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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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EXPLANATORY NOTE
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PART III
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.
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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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.
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ITEM 15
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EXHIBITS, FINANCIAL STATEMENT SCHEDULES
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SIGNATURES
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Name
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Age
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Position with Company
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Michael H. Braun (1)
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51
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Chief Executive Officer, President, Class I Director
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Jenifer G. Kimbrough (2)(4)(5)
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48
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Class I Director
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Bruce F. Simberg (1)(3)
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70
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Chairman of the Board, Class II Director
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Richard W. Wilcox Jr. (2)(4)(5)
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77
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Lead Independent Director, Class II Director
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William G. Stewart (3)(5)
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70
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Class II Director
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Thomas A. Rogers (1)(4)(5)
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67
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Class III Director
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Roberta N. Young (2)(3)(5)
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69
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Class III Director
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Ronald A. Jordan
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51
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Chief Financial Officer
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(1)
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Business Strategy Committee Member
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(2)
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Audit Committee Member
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(3)
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Investment Committee Member
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(4)
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Compensation Committee Member
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(5)
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Nominating Committee Member
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•
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The Board added two new independent directors in 2015 and a third new independent director in 2017, continuing the Board’s refreshment efforts and maintaining the number of independent directors at six of the seven Board members, or 86%.
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•
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The Board has separated the roles of Chairman of the Board and Chief Executive Officer.
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•
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The Board amended the Company’s bylaws to implement a majority voting standard for uncontested elections of directors.
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•
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The Board approved increasing the frequency of the shareholder vote on executive compensation (“say- on-pay”) to occur annually.
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•
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The Board amended the Company’s articles and bylaws to reduce the supermajority requirement (66- 2/3% of the shares outstanding) to amend certain provisions to a simple majority of shares outstanding.
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•
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The Board amended the Company’s articles and bylaws to reduce the percentage of shares required to call a special meeting from 33% to 25%.
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•
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The Board approved stock ownership and retention guidelines applicable to our directors, in addition to our Chief Executive Officer and Chief Financial Officer. Under these guidelines, our outside, non- employee directors are each required to hold shares of the Company’s common stock with a value of at least four times their annual retainer. The guidelines further provide that the outside directors should achieve the guideline amounts within five years of the policy’s adoption and, until the guideline amounts are achieved, our directors must retain 66-2/3% of any shares received as equity grants from the Company, net of shares withheld or sold to pay taxes.
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•
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The Board prohibited directors and executive officers from hedging or pledging the Company’s common stock, without exception.
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•
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The Board adopted corporate governance guidelines, which update, consolidate and memorialize the corporate governance practices followed by the Board and the Company.
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•
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The Company’s Amended and Restated 2012 Stock Incentive Plan was amended to prohibit option repricing and implement a one-year minimum vesting requirement, and similar provisions were included in the 2018 Omnibus Incentive Compensation Plan approved by the shareholders at the 2018 Annual Meeting of Shareholders.
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•
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The Board adopted the most restrictive definition of “independence” when appointing the current members of its Compensation and Nominating committees.
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•
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Director qualifications generally and guidelines on the composition of the Board and its committees;
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•
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Director responsibilities and the standards for carrying out such responsibilities;
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•
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Board membership criteria;
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•
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Board committee requirements;
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•
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Director compensation;
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•
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Director access to management and independent advisors;
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•
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Director orientation and continuing education requirements; and
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•
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Chief Executive Officer evaluation, management succession and Chief Executive Officer compensation.
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What We Do
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What We Do Not Do
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ü
Establish long-term performance-based criteria for the equity awards to our Chief Executive Officer, which for 2018 constituted 50%, and for 2019 will constitute 40%, of his total incentive award.
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x
No change-in-control excise tax gross-ups.
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ü
Enforce a clawback policy that allows for the recovery of previously paid incentive compensation in the event of a restatement of our financial statements.
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x
No tax gross-ups on perquisites.
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ü
Maintain rigorous stock ownership and retention guidelines for our executive officers and directors.
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x
No excessive perquisites.
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ü
Execute a robust shareholder outreach program to solicit investor feedback on compensation plan design and disclosure and which we will continue in connection with this Annual Meeting.
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x
No hedging or pledging of the Company’s common stock.
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ü
Require a “double trigger” for the payment of change-in-control payments to our Named Executive Officers, meaning that payments will not be triggered without a qualifying termination following a change in control, and to provide that any such change in control payment would be based on the average of the preceding three years’ actual bonuses earned.
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x
No option repricing or repurchases of underwater options without shareholder approval.
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•
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Total revenue in our homeowners line of business increased 13.4% to $364.8 million, driving consolidated total revenue growth of 1.1%, despite the substantial reduction in revenue from the non-core lines of business we are exiting.
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•
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Net income attributable to the Company’s shareholders grew to $14.9 million, up 86.9% over the prior year.
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•
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Book value per share, excluding non-controlling interest, grew to 6% to $17.13 from $16.16 in 2017, overcoming the substantial adverse impact of Hurricane Michael.
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•
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We maintained the Company’s dividend at $0.08 per quarter, returning almost $4.2 million to shareholders based on dividends paid during the year.
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•
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Through rigorous focus on exposure management and underwriting, the Company reduced the cost of its catastrophe reinsurance program by approximately $30 million for the 2018-2019 treaty year.
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•
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The Company continued its expansion outside of Florida. Collectively, gross written premium in Alabama, Louisiana, South Carolina and Texas increased by 48.1% in 2018 to over $81 million.
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•
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We reduced our total staffing by over 100 positions during 2018, as we continue to maximize operational initiatives, representing annualized savings of approximately $6 million.
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•
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Lastly, the Company completed a thorough due diligence and negotiation process culminating in our recent announcement of the pending acquisition of the insurance operations of 1347 Property Insurance Holdings, Inc. This pending transaction will further diversify the Company’s premium base, adds organic non-Florida agent distribution, and increases our scale, and is expected to be meaningfully accretive to 2019 earnings.
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Name and
Principal Position |
Year
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Base Salary Rate
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Annual
Incentive and Other Cash Awards |
Long-Term
Incentive and Other Share-Based Awards |
Total
Compensation |
|||||||||||||||||
Target
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Actual
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Target
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Actual-to-Date
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Target
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Actual-to-Date
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|||||||||||||||||
Michael H. Braun
Chief Executive Officer and President (1) |
2018
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$1,000,000
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$875,000
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$534,167
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$875,000
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$0
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$2,750,000
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$1,534,167
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2017
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$1,000,000
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$875,000
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$698,333
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$875,000
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$0
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$2,750,000
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$1,698,333
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2016
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$1,000,000
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--
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--
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--
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--
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$1,000,000
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$1,000,000
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Ronald A. Jordan
Chief Financial Officer (2) |
2018
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$290,000
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$108,750
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$100,000
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$108,750
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$100,000
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$613,896
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$490,000
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2017
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$275,000
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--
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$100,000
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--
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$151,500
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$275,000
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$526,500
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2016
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--
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--
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--
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--
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--
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--
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--
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(1)
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The 2018 annual incentive award was paid in 2019 for short-term performance goals met in 2018 and included a discretionary component. The 2018 long-term incentive award of 53,713 shares of restricted stock (at Target payout level) was granted in 2018 for performance-based goals to be met over a three-year period from 2018 to 2020. Such goals were not met in 2018, resulting in the forfeiture of 11,936 shares (or $194,000 based on the grant date share price), thus far, from this grant. The 2017 annual incentive award was paid in 2018 for 2017 short-term performance goals met in 2017. The 2017 long-term incentive award of 47,971 shares of restricted stock (at Target payout level) was granted in 2017 for performance-based goals to be met over a three-year period from 2017 to 2019. Such goals were not met in 2017 and 2018, resulting in the forfeiture of 21,320 shares (or $389,000 based on the grant date share price), thus far, from this grant.
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(2)
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The 2018 annual incentive award was paid in 2019 for short-term performance goals met in 2018, and included a discretionary component. The 2018 long-term incentive award includes:(1) 6,675 shares of restricted stock was granted in 2018 for performance-based goals to be met over a three-year period from 2018 to 2020. Such goals were not met in 2018, resulting in the forfeiture of 1,482 shares (or $24,000 based on the grant date share price), thus far, from this grant; and (2) 5,546 shares of restricted stock (or $100,000) granted in 2019 that time-vests over a five-year period. Mr. Jordan joined the Company in April 2017 and was not a participant in the 2017 incentive compensation plan. The 2017 cash award was paid in 2018 for Mr. Jordan’s efforts during 2017. Mr. Jordan received a grant of 10,000 shares of restricted stock (or $151,500 based on the grant date share price) and $100,000 for relocation expenses as part of the terms of his employment when he joined the Company. The relocation allowance is not included in this table, as the Compensation Committee deems to be an expense reimbursement rather than compensation.
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What We Heard
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How We Responded
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§
The metrics used to determine awards under the short and long-term incentive plans should be different from one another and closely tied to Company performance, and Compensation Committee should minimize discretionary payouts.
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§
Beginning in 2017, the Compensation Committee approved a new formula-based short and long-term incentive plan structure for evaluating our Chief Executive Officer’s performance, with 50% of his incentive award based on annual financial goals that reflect the Company’s financial and operating performance on a year-to-year basis, and 50% based on long-term financial goals that reflect the growth realized by the Company’s shareholders over a more extended horizon. This incentive structure continued in 2018, including further refinement of the annual and long-term metrics, as described below.
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§
The use of increase in gross revenues as a performance metric may encourage growth at the expense of overall profitability.
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§
For the 2019 incentive compensation plan, we have eliminated the performance-based metric related to increasing in gross revenues. Such action is consistent with our stated focus on increasing our profitability and growing our net income.
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§
Our historical reliance on time-based vesting of equity awards should be reduced, with the emphasis instead on performance-based vesting of equity.
§
Awards made under the long-term incentive plan should be granted predominantly in the form of equity, rather than cash.
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§
Beginning in 2017, a portion of our Chief
Executive Officer’s awards under the incentive plan were granted 100% in the form of performance-based equity. In 2018, this approach was applied to the Chief Financial Officer’s incentive compensation as well.
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§
The Company should clearly disclose the performance metrics, goals and weighting that were considered when determining our Named Executive Officers’ incentive compensation payouts.
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§
We have substantially revamped and restructured our Compensation Discussion and Analysis to provide a more detailed and transparent presentation of the alignment between pay and performance. Although the Company does not provide earnings guidance, and accordingly has not disclosed the specific measurement levels for the performance metrics, we have expanded our disclosures to describe how the measurement levels were determined.
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§
The Company should consider amending its
executive employment agreement(s) from a “single- trigger” for the payment of change of control bonus to a “double-trigger” for payment.
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§
We amended our Chief Executive Officer’s
employment agreement to provide for a “double- trigger” for payment of his change of control bonus and to modify the calculation of that bonus to be based on the average of the Chief Executive Officer’s actual bonuses received for the three years prior to the change of control. This same provision was incorporated into the employment agreement recently executed with our Chief Financial Officer.
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-
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HCI Group, Inc. (NYSE: HCI)
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-
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United Insurance Holdings Corp. (NASDAQ: UIHC)
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-
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Universal Insurance Holdings, Inc. (NYSE: UVE).
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-
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Safety Insurance Group Inc. (NASDAQ: SAFT)
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-
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Donegal Group Inc. (NASDAQ: DGICA)
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-
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Greenlight Capital Re Ltd. (NASDAQ: GLRE)
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-
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Third Point Reinsurance Ltd. (NYSE: TPRE)
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-
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Hallmark Financial Services (NASDAQ: HALL)
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-
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First Acceptance Corp. (NYSE: FAC)
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-
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Atlas Financial Holdings Inc. (NASDAQ: AFH)
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-
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RLI Corp. (NYSE: RLI)
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-
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EMC Insurance Group Inc. (NASDAQ: EMCI)
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-
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Baldwin & Lyons (NASDAQ: BWINB)
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-
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Atlantic American Corp. (NASDAQ: AAME)
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•
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ROE was 8.3%, which was below the minimum;
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•
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Expense control was 40.3%, which substantially achieved the target level of 40.0%; and
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•
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EBITDA was $25.7 million, which was below the minimum.
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•
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Rigorous exposure management that drove a $30 million reduction in the cost of the Company’s excess-of-loss catastrophe reinsurance spend for the treaty year ending June 30, 2019.
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•
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Growth in net income to $14.9 million, up 86.9% over 2017, driven by $22.2 million of earnings from our core homeowners business, a 689% increase over the prior year.
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•
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Streamlining of corporate operations and corresponding reductions in overhead, representing annualized savings of approximately $6 million.
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•
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Increase in gross revenues was 1.1%, which was below the minimum;
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•
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Increase in book value per share was 6.0%, which was below the minimum; and
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•
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The Relative TSR metric will not be determined for two more years.
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•
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ROE was 8.3%, which was below the minimum;
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•
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Increase in book value per share was 6.0%, which was below the minimum; and
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•
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The Relative TSR metric will not be determined for one more year; however, cumulative performance through two years of the three-year measurement period is below the Threshold level of achievement.
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•
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The removal of increase in gross revenues as an incentive compensation metric, to avoid any incentive that might encourage unprofitable growth;
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•
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Total shareholder return was removed as a metric, as the Compensation Committee concluded it often does not accurately reflect the effectiveness of management’s actions over the performance period, due to the impacts of macroeconomics, investor sentiment and other external factors;
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•
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ROE was moved to the long-term component of the plan; and
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•
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Adjustments to the relative weighting of the annual and long-term components of the plan, as well as the underlying metrics contained therein.
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•
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Adding an option for the Compensation Committee to consider achievement of other important Company initiatives when determining up to 10% of the annual award.
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Performance Metrics
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Weight
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Threshold
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Target
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Maximum
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EBITDA
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0.25
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1.00
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1.75
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2.50
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Expense Control
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0.25
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1.00
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1.75
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2.50
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Discretionary component
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0.10
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1.00
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1.75
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2.50
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Performance Metrics
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Weight
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Threshold
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Target
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Maximum
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ROE
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0.20
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1.00
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1.75
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2.50
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Increase in Book Value Per Share
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0.20
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1.00
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1.75
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2.50
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Name and
Principal Position |
Year
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Salary
|
Bonus
(1) |
Stock Awards
|
Option Awards
|
Non-Equity Incentive Plan Compensation (2)
|
Nonqualified Deferred Compensation Earnings
|
All Other Compensation (3)
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Total
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||||||||||||||
Michael H. Braun
Chief Executive Officer and President |
2018
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$1,000,000
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--
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$872,836
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(4)
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--
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$534,167
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--
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$16,200
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$2,423,203
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2017
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$1,000,000
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--
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$875,000
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(5)
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--
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$698,333
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--
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$16,200
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$2,589,533
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||
2016
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$993,846
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--
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--
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--
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--
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--
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$35,093
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$1,028,939
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||||
Ronald A. Jordan
Chief Financial Officer |
2018
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$290,000
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--
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$208,469
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(6)
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--
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$100,000
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--
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$15,427
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|
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$613,896
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2017
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$190,419
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$100,000
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$151,500
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--
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--
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--
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$103,219
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(7)
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$545,138
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||
2016
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--
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--
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--
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--
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--
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--
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--
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--
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(1)
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Reflects cash bonuses earned by the Named Executive Officer for the applicable fiscal year but that were paid in the following fiscal year. Mr. Jordan was not a participant in the Company’s incentive compensation plan in 2017.
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(2)
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Reflects annual incentive bonuses based on performance criteria for the stated year, each of which were paid in the following fiscal year.
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(3)
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See table "All Other Compensation" below for an itemized disclosure of this element of compensation.
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(4)
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Reflects long-term incentive award of 53,713 shares (at Target payout level) of restricted stock granted in 2018 for performance-based goals to be met over a three-year period from 2018 to 2020, of which certain goals were not met in 2018, resulting in the forfeiture of 11,936 shares (or $194,000 based on the grant date share price), thus far, from this grant.
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(5)
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Reflects (1) long-term incentive award of 47,971 shares (at Target payout level) of restricted stock granted in 2017 for performance-based goals to be met over a three-year period from 2017 to 2019, of which certain goals were not met in 2017 and 2018, resulting in the forfeiture of 21,320 shares (or $389,000 based on the grant date share price), thus far, from this grant, and (2) 5,546 shares of restricted stock (or $100,000 based on the grant date share price) granted in 2019 that time-vests over a five-year period.
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(6)
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Reflects long-term incentive award of 6,675 shares (at Target payout level) of restricted stock granted in 2018 for performance-based goals to be met over a three-year period from 2018 to 2020, of which certain goals were not met in 2018, resulting in the forfeiture of 1,482 shares (or $24,000 based on the grant date share price) from this grant.
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(7)
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This amount includes the amount of relocation expense that was paid to Mr. Jordan.
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ALL OTHER COMPENSATION
|
||||||||||||||||||
Name
|
Year
|
Auto
|
Relocation
|
Insurance
Benefits (1) |
Contribution to 401(k) Plan (2)
|
All Other Compensation Total
|
||||||||||||
Michael H. Braun
|
2018
|
--
|
|
|
--
|
|
--
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|
|
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$16,200
|
|
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$16,200
|
|
|||
2017
|
--
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|
(3)
|
--
|
|
--
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|
(3)
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|
$16,200
|
|
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$16,200
|
|
||||
2016
|
|
$3,817
|
|
(3)
|
--
|
|
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$11,261
|
|
|
|
$20,015
|
|
|
$35,093
|
|
||
Ronald A. Jordan
|
2018
|
--
|
|
|
--
|
|
--
|
|
|
|
$15,427
|
|
|
$15,427
|
|
|||
2017
|
--
|
|
|
|
$100,000
|
|
--
|
|
|
|
$3,219
|
|
|
$103,219
|
|
|||
2016
|
--
|
|
|
--
|
|
--
|
|
|
--
|
|
--
|
|
(1)
|
Represents premiums for medical insurance.
|
(2)
|
Represents matching contributions and a discretionary profit contribution made by the Company on behalf of the Named Executive Officers to the Company’s 401(k) plan.
|
(3)
|
Mr. Braun’s automobile allowance was eliminated in July 2016 and payment of 100% of his health insurance premiums was eliminated effective January 1, 2017.
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Name
|
Grant Date
|
All Other Equity Awards /
Number of Securities Underlying Options
|
Exercise or Base
Price of Equity Awards
|
Grant Date Fair Value of Equity Awards (1)
|
Michael H. Braun
|
3/16/2018
|
53,713 (2)
|
--
|
$872,836
|
Ronald A. Jordan
|
3/16/2018
|
6,675 (2)
|
--
|
$108,469
|
(1)
|
This amount reflects the aggregate grant date fair value of the shares granted at the Target level of payout. The grant date fair value is based on the closing price of the Common Stock at the applicable grant date.
|
(2)
|
Shares granted in 2018 for performance awards to be based on 2018 to 2020 performance.
|
|
Stock Option Awards
|
Restricted Stock Awards
|
|||||||||
Name
|
Number of Securities Underlying Exercisable Options (#)
|
Number of Securities Underlying Unexercisable Options (#)
|
Option Exercise Price ($)
|
Option Expiration Date
|
Shares That Have
Not Vested (#) |
Market Value of Shares That Have
Not Vested ($) (1) |
Number of Unearned Shares, Units or Other Rights That Have
Not Vested |
Market or Payout Value of Unearned Shares, Units or Other Rights That Have
Not Vested |
|||
Michael H. Braun
|
|
|
|
|
9,000
|
|
$179,280
|
|
--
|
--
|
(2)
|
|
|
|
|
10,000
|
|
$199,200
|
|
--
|
--
|
(3)
|
|
|
|
|
|
20,000
|
|
$398,400
|
|
--
|
--
|
(4)
|
|
|
|
|
|
18,789
|
|
$374,277
|
|
--
|
--
|
(5)
|
|
|
|
|
|
38,072
|
|
$758,394
|
|
--
|
--
|
(6)
|
|
|
|
|
|
59,682
|
|
$1,188,865
|
|
--
|
--
|
(7)
|
|
Ronald A. Jordan
|
|
|
|
|
8,000
|
|
$159,360
|
|
|
|
(8)
|
|
|
|
|
7,788
|
|
$155,137
|
|
|
|
(9)
|
(1)
|
Based on the market value per share of $19.92 on 12/31/2018.
|
(2)
|
Restricted stock vested as to 80% as of 12/31/2018, the remaining 20% vest as follows: 20% on 9/9/2019.
|
(3)
|
Restricted stock vested as to 80% as of 12/31/ 2018, the remaining 20% vest as follows:
|
(4)
|
Restricted stock vested as to 60% as of 12/31/ 2018, the remaining 40% vest as follows: 20% on 5/5/2019 and 20% on 5/5/2020.
|
(5)
|
Restricted stock vested as to 40% as of 12/31/ 2018, the remaining 60% vest as follows:
|
(6)
|
A portion of this grant is performance-based restricted stock that cliff vests over a three-year period from 2017 to 2019 and the remaining portion vests based on performance achieved in 2019. The Threshold level of Company performance was not achieved for 2017 and 2018, therefore the annually measured components of the grant for those years were forfeited.
|
(7)
|
A portion of this grant is performance-based restricted stock that cliff vests over a three-year period from 2018 to 2020 and the remaining portion vests based on performance achieved each year from 2019 to 2020. The Threshold level of Company performance was not achieved for 2018, therefore the annually measured component of the grant for that year was forfeited.
|
(8)
|
Restricted stock vested as to 20% as of 12-31-18, the remaining 80% vest as follows:
|
(9)
|
A portion of this grant is performance-based restricted stock that cliff vests over a three-year period from 2018 to 2020 and the remaining portion vests based on performance achieved each year from 2019 to 2020. The Threshold level of Company performance was not achieved for 2018, therefore the annually measured component of the grant for that year was forfeited.
|
NON-EMPLOYEE DIRECTORS' COMPENSATION SUMMARY
|
|||||||||||||
Name
|
Fees Earned or Paid in Cash
|
Equity (Restricted Stock) Awards (1)
|
Stock Option Awards (1)
|
Non-Equity Incentive Plan Compensation
|
Non-Qualified Deferred Compensation Earnings
|
All Other Compensation
|
Total
|
||||||
Jenifer G. Kimbrough
|
|
$99,750
|
|
|
$69,826
|
|
--
|
--
|
--
|
--
|
|
$169,576
|
|
Thomas A. Rogers
|
|
$94,500
|
|
|
$69,826
|
|
--
|
--
|
--
|
--
|
|
$164,326
|
|
Bruce F. Simberg
|
|
$120,750
|
|
|
$69,826
|
|
--
|
--
|
--
|
--
|
|
$190,576
|
|
William G. Stewart
|
|
$97,125
|
|
|
$69,826
|
|
--
|
--
|
--
|
--
|
|
$166,951
|
|
Richard W. Wilcox Jr
|
|
$99,750
|
|
|
$69,826
|
|
--
|
--
|
--
|
--
|
|
$169,576
|
|
Roberta N. Young (2)
|
|
$78,750
|
|
|
$169,569
|
|
--
|
--
|
--
|
--
|
|
$248,319
|
|
(1)
|
The following table provides certain additional information concerning the outstanding stock options and/or equity awards held by our non-employee directors as of the end of 2018.
|
(2)
|
In March 2018, in addition to the annual grant received by each Board member, Ms. Young received a grant of 6,138 shares of restricted stock that vest over five years in connection with her election to the Board.
|
Name
|
Total Stock Option/Equity
Awards Outstanding at 2018 Fiscal Year End (Shares) |
Stock Option /
Equity Awards Granted During Fiscal Year 2018 (Shares) |
Grant Date Fair Value of Equity Awards Granted During Fiscal Year 2018 ($)
|
||||
Jenifer G. Kimbrough
|
24,708
|
(a)
|
4,297
|
|
$69,826
|
|
(b)
|
Thomas A. Rogers
|
10,839
|
(c)
|
4,297
|
|
$69,826
|
|
(b)
|
Bruce F. Simberg
|
11,708
|
(d)
|
4,297
|
|
$69,826
|
|
(b)
|
William G. Stewart
|
10,839
|
(c)
|
4,297
|
|
$69,826
|
|
(b)
|
Richard W. Wilcox Jr
|
9,708
|
(e)
|
4,297
|
|
$69,826
|
|
(b)
|
Roberta N. Young
|
10,435
|
(f)
|
10,435
|
|
$169,569
|
|
(b)
|
(a)
|
Includes 15,000 fully vested options granted on April 6, 2012 with an exercise price of $4.40 and an expiration date of April 6, 2022; 2,000 shares of restricted stock which began vesting over five years with an initial vest date of September 9, 2015; 1,218 shares of restricted stock which began vesting over three years with an initial vest date of March 10, 2017, 2,193 shares of restricted stock which will begin vesting over three years with an initial vest date of March 14, 2018 and 4,297 shares of restricted stock which will begin vesting over three years with an initial vest date of March 6, 2019.
|
(b)
|
Based on the market value per share of $16.25 on March 16, 2018.
|
(c)
|
Includes 1,218 shares of restricted stock which began vesting over three years with an initial vest date of March 10, 2017, 3,131 shares of restricted stock which began vesting over five years with an initial vest date of March 10, 2017 and 2,193 shares of restricted stock which will begin vesting over three years with an initial vest date of March 14, 2018, and 4,297 shares of restricted stock which will begin vesting over three years with an initial vest date of March 6, 2019.
|
(d)
|
Includes 4,000 shares of restricted stock which will began vesting over five years with an initial vest date of September 9, 2015, 1,218 shares of restricted stock which began vesting over three years with an initial vest date of March 10, 2017 and 2,193
|
(e)
|
Includes 2,000 shares of restricted stock which began vesting over five years with an initial vest date of September 9, 2015; 1,218 shares of restricted stock which began vesting over three years with an initial vest date of March 10, 2017 and 2,193 shares of restricted stock which will begin vesting over three years with an initial vest date of March 14, 2018 and 4,297 shares of restricted stock which will begin vesting over three years with an initial vest date of March 6, 2019.
|
(f)
|
Includes 6,138 shares of restricted stock which will begin vesting over five years with an initial vest date of March 6, 2019 and 4,297 shares of restricted stock which will begin vesting over three years with an initial vest date of March 06, 2019.
|
Name and Address of Beneficial Owner (1)
|
Number of Shares Beneficially Owned
|
Percent of Class Outstanding (1)
|
|
Michael H. Braun (2)
|
611,706
|
4.62
|
%
|
Bruce F. Simberg (3)
|
512,150
|
3.87
|
%
|
Richard W. Wilcox Jr. (4)
|
176,761
|
1.34
|
%
|
Jenifer G. Kimbrough (5)
|
38,780
|
*
|
|
Ronald A. Jordan (8)
|
34,149
|
*
|
|
Thomas A. Rogers (6)
|
22,004
|
*
|
|
William G. Stewart (7)
|
22,004
|
*
|
|
Roberta N. Young (9)
|
15,981
|
*
|
|
All directors and executive officers as a group (nine persons) (10)
|
1,433,535
|
10.84
|
%
|
|
|
|
|
5% or greater holders:
|
|||
Dimensional Fund Advisors LP (11)
|
1,089,117
|
8.23
|
%
|
Palisades West, Building One
|
|
|
|
6300 Bee Cave Road
|
|
|
|
Austin, TX 78746
|
|
|
|
Lenox Capital Management, Inc. (12)
|
1,078,380
|
8.15
|
%
|
Douglas Ruth (12)
|
|
|
|
322 Alana Drive
|
|
|
|
New Lenox, IL 60451
|
|
|
|
BlackRock, Inc. (13)
|
897,350
|
6.78
|
%
|
55 East 52nd Street
|
|
|
|
New York, NY 10022
|
|
|
|
Capital Returns Management, LLC (14)
|
823,830
|
6.23
|
%
|
Ronald D. Bobman (14)
|
|
|
|
641 Lexington Avenue, 18th Floor
|
|||
New York, NY 10022
|
|
|
(1)
|
Unless otherwise indicated, the address of each beneficial owner listed is c/o FedNat Holding Company, 14050 N.W. 14 Street, Suite 180, Sunrise, Florida 33323. The percentage of class outstanding is based on 13,228,114 shares outstanding as of April 26, 2019.
|
(2)
|
Includes 9,000 shares of restricted stock, which began vesting over five years with an initial vest date of September 9, 2015, 10,000 shares of restricted stock, which began vesting over five years with an initial vest date of December 9, 2015, 20,000 shares of restricted stock, which began vesting over five years with an initial vest date of May 5, 2016, 12,526 shares of restricted stock, which began vesting over five years with an initial vest date of March 10, 2017, 15,229 shares of restricted stock, which began vesting over three years based on performance with an initial vest date of March 14, 2018, 22,843 shares of restricted stock, which will cliff vest over three years based on performance on March 14, 2020, 34,104 shares of restricted stock, which began vesting over three years based on performance with an initial vest date of March 16, 2019, 25,578 shares of restricted stock, which will cliff vest over three years based on performance with a vest date of March 16, 2021, and 55,462 shares of restricted stock, which will begin vesting over three years based on performance with an initial vest date of March 6, 2020.
|
(3)
|
Includes 1,096 shares of restricted stock, which began vesting over three years with an initial vest date of March 14, 2018, 2,864 shares of restricted stock, which began vesting over three years with an initial vest date of March 16, 2019, and 5,546 shares of restricted stock, which will vest over three years with an initial vest date of March 6, 2020.
|
(4)
|
Includes 3,000 shares of common stock held in Mr. Wilcox’s IRA, 40,000 shares of common stock held by Mr. Wilcox’s spouse, 2,000 shares of restricted stock, which began vesting over five years with an initial vest date of September 9, 2015, 1,096 shares of restricted stock, which began vesting over three years with an initial vest date of March 14, 2018, 2,864 shares of restricted stock, which began vesting over three years with an initial vest date of March 16, 2019 and 5,546 shares of restricted stock, which will vest over three years with an initial vest date of March 6, 2020.
|
(5)
|
Includes 2,000 shares of restricted stock, which began vesting over five years with an initial vest date of September 9, 2015, 1,096 shares of restricted stock, which began vesting over three years with an initial vest date of March 14, 2018, 2,864 shares of restricted stock, which began vesting over three years with an initial vest date of March 16, 2019, 5,546 shares of restricted stock, which will vest over three years with an initial vest date of March 6, 2020 and 15,000 shares of common stock issuable upon the exercise of vested stock options held by Ms. Kimbrough.
|
(6)
|
Includes 8,000 restricted shares, which began vesting over five years with an initial vest date of May 12, 2018, 4,450 shares of restricted stock, which began vesting over three years based on performance with an initial vest date of March 16, 2019, 3,338 shares of restricted stock, which will cliff vest over three years based on performance with a vest date of March 16, 2021, 5,546 shares of restricted stock, which will vest over five years with an initial vest date of March 6, 2020 and 10,815 shares of restricted stock, which will vest over three years based on performance with an initial vest date of March 6, 2020.
|
(7)
|
Includes 2,088 shares of restricted stock, which began vesting over five years with an initial vest date of March 10, 2017, 1,096 shares of restricted stock, which began vesting over three years with an initial vest date of March 14, 2018, 2,864 shares of restricted stock which began vesting over three years with an initial vest date of March 16, 2019 and 5,546 shares of restricted stock which will vest over three years with an initial vest date of March 6, 2020.
|
(8)
|
Includes 2,088 shares of restricted stock, which began vesting over five years with an initial vest date of March 10, 2017, 1,096 shares of restricted stock, which began vesting over three years with an initial vest date of March 14, 2018, 2,864 shares of restricted stock, which began vesting over three years with an initial vest date of March 16, 2019 and 5,546 shares of restricted stock, which will vest over three years with an initial vest date of March 6, 2020.
|
(9)
|
Includes 2,864 shares of restricted stock, which began vesting over three years with an initial vest date of March 16, 2019, 4,911 shares of restricted stock, which began vesting over five years with an initial vest date of March 16, 2019 and 5,546 shares of restricted stock, which will vest over three years with an initial vest date of March 6, 2020.
|
(10)
|
Includes a total of 311,478 shares of unvested restricted stock, but does not include the 15,000 shares of common stock issuable upon the exercise of vested stock options, which are both detailed above.
|
(11)
|
This information is based on the Schedule 13G/A filed with the SEC on February 8, 2019.
|
(12)
|
This information is based on the Schedule 13G/A filed with the SEC on February 20, 2019.
|
(13)
|
This information is based on the Schedule 13G/A filed with the SEC on February 4, 2019.
|
(14)
|
This information is based on the Schedule 13G/A filed with the SEC on February 13, 2019.
|
|
Year Ended December 31,
|
|||||
|
2018
|
2017
|
||||
Audit Fees (1)
|
$
|
915,200
|
|
|
$1,129,000
|
|
Audit-Related Fees (2)
|
36,511
|
|
121,553
|
|
||
Tax fees (3)
|
252,840
|
|
154,152
|
|
||
Total
|
|
$1,204,551
|
|
|
$1,404,705
|
|
(1)
|
Audit fees consisted of audit work performed in the preparation of financial statements, as well as work generally only the independent auditor can reasonably be expected to provide, such as statutory audits.
|
(2)
|
Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit fees.”
|
(3)
|
Tax fees consist of fees billed for professional services rendered for tax compliance, tax advice, and tax planning. These services include assistance regarding federal, state, and international tax compliance, acquisitions and international tax planning.
|
|
|
|
|
(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
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10.31
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March 16, 2017
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10.27
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8-K
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10.1
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February 26, 2019
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10.28
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8-K
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10.2
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February 26, 2019
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10.29
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8-K
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10.1
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March 6, 2019
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10.30
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8-K/A
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10.1
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March 6, 2019
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21.1
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10-K
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21.1
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March 7, 2019
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23.1
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10-K
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23.1
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March 7, 2019
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31.1
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10-K
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31.1
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March 7, 2019
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31.2
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10-K
|
31.2
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March 7, 2019
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31.3
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X
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31.4
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X
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32.1
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10-K
|
32.1
|
March 7, 2019
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32.2
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10-K
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32.2
|
March 7, 2019
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101.INS**
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10-K
|
101.IN
|
March 7, 2019
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101.SCH**
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10-K
|
101.SC
|
March 7, 2019
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101.CAL**
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10-K
|
101.CA
|
March 7, 2019
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101.LAB**
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10-K
|
101.LA
|
March 7, 2019
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101.PRE**
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10-K
|
101.PR
|
March 7, 2019
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FEDNAT HOLDING COMPANY
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By:
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/s/ Michael H. Braun
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Michael H. Braun, Chief Executive Officer
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(Principal Executive Officer)
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/s/ Ronald Jordan
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|
Ronald Jordan, Chief Financial Officer
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(Principal Financial Officer)
|
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1.
|
I have reviewed this Amendment No. 1 on Form 10-K/A to the annual report on Form 10-K of FedNat Holding Company; and
|
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.
|
[Omitted]
|
4.
|
[Omitted]
|
5.
|
[Omitted]
|
|
FEDNAT HOLDING COMPANY
|
|
|
|
|
|
|
Date: April 30, 2019
|
By:
|
/s/ Michael H. Braun
|
|
|
Name:
|
Michael H. Braun
|
|
Title:
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
1.
|
I have reviewed this Amendment No. 1 on Form 10-K/A to the annual report on Form 10-K of FedNat Holding Company; and
|
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.
|
[Omitted]
|
4.
|
[Omitted]
|
5.
|
[Omitted]
|
|
FEDNAT HOLDING COMPANY
|
|
|
|
|
|
|
Date: April 30, 2019
|
By:
|
/s/ Ronald A. Jordan
|
|
|
Name:
|
Ronald A. Jordan
|
|
Title:
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
|
|