferred income tax liabilities
|
|
(12,048
|
)
|
|
(12,920
|
)
|
||
|
|
|
|
|
||||
Deferred income tax asset (liability), net
|
|
$
|
3,199
|
|
|
$
|
307
|
|
|
|
Aggregate
|
||
|
|
Minimum
|
||
Year Ended December 31,
|
|
Lease Payments
|
||
|
|
(In thousands)
|
||
2019
|
|
$
|
802
|
|
2020
|
|
955
|
|
|
2021
|
|
984
|
|
|
2022
|
|
1,013
|
|
|
2023
|
|
1,043
|
|
|
Thereafter
|
|
5,500
|
|
|
Total
|
|
$
|
10,297
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Restricted stock
|
|
$
|
2,134
|
|
|
$
|
2,639
|
|
|
$
|
3,831
|
|
Performance stock
|
|
233
|
|
|
207
|
|
|
—
|
|
|||
Total share-based compensation expense
|
|
$
|
2,367
|
|
|
$
|
2,846
|
|
|
$
|
3,831
|
|
|
|
|
|
|
|
|
|
|
|
|||
Recognized tax benefit
|
|
$
|
600
|
|
|
$
|
1,098
|
|
|
$
|
1,478
|
|
Intrinsic value of options exercised
|
|
$
|
229
|
|
|
$
|
371
|
|
|
$
|
1,373
|
|
Fair value of restricted stock vested
|
|
$
|
2,360
|
|
|
$
|
2,328
|
|
|
$
|
4,150
|
|
|
|
|
|
Weighted
|
|||
|
|
|
|
Average
|
|||
|
|
Number of
|
|
Option
|
|||
|
|
Shares
|
|
Exercise Price
|
|||
Outstanding at January 1, 2016
|
|
174,633
|
|
|
$
|
3.79
|
|
Granted
|
|
—
|
|
|
—
|
|
|
Exercised
|
|
(94,249
|
)
|
|
3.85
|
|
|
Cancelled
|
|
(900
|
)
|
|
4.40
|
|
|
Outstanding at December 31, 2016
|
|
79,484
|
|
|
3.70
|
|
|
Granted
|
|
—
|
|
|
—
|
|
|
Exercised
|
|
(29,133
|
)
|
|
3.68
|
|
|
Cancelled
|
|
—
|
|
|
—
|
|
|
Outstanding at December 31, 2017
|
|
50,351
|
|
|
3.72
|
|
|
Granted
|
|
—
|
|
|
—
|
|
|
Exercised
|
|
(10,834
|
)
|
|
3.47
|
|
|
Cancelled
|
|
(500
|
)
|
|
2.45
|
|
|
Outstanding at December 31, 2018
|
|
39,017
|
|
|
$
|
3.80
|
|
|
|
Options Outstanding and Exercisable
|
||||||
|
|
|
|
Weighted Average
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
|
|
|
Shares Outstanding
|
|
Contractual Life
|
|
Weighted Average
|
|
Aggregate
|
Range of Exercise Price
|
|
and Exercisable
|
|
(years)
|
|
Exercise Price
|
|
Intrinsic Value
|
$2.45 - $4.40
|
|
39,017
|
|
2.89
|
|
$3.80
|
|
628,993
|
|
|
|
|
Weighted
|
|||
|
|
|
|
Average
|
|||
|
|
Number of
|
|
Grant Date
|
|||
|
|
Shares
|
|
Fair Value
|
|||
Outstanding at January 1, 2016
|
|
418,807
|
|
|
$
|
20.14
|
|
Granted
|
|
128,472
|
|
|
19.16
|
|
|
Vested
|
|
(204,916
|
)
|
|
20.25
|
|
|
Cancelled
|
|
(5,160
|
)
|
|
20.58
|
|
|
Outstanding at December 31, 2016
|
|
337,203
|
|
|
19.69
|
|
|
Granted
|
|
106,454
|
|
|
17.95
|
|
|
Vested
|
|
(140,514
|
)
|
|
16.57
|
|
|
Cancelled
|
|
(5,600
|
)
|
|
19.80
|
|
|
Outstanding at December 31, 2017
|
|
297,543
|
|
|
20.54
|
|
|
Granted
|
|
133,060
|
|
|
16.31
|
|
|
Vested
|
|
(112,071
|
)
|
|
21.06
|
|
|
Cancelled
|
|
(56,198
|
)
|
|
17.87
|
|
|
Outstanding at December 31, 2018
|
|
262,334
|
|
|
$
|
18.78
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
||||||||||||||||||||
|
|
Before
Tax
|
|
Income
Tax
|
|
Net
|
|
Before
Tax
|
|
Income
Tax
|
|
Net
|
||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||
Accumulated other comprehensive income (loss), beginning-of-period
|
|
$
|
2,287
|
|
|
$
|
(593
|
)
|
|
$
|
1,694
|
|
|
$
|
3,324
|
|
|
$
|
(1,201
|
)
|
|
$
|
2,123
|
|
Cumulative effect of new accounting standards
|
|
(1,349
|
)
|
|
355
|
|
|
(994
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive income (loss) before reclassification
|
|
(8,747
|
)
|
|
2,217
|
|
|
(6,530
|
)
|
|
7,511
|
|
|
(2,640
|
)
|
|
4,871
|
|
||||||
Reclassification adjustment for realized losses (gains) included in net income
|
|
2,786
|
|
|
(706
|
)
|
|
2,080
|
|
|
(8,548
|
)
|
|
3,248
|
|
|
(5,300
|
)
|
||||||
|
|
(5,961
|
)
|
|
1,511
|
|
|
(4,450
|
)
|
|
(1,037
|
)
|
|
608
|
|
|
(429
|
)
|
||||||
Accumulated other comprehensive income (loss), end-of-period
|
|
$
|
(5,023
|
)
|
|
$
|
1,273
|
|
|
$
|
(3,750
|
)
|
|
$
|
2,287
|
|
|
$
|
(593
|
)
|
|
$
|
1,694
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands, except per share data)
|
||||||||||
Net income (loss) attributable to FedNat Holding Company shareholders
|
|
$
|
14,928
|
|
|
$
|
7,989
|
|
|
$
|
1,015
|
|
|
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding - basic
|
|
12,775
|
|
|
13,170
|
|
|
13,758
|
|
|||
|
|
|
|
|
|
|
||||||
Net income (loss) per common share - basic
|
|
|
$1.17
|
|
|
|
$0.61
|
|
|
|
$0.07
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding - basic
|
|
12,775
|
|
|
13,170
|
|
|
13,758
|
|
|||
Dilutive effect of stock compensation plans
|
|
92
|
|
|
80
|
|
|
164
|
|
|||
Weighted average number of common shares outstanding - diluted
|
|
12,867
|
|
|
13,250
|
|
|
13,922
|
|
|||
|
|
|
|
|
|
|
||||||
Net income (loss) per common share - diluted
|
|
$
|
1.16
|
|
|
$
|
0.60
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
||||||
Dividends per share
|
|
$
|
0.24
|
|
|
$
|
0.32
|
|
|
$
|
0.27
|
|
|
|
December 31,
|
||
|
|
2017
|
||
Assets
|
|
|
||
Investments:
|
|
|
||
Debt securities, available-for-sale, at fair value
|
|
$
|
25,111
|
|
Equity securities, available-for-sale, at fair value
|
|
1,173
|
|
|
Total investments
|
|
26,284
|
|
|
Cash and cash equivalents
|
|
14,211
|
|
|
Reinsurance recoverable
|
|
3,323
|
|
|
Prepaid reinsurance premiums
|
|
2,481
|
|
|
Premiums receivable, net
|
|
1,184
|
|
|
Deferred acquisition costs
|
|
1,722
|
|
|
Other assets
|
|
2,322
|
|
|
Total assets
|
|
$
|
51,527
|
|
|
|
|
||
Liabilities
|
|
|
||
Loss and loss adjustment expense reserves
|
|
$
|
6,356
|
|
Unearned premiums
|
|
8,752
|
|
|
Reinsurance payable
|
|
1,802
|
|
|
Debt, net of deferred financing costs
|
|
4,930
|
|
|
Other liabilities
|
|
1,825
|
|
|
Total liabilities
|
|
$
|
23,665
|
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
||||||||
|
|
(In thousands, except per share data)
|
||||||||||||||
2018
|
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
|
$
|
82,109
|
|
|
$
|
83,557
|
|
|
$
|
98,493
|
|
|
$
|
91,098
|
|
Total revenue
|
|
$
|
93,077
|
|
|
$
|
95,742
|
|
|
$
|
110,832
|
|
|
$
|
96,442
|
|
Losses and loss adjustment expenses
|
|
$
|
46,071
|
|
|
$
|
47,570
|
|
|
$
|
62,457
|
|
|
$
|
72,318
|
|
Total costs and expenses
|
|
$
|
83,461
|
|
|
$
|
83,726
|
|
|
$
|
99,862
|
|
|
$
|
108,836
|
|
Net income (loss) attributable to FedNat Holding Company shareholders
|
|
$
|
7,463
|
|
|
$
|
8,820
|
|
|
$
|
7,950
|
|
|
$
|
(9,305
|
)
|
Net income (loss) per share - basic
|
|
$
|
0.58
|
|
|
$
|
0.69
|
|
|
$
|
0.62
|
|
|
$
|
(0.73
|
)
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
||||||||
|
|
(In thousands, except per share data)
|
||||||||||||||
2017
|
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
|
$
|
81,660
|
|
|
$
|
83,554
|
|
|
$
|
80,764
|
|
|
$
|
87,503
|
|
Total revenue
|
|
$
|
93,054
|
|
|
$
|
98,159
|
|
|
$
|
98,697
|
|
|
$
|
101,752
|
|
Losses and loss adjustment expenses
|
|
$
|
56,899
|
|
|
$
|
56,417
|
|
|
$
|
75,367
|
|
|
$
|
58,874
|
|
Total costs and expenses
|
|
$
|
89,170
|
|
|
$
|
92,504
|
|
|
$
|
108,876
|
|
|
$
|
92,185
|
|
Net income (loss) attributable to FedNat Holding Company shareholders
|
|
$
|
2,422
|
|
|
$
|
3,995
|
|
|
$
|
(4,724
|
)
|
|
$
|
6,296
|
|
Net income (loss) per share - basic
|
|
$
|
0.18
|
|
|
$
|
0.30
|
|
|
$
|
(0.36
|
)
|
|
$
|
0.48
|
|
|
|
|
|
(a)
|
The following documents are filed as part of this report.
|
|
|
|
|
(1)
|
Financial Statements
|
|
|
|
|
|
The following consolidated financial statements of the Company and the reports of independent auditors thereon are filed with this report:
|
|
|
|
|
|
Consolidated Balance Sheets as of December 31, 2018 and 2017
|
|
|
|
|
|
Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016.
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2018, 2017 and 2016.
|
|
|
|
|
|
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2018, 2017 and 2016.
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016.
|
|
|
|
|
|
Notes to Consolidated Financial Statements for the years ended December 31, 2018, 2017 and 2016.
|
|
|
|
|
(2)
|
Financial Statement Schedules.
|
|
|
|
|
|
The following are included herein under Item 8, Financial Statements and Supplementary Data:
|
|
|
|
|
|
Schedule II, Condensed Financial Information of Registrant
|
|
|
|
|
|
Schedule V, Valuation and Qualifying Accounts
|
|
|
|
|
|
Schedule VI, Supplemental Information Concerning Insurance Operations
|
|
|
|
|
(3)
|
Exhibits.
|
Exhibit Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
Filed
Herewith
|
||
|
|
|
|
Form
|
Exhibit
|
Filing Date
|
|
|
|
|
|
|
|
|
|
2.1
|
|
|
8-K
|
2.1
|
February 26, 2019
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
10-Q
|
3.1
|
November 7, 2018
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
10-Q
|
3.2
|
November 7, 2018
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
SB-2
File No. 333-63623
|
4.1
|
October 27, 1998
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
|
8-K
|
4.1
|
January 3, 2018
|
|
|
|
|
|
|
|
|
|
|
4.3
|
|
|
8-K
|
4.2
|
January 3, 2018
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
|
8-K
|
4.3
|
January 3, 2018
|
|
|
|
|
|
|
|
|
|
|
4.5
|
|
|
8-K
|
4.4
|
January 3, 2018
|
|
|
|
|
|
|
|
|
|
|
4.6
|
|
|
8-K
|
4.5
|
January 3, 2018
|
|
|
|
|
|
|
|
|
|
|
4.7
|
|
|
8-K
|
4.1
|
March 6, 2019
|
|
|
|
|
|
|
|
|
|
|
4.8
|
|
Form of Rule 144A Senior Unsecured Note due 2029 (included in Exhibit 4.7)
|
|
8-K
|
4.2
|
March 6, 2019
|
|
|
|
|
|
|
|
|
|
4.9
|
|
Form of IAI Senior Unsecured Note due 2029 (included in Exhibit 4.7)
|
|
8-K
|
4.3
|
March 6, 2019
|
|
|
|
|
|
|
|
|
|
10.1*
|
|
|
10-Q
|
10.2
|
November 9, 2017
|
|
|
|
|
|
|
|
|
|
|
10.2*
|
|
|
10-Q
|
10.1
|
November 7, 2018
|
|
|
|
|
|
|
|
|
|
|
10.3*
|
|
|
10-Q
|
10.2
|
November 7, 2018
|
|
|
|
|
|
|
|
|
|
|
10.4*
|
|
|
10-Q
|
10.3
|
November 7, 2018
|
|
|
|
|
|
|
|
|
|
|
10.5*
|
|
|
10-Q
|
10.4
|
November 7, 2018
|
|
|
|
|
|
|
|
|
|
|
10.6*
|
|
|
10-Q
|
10.5
|
November 7, 2018
|
|
|
|
|
|
|
|
|
|
|
10.7*
|
|
|
10-Q
|
10.6
|
November 7, 2018
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
|
10-Q
|
10.1
|
May 8, 2018
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
|
10-Q
|
10.2
|
May 8, 2018
|
|
|
|
|
|
|
|
|
|
|
10.10*
|
|
|
10-Q
|
10.9
|
November 9, 2017
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
|
10-Q
|
10.5
|
November 6, 2013
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
|
10-Q
|
10.6
|
November 6, 2013
|
|
|
|
|
|
|
|
|
|
|
10.13
|
|
|
10-Q
|
10.6
|
May 11, 2015
|
|
|
|
|
|
|
|
|
|
|
10.14+
|
|
|
10-Q
|
10.3
|
May 10, 2017
|
|
|
|
|
|
|
|
|
|
|
10.15+
|
|
|
10-Q
|
10.4
|
May 10, 2017
|
|
|
|
|
|
|
|
|
|
|
10.16+
|
|
|
10-K
|
10.30
|
March 16, 2017
|
|
|
|
|
|
|
|
|
|
|
10.17+
|
|
|
10-Q
|
10.5
|
May 10, 2017
|
|
|
|
|
|
|
|
|
|
|
10.18+
|
|
|
8-K
|
99.2
|
January 14, 2019
|
|
|
|
|
|
|
|
|
|
|
10.19+
|
|
|
8-K
|
99.3
|
January 14, 2019
|
|
|
|
|
|
|
|
|
|
|
10.20+
|
|
|
10-K
|
10.14
|
March 17, 2008
|
|
|
|
|
|
|
|
|
|
|
10.21+
|
|
|
8-K
|
10.1
|
August 7, 2013
|
|
|
|
|
|
|
|
|
|
|
10.22+
|
|
|
8-K
|
10.1
|
January 20, 2012
|
|
|
|
|
|
|
|
|
|
|
10.23+
|
|
|
10-Q
|
10.3
|
May 11, 2015
|
|
|
|
|
|
|
|
|
|
|
10.24+
|
|
|
10-Q
|
10.4
|
May 11, 2015
|
|
|
|
|
|
|
|
|
|
|
10.25+
|
|
|
8-K
|
99.1
|
January 14, 2019
|
|
|
|
|
|
|
|
|
|
|
10.26+
|
|
|
10-K
|
10.31
|
March 16, 2017
|
|
|
|
|
|
|
|
|
|
|
10.27
|
|
|
8-K
|
10.1
|
February 26, 2019
|
|
|
|
|
|
|
|
|
|
|
10.28
|
|
|
8-K
|
10.2
|
February 26, 2019
|
|
|
|
|
|
|
|
|
|
|
10.29
|
|
|
8-K
|
10.1
|
March 6, 2019
|
|
|
|
|
|
|
|
|
|
|
10.30
|
|
|
8-K/A
|
10.1
|
March 6, 2019
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
23.1
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.INS**
|
|
XBRL Instance Document.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.SCH**
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.CAL**
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.LAB**
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.PRE**
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
X
|
|
FEDNAT HOLDING COMPANY
|
|
|
|
|
|
|
|
By:
|
/s/ Michael H. Braun
|
|
|
|
Michael H. Braun, Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
Signature
|
|
Title
|
Date
|
|
|
|
|
/s/ Michael H. Braun
|
|
Chief Executive Officer, President and Director
|
March 7, 2019
|
Michael H. Braun
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Ronald A. Jordan
|
|
Chief Financial Officer
|
March 7, 2019
|
Ronald A. Jordan
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Erick A. Fernandez
|
|
Chief Accounting Officer
|
March 7, 2019
|
Erick A. Fernandez
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Bruce F. Simberg
|
|
Chairman of the Board and Director
|
March 7, 2019
|
Bruce F. Simberg
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Jenifer G. Kimbrough
|
|
Director
|
March 7, 2019
|
Jenifer G. Kimbrough
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Thomas A. Rogers
|
|
Director
|
March 7, 2019
|
Thomas A. Rogers
|
|
|
|
|
|
|
|
|
|
|
|
/s/ William G. Stewart
|
|
Director
|
March 7, 2019
|
William G. Stewart
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Richard W. Wilcox, Jr.
|
|
Director
|
March 7, 2019
|
Richard W. Wilcox, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Roberta N. Young
|
|
Director
|
March 7, 2019
|
Roberta N. Young
|
|
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
ASSETS
|
|
|
|
|
||||
Investments in subsidiaries
|
|
$
|
224,951
|
|
|
$
|
220,901
|
|
Investment securities, available-for-sale, at fair value
|
|
19,431
|
|
|
15,826
|
|
||
Equity securities, at fair value
|
|
1,490
|
|
|
—
|
|
||
Cash and cash equivalents
|
|
4,109
|
|
|
46,717
|
|
||
Deferred income taxes, net
|
|
786
|
|
|
415
|
|
||
Income taxes receivable
|
|
9,885
|
|
|
7,700
|
|
||
Other assets
|
|
2,436
|
|
|
1,938
|
|
||
Total assets
|
|
$
|
263,088
|
|
|
$
|
293,497
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
Due to subsidiaries
|
|
$
|
987
|
|
|
$
|
19,624
|
|
Long-term debt
|
|
44,404
|
|
|
44,321
|
|
||
Other liabilities
|
|
2,438
|
|
|
2,093
|
|
||
Total liabilities
|
|
47,829
|
|
|
66,038
|
|
||
|
|
|
|
|
||||
Shareholders' Equity
|
|
|
|
|
||||
Preferred stock
|
|
—
|
|
|
—
|
|
||
Common stock
|
|
128
|
|
|
130
|
|
||
Additional paid-in capital
|
|
141,128
|
|
|
139,728
|
|
||
Accumulated other comprehensive income (loss)
|
|
(3,750
|
)
|
|
1,770
|
|
||
Retained earnings
|
|
77,753
|
|
|
70,009
|
|
||
Total shareholders’ equity attributable to FedNat Holding Company shareholders
|
|
215,259
|
|
|
211,637
|
|
||
Non-controlling interest
|
|
—
|
|
|
15,822
|
|
||
Total shareholders’ equity
|
|
215,259
|
|
|
227,459
|
|
||
Total liabilities and shareholders' equity
|
|
$
|
263,088
|
|
|
$
|
293,497
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Revenues:
|
|
|
|
|
|
|
||||||
Management fees
|
|
$
|
2,608
|
|
|
$
|
2,611
|
|
|
$
|
2,492
|
|
Net investment income
|
|
843
|
|
|
501
|
|
|
623
|
|
|||
Net realized and unrealized investment gains (losses)
|
|
(765
|
)
|
|
—
|
|
|
—
|
|
|||
Equity in income of consolidated subsidiaries
|
|
30,895
|
|
|
16,902
|
|
|
8,550
|
|
|||
Total revenue
|
|
33,581
|
|
|
20,014
|
|
|
11,665
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses:
|
|
|
|
|
|
|
||||||
General and administrative expenses
|
|
9,296
|
|
|
11,087
|
|
|
9,862
|
|
|||
Interest expense
|
|
4,077
|
|
|
—
|
|
|
—
|
|
|||
Total costs and expenses
|
|
13,373
|
|
|
11,087
|
|
|
9,862
|
|
|||
|
|
|
|
|
|
|
||||||
Income (loss) before income taxes
|
|
20,208
|
|
|
8,927
|
|
|
1,803
|
|
|||
Income tax expense (benefit)
|
|
5,498
|
|
|
3,585
|
|
|
542
|
|
|||
Net income (loss)
|
|
14,710
|
|
|
5,342
|
|
|
1,261
|
|
|||
Net income (loss) attributable to non-contolling interest
|
|
(218
|
)
|
|
(2,647
|
)
|
|
246
|
|
|||
Net income (loss) attributable to FedNat Holding Company shareholders
|
|
$
|
14,928
|
|
|
$
|
7,989
|
|
|
$
|
1,015
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Cash flow from operating activities:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
14,710
|
|
|
$
|
5,342
|
|
|
$
|
1,261
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
||||||
Net realized and unrealized investment (gains) losses
|
|
765
|
|
|
—
|
|
|
—
|
|
|||
Equity in undistributed income of consolidated subsidiaries
|
|
(30,895
|
)
|
|
(16,902
|
)
|
|
(10,691
|
)
|
|||
Amortization of investment premium or discount, depreciation and amortization
|
|
141
|
|
|
88
|
|
|
73
|
|
|||
Share-based compensation
|
|
1,183
|
|
|
2,846
|
|
|
4,420
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Deferred income taxes, net of other comprehensive (loss) income
|
|
(230
|
)
|
|
(2,057
|
)
|
|
2,127
|
|
|||
Income taxes, net
|
|
(2,141
|
)
|
|
6,411
|
|
|
2,978
|
|
|||
Due to subsidiaries
|
|
(9,317
|
)
|
|
20,468
|
|
|
23,574
|
|
|||
Other, net
|
|
1,497
|
|
|
1,450
|
|
|
3,786
|
|
|||
Net cash provided by (used in) operating activities
|
|
(24,287
|
)
|
|
17,646
|
|
|
27,528
|
|
|||
Cash flow from investing activities:
|
|
|
|
|
|
|
||||||
Capital contributions to consolidated subsidiaries
|
|
(30,000
|
)
|
|
(25,000
|
)
|
|
—
|
|
|||
Sales, maturities and redemptions of investments securities
|
|
54,543
|
|
|
42,979
|
|
|
76,928
|
|
|||
Purchases of investment securities
|
|
(61,009
|
)
|
|
(26,828
|
)
|
|
(83,724
|
)
|
|||
Purchases of property and equipment
|
|
(639
|
)
|
|
(102
|
)
|
|
(299
|
)
|
|||
Net cash provided by (used in) investing activities
|
|
(37,105
|
)
|
|
(8,951
|
)
|
|
(7,095
|
)
|
|||
Cash flow from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
|
—
|
|
|
45,000
|
|
|
—
|
|
|||
Tax impact related to share-based compensation
|
|
—
|
|
|
—
|
|
|
589
|
|
|||
Issuance of common stock for share-based awards
|
|
39
|
|
|
103
|
|
|
361
|
|
|||
Purchases of FedNat Holding Company common stock
|
|
(5,061
|
)
|
|
(10,616
|
)
|
|
(11,317
|
)
|
|||
Dividends from consolidated subsidiaries
|
|
27,990
|
|
|
—
|
|
|
—
|
|
|||
Dividends paid
|
|
(4,184
|
)
|
|
(4,251
|
)
|
|
(4,677
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
18,784
|
|
|
30,236
|
|
|
(15,044
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
(42,608
|
)
|
|
38,931
|
|
|
5,389
|
|
|||
Cash and cash equivalents at beginning of period
|
|
46,717
|
|
|
7,786
|
|
|
2,397
|
|
|||
Cash and cash equivalents at end of period
|
|
$
|
4,109
|
|
|
$
|
46,717
|
|
|
$
|
7,786
|
|
|
|
|
|
|
|
Charged to
|
|
|
|
|
||||||||
|
|
|
|
Balance at
|
|
Costs and
|
|
|
|
Balance at
|
||||||||
Year
|
|
Description
|
|
January 1,
|
|
Expenses
|
|
Deductions
|
|
December 31,
|
||||||||
|
|
|
|
(in thousands)
|
||||||||||||||
2018
|
|
Allowance for uncollectible reinsurance recoverable
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Allowance for uncollectible premiums receivable
|
|
$
|
70
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
77
|
|
2017
|
|
Allowance for uncollectible reinsurance recoverable
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Allowance for uncollectible premiums receivable
|
|
$
|
55
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
70
|
|
2016
|
|
Allowance for uncollectible reinsurance recoverable
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Allowance for uncollectible premiums receivable
|
|
$
|
302
|
|
|
$
|
(219
|
)
|
|
$
|
(28
|
)
|
|
$
|
55
|
|
|
|
|
|
December 31,
|
|
Year Ended December 31,
|
|
|||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
Loss and
|
|
|
|
|
|
|
|
Claim and Claim
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
Loss
|
|
|
|
|
|
|
|
Adjustment Expenses
|
|
Amortization
|
|
Paid Claims
|
|
|
||||||||||||||||||||||
|
|
|
|
Deferred
|
|
Adjustment
|
|
|
|
|
|
Net
|
|
Incurred Related to
|
|
of Deferred
|
|
and Claim
|
|
Net
|
||||||||||||||||||||||
|
|
|
|
Acquisition
|
|
Expense
|
|
Unearned
|
|
Earned
|
|
Investment
|
|
Current
|
|
Prior
|
|
Acquisition
|
|
Adjustment
|
|
Premiums
|
||||||||||||||||||||
Year
|
|
Line of Business
|
|
Cost
|
|
Reserves
|
|
Premiums
|
|
Premiums
|
|
Income
|
|
Year
|
|
Year
|
|
Costs
|
|
Expenses
|
|
Written
|
||||||||||||||||||||
|
|
|
|
(In thousands)
|
||||||||||||||||||||||||||||||||||||||
2018
|
|
Property and Casualty Insurance
|
|
$
|
39,436
|
|
|
$
|
296,230
|
|
|
$
|
281,992
|
|
|
$
|
355,257
|
|
|
$
|
12,460
|
|
|
$
|
231,133
|
|
|
$
|
(2,717
|
)
|
|
$
|
97,873
|
|
|
$
|
230,752
|
|
|
$
|
365,032
|
|
2017
|
|
Property and Casualty Insurance
|
|
$
|
40,893
|
|
|
$
|
230,515
|
|
|
$
|
294,423
|
|
|
$
|
333,481
|
|
|
$
|
10,254
|
|
|
$
|
245,545
|
|
|
$
|
2,012
|
|
|
$
|
87,310
|
|
|
$
|
233,085
|
|
|
$
|
342,893
|
|
2016
|
|
Property and Casualty Insurance
|
|
$
|
41,892
|
|
|
$
|
158,110
|
|
|
$
|
294,022
|
|
|
$
|
261,369
|
|
|
$
|
9,063
|
|
|
$
|
201,704
|
|
|
$
|
(3,894
|
)
|
|
$
|
57,452
|
|
|
$
|
170,322
|
|
|
$
|
319,499
|
|
I, Michael H. Braun, certify that:
|
||||
|
|
|
|
|
1. I have reviewed this Annual Report on Form 10-K of FedNat Holding Company;
|
||||
|
|
|
|
|
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 the registrant’s board of directors (or persons performing the equivalent functions):
|
||||
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
Date: March 7, 2019
|
|
|||
|
|
|||
/s/ Michael H. Braun
|
|
|||
Michael H. Braun
|
|
|||
Chief Executive Officer (Principal Executive Officer)
|
I, Ronald Jordan, certify that:
|
||||
|
|
|
|
|
1. I have reviewed this Annual Report on Form 10-K of FedNat Holding Company;
|
||||
|
|
|
|
|
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 the registrant’s board of directors (or persons performing the equivalent functions):
|
||||
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
Date: March 7, 2019
|
|
|||
|
|
|
|
|
/s/ Ronald A. Jordan
|
|
|||
Ronald A. Jordan
|
|
|||
Chief Financial Officer (Principal Financial Officer)
|
|
|
|
|
/s/ Michael H. Braun
|
|
|
Michael H. Braun
|
|
|
|
|
|
/s/ Ronald A. Jordan
|
|
|
Ronald A. Jordan
|
|