|
|
Florida
|
|
65-0248866
|
(State or Other Jurisdiction of Incorporation or Organization)
|
|
(IRS Employer Identification Number)
|
|
|
|
14050 N.W. 14
th
Street, Suite 180, Sunrise, FL
|
|
33323
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
|
|
Large accelerated filer
¨
|
Accelerated filer
þ
|
Non‑accelerated filer
¨
|
Smaller reporting company
¨
|
|
|
|
Emerging growth company
¨
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Common Stock
|
FNHC
|
Nasdaq Global Market
|
|
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
|
||||
Investments:
|
|
|
|
|
||||
Debt securities, available-for-sale, at fair value (amortized cost of $439,254 and $433,664, respectively)
|
|
$
|
443,458
|
|
|
$
|
428,641
|
|
Debt securities, held-to-maturity, at amortized cost
|
|
4,552
|
|
|
5,126
|
|
||
Equity securities, at fair value
|
|
20,824
|
|
|
17,758
|
|
||
Total investments
|
|
468,834
|
|
|
451,525
|
|
||
Cash and cash equivalents
|
|
100,589
|
|
|
64,423
|
|
||
Prepaid reinsurance premiums
|
|
69,858
|
|
|
108,577
|
|
||
Premiums receivable, net of allowance of $67 and $77, respectively
|
|
22,684
|
|
|
29,791
|
|
||
Reinsurance recoverable, net
|
|
301,922
|
|
|
211,424
|
|
||
Deferred acquisition costs, net
|
|
40,232
|
|
|
39,436
|
|
||
Income taxes, net
|
|
4,027
|
|
|
5,220
|
|
||
Other assets
|
|
27,441
|
|
|
14,975
|
|
||
Total assets
|
|
$
|
1,035,587
|
|
|
$
|
925,371
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
Loss and loss adjustment expense reserves
|
|
$
|
374,124
|
|
|
$
|
296,230
|
|
Unearned premiums
|
|
275,860
|
|
|
281,992
|
|
||
Reinsurance payable
|
|
31,399
|
|
|
63,599
|
|
||
Long-term debt, net of deferred financing costs of $1,599 and $596, respectively
|
|
98,401
|
|
|
44,404
|
|
||
Deferred revenue
|
|
4,567
|
|
|
4,585
|
|
||
Other liabilities
|
|
33,320
|
|
|
19,302
|
|
||
Total liabilities
|
|
817,671
|
|
|
710,112
|
|
||
|
|
|
|
|
||||
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; 12,836,401 and 12,784,444 shares issued and outstanding, respectively
|
|
128
|
|
|
128
|
|
||
Additional paid-in capital
|
|
141,803
|
|
|
141,128
|
|
||
Accumulated other comprehensive income (loss)
|
|
3,138
|
|
|
(3,750
|
)
|
||
Retained earnings
|
|
72,847
|
|
|
77,753
|
|
||
Total shareholders’ equity
|
|
217,916
|
|
|
215,259
|
|
||
Total liabilities and shareholders' equity
|
|
$
|
1,035,587
|
|
|
$
|
925,371
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Revenues:
|
|
|
|
|
||||
Net premiums earned
|
|
$
|
88,784
|
|
|
$
|
82,109
|
|
Net investment income
|
|
3,710
|
|
|
2,943
|
|
||
Net realized and unrealized investment gains (losses)
|
|
2,301
|
|
|
(1,052
|
)
|
||
Direct written policy fees
|
|
2,391
|
|
|
3,576
|
|
||
Other income
|
|
4,011
|
|
|
5,501
|
|
||
Total revenues
|
|
101,197
|
|
|
93,077
|
|
||
|
|
|
|
|
|
|
||
Costs and expenses:
|
|
|
|
|
|
|
||
Losses and loss adjustment expenses
|
|
66,839
|
|
|
46,071
|
|
||
Commissions and other underwriting expenses
|
|
28,234
|
|
|
30,221
|
|
||
General and administrative expenses
|
|
6,311
|
|
|
6,085
|
|
||
Interest expense
|
|
5,051
|
|
|
1,084
|
|
||
Total costs and expenses
|
|
106,435
|
|
|
83,461
|
|
||
|
|
|
|
|
|
|
||
Income (loss) before income taxes
|
|
(5,238
|
)
|
|
9,616
|
|
||
Income tax expense (benefit)
|
|
(1,373
|
)
|
|
2,371
|
|
||
Net income (loss)
|
|
(3,865
|
)
|
|
7,245
|
|
||
Net income (loss) attributable to non-controlling interest
|
|
—
|
|
|
(218
|
)
|
||
Net income (loss) attributable to FedNat Holding Company shareholders
|
|
$
|
(3,865
|
)
|
|
$
|
7,463
|
|
|
|
|
|
|
|
|
||
Net Income (Loss) Per Common Share
|
|
|
|
|
|
|
||
Basic
|
|
$
|
(0.30
|
)
|
|
$
|
0.58
|
|
Diluted
|
|
$
|
(0.30
|
)
|
|
$
|
0.58
|
|
|
|
|
|
|
|
|
||
Weighted Average Number of Shares of Common Stock Outstanding
|
|
|
|
|
|
|
||
Basic
|
|
12,795
|
|
|
12,850
|
|
||
Diluted
|
|
12,795
|
|
|
12,945
|
|
||
|
|
|
|
|
|
|
||
Dividends Declared Per Common Share
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
(3,865
|
)
|
|
$
|
7,245
|
|
|
|
|
|
|
||||
Change in net unrealized gains (losses) on investments, available-for-sale, net of tax
|
|
6,888
|
|
|
(4,561
|
)
|
||
Comprehensive income (loss)
|
|
3,023
|
|
|
2,684
|
|
||
|
|
|
|
|
||||
Less: comprehensive income (loss) attributable to non-controlling interest, net of ta
x
|
|
—
|
|
|
(447
|
)
|
||
Comprehensive income (loss) attributable to FedNat Holding Company share
holders
|
|
$
|
3,023
|
|
|
$
|
3,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2019
|
|
$
|
—
|
|
|
12,784,444
|
|
|
$
|
128
|
|
|
$
|
141,128
|
|
|
$
|
(3,750
|
)
|
|
$
|
77,753
|
|
|
$
|
215,259
|
|
|
$
|
—
|
|
|
$
|
215,259
|
|
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,865
|
)
|
|
(3,865
|
)
|
|
—
|
|
|
(3,865
|
)
|
||||||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,888
|
|
|
—
|
|
|
6,888
|
|
|
—
|
|
|
6,888
|
|
||||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,041
|
)
|
|
(1,041
|
)
|
|
—
|
|
|
(1,041
|
)
|
||||||||
Shares issued under share-based compensation plans
|
|
—
|
|
|
51,957
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
675
|
|
|
—
|
|
|
—
|
|
|
675
|
|
|
—
|
|
|
675
|
|
||||||||
Balance as of March 31, 2019
|
|
$
|
—
|
|
|
12,836,401
|
|
|
$
|
128
|
|
|
$
|
141,803
|
|
|
$
|
3,138
|
|
|
$
|
72,847
|
|
|
$
|
217,916
|
|
|
$
|
—
|
|
|
$
|
217,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2018
|
|
$
|
—
|
|
|
12,988,247
|
|
|
$
|
130
|
|
|
$
|
139,728
|
|
|
$
|
1,770
|
|
|
$
|
70,009
|
|
|
$
|
211,637
|
|
|
$
|
15,822
|
|
|
$
|
227,459
|
|
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,463
|
|
|
7,463
|
|
|
(218
|
)
|
|
7,245
|
|
||||||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,332
|
)
|
|
—
|
|
|
(4,332
|
)
|
|
(229
|
)
|
|
(4,561
|
)
|
||||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,043
|
)
|
|
(1,043
|
)
|
|
—
|
|
|
(1,043
|
)
|
||||||||
Cumulative effect of new accounting standards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(994
|
)
|
|
994
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Acquisition of non-controlling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,005
|
)
|
|
(305
|
)
|
|
—
|
|
|
(1,310
|
)
|
|
(15,375
|
)
|
|
(16,685
|
)
|
||||||||
Shares issued under share-based compensation plans
|
|
—
|
|
|
53,571
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Repurchases of common stock
|
|
—
|
|
|
(322,865
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(4,997
|
)
|
|
(5,000
|
)
|
|
—
|
|
|
(5,000
|
)
|
||||||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
665
|
|
|
—
|
|
|
—
|
|
|
665
|
|
|
—
|
|
|
665
|
|
||||||||
Balance as of March 31, 2018
|
|
$
|
—
|
|
|
12,718,953
|
|
|
$
|
127
|
|
|
$
|
139,388
|
|
|
$
|
(3,861
|
)
|
|
$
|
72,426
|
|
|
$
|
208,080
|
|
|
$
|
—
|
|
|
$
|
208,080
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Cash flow from operating activities:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
(3,865
|
)
|
|
$
|
7,245
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
||||
Net realized and unrealized investment (gains) losses
|
|
(2,301
|
)
|
|
1,052
|
|
||
Loss (gain) on early extinguishment of debt
|
|
3,575
|
|
|
67
|
|
||
Amortization of investment premium or discount, net
|
|
197
|
|
|
616
|
|
||
Depreciation and amortization
|
|
355
|
|
|
371
|
|
||
Share-based compensation
|
|
675
|
|
|
665
|
|
||
Tax impact related to share-based compensation
|
|
(10
|
)
|
|
(77
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Prepaid reinsurance premiums
|
|
38,719
|
|
|
48,291
|
|
||
Premiums receivable, net
|
|
7,107
|
|
|
726
|
|
||
Reinsurance recoverable, net
|
|
(90,498
|
)
|
|
(21,490
|
)
|
||
Deferred acquisition costs
|
|
(796
|
)
|
|
1,492
|
|
||
Income taxes, net
|
|
(1,136
|
)
|
|
2,521
|
|
||
Deferred revenue
|
|
(18
|
)
|
|
(298
|
)
|
||
Loss and loss adjustment expense reserves
|
|
77,894
|
|
|
5,699
|
|
||
Unearned premiums
|
|
(6,132
|
)
|
|
(12,026
|
)
|
||
Reinsurance payable
|
|
(32,200
|
)
|
|
(33,455
|
)
|
||
Other
|
|
1,639
|
|
|
11,019
|
|
||
Net cash provided by (used in) operating activities
|
|
(6,795
|
)
|
|
12,418
|
|
||
Cash flow from investing activities:
|
|
|
|
|
||||
Proceeds from sales of equity securities
|
|
1,506
|
|
|
4,262
|
|
||
Proceeds from sales of debt securities
|
|
49,174
|
|
|
73,830
|
|
||
Purchases of equity securities
|
|
(2,188
|
)
|
|
(5,177
|
)
|
||
Purchases of debt securities
|
|
(62,741
|
)
|
|
(138,738
|
)
|
||
Maturities and redemptions of debt securities
|
|
8,271
|
|
|
50,584
|
|
||
Purchases of property and equipment
|
|
(486
|
)
|
|
(66
|
)
|
||
Net cash provided by (used in) investing activities
|
|
(6,464
|
)
|
|
(15,305
|
)
|
||
Cash flow from financing activities:
|
|
|
|
|
||||
Issuance of long-term debt, net of issuance costs
|
|
98,464
|
|
|
—
|
|
||
Payment of long-term debt and prepayment penalties
|
|
(48,000
|
)
|
|
(5,000
|
)
|
||
Purchase of non-controlling interest
|
|
—
|
|
|
(16,685
|
)
|
||
Purchases of FedNat Holding Company common stock
|
|
—
|
|
|
(5,000
|
)
|
||
Dividends paid
|
|
(1,039
|
)
|
|
(1,065
|
)
|
||
Net cash provided by (used in) financing activities
|
|
49,425
|
|
|
(27,750
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
|
36,166
|
|
|
(30,637
|
)
|
||
Cash and cash equivalents at beginning-of-period
|
|
64,423
|
|
|
86,228
|
|
||
Cash and cash equivalents at end-of-period
|
|
$
|
100,589
|
|
|
$
|
55,591
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Cash paid (received) during the period for interest
|
|
$
|
902
|
|
|
$
|
977
|
|
Cash paid (received) during the period for income taxes
|
|
$
|
(277
|
)
|
|
$
|
70
|
|
|
|
|
|
|
||||
Significant non-cash investing and financing transactions:
|
|
|
|
|
||||
Right-of-use asset
|
|
$
|
(8,103
|
)
|
|
$
|
—
|
|
Lease liability
|
|
$
|
8,103
|
|
|
$
|
—
|
|
•
|
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.
|
|
|
March 31, 2019
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Debt securities - available-for-sale, at fair value:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
$
|
43,412
|
|
|
$
|
102,550
|
|
|
$
|
—
|
|
|
$
|
145,962
|
|
Obligations of states and political subdivisions
|
|
—
|
|
|
11,519
|
|
|
—
|
|
|
11,519
|
|
||||
Corporate securities
|
|
—
|
|
|
263,385
|
|
|
—
|
|
|
263,385
|
|
||||
International securities
|
|
—
|
|
|
22,592
|
|
|
—
|
|
|
22,592
|
|
||||
Debt securities, at fair value
|
|
43,412
|
|
|
400,046
|
|
|
—
|
|
|
443,458
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Equity securities, at fair value
|
|
18,907
|
|
|
1,917
|
|
|
—
|
|
|
20,824
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total investments, at fair value
|
|
$
|
62,319
|
|
|
$
|
401,963
|
|
|
$
|
—
|
|
|
$
|
464,282
|
|
|
|
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
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
(In thousands)
|
||||||||||||||
March 31, 2019
|
|
$
|
3,360
|
|
|
$
|
1,109
|
|
|
$
|
—
|
|
|
$
|
4,469
|
|
December 31, 2018
|
|
3,809
|
|
|
1,155
|
|
|
—
|
|
|
4,964
|
|
•
|
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)
|
||||||||||||||
March 31, 2019
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
$
|
144,450
|
|
|
$
|
2,037
|
|
|
$
|
525
|
|
|
$
|
145,962
|
|
Obligations of states and political subdivisions
|
|
11,502
|
|
|
88
|
|
|
71
|
|
|
11,519
|
|
||||
Corporate
|
|
260,844
|
|
|
3,693
|
|
|
1,152
|
|
|
263,385
|
|
||||
International
|
|
22,458
|
|
|
213
|
|
|
79
|
|
|
22,592
|
|
||||
|
|
439,254
|
|
|
6,031
|
|
|
1,827
|
|
|
443,458
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
United States government obligations and authorities
|
|
3,567
|
|
|
2
|
|
|
91
|
|
|
3,478
|
|
||||
Corporate
|
|
930
|
|
|
8
|
|
|
2
|
|
|
936
|
|
||||
International
|
|
55
|
|
|
—
|
|
|
—
|
|
|
55
|
|
||||
|
|
4,552
|
|
|
10
|
|
|
93
|
|
|
4,469
|
|
||||
Total investments, excluding equity securities
|
|
$
|
443,806
|
|
|
$
|
6,041
|
|
|
$
|
1,920
|
|
|
$
|
447,927
|
|
|
|
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
|
|
$
|
438,790
|
|
|
$
|
1,643
|
|
|
$
|
6,828
|
|
|
$
|
433,605
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Gross realized and unrealized gains:
|
|
|
|
|
||||
Debt securities
|
|
$
|
317
|
|
|
$
|
223
|
|
Equity securities
|
|
2,830
|
|
|
1,153
|
|
||
Total gross realized and unrealized gains
|
|
3,147
|
|
|
1,376
|
|
||
|
|
|
|
|
|
|||
Gross realized and unrealized losses:
|
|
|
|
|
|
|||
Debt securities
|
|
(400
|
)
|
|
(1,441
|
)
|
||
Equity securities
|
|
(446
|
)
|
|
(987
|
)
|
||
Total gross realized and unrealized losses
|
|
(846
|
)
|
|
(2,428
|
)
|
||
Net realized and unrealized gains (losses) on investments
|
|
$
|
2,301
|
|
|
$
|
(1,052
|
)
|
|
|
March 31, 2019
|
||||||
|
|
Amortized
|
|
|
||||
|
|
Cost
|
|
Fair Value
|
||||
Securities with Maturity Dates
|
|
(In thousands)
|
||||||
Debt securities, available-for-sale:
|
|
|
|
|
||||
One year or less
|
|
$
|
17,108
|
|
|
$
|
17,094
|
|
Over one through five years
|
|
198,410
|
|
|
199,858
|
|
||
Over five through ten years
|
|
218,177
|
|
|
220,854
|
|
||
Over ten years
|
|
5,559
|
|
|
5,652
|
|
||
|
|
439,254
|
|
|
443,458
|
|
||
Debt securities, held-to-maturity:
|
|
|
|
|
||||
One year or less
|
|
135
|
|
|
135
|
|
||
Over one through five years
|
|
4,042
|
|
|
3,963
|
|
||
Over five through ten years
|
|
375
|
|
|
371
|
|
||
|
|
4,552
|
|
|
4,469
|
|
||
Total
|
|
$
|
443,806
|
|
|
$
|
447,927
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Interest income
|
|
$
|
3,657
|
|
|
$
|
2,887
|
|
Dividends income
|
|
53
|
|
|
56
|
|
||
Net investment income
|
|
$
|
3,710
|
|
|
$
|
2,943
|
|
|
|
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)
|
|
|
|
|
||||||||||||||
March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States government obligations and authorities
|
|
$
|
10,279
|
|
|
$
|
8
|
|
|
$
|
32,169
|
|
|
$
|
517
|
|
|
$
|
42,448
|
|
|
$
|
525
|
|
Obligations of states and political subdivisions
|
|
790
|
|
|
21
|
|
|
5,339
|
|
|
50
|
|
|
6,129
|
|
|
71
|
|
||||||
Corporate
|
|
26,723
|
|
|
311
|
|
|
57,096
|
|
|
841
|
|
|
83,819
|
|
|
1,152
|
|
||||||
International
|
|
2,711
|
|
|
6
|
|
|
5,877
|
|
|
73
|
|
|
8,588
|
|
|
79
|
|
||||||
|
|
40,503
|
|
|
346
|
|
|
100,481
|
|
|
1,481
|
|
|
140,984
|
|
|
1,827
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt securities, held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States government obligations and authorities
|
|
114
|
|
|
—
|
|
|
3,161
|
|
|
91
|
|
|
3,275
|
|
|
91
|
|
||||||
Corporate
|
|
80
|
|
|
—
|
|
|
173
|
|
|
2
|
|
|
253
|
|
|
2
|
|
||||||
International
|
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|
—
|
|
||||||
|
|
194
|
|
|
—
|
|
|
3,363
|
|
|
93
|
|
|
3,557
|
|
|
93
|
|
||||||
Total investments, excluding equity securities
|
|
$
|
40,697
|
|
|
$
|
346
|
|
|
$
|
103,844
|
|
|
$
|
1,574
|
|
|
$
|
144,541
|
|
|
$
|
1,920
|
|
|
|
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
|
|
||||||
Total investments, excluding equity securities
|
|
$
|
202,770
|
|
|
$
|
3,547
|
|
|
$
|
95,626
|
|
|
$
|
3,281
|
|
|
$
|
298,396
|
|
|
$
|
6,828
|
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Reinsurance recoverable on paid losses
|
|
$
|
67,629
|
|
|
$
|
45,028
|
|
Reinsurance recoverable on unpaid losses
|
|
234,293
|
|
|
166,396
|
|
||
Reinsurance recoverable, net
|
|
$
|
301,922
|
|
|
$
|
211,424
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Net Premiums Written
|
|
|
|
|
||||
Direct
|
|
$
|
132,233
|
|
|
$
|
134,395
|
|
Ceded
|
|
(11,793
|
)
|
|
(20,107
|
)
|
||
|
|
$
|
120,440
|
|
|
$
|
114,288
|
|
Net Premiums Earned
|
|
|
|
|
|
|
||
Direct
|
|
$
|
138,367
|
|
|
$
|
146,442
|
|
Ceded
|
|
(49,583
|
)
|
|
(64,333
|
)
|
||
|
|
$
|
88,784
|
|
|
$
|
82,109
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Gross reserves, beginning-of-period
|
|
$
|
296,230
|
|
|
$
|
230,515
|
|
Less: reinsurance recoverable (1)
|
|
(166,396
|
)
|
|
(98,345
|
)
|
||
Net reserves, beginning-of-period
|
|
129,834
|
|
|
132,170
|
|
||
|
|
|
|
|
||||
Incurred loss, net of reinsurance, related to:
|
|
|
|
|
||||
Current year
|
|
67,048
|
|
|
48,459
|
|
||
Prior year loss development (re
dundancy) (2)
|
|
721
|
|
|
(653
|
)
|
||
Ceded losses subject to offsetting experience account adjustments (3)
|
|
(930
|
)
|
|
(1,735
|
)
|
||
Prior years
|
|
(209
|
)
|
|
(2,388
|
)
|
||
Total incurred loss and LAE, net of reinsurance
|
|
66,839
|
|
|
46,071
|
|
||
|
|
|
|
|
|
|||
Paid loss, net of reinsurance, related to:
|
|
|
|
|
|
|||
Current year
|
|
14,868
|
|
|
22,543
|
|
||
Prior years
|
|
41,974
|
|
|
30,911
|
|
||
Total paid loss and LAE, net of reinsurance
|
|
56,842
|
|
|
53,454
|
|
||
|
|
|
|
|
|
|||
Net reserves, end-of-period
|
|
139,831
|
|
|
124,787
|
|
||
Plus: reinsurance recoverable (1)
|
|
234,293
|
|
|
111,427
|
|
||
Gross reserves, end-of-period
|
|
$
|
374,124
|
|
|
$
|
236,214
|
|
(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).
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Senior unsecured fixed rate notes, due March 15, 2029, net of deferred financing costs of $1,599 and $0, respectively
|
|
$
|
98,401
|
|
|
$
|
—
|
|
Senior unsecured floating rate notes, due December 31, 2027, net of deferred financing costs of $0 and $348, respectively
|
|
—
|
|
|
24,652
|
|
||
Senior unsecured fixed rate notes, due December 31, 2022, net of deferred financing costs of $0 and $248, respectively
|
|
—
|
|
|
19,752
|
|
||
Total long-term debt, net
|
|
$
|
98,401
|
|
|
$
|
44,404
|
|
|
|
Aggregate
|
||
|
|
Debt
|
||
For the Years Ending December 31,
|
|
Maturities
|
||
|
|
(In thousands)
|
||
2019
|
|
$
|
—
|
|
2020
|
|
—
|
|
|
2021
|
|
—
|
|
|
2022
|
|
—
|
|
|
2023
|
|
—
|
|
|
Thereafter
|
|
100,000
|
|
|
Total debt maturities
|
|
100,000
|
|
|
Less: deferred financing costs
|
|
1,599
|
|
|
Total debt maturities, net
|
|
$
|
98,401
|
|
|
|
March 31,
|
||
|
|
2019
|
||
|
|
(In thousands)
|
||
Right-of-use asset
|
|
$
|
8,103
|
|
Accrued rent
|
|
(140
|
)
|
|
Right-of-use asset, net
|
|
$
|
7,963
|
|
|
|
|
||
Lease liability
|
|
$
|
8,103
|
|
|
|
|
||
Weighted-average discount rate
|
|
4.71
|
%
|
|
|
Three
|
||
|
|
Months
|
||
|
|
Ended
|
||
|
|
March 31, 2019
|
||
|
|
(In thousands)
|
||
Lease expense
|
|
$
|
260
|
|
Sublease income
|
|
—
|
|
|
Lease expense, net
|
|
$
|
260
|
|
|
|
|
||
Net cash provided by (used in) operating activities
|
|
$
|
(137
|
)
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Restricted stock
|
|
$
|
494
|
|
|
$
|
623
|
|
Performance stock
|
|
181
|
|
|
42
|
|
||
Total share-based compensation expense
|
|
$
|
675
|
|
|
$
|
665
|
|
|
|
|
|
|
|
|
||
Recognized tax benefit
|
|
$
|
171
|
|
|
$
|
169
|
|
Intrinsic value of options exercised
|
|
—
|
|
|
—
|
|
||
Fair value of restricted stock vested
|
|
$
|
927
|
|
|
$
|
1,187
|
|
|
|
Number of Shares
|
|
Weighted Average Option Exercise Price
|
|||
Outstanding at January 1, 2019
|
|
39,017
|
|
|
$
|
3.80
|
|
Granted
|
|
—
|
|
|
—
|
|
|
Exercised
|
|
—
|
|
|
—
|
|
|
Cancelled
|
|
—
|
|
|
—
|
|
|
Outstanding at March 31, 2019
|
|
39,017
|
|
|
$
|
3.80
|
|
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Outstanding at January 1, 2019
|
|
262,334
|
|
|
$
|
18.78
|
|
Granted
|
|
140,156
|
|
|
18.03
|
|
|
Vested
|
|
(51,957
|
)
|
|
17.85
|
|
|
Cancelled
|
|
(10,990
|
)
|
|
18.27
|
|
|
Outstanding at March 31, 2019
|
|
339,543
|
|
|
$
|
18.64
|
|
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
|
Before Tax
|
|
Income Tax
|
|
Net
|
|
Before Tax
|
|
Income Tax
|
|
Net
|
||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||
Accumulated other comprehensive income (loss), beginning-of-period
|
|
$
|
(5,023
|
)
|
|
$
|
1,273
|
|
|
$
|
(3,750
|
)
|
|
$
|
2,287
|
|
|
$
|
(593
|
)
|
|
$
|
1,694
|
|
Cumulative effect of new accounting standards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,349
|
)
|
|
355
|
|
|
(994
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive income (loss) before reclassification
|
|
11,528
|
|
|
(2,922
|
)
|
|
8,606
|
|
|
(7,200
|
)
|
|
1,825
|
|
|
(5,375
|
)
|
||||||
Reclassification adjustment for realized losses (gains) included in net income
|
|
(2,301
|
)
|
|
583
|
|
|
(1,718
|
)
|
|
1,052
|
|
|
(238
|
)
|
|
814
|
|
||||||
|
|
9,227
|
|
|
(2,339
|
)
|
|
6,888
|
|
|
(6,148
|
)
|
|
1,587
|
|
|
(4,561
|
)
|
||||||
Accumulated other comprehensive income (loss), end-of-period
|
|
$
|
4,204
|
|
|
$
|
(1,066
|
)
|
|
$
|
3,138
|
|
|
$
|
(5,210
|
)
|
|
$
|
1,349
|
|
|
$
|
(3,861
|
)
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands, except per share data)
|
||||||
Net income (loss) attributable to FedNat Holding Company shareholders
|
|
$
|
(3,865
|
)
|
|
$
|
7,463
|
|
|
|
|
|
|
|
|
||
Weighted average number of common shares outstanding - basic
|
|
12,795
|
|
|
12,850
|
|
||
|
|
|
|
|
||||
Net income (loss) per common share - basic
|
|
$
|
(0.30
|
)
|
|
$
|
0.58
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Weighted average number of common shares outstanding - basic
|
|
12,795
|
|
|
12,850
|
|
||
Dilutive effect of stock compensation plans
|
|
—
|
|
|
95
|
|
||
Weighted average number of common shares outstanding - diluted
|
|
12,795
|
|
|
12,945
|
|
||
|
|
|
|
|
||||
Net income (loss) per common share - diluted
|
|
$
|
(0.30
|
)
|
|
$
|
0.58
|
|
|
|
|
|
|
|
|
||
Dividends per share
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
•
|
Net realized and unrealized gains (losses), including, but not limited to, gains (losses) associated with investments and early extinguishment of debt;
|
•
|
Acquisition/integration and other costs and the amortization of specifically identifiable intangibles (other than value of business acquired);
|
•
|
Impairment of intangibles;
|
•
|
Income (loss) from initial adoption of new regulations and accounting guidance; and
|
•
|
Income (loss) from discontinued operations.
|
|
|
Three Months Ended
|
|||||||||
|
|
March 31,
|
|||||||||
|
|
2019
|
|
% Change
|
|
2018
|
|||||
|
|
(Dollars in thousands)
|
|||||||||
Revenues:
|
|
|
|
|
|
|
|||||
Gross premiums written
|
|
$
|
132,233
|
|
|
(1.6
|
)%
|
|
$
|
134,395
|
|
Gross premiums earned
|
|
138,367
|
|
|
(5.5
|
)%
|
|
146,442
|
|
||
Ceded premiums
|
|
(49,583
|
)
|
|
(22.9
|
)%
|
|
(64,333
|
)
|
||
Net premiums earned
|
|
88,784
|
|
|
8.1
|
%
|
|
82,109
|
|
||
Net investment income
|
|
3,710
|
|
|
26.1
|
%
|
|
2,943
|
|
||
Net realized and unrealized investment gains (losses)
|
|
2,301
|
|
|
(318.7
|
)%
|
|
(1,052
|
)
|
||
Direct written policy fees
|
|
2,391
|
|
|
(33.1
|
)%
|
|
3,576
|
|
||
Other income
|
|
4,011
|
|
|
(27.1
|
)%
|
|
5,501
|
|
||
Total revenues
|
|
101,197
|
|
|
8.7
|
%
|
|
93,077
|
|
||
|
|
|
|
|
|
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||
Losses and loss adjustment expenses
|
|
66,839
|
|
|
45.1
|
%
|
|
46,071
|
|
||
Commissions and other underwriting expenses
|
|
28,234
|
|
|
(6.6
|
)%
|
|
30,221
|
|
||
General and administrative expenses
|
|
6,311
|
|
|
3.7
|
%
|
|
6,085
|
|
||
Interest expense
|
|
5,051
|
|
|
366.0
|
%
|
|
1,084
|
|
||
Total costs and expenses
|
|
106,435
|
|
|
27.5
|
%
|
|
83,461
|
|
||
|
|
|
|
|
|
|
|
||||
Income (loss) before income taxes
|
|
(5,238
|
)
|
|
(154.5
|
)%
|
|
9,616
|
|
||
Income tax expense (benefit)
|
|
(1,373
|
)
|
|
(157.9
|
)%
|
|
2,371
|
|
||
Net income (loss)
|
|
(3,865
|
)
|
|
(153.3
|
)%
|
|
7,245
|
|
||
Net income (loss) attributable to non-controlling interest
|
|
—
|
|
|
(100.0
|
)%
|
|
(218
|
)
|
||
Net income (loss) attributable to FNHC shareholders
|
|
$
|
(3,865
|
)
|
|
(151.8
|
)%
|
|
$
|
7,463
|
|
|
|
|
|
|
|
|
|
|
|
||
Ratios to net premiums earned:
|
|
|
|
|
|
|
|
|
|
||
Net loss ratio
|
|
75.3
|
%
|
|
|
|
|
56.1
|
%
|
||
Net expense ratio
|
|
38.9
|
%
|
|
|
|
|
44.2
|
%
|
||
Combined ratio
|
|
114.2
|
%
|
|
|
|
|
100.3
|
%
|
(1)
|
Net loss ratio is calculated as losses and loss adjustment expenses ("LAE") 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 LAE and all operating expenses less interest expense divided by net premiums earned.
|
|
|
As of or For the Three Months Ended March 31,
|
||||||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
||||||||||||||||||||||||||||
|
|
Homeowners
|
|
Automobile
|
|
Other
|
|
Consolidated
|
|
Homeowners
|
|
Automobile
|
|
Other
|
|
Consolidated
|
||||||||||||||||
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
||||||||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total revenues
|
|
$
|
93,651
|
|
|
$
|
20
|
|
|
$
|
7,526
|
|
|
$
|
101,197
|
|
|
$
|
83,305
|
|
|
$
|
4,166
|
|
|
$
|
5,606
|
|
|
$
|
93,077
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net realized and unrealized investment gains (losses)
|
|
—
|
|
|
—
|
|
|
2,301
|
|
|
2,301
|
|
|
—
|
|
|
—
|
|
|
(1,052
|
)
|
|
(1,052
|
)
|
||||||||
Adjusted operating revenues
|
|
$
|
93,651
|
|
|
$
|
20
|
|
|
$
|
5,225
|
|
|
$
|
98,896
|
|
|
$
|
83,305
|
|
|
$
|
4,166
|
|
|
$
|
6,658
|
|
|
$
|
94,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
|
$
|
(1,423
|
)
|
|
$
|
(679
|
)
|
|
$
|
(1,763
|
)
|
|
$
|
(3,865
|
)
|
|
$
|
6,941
|
|
|
$
|
(41
|
)
|
|
$
|
563
|
|
|
$
|
7,463
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net realized and unrealized investment gains (losses)
|
|
—
|
|
|
—
|
|
|
1,718
|
|
|
1,718
|
|
|
—
|
|
|
—
|
|
|
(785
|
)
|
|
(785
|
)
|
||||||||
Acquisition and other costs
|
|
(36
|
)
|
|
—
|
|
|
(484
|
)
|
|
(520
|
)
|
|
(176
|
)
|
|
(21
|
)
|
|
(19
|
)
|
|
(216
|
)
|
||||||||
Gain (loss) on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
(2,669
|
)
|
|
(2,669
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Adjusted operating income (loss)
|
|
$
|
(1,387
|
)
|
|
$
|
(679
|
)
|
|
$
|
(328
|
)
|
|
$
|
(2,394
|
)
|
|
$
|
7,117
|
|
|
$
|
(20
|
)
|
|
$
|
1,367
|
|
|
$
|
8,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Income tax rate assumed for reconciling items above
|
|
25.35
|
%
|
|
25.35
|
%
|
|
25.35
|
%
|
|
25.35
|
%
|
|
25.35
|
%
|
|
25.35
|
%
|
|
25.35
|
%
|
|
25.35
|
%
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||||||||||
|
Homeowners
|
|
Automobile
|
|
Other
|
|
Consolidated
|
|
Homeowners
|
|
Automobile
|
|
Other
|
|
Consolidated
|
||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gross premiums written
|
$
|
129,283
|
|
|
$
|
(1
|
)
|
|
$
|
2,951
|
|
|
$
|
132,233
|
|
|
$
|
122,815
|
|
|
$
|
6,347
|
|
|
$
|
5,233
|
|
|
$
|
134,395
|
|
Gross premiums earned
|
133,842
|
|
|
22
|
|
|
4,503
|
|
|
138,367
|
|
|
132,463
|
|
|
8,328
|
|
|
5,651
|
|
|
146,442
|
|
||||||||
Ceded premiums
|
(46,031
|
)
|
|
(17
|
)
|
|
(3,535
|
)
|
|
(49,583
|
)
|
|
(55,058
|
)
|
|
(6,117
|
)
|
|
(3,158
|
)
|
|
(64,333
|
)
|
||||||||
Net premiums earned
|
87,811
|
|
|
5
|
|
|
968
|
|
|
88,784
|
|
|
77,405
|
|
|
2,211
|
|
|
2,493
|
|
|
82,109
|
|
||||||||
Net investment income
|
—
|
|
|
—
|
|
|
3,710
|
|
|
3,710
|
|
|
—
|
|
|
—
|
|
|
2,943
|
|
|
2,943
|
|
||||||||
Net realized and unrealized investment gains (losses)
|
—
|
|
|
—
|
|
|
2,301
|
|
|
2,301
|
|
|
—
|
|
|
—
|
|
|
(1,052
|
)
|
|
(1,052
|
)
|
||||||||
Direct written policy fees
|
2,298
|
|
|
3
|
|
|
90
|
|
|
2,391
|
|
|
1,923
|
|
|
1,467
|
|
|
186
|
|
|
3,576
|
|
||||||||
Other income
|
3,542
|
|
|
12
|
|
|
457
|
|
|
4,011
|
|
|
3,977
|
|
|
488
|
|
|
1,036
|
|
|
5,501
|
|
||||||||
Total revenues
|
93,651
|
|
|
20
|
|
|
7,526
|
|
|
101,197
|
|
|
83,305
|
|
|
4,166
|
|
|
5,606
|
|
|
93,077
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
63,330
|
|
|
844
|
|
|
2,665
|
|
|
66,839
|
|
|
41,955
|
|
|
2,236
|
|
|
1,880
|
|
|
46,071
|
|
||||||||
Commissions and other underwriting expenses
|
27,367
|
|
|
35
|
|
|
832
|
|
|
28,234
|
|
|
27,356
|
|
|
1,860
|
|
|
1,005
|
|
|
30,221
|
|
||||||||
General and administrative expenses
|
4,860
|
|
|
50
|
|
|
1,401
|
|
|
6,311
|
|
|
4,889
|
|
|
125
|
|
|
1,071
|
|
|
6,085
|
|
||||||||
Interest expense
|
—
|
|
|
—
|
|
|
5,051
|
|
|
5,051
|
|
|
100
|
|
|
—
|
|
|
984
|
|
|
1,084
|
|
||||||||
Total costs and expenses
|
95,557
|
|
|
929
|
|
|
9,949
|
|
|
106,435
|
|
|
74,300
|
|
|
4,221
|
|
|
4,940
|
|
|
83,461
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Income (loss) before income taxes
|
(1,906
|
)
|
|
(909
|
)
|
|
(2,423
|
)
|
|
(5,238
|
)
|
|
9,005
|
|
|
(55
|
)
|
|
666
|
|
|
9,616
|
|
||||||||
Income tax expense (benefit)
|
(483
|
)
|
|
(230
|
)
|
|
(660
|
)
|
|
(1,373
|
)
|
|
2,282
|
|
|
(14
|
)
|
|
103
|
|
|
2,371
|
|
||||||||
Net income (loss)
|
(1,423
|
)
|
|
(679
|
)
|
|
(1,763
|
)
|
|
(3,865
|
)
|
|
6,723
|
|
|
(41
|
)
|
|
563
|
|
|
7,245
|
|
||||||||
Net income (loss) attributable to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(218
|
)
|
|
—
|
|
|
—
|
|
|
(218
|
)
|
||||||||
Net income (loss) attributable to FNHC shareholders
|
$
|
(1,423
|
)
|
|
$
|
(679
|
)
|
|
$
|
(1,763
|
)
|
|
$
|
(3,865
|
)
|
|
$
|
6,941
|
|
|
$
|
(41
|
)
|
|
$
|
563
|
|
|
$
|
7,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ratios to net premiums earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net loss ratio
|
72.1
|
%
|
|
NCM
|
|
|
275.3
|
%
|
|
75.3
|
%
|
|
54.2
|
%
|
|
101.1
|
%
|
|
75.4
|
%
|
|
56.1
|
%
|
||||||||
Net expense ratio
|
36.7
|
%
|
|
|
|
|
|
38.9
|
%
|
|
41.7
|
%
|
|
|
|
|
|
44.2
|
%
|
||||||||||||
Combined ratio
|
108.8
|
%
|
|
|
|
|
|
114.2
|
%
|
|
95.9
|
%
|
|
|
|
|
|
100.3
|
%
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Gross premiums written:
|
|
|
|
|
||||
Homeowners Florida
|
|
$
|
103,963
|
|
|
$
|
108,371
|
|
Homeowners non-Florida
|
|
25,320
|
|
|
14,444
|
|
||
Automobile
|
|
(1
|
)
|
|
6,347
|
|
||
Commercial general liability
|
|
(53
|
)
|
|
2,514
|
|
||
Federal flood
|
|
3,004
|
|
|
2,719
|
|
||
Total gross premiums written
|
|
$
|
132,233
|
|
|
$
|
134,395
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Gross premiums earned:
|
|
|
|
|
||||
Homeowners Florida
|
|
$
|
112,672
|
|
|
$
|
118,824
|
|
Homeowners non-Florida
|
|
21,170
|
|
|
13,639
|
|
||
Automobile
|
|
22
|
|
|
8,328
|
|
||
Commercial general liability
|
|
1,036
|
|
|
2,629
|
|
||
Federal flood
|
|
3,467
|
|
|
3,022
|
|
||
Total gross premiums earned
|
|
$
|
138,367
|
|
|
$
|
146,442
|
|
|
|
Three Months Ended
|
|||||||||
|
|
March 31,
|
|||||||||
|
|
2019
|
|
% Change
|
|
2018
|
|||||
|
|
(In thousands)
|
|||||||||
Other income:
|
|
|
|
|
|
|
|||||
Commission income
|
|
$
|
458
|
|
|
(67.5
|
)%
|
|
$
|
1,409
|
|
Brokerage
|
|
3,134
|
|
|
(11.5
|
)%
|
|
3,542
|
|
||
Financing and other revenue
|
|
419
|
|
|
(23.8
|
)%
|
|
550
|
|
||
Total other income
|
|
$
|
4,011
|
|
|
(27.1
|
)%
|
|
$
|
5,501
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Commissions and other underwriting expenses:
|
|
|
|
|
||||
Homeowners Florida
|
|
$
|
13,222
|
|
|
$
|
14,363
|
|
All others
|
|
5,267
|
|
|
4,800
|
|
||
Ceding commissions
|
|
(2,784
|
)
|
|
(3,715
|
)
|
||
Total commissions
|
|
15,705
|
|
|
15,448
|
|
||
|
|
|
|
|
||||
Automobile
|
|
3
|
|
|
1,467
|
|
||
Homeowners non-Florida
|
|
676
|
|
|
186
|
|
||
Total fees
|
|
679
|
|
|
1,653
|
|
||
|
|
|
|
|
||||
Salaries and wages
|
|
3,322
|
|
|
3,766
|
|
||
Other underwriting expenses
|
|
8,528
|
|
|
9,354
|
|
||
Total commissions and other underwriting expenses
|
|
$
|
28,234
|
|
|
$
|
30,221
|
|
(c)
|
Issuer Purchases of Equity Securities
. The following table sets forth information with respect to purchases of shares of our common stock made during the quarter ended
March 31, 2019
by or on behalf of FNHC. All purchases were made in the open market in accordance with Rule 10b-18 or under Rule 10b5-1 of the Exchange Act.
|
|
|
|
|
|
|
Total Number of
|
|
Approximate Dollar
|
||||||
|
|
Total Number
|
|
Average
|
|
Shares Purchased
|
|
Value of Shares That
|
||||||
|
|
of Shares
|
|
Price Paid
|
|
as Part of Publicly
|
|
May Yet Be Purchased
|
||||||
|
|
Repurchased
|
|
Per Share
|
|
Announced Plans
|
|
Under the Plans
(1)
|
||||||
January 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
10,000,000
|
|
February 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000,000
|
|
||
March 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000,000
|
|
(1)
|
In December 2018, the Company’s Board of Directors authorized an additional share repurchase program under which the Company may repurchase up to
$10.0 million
of its outstanding shares of common stock through
December 31, 2019
. As of
March 31, 2019
, the remaining availability for future repurchases of our common stock was
$10.0 million
.
|
Exhibit No.
|
Description
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
|
101.INS
|
XBRL Instance Document**
|
101.SCH
|
XBRL Taxonomy Extension Schema Document**
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document**
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document**
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document**
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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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/s/ Michael H. Braun
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Michael H. Braun
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Chief Executive Officer (Principal Executive Officer)
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/s/ Ronald Jordan
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Ronald Jordan
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of FedNat Holding Company.
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/s/ Michael H. Braun
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Michael H. Braun
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Chief Executive Officer (Principal Executive Officer)
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of FedNat Holding Company.
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/s/ Ronald Jordan
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Ronald Jordan
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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