☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
INDIANA | 35-0160330 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
111 Congressional Boulevard, Carmel, Indiana | 46032 | |
(Address of principal executive offices) | (Zip Code) |
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Class A Common Stock, No Par Value | PTVCA | The Nasdaq Stock Market LLC |
Class B Common Stock, No Par Value | PTVCB | The Nasdaq Stock Market LLC |
Common Stock, No Par Value: | Class A (voting) | 2,612,288 | ||
Class B (non-voting) | 11,779,483 | |||
14,391,771 |
Baldwin & Lyons, Inc. and Subsidiaries | ||||||||
Unaudited Consolidated Balance Sheets | ||||||||
(in thousands, except share data) | ||||||||
September 30 | December 31 | |||||||
2017 | 2016 | |||||||
Assets | ||||||||
Investments: | ||||||||
Fixed maturities | $ | 489,606 | $ | 491,904 | ||||
Equity securities | 194,167 | 119,945 | ||||||
Limited partnerships | 69,568 | 76,469 | ||||||
Short-term and other | 1,000 | 1,500 | ||||||
754,341 | 689,818 | |||||||
Cash and cash equivalents | 68,529 | 62,976 | ||||||
Accounts receivable | 80,112 | 64,984 | ||||||
Reinsurance recoverable | 307,239 | 255,024 | ||||||
Other assets | 81,655 | 78,732 | ||||||
Current federal income taxes recoverable | 5,680 | 2,603 | ||||||
$ | 1,297,556 | $ | 1,154,137 | |||||
Liabilities and shareholders' equity | ||||||||
Reserves for losses and loss expenses | $ | 656,006 | $ | 576,330 | ||||
Reserves for unearned premiums | 40,059 | 21,694 | ||||||
Short-term borrowings | 20,000 | 20,000 | ||||||
Accounts payable and other liabilities | 162,144 | 120,356 | ||||||
Deferred federal income taxes | 14,417 | 11,412 | ||||||
892,626 | 749,792 | |||||||
Shareholders' equity: | ||||||||
Common stock-no par value: | ||||||||
Class A voting -- authorized 3,000,000 shares; | ||||||||
outstanding -- 2017 - 2,623,109; 2016 - 2,623,109 | 112 | 112 | ||||||
Class B non-voting -- authorized 20,000,000 shares; | ||||||||
outstanding -- 2017 - 12,413,798; 2016 - 12,460,900 | 530 | 532 | ||||||
Additional paid-in capital | 54,845 | 54,286 | ||||||
Unrealized net gains on investments | 45,488 | 34,051 | ||||||
Foreign exchange adjustment | (321 | ) | (831 | ) | ||||
Retained earnings | 304,276 | 316,195 | ||||||
404,930 | 404,345 | |||||||
$ | 1,297,556 | $ | 1,154,137 |
June 30 2019 | December 31 2018 | |||||||
Assets | ||||||||
Investments: | ||||||||
Fixed income securities | $ | 737,148 | $ | 592,645 | ||||
Equity securities | 74,555 | 66,422 | ||||||
Limited partnerships | 35,535 | 55,044 | ||||||
Commercial mortgage loans | 8,884 | 6,672 | ||||||
Short-term and other | 1,000 | 1,000 | ||||||
857,122 | 721,783 | |||||||
Cash and cash equivalents | 80,772 | 163,996 | ||||||
Restricted cash and cash equivalents | 16,333 | 6,815 | ||||||
Accounts receivable | 111,573 | 102,972 | ||||||
Reinsurance recoverable | 410,445 | 392,436 | ||||||
Other assets | 87,425 | 88,426 | ||||||
Current federal income taxes recoverable | 4,599 | 7,441 | ||||||
Deferred federal income taxes | 2,757 | 6,262 | ||||||
$ | 1,571,026 | $ | 1,490,131 | |||||
Liabilities and shareholders' equity | ||||||||
Reserves for losses and loss expenses | $ | 933,463 | $ | 865,339 | ||||
Reserves for unearned premiums | 79,429 | 71,625 | ||||||
Reinsurance payable | 59,313 | 66,632 | ||||||
Short-term borrowings | 20,000 | 20,000 | ||||||
Accounts payable and other liabilities | 111,405 | 110,453 | ||||||
1,203,610 | 1,134,049 | |||||||
Shareholders' equity: | ||||||||
Common stock-no par value: | ||||||||
Class A voting -- authorized 3,000,000 shares; outstanding -- 2019 - 2,612,446; 2018 - 2,615,339 | 112 | 112 | ||||||
Class B non-voting -- authorized 20,000,000 shares; outstanding -- 2019 - 11,932,076; 2018 - 12,253,922 | 509 | 522 | ||||||
Additional paid-in capital | 54,065 | 54,720 | ||||||
Accumulated other comprehensive income (loss) | 8,217 | (7,347 | ) | |||||
Retained earnings | 304,513 | 308,075 | ||||||
367,416 | 356,082 | |||||||
$ | 1,571,026 | $ | 1,490,131 |
Baldwin & Lyons, Inc. and Subsidiaries | ||||||||||||||||
Unaudited Consolidated Statements of Operations | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | ||||||||||||||||
Net premiums earned | $ | 89,100 | $ | 71,235 | $ | 231,070 | $ | 206,870 | ||||||||
Net investment income | 4,027 | 3,513 | 12,434 | 10,501 | ||||||||||||
Commissions and other income | 1,407 | 1,207 | 3,789 | 4,035 | ||||||||||||
Net realized gains on investments, excluding | ||||||||||||||||
impairment losses | 5,982 | 9,576 | 15,603 | 22,023 | ||||||||||||
Total other-than-temporary impairment losses on investments | (38 | ) | (1,844 | ) | (69 | ) | (4,999 | ) | ||||||||
Net realized gains on investments | 5,944 | 7,732 | 15,534 | 17,024 | ||||||||||||
100,478 | 83,687 | 262,827 | 238,430 | |||||||||||||
Expenses | ||||||||||||||||
Losses and loss expenses incurred | 60,673 | 56,827 | 181,026 | 138,116 | ||||||||||||
Other operating expenses | 29,187 | 21,225 | 82,185 | 64,326 | ||||||||||||
89,860 | 78,052 | 263,211 | 202,442 | |||||||||||||
Income (loss) before federal income taxes (benefits) | 10,618 | 5,635 | (384 | ) | 35,988 | |||||||||||
Federal income taxes (benefits) | 3,184 | 1,634 | (2,231 | ) | 11,906 | |||||||||||
Net income | $ | 7,434 | $ | 4,001 | $ | 1,847 | $ | 24,082 | ||||||||
Per share data: | ||||||||||||||||
Basic and diluted earnings | $ | .49 | $ | .27 | $ | .12 | $ | 1.60 | ||||||||
Dividends paid to shareholders | $ | .27 | $ | .26 | $ | .81 | $ | .78 | ||||||||
Reconciliation of shares outstanding: | ||||||||||||||||
Average shares outstanding - basic | 15,089 | 15,084 | 15,084 | 15,068 | ||||||||||||
Dilutive effect of share equivalents | 29 | - | 40 | 16 | ||||||||||||
Average shares outstanding - diluted | 15,118 | 15,084 | 15,124 | 15,084 |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues | ||||||||||||||||
Net premiums earned | $ | 115,631 | $ | 111,940 | $ | 225,644 | $ | 217,402 | ||||||||
Net investment income | 6,500 | 5,796 | 12,732 | 10,432 | ||||||||||||
Commissions and other income | 1,978 | 2,263 | 4,043 | 4,076 | ||||||||||||
Net realized gains on investments, excluding impairment losses | 713 | 915 | 673 | 1,290 | ||||||||||||
Other-than-temporary impairment losses on investments | (86 | ) | – | (346 | ) | – | ||||||||||
Net unrealized gains (losses) on equity securities and limited partnership investments | 2,262 | (4,350 | ) | 8,589 | (9,258 | ) | ||||||||||
Net realized and unrealized gains (losses) on investments | 2,889 | (3,435 | ) | 8,916 | (7,968 | ) | ||||||||||
126,998 | 116,564 | 251,335 | 223,942 | |||||||||||||
Expenses | ||||||||||||||||
Losses and loss expenses incurred | 90,433 | 77,488 | 177,555 | 149,787 | ||||||||||||
Other operating expenses | 34,615 | 36,019 | 68,316 | 70,784 | ||||||||||||
125,048 | 113,507 | 245,871 | 220,571 | |||||||||||||
Income before federal income tax expense | 1,950 | 3,057 | 5,464 | 3,371 | ||||||||||||
Federal income tax expense | 415 | 570 | 1,181 | 554 | ||||||||||||
Net income | $ | 1,535 | $ | 2,487 | $ | 4,283 | $ | 2,817 | ||||||||
Per share data: | ||||||||||||||||
Basic and diluted earnings | $ | .11 | $ | .17 | $ | .28 | $ | .19 | ||||||||
Dividends paid to shareholders | $ | .10 | $ | .28 | $ | .20 | $ | .56 | ||||||||
Reconciliation of shares outstanding: | ||||||||||||||||
Average shares outstanding - basic | 14,616 | 15,014 | 14,731 | 15,012 | ||||||||||||
Dilutive effect of share equivalents | 63 | 9 | 60 | 9 | ||||||||||||
Average shares outstanding - diluted | 14,679 | 15,023 | 14,791 | 15,021 |
Baldwin & Lyons, Inc. and Subsidiaries | ||||||||||||||||
Unaudited Consolidated Statements of Comprehensive Income | ||||||||||||||||
(in thousands) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income | $ | 7,434 | $ | 4,001 | $ | 1,847 | $ | 24,082 | ||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Unrealized net gains (losses) on securities: | ||||||||||||||||
Unrealized net gains arising during the period | 4,862 | 4,900 | 15,999 | 7,471 | ||||||||||||
Less: reclassification adjustment for net gains | ||||||||||||||||
included in net income | 2,240 | 2,164 | 4,562 | 8,985 | ||||||||||||
2,622 | 2,736 | 11,437 | (1,514 | ) | ||||||||||||
Foreign currency translation adjustments | 57 | (145 | ) | 510 | 398 | |||||||||||
Other comprehensive income (loss) | 2,679 | 2,591 | 11,947 | (1,116 | ) | |||||||||||
Comprehensive income | $ | 10,113 | $ | 6,592 | $ | 13,794 | $ | 22,966 |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | 1,535 | $ | 2,487 | $ | 4,283 | $ | 2,817 | ||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Unrealized net gains (losses) on fixed income securities | 6,517 | (2,026 | ) | 14,973 | (5,147 | ) | ||||||||||
Foreign currency translation adjustments | 284 | (188 | ) | 591 | (411 | ) | ||||||||||
Other comprehensive income (loss) | 6,801 | (2,214 | ) | 15,564 | (5,558 | ) | ||||||||||
Comprehensive income (loss) | $ | 8,336 | $ | 273 | $ | 19,847 | $ | (2,741 | ) |
Baldwin & Lyons, Inc. and Subsidiaries | ||||||||
Unaudited Consolidated Statements of Cash Flows | ||||||||
(in thousands) | ||||||||
Nine Months Ended | ||||||||
September 30 | ||||||||
2017 | 2016 | |||||||
Net cash provided by operating activities | $ | 55,235 | $ | 32,397 | ||||
Investing activities: | ||||||||
Purchases of available-for-sale investments | (305,130 | ) | (310,398 | ) | ||||
Purchases of limited partnership interests | (897 | ) | - | |||||
Proceeds from sales or maturities | ||||||||
of available-for-sale investments | 257,977 | 286,580 | ||||||
Net sales of short-term investments | 500 | 720 | ||||||
Distributions from limited partnerships | 16,313 | 1,462 | ||||||
Other investing activities | (4,825 | ) | (5,440 | ) | ||||
Net cash used in investing activities | (36,062 | ) | (27,076 | ) | ||||
Financing activities: | ||||||||
Dividends paid to shareholders | (12,250 | ) | (11,885 | ) | ||||
Repurchase of common shares | (1,880 | ) | - | |||||
Net cash used in financing activities | (14,130 | ) | (11,885 | ) | ||||
Effect of foreign exchange rates on cash and cash equivalents | 510 | 398 | ||||||
Increase (decrease) in cash and cash equivalents | 5,553 | (6,166 | ) | |||||
Cash and cash equivalents at beginning of period | 62,976 | 73,538 | ||||||
Cash and cash equivalents at end of period | $ | 68,529 | $ | 67,372 |
Common Stock | Additional | Accumulated Other | ||||||||||||||||||||||||||||||
Class A | Class B | Paid-in | Comprehensive | Retained | Total | |||||||||||||||||||||||||||
Description | Shares | Amount | Shares | Amount | Capital | Income (Loss) | Earnings | Equity | ||||||||||||||||||||||||
Balance at December 31, 2018 | 2,615 | $ | 112 | 12,254 | $ | 522 | $ | 54,720 | $ | (7,347 | ) | $ | 308,075 | $ | 356,082 | |||||||||||||||||
Net income | – | – | – | – | – | – | 4,283 | 4,283 | ||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax | – | – | – | – | – | 591 | – | 591 | ||||||||||||||||||||||||
Change in unrealized gain (loss) on investments, net of tax | – | – | – | – | – | 14,973 | – | 14,973 | ||||||||||||||||||||||||
Common stock dividends | – | – | – | – | – | – | (2,987 | ) | (2,987 | ) | ||||||||||||||||||||||
Repurchase of common stock | (3 | ) | – | (371 | ) | (15 | ) | (1,614 | ) | – | (4,858 | ) | (6,487 | ) | ||||||||||||||||||
Restricted stock grants | – | – | 49 | 2 | 959 | –– | – | 961 | ||||||||||||||||||||||||
Balance at June 30, 2019 | 2,612 | $ | 112 | 11,932 | $ | 509 | $ | 54,065 | $ | 8,217 | $ | 304,513 | $ | 367,416 |
Common Stock | Additional | Accumulated Other | ||||||||||||||||||||||||||||||
Class A | Class B | Paid-in | Comprehensive | Retained | Total | |||||||||||||||||||||||||||
Description | Shares | Amount | Shares | Amount | Capital | Income | Earnings | Equity | ||||||||||||||||||||||||
Balance at March 31, 2019 | 2,615 | $ | 112 | 12,249 | $ | 522 | $ | 55,049 | $ | 1,416 | $ | 308,971 | $ | 366,070 | ||||||||||||||||||
Net income | – | – | – | – | – | – | 1,535 | 1,535 | ||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax | – | – | – | – | – | 284 | – | 284 | ||||||||||||||||||||||||
Change in unrealized gain (loss) on investments, net of tax | – | – | – | – | – | 6,517 | – | 6,517 | ||||||||||||||||||||||||
Common stock dividends | – | – | – | – | – | – | (1,494 | ) | (1,494 | ) | ||||||||||||||||||||||
Repurchase of common stock | (3 | ) | – | (346 | ) | (15 | ) | (1,506 | ) | – | (4,499 | ) | (6,020 | ) | ||||||||||||||||||
Restricted stock grants | – | – | 29 | 2 | 522 | – | – | 524 | ||||||||||||||||||||||||
Balance at June 30, 2019 | 2,612 | $ | 112 | 11,932 | $ | 509 | $ | 54,065 | $ | 8,217 | $ | 304,513 | $ | 367,416 |
Common Stock | Additional | Accumulated Other | ||||||||||||||||||||||||||||||
Class A | Class B | Paid-in | Comprehensive | Retained | Total | |||||||||||||||||||||||||||
Description | Shares | Amount | Shares | Amount | Capital | Income (Loss) | Earnings | Equity | ||||||||||||||||||||||||
Balance at December 31, 2017 | 2,623 | $ | 112 | 12,424 | $ | 530 | $ | 55,078 | $ | 46,391 | $ | 316,700 | $ | 418,811 | ||||||||||||||||||
Cumulative effect of adoption of ASU 2016-01, net of tax (Note 1) | – | – | – | – | – | (46,157 | ) | 46,157 | – | |||||||||||||||||||||||
Cumulative effect of adoption of ASU 2018-02 (Note 1) | – | – | – | – | – | 117 | (117 | ) | – | |||||||||||||||||||||||
Net income | – | – | – | – | – | – | 2,817 | 2,817 | ||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax | – | – | – | – | – | (411 | ) | – | (411 | ) | ||||||||||||||||||||||
Change in unrealized gain (loss) on investments, net of tax | – | – | – | – | – | (5,147 | ) | – | (5,147 | ) | ||||||||||||||||||||||
Common stock dividends | – | – | – | – | – | – | (8,456 | ) | (8,456 | ) | ||||||||||||||||||||||
Repurchase of common stock | – | – | (54 | ) | (2 | ) | (234 | ) | – | (1,044 | ) | (1,280 | ) | |||||||||||||||||||
Restricted stock grants | – | – | 10 | – | 901 | – | – | 901 | ||||||||||||||||||||||||
Balance at June 30, 2018 | 2,623 | $ | 112 | 12,380 | $ | 528 | $ | 55,745 | $ | (5,207 | ) | $ | 356,057 | $ | 407,235 |
Common Stock | Additional | Accumulated Other | ||||||||||||||||||||||||||||||
Class A | Class B | Paid-in | Comprehensive | Retained | Total | |||||||||||||||||||||||||||
Description | Shares | Amount | Shares | Amount | Capital | Loss | Earnings | Equity | ||||||||||||||||||||||||
Balance at March 31, 2018 | 2,623 | $ | 112 | 12,418 | $ | 530 | $ | 55,511 | $ | (2,993 | ) | $ | 358,651 | $ | 411,811 | |||||||||||||||||
Net income | – | – | – | – | – | – | 2,487 | 2,487 | ||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax | – | – | – | – | – | (188 | ) | – | (188 | ) | ||||||||||||||||||||||
Change in unrealized gain (loss) on investments, net of tax | – | – | – | – | – | (2,026 | ) | – | (2,026 | ) | ||||||||||||||||||||||
Common stock dividends | – | – | – | – | – | – | (4,227 | ) | (4,227 | ) | ||||||||||||||||||||||
Repurchase of common stock | – | – | (43 | ) | (2 | ) | (188 | ) | – | (854 | ) | (1,044 | ) | |||||||||||||||||||
Restricted stock grants | – | – | 5 | – | 422 | – | – | 422 | ||||||||||||||||||||||||
Balance at June 30, 2018 | 2,623 | $ | 112 | 12,380 | $ | 528 | $ | 55,745 | $ | (5,207 | ) | $ | 356,057 | $ | 407,235 |
Six Months Ended June 30 | ||||||||
2019 | 2018 | |||||||
Operating activities | ||||||||
Net income | $ | 4,283 | $ | 2,817 | ||||
Adjustments to reconcile net income to net cash provided by operating activities | 34,113 | 21,857 | ||||||
Net cash provided by operating activities | 38,396 | 24,674 | ||||||
Investing activities | ||||||||
Purchases of fixed income and equity securities | (245,099 | ) | (215,226 | ) | ||||
Purchases of limited partnership interests | – | (450 | ) | |||||
Distributions from limited partnerships | 20,231 | 369 | ||||||
Proceeds from maturities | 38,917 | 37,590 | ||||||
Proceeds from sales of fixed income securities | 71,839 | 102,408 | ||||||
Proceeds from sales of equity securities | 14,449 | 87,557 | ||||||
Purchase of insurance company-owned life insurance | – | (10,000 | ) | |||||
Purchase of commercial mortgage loans | (2,213 | ) | – | |||||
Purchases of property and equipment | (1,346 | ) | (2,691 | ) | ||||
Proceeds from disposals of property and equipment | 3 | 8 | ||||||
Net cash used in investing activities | (103,219 | ) | (435 | ) | ||||
Financing activities | ||||||||
Dividends paid to shareholders | (2,987 | ) | (8,456 | ) | ||||
Repurchase of common shares | (6,487 | ) | (1,280 | ) | ||||
Net cash used in financing activities | (9,474 | ) | (9,736 | ) | ||||
Effect of foreign exchange rates on cash and cash equivalents | 591 | (411 | ) | |||||
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents | (73,706 | ) | 14,092 | |||||
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period | 170,811 | 68,713 | ||||||
Cash, cash equivalents and restricted cash and cash equivalents at end of period | $ | 97,105 | $ | 82,805 |
Net | ||||||||||||||||||||
Cost or | Gross | Gross | Unrealized | |||||||||||||||||
Fair | Amortized | Unrealized | Unrealized | Gains | ||||||||||||||||
Value | Cost | Gains | Losses | (Losses) | ||||||||||||||||
September 30, 2017 | ||||||||||||||||||||
Fixed maturities | ||||||||||||||||||||
Agency collateralized mortgage obligations | $ | 11,017 | $ | 10,390 | $ | 636 | $ | (9 | ) | $ | 627 | |||||||||
Agency mortgage-backed securities | 19,712 | 19,667 | 92 | (47 | ) | 45 | ||||||||||||||
Asset-backed securities | 50,030 | 48,969 | 1,133 | (72 | ) | 1,061 | ||||||||||||||
Bank loans | 24,986 | 24,914 | 182 | (110 | ) | 72 | ||||||||||||||
Certificates of deposit | 3,138 | 3,125 | 13 | - | 13 | |||||||||||||||
Collateralized mortgage obligations | 7,055 | 6,625 | 470 | (40 | ) | 430 | ||||||||||||||
Corporate securities | 165,794 | 164,965 | 2,109 | (1,280 | ) | 829 | ||||||||||||||
Mortgage-backed securities | 20,643 | 19,534 | 1,508 | (399 | ) | 1,109 | ||||||||||||||
Municipal obligations | 102,805 | 102,272 | 744 | (211 | ) | 533 | ||||||||||||||
Non-U.S. government obligations | 32,942 | 33,399 | 512 | (969 | ) | (457 | ) | |||||||||||||
U.S. government obligations | 51,484 | 51,766 | 20 | (302 | ) | (282 | ) | |||||||||||||
Total fixed maturities | 489,606 | 485,626 | 7,419 | (3,439 | ) | 3,980 | ||||||||||||||
Equity securities: | ||||||||||||||||||||
Consumer | 41,913 | 19,749 | 22,728 | (564 | ) | 22,164 | ||||||||||||||
Energy | 8,168 | 5,454 | 2,795 | (81 | ) | 2,714 | ||||||||||||||
Financial | 42,596 | 29,780 | 13,213 | (397 | ) | 12,816 | ||||||||||||||
Industrial | 23,972 | 7,825 | 16,293 | (146 | ) | 16,147 | ||||||||||||||
Technology | 11,825 | 5,452 | 6,373 | - | 6,373 | |||||||||||||||
Mutual fund | 58,178 | 55,025 | 3,163 | (10 | ) | 3,153 | ||||||||||||||
Other | 7,515 | 4,881 | 2,757 | (123 | ) | 2,634 | ||||||||||||||
Total equity securities | 194,167 | 128,166 | 67,322 | (1,321 | ) | 66,001 | ||||||||||||||
Total | $ | 683,773 | $ | 613,792 | $ | 74,741 | $ | (4,760 | ) | 69,981 | ||||||||||
Applicable federal income taxes | (24,493 | ) | ||||||||||||||||||
Net unrealized gains - net of tax | $ | 45,488 |
Fair Value | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Gains (Losses) | ||||||||||||||||
June 30, 2019 | ||||||||||||||||||||
Fixed income securities | ||||||||||||||||||||
Agency collateralized mortgage obligations | $ | 15,730 | $ | 15,384 | $ | 352 | $ | (6 | ) | $ | 346 | |||||||||
Agency mortgage-backed securities | 41,031 | 39,609 | 1,438 | (16 | ) | 1,422 | ||||||||||||||
Asset-backed securities | 94,880 | 94,847 | 539 | (506 | ) | 33 | ||||||||||||||
Bank loans | 16,074 | 16,279 | 60 | (265 | ) | (205 | ) | |||||||||||||
Certificates of deposit | 2,835 | 2,835 | – | – | – | |||||||||||||||
Collateralized mortgage obligations | 6,165 | 5,686 | 549 | (70 | ) | 479 | ||||||||||||||
Corporate securities | 256,318 | 251,977 | 5,185 | (844 | ) | 4,341 | ||||||||||||||
Mortgage-backed securities | 42,506 | 41,706 | 946 | (146 | ) | 800 | ||||||||||||||
Municipal obligations | 32,834 | 32,177 | 688 | (31 | ) | 657 | ||||||||||||||
Non-U.S. government obligations | 31,378 | 31,064 | 326 | (12 | ) | 314 | ||||||||||||||
U.S. government obligations | 197,397 | 194,489 | 3,092 | (184 | ) | 2,908 | ||||||||||||||
Total fixed income securities | $ | 737,148 | $ | 726,053 | $ | 13,175 | $ | (2,080 | ) | $ | 11,095 |
Net | ||||||||||||||||||||
Cost or | Gross | Gross | Unrealized | |||||||||||||||||
Fair | Amortized | Unrealized | Unrealized | Gains | ||||||||||||||||
Value | Cost | Gains | Losses | (Losses) | ||||||||||||||||
December 31, 2016 | ||||||||||||||||||||
Fixed maturities | ||||||||||||||||||||
Agency collateralized mortgage obligations | $ | 6,171 | $ | 6,000 | $ | 171 | $ | - | $ | 171 | ||||||||||
Agency mortgage-backed securities | 4,770 | 4,751 | 57 | (38 | ) | 19 | ||||||||||||||
Asset-backed securities | 45,183 | 45,207 | 458 | (482 | ) | (24 | ) | |||||||||||||
Bank loans | 10,349 | 10,222 | 149 | (22 | ) | 127 | ||||||||||||||
Certificates of deposit | 3,117 | 3,126 | - | (9 | ) | (9 | ) | |||||||||||||
Collateralized mortgage obligations | 9,104 | 9,096 | 290 | (282 | ) | 8 | ||||||||||||||
Corporate securities | 142,683 | 143,356 | 1,643 | (2,316 | ) | (673 | ) | |||||||||||||
Mortgage-backed securities | 24,571 | 23,904 | 1,132 | �� | (465 | ) | 667 | |||||||||||||
Municipal obligations | 129,335 | 130,204 | 391 | (1,260 | ) | (869 | ) | |||||||||||||
Non-U.S. government obligations | 24,681 | 26,461 | 230 | (2,010 | ) | (1,780 | ) | |||||||||||||
U.S. government obligations | 91,940 | 92,234 | 74 | (368 | ) | (294 | ) | |||||||||||||
Total fixed maturities | 491,904 | 494,561 | 4,595 | (7,252 | ) | (2,657 | ) | |||||||||||||
Equity securities: | ||||||||||||||||||||
Consumer | 32,576 | 15,231 | 17,656 | (311 | ) | 17,345 | ||||||||||||||
Energy | 12,842 | 5,641 | 7,203 | (2 | ) | 7,201 | ||||||||||||||
Financial | 31,186 | 22,417 | 8,998 | (229 | ) | 8,769 | ||||||||||||||
Industrial | 21,145 | 6,239 | 15,098 | (192 | ) | 14,906 | ||||||||||||||
Technology | 8,858 | 4,117 | 4,769 | (28 | ) | 4,741 | ||||||||||||||
Mutual fund | 6,995 | 6,930 | 121 | (56 | ) | 65 | ||||||||||||||
Other | 6,343 | 4,327 | 2,181 | (165 | ) | 2,016 | ||||||||||||||
Total equity securities | 119,945 | 64,902 | 56,026 | (983 | ) | 55,043 | ||||||||||||||
Total | $ | 611,849 | $ | 559,463 | $ | 60,621 | $ | (8,235 | ) | 52,386 | ||||||||||
Applicable federal income taxes | (18,335 | ) | ||||||||||||||||||
Net unrealized gains - net of tax | $ | 34,051 |
Fair Value | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Gains (Losses) | ||||||||||||||||
December 31, 2018 | ||||||||||||||||||||
Fixed income securities | ||||||||||||||||||||
Agency collateralized mortgage obligations | $ | 10,687 | $ | 10,636 | $ | 145 | $ | (94 | ) | $ | 51 | |||||||||
Agency mortgage-backed securities | 37,385 | 37,168 | 371 | (154 | ) | 217 | ||||||||||||||
Asset-backed securities | 64,422 | 66,241 | 14 | (1,833 | ) | (1,819 | ) | |||||||||||||
Bank loans | 9,750 | 10,208 | 27 | (485 | ) | (458 | ) | |||||||||||||
Certificates of deposit | 2,835 | 2,835 | – | – | – | |||||||||||||||
Collateralized mortgage obligations | 5,423 | 5,095 | 376 | (48 | ) | 328 | ||||||||||||||
Corporate securities | 190,450 | 196,925 | 127 | (6,602 | ) | (6,475 | ) | |||||||||||||
Mortgage-backed securities | 38,540 | 38,586 | 377 | (423 | ) | (46 | ) | |||||||||||||
Municipal obligations | 29,155 | 29,102 | 239 | (186 | ) | 53 | ||||||||||||||
Non-U.S. government obligations | 25,180 | 25,339 | 6 | (165 | ) | (159 | ) | |||||||||||||
U.S. government obligations | 178,818 | 178,369 | 1,252 | (803 | ) | 449 | ||||||||||||||
Total fixed income securities | $ | 592,645 | $ | 600,504 | $ | 2,934 | $ | (10,793 | ) | $ | (7,859 | ) |
June 30, 2019 | December 31, 2018 | |||||||||||||||||||||||
Number of Securities | Fair Value | Gross Unrealized Loss | Number of Securities | Fair Value | Gross Unrealized Loss | |||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||
12 months or less | 81 | $ | 76,363 | $ | (1,166 | ) | 275 | $ | 282,646 | $ | (7,296 | ) | ||||||||||||
Greater than 12 months | 149 | 95,614 | (914 | ) | 217 | 131,001 | (3,497 | ) | ||||||||||||||||
Total fixed income securities | 230 | $ | 171,977 | $ | (2,080 | ) | 492 | $ | 413,647 | $ | (10,793 | ) | ||||||||||||
September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
Number of Securities | Fair Value | Gross Unrealized Loss | Number of Securities | Fair Value | Gross Unrealized Loss | |||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
12 months or less | 325 | $ | 233,926 | $ | (1,999 | ) | 397 | $ | 291,048 | $ | (4,380 | ) | ||||||||||||
Greater than 12 months | 47 | 25,633 | (1,440 | ) | 54 | 32,054 | (2,872 | ) | ||||||||||||||||
Total fixed maturities | 372 | 259,559 | (3,439 | ) | 451 | 323,102 | (7,252 | ) | ||||||||||||||||
Equity securities: | ||||||||||||||||||||||||
12 months or less | 36 | 33,213 | (1,321 | ) | 35 | 20,698 | (983 | ) | ||||||||||||||||
Greater than 12 months | - | - | - | - | - | - | ||||||||||||||||||
Total equity securities | 36 | 33,213 | (1,321 | ) | 35 | 20,698 | (983 | ) | ||||||||||||||||
Total fixed maturity and equity securities | 408 | $ | 292,772 | $ | (4,760 | ) | 486 | $ | 343,800 | $ | (8,235 | ) |
Fair Value | Cost or Amortized Cost | |||||||
One year or less | $ | 99,531 | $ | 99,574 | ||||
Excess of one year to five years | 342,358 | 336,988 | ||||||
Excess of five years to ten years | 89,596 | 87,051 | ||||||
Excess of ten years | 11,517 | 10,894 | ||||||
Contractual maturities | 543,002 | 534,507 | ||||||
Asset-backed securities | 194,146 | 191,546 | ||||||
Total | $ | 737,148 | $ | 726,053 |
Fair Value | Cost or Amortized Cost | |||||||
One year or less | $ | 47,563 | $ | 47,558 | ||||
Excess of one year to five years | 272,390 | 272,639 | ||||||
Excess of five years to ten years | 60,122 | 59,322 | ||||||
Excess of ten years | 3,486 | 3,338 | ||||||
Contractual maturities | 383,561 | 382,857 | ||||||
Asset-backed securities | 106,045 | 102,769 | ||||||
Total | $ | 489,606 | $ | 485,626 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Fixed maturities: | ||||||||||||||||
Gross gains | $ | 3,852 | $ | 7,496 | $ | 9,544 | $ | 9,338 | ||||||||
Gross losses | (4,011 | ) | (8,434 | ) | (10,160 | ) | (12,470 | ) | ||||||||
Net realized losses | (159 | ) | (938 | ) | (616 | ) | (3,132 | ) | ||||||||
Equity securities: | ||||||||||||||||
Gross gains | 4,103 | 5,086 | 8,601 | 21,722 | ||||||||||||
Gross losses | (498 | ) | (819 | ) | (966 | ) | (4,767 | ) | ||||||||
Net realized gains | 3,605 | 4,267 | 7,635 | 16,955 | ||||||||||||
Limited partnerships - net gain | 2,498 | 4,403 | 8,515 | 3,201 | ||||||||||||
Total net gains | $ | 5,944 | $ | 7,732 | $ | 15,534 | $ | 17,024 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Realized net gains on the disposal of securities | $ | 3,244 | $ | 3,482 | $ | 5,886 | $ | 10,649 | ||||||||
Mark-to-market adjustment | 171 | 108 | 136 | (326 | ) | |||||||||||
Equity in gains of limited partnership | ||||||||||||||||
investments - realized and unrealized | 2,498 | 4,403 | 8,515 | 3,201 | ||||||||||||
Impairment: | ||||||||||||||||
Write-downs based upon objective criteria | (38 | ) | (1,844 | ) | (69 | ) | (4,999 | ) | ||||||||
Recovery of prior write-downs | ||||||||||||||||
upon sale or disposal | 69 | 1,583 | 1,066 | 8,499 | ||||||||||||
Total net gains | $ | 5,944 | $ | 7,732 | $ | 15,534 | $ | 17,024 |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Gross gains on available-for-sale fixed income securities sold during the period | $ | 4,132 | $ | 3,691 | $ | 7,303 | $ | 6,134 | ||||||||
Gross losses on available-for-sale fixed income securities sold during the period | (3,154 | ) | (3,088 | ) | (6,681 | ) | (5,796 | ) | ||||||||
Other-than-temporary impairments | (86 | ) | – | (346 | ) | – | ||||||||||
Change in value of limited partnership investments | 314 | (2,842 | ) | 722 | (5,445 | ) | ||||||||||
Gains (losses) on equity securities: | ||||||||||||||||
Realized gains (losses) on equity securities sold during the period | (265 | ) | 312 | 51 | 953 | |||||||||||
Unrealized gains (losses) on equity securities held at the end of the period | 1,948 | (1,508 | ) | 7,867 | (3,814 | ) | ||||||||||
Realized and unrealized gains (losses) on equity securities during the period | 1,683 | (1,196 | ) | 7,918 | (2,861 | ) | ||||||||||
Net realized and unrealized gains (losses) on investments | $ | 2,889 | $ | (3,435 | ) | $ | 8,916 | $ | (7,968 | ) |
As of and for the | ||||||||
Nine Months Ended | ||||||||
September 30 | ||||||||
2017 | 2016 | |||||||
Total assets | $ | 517,411 | $ | 487,784 | ||||
Total partners' capital | 517,411 | 487,784 | ||||||
Net increase in partners' capital resulting from operations | 95,314 | 23,841 |
2017 | 2016 | |||||||
Three months ended September 30: | ||||||||
Premiums ceded to reinsurers | $ | 34,025 | $ | 30,996 | ||||
Losses and loss expenses | ||||||||
ceded to reinsurers | 30,531 | 21,237 | ||||||
Commissions from reinsurers | 7,205 | 11,898 | ||||||
Nine months ended September 30: | ||||||||
Premiums ceded to reinsurers | $ | 111,124 | $ | 94,331 | ||||
Losses and loss expenses | ||||||||
ceded to reinsurers | 102,401 | 70,081 | ||||||
Commissions from reinsurers | 21,000 | 32,587 |
2019 | 2018 | |||||||
Three months ended June 30: | ||||||||
Premiums ceded to reinsurers | $ | 32,425 | $ | 28,800 | ||||
Losses and loss expenses ceded to reinsurers | 28,859 | 21,975 | ||||||
Commissions from reinsurers | 8,176 | 6,443 | ||||||
Six months ended June 30: | ||||||||
Premiums ceded to reinsurers | $ | 62,598 | $ | 61,241 | ||||
Losses and loss expenses ceded to reinsurers | 59,648 | 48,636 | ||||||
Commissions from reinsurers | 15,410 | 14,323 | ||||||
2017 | 2016 | Six Months Ended | ||||||||||||||
Reserves, gross of reinsurance | ||||||||||||||||
recoverable, at the beginning of the year | $ | 576,330 | $ | 513,596 | ||||||||||||
June 30 | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Reserves, gross of reinsurance recoverable, at the beginning of the year | $ | 865,339 | $ | 680,274 | ||||||||||||
Reinsurance recoverable on unpaid losses at the beginning of the year | 251,563 | 211,843 | 375,935 | 308,143 | ||||||||||||
Reserves at the beginning of the year | 324,767 | 301,753 | 489,404 | 372,131 | ||||||||||||
Provision for losses and loss expenses: | ||||||||||||||||
Claims occurring during the current period | 164,546 | 129,404 | 179,211 | 151,462 | ||||||||||||
Claims occurring during prior periods | 16,480 | 8,712 | (1,656 | ) | (1,675 | ) | ||||||||||
Total incurred | 181,026 | 138,116 | 177,555 | 149,787 | ||||||||||||
Loss and loss expense payments: | ||||||||||||||||
Claims occurring during the current period | 41,616 | 30,932 | 30,573 | 28,903 | ||||||||||||
Claims occurring during prior periods | 109,616 | 81,427 | 92,822 | 88,965 | ||||||||||||
Total paid | 151,232 | 112,359 | 123,395 | 117,868 | ||||||||||||
Reserves at the end of the period | 354,561 | 327,510 | 543,564 | 404,050 | ||||||||||||
Reinsurance recoverable on unpaid losses at the end of the period | 301,445 | 238,049 | 389,899 | 312,231 | ||||||||||||
Reserves, gross of reinsurance | ||||||||||||||||
recoverable, at the end of the period | $ | 656,006 | $ | 565,559 | ||||||||||||
Reserves, gross of reinsurance recoverable, at the end of the period | $ | 933,463 | $ | 716,281 |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September 30 | September 30 | |||||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Net premiums earned | $ | 89,100 | $ | 71,235 | $ | 231,070 | $ | 206,870 | $ | 115,631 | $ | 111,940 | $ | 225,644 | $ | 217,402 | ||||||||||||||||
Net investment income | 4,027 | 3,513 | 12,434 | 10,501 | 6,500 | 5,796 | 12,732 | 10,432 | ||||||||||||||||||||||||
Net realized gains on investments | 5,944 | 7,732 | 15,534 | 17,024 | ||||||||||||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 2,889 | (3,435 | ) | 8,916 | (7,968 | ) | ||||||||||||||||||||||||||
Commissions and other income | 1,407 | 1,207 | 3,789 | 4,035 | 1,978 | 2,263 | 4,043 | 4,076 | ||||||||||||||||||||||||
Total revenues | $ | 100,478 | $ | 83,687 | $ | 262,827 | $ | 238,430 | $ | 126,998 | $ | 116,564 | $ | 251,335 | $ | 223,942 |
As of September 30, 2017: | ||||||||||||||||
Description | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Fixed maturities: | ||||||||||||||||
Agency collateralized mortgage obligations | $ | 11,017 | $ | - | $ | 11,017 | $ | - | ||||||||
Agency mortgage-backed securities | 19,712 | - | 19,712 | - | ||||||||||||
Asset-backed securities | 50,030 | - | 50,030 | - | ||||||||||||
Bank loans | 24,986 | - | 24,986 | - | ||||||||||||
Certificates of deposit | 3,138 | 3,138 | - | - | ||||||||||||
Collateralized mortgage obligations | 7,055 | - | 7,055 | - | ||||||||||||
Corporate securities | 160,716 | - | 160,558 | 158 | ||||||||||||
Options embedded in convertible securities | 5,078 | - | 5,078 | - | ||||||||||||
Mortgage-backed securities | 20,643 | - | 20,413 | 230 | ||||||||||||
Municipal obligations | 102,805 | - | 102,805 | - | ||||||||||||
Non-U.S. government obligations | 32,942 | - | 32,942 | - | ||||||||||||
U.S. government obligations | 51,484 | - | 51,484 | - | ||||||||||||
Total fixed maturities | 489,606 | 3,138 | 486,080 | 388 | ||||||||||||
Equity securities: | ||||||||||||||||
Consumer | 41,912 | 41,912 | - | - | ||||||||||||
Energy | 8,168 | 8,168 | - | - | ||||||||||||
Financial | 46,167 | 46,167 | - | - | ||||||||||||
Industrial | 23,971 | 23,971 | - | - | ||||||||||||
Technology | 11,826 | 11,826 | - | - | ||||||||||||
Mutual fund | 53,528 | 53,528 | - | - | ||||||||||||
Other | 8,595 | 8,595 | - | - | ||||||||||||
Total equity securities | 194,167 | 194,167 | - | - | ||||||||||||
Short-term | 1,000 | 1,000 | - | - | ||||||||||||
Cash equivalents | 64,153 | - | 64,153 | - | ||||||||||||
Total | $ | 748,926 | $ | 198,305 | $ | 550,233 | $ | 388 |
Description | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Fixed income securities: | ||||||||||||||||
Agency collateralized mortgage obligations | $ | 15,730 | $ | – | $ | 15,730 | $ | – | ||||||||
Agency mortgage-backed securities | 41,031 | – | 41,031 | – | ||||||||||||
Asset-backed securities | 94,880 | – | 94,880 | – | ||||||||||||
Bank loans | 16,074 | – | 16,074 | – | ||||||||||||
Certificates of deposit | 2,835 | 2,835 | – | – | ||||||||||||
Collateralized mortgage obligations | 6,165 | – | 6,165 | – | ||||||||||||
Corporate securities | 251,394 | – | 251,394 | – | ||||||||||||
Options embedded in convertible securities | 4,924 | – | 4,924 | – | ||||||||||||
Mortgage-backed securities | 42,506 | – | 42,506 | – | ||||||||||||
Municipal obligations | 32,834 | – | 32,834 | – | ||||||||||||
Non-U.S. government obligations | 31,378 | – | 31,378 | – | ||||||||||||
U.S. government obligations | 197,397 | – | 197,397 | – | ||||||||||||
Total fixed income securities | 737,148 | 2,835 | 734,313 | – | ||||||||||||
Equity securities: | ||||||||||||||||
Consumer | 17,125 | 17,125 | – | – | ||||||||||||
Energy | 3,340 | 3,340 | – | – | ||||||||||||
Financial | 29,117 | 29,117 | – | – | ||||||||||||
Industrial | 4,176 | 4,176 | – | – | ||||||||||||
Technology | 2,414 | 2,414 | – | – | ||||||||||||
Funds (e.g. mutual funds, closed end funds, ETFs) | 9,796 | 9,796 | – | – | ||||||||||||
Other | 8,587 | 8,587 | – | – | ||||||||||||
Total equity securities | 74,555 | 74,555 | – | – | ||||||||||||
Short-term | 1,000 | 1,000 | – | – | ||||||||||||
Cash equivalents | 76,967 | – | 76,967 | – | ||||||||||||
Total | $ | 889,670 | $ | 78,390 | $ | 811,280 | $ | – |
As of December 31, 2016: | ||||||||||||||||||||||||||||||||
Description | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||||||||||
Agency collateralized mortgage obligations | $ | 6,171 | $ | - | $ | 6,171 | $ | - | $ | 10,687 | $ | – | $ | 10,687 | $ | – | ||||||||||||||||
Agency mortgage-backed securities | 4,770 | - | 4,770 | - | 37,385 | – | 37,385 | – | ||||||||||||||||||||||||
Asset-backed securities | 45,183 | - | 37,919 | 7,264 | 64,422 | – | 64,422 | – | ||||||||||||||||||||||||
Bank loans | 10,349 | - | - | 10,349 | 9,750 | – | 9,750 | – | ||||||||||||||||||||||||
Certificates of deposit | 3,117 | 3,117 | - | - | 2,835 | 2,835 | – | – | ||||||||||||||||||||||||
Collateralized mortgage obligations | 9,104 | - | 6,409 | 2,695 | 5,423 | – | 5,423 | – | ||||||||||||||||||||||||
Corporate securities | 137,932 | - | 135,794 | 2,138 | 186,651 | – | 186,651 | – | ||||||||||||||||||||||||
Options embedded in convertible securities | 4,751 | - | 4,751 | - | 3,799 | – | 3,799 | – | ||||||||||||||||||||||||
Mortgage-backed securities | 24,571 | - | 22,206 | 2,365 | 38,540 | – | 38,540 | – | ||||||||||||||||||||||||
Municipal obligations | 129,335 | - | 129,190 | 145 | 29,155 | – | 29,155 | – | ||||||||||||||||||||||||
Non-U.S. government obligations | 24,681 | - | 24,419 | 262 | 25,180 | – | 25,180 | – | ||||||||||||||||||||||||
U.S. government obligations | 91,940 | - | 91,940 | - | 178,818 | – | 178,818 | – | ||||||||||||||||||||||||
Total fixed maturities | 491,904 | 3,117 | 463,569 | 25,218 | ||||||||||||||||||||||||||||
Total fixed income securities | 592,645 | 2,835 | 589,810 | – | ||||||||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Consumer | 32,576 | 32,576 | - | - | 17,945 | 17,945 | – | – | ||||||||||||||||||||||||
Energy | 12,842 | 12,842 | - | - | 3,179 | 3,179 | – | – | ||||||||||||||||||||||||
Financial | 31,186 | 30,943 | 243 | - | 25,253 | 25,253 | – | – | ||||||||||||||||||||||||
Industrial | 21,145 | 20,262 | 883 | - | 6,920 | 6,920 | – | – | ||||||||||||||||||||||||
Technology | 8,858 | 8,858 | - | - | 2,303 | 2,303 | – | – | ||||||||||||||||||||||||
Mutual fund | 6,995 | - | 6,995 | - | ||||||||||||||||||||||||||||
Funds (e.g. mutual funds, closed end funds, ETFs) | 5,489 | 5,489 | – | – | ||||||||||||||||||||||||||||
Other | 6,343 | 6,343 | - | - | 5,333 | 5,333 | – | – | ||||||||||||||||||||||||
Total equity securities | 119,945 | 111,824 | 8,121 | - | 66,422 | 66,422 | – | – | ||||||||||||||||||||||||
Short-term | 1,500 | 1,500 | - | - | 1,000 | 1,000 | – | – | ||||||||||||||||||||||||
Cash equivalents | 59,683 | - | 59,683 | - | 156,855 | – | 156,855 | – | ||||||||||||||||||||||||
Total | $ | 673,032 | $ | 116,441 | $ | 531,373 | $ | 25,218 | $ | 816,922 | $ | 70,257 | $ | 746,665 | $ | – |
Level Input: | Input Definition: | |
Level 1 | Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. | |
Level 2 | Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date. | |
Level 3 | Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. |
2017 | 2016 | |||||||
Beginning of period balance | $ | 25,218 | $ | 16,793 | ||||
Total gains (realized or unrealized) | ||||||||
included in income | 316 | 1,846 | ||||||
Purchases | 81 | 5,540 | ||||||
Settlements | (8,950 | ) | (8,791 | ) | ||||
Transfers into Level 3 | 144 | 10,202 | ||||||
Transfers out of Level 3 | (16,421 | ) | (372 | ) | ||||
End of period balance | $ | 388 | $ | 25,218 |
Carrying | Fair Value | |||||||||||||||||||
Value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
September 30, 2017 | ||||||||||||||||||||
Assets: Limited partnerships | $ | 69,568 | $ | - | $ | - | $ | 69,568 | $ | 69,568 | ||||||||||
Liabilities: Short-term borrowings | 20,000 | - | 20,000 | - | 20,000 | |||||||||||||||
December 31, 2016 | ||||||||||||||||||||
Assets: Limited partnerships | 76,469 | - | - | 76,469 | 76,469 | |||||||||||||||
Liabilities: Short-term borrowings | 20,000 | - | 20,000 | - | 20,000 |
Carrying | Fair Value | |||||||||||||||||||
Value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
June 30, 2019 | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Limited partnerships | $ | 35,535 | $ | – | $ | – | $ | 35,535 | $ | 35,535 | ||||||||||
Commercial mortgage loans | 8,884 | – | – | 8,884 | 8,884 | |||||||||||||||
Liabilities: | ||||||||||||||||||||
Short-term borrowings | 20,000 | – | 20,000 | – | 20,000 | |||||||||||||||
December 31, 2018 | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Limited partnerships | $ | 55,044 | $ | – | $ | – | $ | 55,044 | $ | 55,044 | ||||||||||
Commercial mortgage loans | 6,672 | – | – | 6,672 | 6,672 | |||||||||||||||
Liabilities: | ||||||||||||||||||||
Short-term borrowings | 20,000 | – | 20,000 | – | 20,000 |
Value | ||||||||||
Per Share | ||||||||||
Effective | Number of Shares | Vesting | Service | on Grant | ||||||
Date | Issued | Date | Period | Date | ||||||
5/10/2016 | 17,677 | �� | 5/10/2017 | 7/1/2016 - 6/30/2017 | $ | 24.89 | ||||
5/9/2017 | 18,183 | 5/9/2018 | 7/1/2017 - 6/30/2018 | $ | 24.20 | |||||
8/31/2017 | 1,257 | 5/9/2018 | 8/31/2017 - 6/30/2018 | $ | 21.90 |
Grant Date | Number of Shares Issued | Vesting Date | Service Period | Grant Date Fair Value Per Share | ||||||
5/9/2017 | 18,183 | 5/9/2018 | 7/1/2017 - 6/30/2018 | $ | 24.20 | |||||
8/31/2017 | 1,257 | 5/9/2018 | 8/31/2017 - 6/30/2018 | $ | 21.90 | |||||
2/9/2018 | 408 | 5/9/2018 | 2/9/2018 - 6/30/2018 | $ | 24.20 | |||||
5/8/2018 | 19,085 | 5/8/2019 | 7/1/2018 - 6/30/2019 | $ | 23.05 | |||||
5/7/2019 | 29,536 | 5/7/2020 | 7/1/2019 - 6/30/2020 | $ | 16.25 | |||||
5/17/2019 | 3,591 | 5/7/2020 | 7/1/2019 - 6/30/2020 | $ | 16.25 | |||||
5/22/2019 | 3,541 | 5/7/2020 | 7/1/2019 - 6/30/2020 | $ | 16.25 |
Additional | ||||||||||||||||||||||
Class A | Class B | Paid-in | ||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | ||||||||||||||||||
Balance at December 31, 2016 | 2,623,109 | $ | 112 | 12,460,900 | $ | 532 | $ | 54,286 | ||||||||||||||
Restricted stock grants | - | - | 37,858 | 2 | 919 | |||||||||||||||||
Repurchase of common shares | - | - | (84,960 | ) | (4 | ) | (360 | ) | ||||||||||||||
Balance at September 30, 2017 | 2,623,109 | $ | 112 | 12,413,798 | $ | 530 | $ | 54,845 |
Total equity | ||||
Balance at December 31, 2016 | $ | 404,345 | ||
Net income | 1,847 | |||
Other comprehensive income | 11,947 | |||
Cash dividends paid to shareholders | (12,250 | ) | ||
Restricted stock grants | 921 | |||
Repurchase of common shares | (1,880 | ) | ||
Balance at September 30, 2017 | $ | 404,930 |
Total equity | ||||
Balance at December 31, 2015 | $ | 394,498 | ||
Net income | 24,082 | |||
Other comprehensive loss | (1,116 | ) | ||
Cash dividends paid to shareholders | (11,885 | ) | ||
Restricted stock grants | 1,343 | |||
Balance at September 30, 2016 | $ | 406,922 |
Unrealized | ||||||||||||
holding gains on | ||||||||||||
Foreign | available-for-sale | |||||||||||
Currency | securities | Total | ||||||||||
Beginning balance | $ | (831 | ) | $ | 34,051 | $ | 33,220 | |||||
Other comprehensive income | ||||||||||||
before reclassifications | 510 | 15,999 | 16,509 | |||||||||
Amounts reclassified from | ||||||||||||
accumulated other | ||||||||||||
comprehensive income | - | (4,562 | ) | (4,562 | ) | |||||||
Net current-period other | ||||||||||||
comprehensive income | 510 | 11,437 | 11,947 | |||||||||
Ending balance | $ | (321 | ) | $ | 45,488 | $ | 45,167 |
Foreign Currency | Unrealized Holding Gains (Losses) on Available-for-sale Securities | Total | ||||||||||
Beginning balance at December 31, 2018 | $ | (1,139 | ) | $ | (6,208 | ) | $ | (7,347 | ) | |||
Other comprehensive income before reclassifications | 591 | 14,758 | 15,349 | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | – | 215 | 215 | |||||||||
Net current-period other comprehensive income | 591 | 14,973 | 15,564 | |||||||||
Ending balance at June 30, 2019 | $ | (548 | ) | $ | 8,765 | $ | 8,217 |
Unrealized | ||||||||||||
holding gains on | ||||||||||||
Foreign | available-for-sale | |||||||||||
Currency | securities | Total | ||||||||||
Beginning balance | $ | (1,066 | ) | $ | 38,924 | $ | 37,858 | |||||
Other comprehensive income | ||||||||||||
before reclassifications | 398 | 7,471 | 7,869 | |||||||||
Amounts reclassified from | ||||||||||||
accumulated other | ||||||||||||
comprehensive income | - | (8,985 | ) | (8,985 | ) | |||||||
Net current-period other | ||||||||||||
comprehensive income | 398 | (1,514 | ) | (1,116 | ) | |||||||
Ending balance | $ | (668 | ) | $ | 37,410 | $ | 36,742 |
Foreign Currency | Unrealized Holding Gains (Losses) on Available-for-sale Securities | Total | ||||||||||
Beginning balance at December 31, 2017 | $ | (309 | ) | $ | 46,700 | $ | 46,391 | |||||
Cumulative effect of adoption of ASU 2016-01, net of tax | – | (46,157 | ) | (46,157 | ) | |||||||
Balance at January 1, 2018 | (309 | ) | 543 | 234 | ||||||||
Cumulative effect of adoption of ASU 2018-02 | – | 117 | 117 | |||||||||
Other comprehensive loss before reclassifications | (411 | ) | (4,050 | ) | (4,461 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) | – | (1,097 | ) | (1,097 | ) | |||||||
Net current-period other comprehensive loss | (411 | ) | (5,147 | ) | (5,558 | ) | ||||||
Ending balance at June 30, 2018 | $ | (720 | ) | $ | (4,487 | ) | $ | (5,207 | ) |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Income before federal income tax expense | $ | 1,950 | $ | 3,057 | $ | 5,464 | $ | 3,371 | ||||||||
Less: Net realized and unrealized gains (losses) on investments | 2,889 | (3,435 | ) | 8,916 | (7,968 | ) | ||||||||||
Less: Net investment income | 6,500 | 5,796 | 12,732 | 10,432 | ||||||||||||
Underwriting income (loss) | $ | (7,439 | ) | $ | 696 | $ | (16,184 | ) | $ | 907 | ||||||
Ratios | ||||||||||||||||
Losses and loss expenses incurred | $ | 90,433 | $ | 77,488 | $ | 177,555 | $ | 149,787 | ||||||||
Net premiums earned | 115,631 | 111,940 | 225,644 | 217,402 | ||||||||||||
Loss ratio | 78.2 | % | 69.2 | % | 78.7 | % | 68.9 | % | ||||||||
Other operating expenses | $ | 34,615 | $ | 36,019 | $ | 68,316 | $ | 70,784 | ||||||||
Less: Commissions and other income | 1,978 | 2,263 | 4,043 | 4,076 | ||||||||||||
Other operating expenses, less commissions and other income | 32,637 | 33,756 | 64,273 | 66,708 | ||||||||||||
Net premiums earned | 115,631 | 111,940 | 225,644 | 217,402 | ||||||||||||
Expense ratio | 28.2 | % | 30.2 | % | 28.5 | % | 30.7 | % | ||||||||
Combined ratio | 106.4 | % | 99.4 | % | 107.2 | % | 99.6 | % |
2017 | 2016 | Change | ||||||||||
Gross Premiums Written | $ | 131,523 | $ | 101,921 | $ | 29,602 | ||||||
Net Premiums Written | 96,222 | 70,530 | 25,692 | |||||||||
Net Premiums Earned | 89,100 | 71,235 | 17,865 |
2019 | 2018 | Change | % Change | |||||||||||||
Gross premiums written | $ | 147,152 | $ | 142,270 | $ | 4,882 | 3.4 | % | ||||||||
Ceded premiums written | (31,457 | ) | (28,016 | ) | (3,441 | ) | 12.3 | % | ||||||||
Net premiums written | $ | 115,695 | $ | 114,254 | $ | 1,441 | 1.3 | % | ||||||||
Net premiums earned | $ | 115,631 | $ | 111,940 | $ | 3,691 | 3.3 | % | ||||||||
Net investment income | 6,500 | 5,796 | 704 | 12.1 | % | |||||||||||
Commissions and other income | 1,978 | 2,263 | (285 | ) | (12.6 | )% | ||||||||||
Net realized and unrealized gains (losses) on investments | 2,889 | (3,435 | ) | 6,324 | 184.1 | % | ||||||||||
Total revenue | 126,998 | 116,564 | ||||||||||||||
Losses and loss expenses incurred | 90,433 | 77,488 | 12,945 | 16.7 | % | |||||||||||
Other operating expenses | 34,615 | 36,019 | (1,404 | ) | (3.9 | )% | ||||||||||
Total expenses | 125,048 | 113,507 | ||||||||||||||
Income before federal income tax expense | 1,950 | 3,057 | (1,107 | ) | ||||||||||||
Federal income tax expense | 415 | 570 | (155 | ) | ||||||||||||
Net income | $ | 1,535 | $ | 2,487 | $ | (952 | ) | |||||||||
2019 | 2018 | Change | % Change | |||||||||||||
Gross premiums written | $ | 296,045 | $ | 291,093 | $ | 4,952 | 1.7 | % | ||||||||
Ceded premiums written | (65,028 | ) | (63,405 | ) | (1,623 | ) | 2.6 | % | ||||||||
Net premiums written | $ | 231,017 | $ | 227,688 | $ | 3,329 | 1.5 | % | ||||||||
Net premiums earned | $ | 225,644 | $ | 217,402 | $ | 8,242 | 3.8 | % | ||||||||
Net investment income | 12,732 | 10,432 | 2,300 | 22.0 | % | |||||||||||
Commissions and other income | 4,043 | 4,076 | (33 | ) | (0.8 | )% | ||||||||||
Net realized and unrealized gains (losses) on investments | 8,916 | (7,968 | ) | 16,884 | 211.9 | % | ||||||||||
Total revenue | 251,335 | 223,942 | ||||||||||||||
Losses and loss expenses incurred | 177,555 | 149,787 | 27,768 | 18.5 | % | |||||||||||
Other operating expenses | 68,316 | 70,784 | (2,468 | ) | (3.5 | )% | ||||||||||
Total expenses | 245,871 | 220,571 | ||||||||||||||
Income before federal income tax expense | 5,464 | 3,371 | 2,093 | |||||||||||||
Federal income tax expense | 1,181 | 554 | 627 | |||||||||||||
Net income | $ | 4,283 | $ | 2,817 | $ | 1,466 | ||||||||||
5% Increase in Ultimate Loss Ratio | 10% Increase in Ultimate Loss Ratio | |||||||
Gross loss expense from further strengthening current reserve position | $ | 42.6 | $ | 85.2 | ||||
Net financial loss | 10.7 | 21.3 | ||||||
$/share (after tax) | $ | 0.57 | $ | 1.14 |
2017 | 2016 | Change | ||||||||||
Gross Premiums Written | $ | 360,558 | $ | 298,120 | $ | 62,438 | ||||||
Net Premiums Written | 246,459 | 202,764 | 43,695 | |||||||||
Net Premiums Earned | 231,070 | 206,870 | 24,200 |
● | general economic conditions, including weakness of the financial markets, prevailing interest rate levels and stock and credit market performance, which may affect or continue to affect (among other things) our ability to sell our products and to collect amounts due to us, our ability to access capital resources and the costs associated with such access to capital and the market value of our investments; |
● | our ability to obtain adequate premium rates and manage our operating strategies; |
● | increasing competition in the sale of our insurance products and services resulting from the entrance of new competitors into, or the expansion of the operations of existing competitors in, our markets and our ability to retain existing customers; |
● | other changes in the markets for our insurance products; |
● | the impact of technological advances, including those specific to the transportation industry; |
● | changes in the legal or regulatory environment, which may affect the manner in which claims are adjusted or litigated, including loss and loss adjustment expense; |
● | legal or regulatory changes or actions, including those relating to the regulation of the sale, underwriting and pricing of insurance products and services and capital requirements; |
● | the impact of a downgrade in our financial strength rating; |
● | technology or network security disruptions or breaches; |
● | adequacy of insurance reserves; |
● | availability of reinsurance and ability of reinsurers to pay their obligations; |
● | our ability to attract and retain qualified employees and to successfully complete our executive officer transition; |
● | tax law and accounting changes; and |
● | legal actions brought against us. |
Fair Value | Estimated Change in Fair Value | |||||||
200 basis point increase | $ | 702,383 | $ | (34,765 | ) | |||
100 basis point increase | 719,203 | (17,945 | ) | |||||
Current fair value | 737,148 | – | ||||||
100 basis point decrease | 755,094 | 17,946 | ||||||
200 basis point decrease | 771,913 | 34,765 |
Approximate dollar | ||||||||||||||||
Total number of | value of shares still | |||||||||||||||
Total number | shares purchased | available to be purchased | ||||||||||||||
of shares purchased | Average price paid per share | as part of program (1) | under the program (000s) (1) | |||||||||||||
July 1 - July 31 | - | - | - | $ | - | |||||||||||
August 1 - August 31 | - | - | - | 17,500 | ||||||||||||
September 1 - September 30 | 84,960 | $ | 22.12 | 84,960 | 15,620 | |||||||||||
Total | 84,960 | 84,960 | $ | 15,620 |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased Under the Program (1) | Remaining Shares Available to be Purchased Under the Program (1) | |||||||||||||
April 1 – April 30 | 172,439 | $ | 17.52 | 172,439 | 1,982,184 | |||||||||||
May 1 – May 31 | 86,082 | 16.60 | 86,082 | 1,896,102 | ||||||||||||
June 1 – June 30 | 90,602 | 17.33 | 90,602 | 1,805,500 | ||||||||||||
Total | 349,123 | 349,123 |
(1) | On August 31, 2017, our Board of Directors authorized the reinstatement of our share repurchase program for up to 2,464,209 shares of our Class A or Class B Common Stock. On August 7, 2018, our Board of Directors reaffirmed our share repurchase program, but also provided that the aggregate dollar amount of shares of our Common Stock that may be repurchased under the share repurchase program through August 8, 2019 may not exceed $25.0 million. Pursuant to this share repurchase program, we entered into a Rule 10b5-1 plan on June 21, 2019, which authorizes the repurchase of up to $4.0 million of our outstanding common stock, at various pricing thresholds, in accordance with guidelines specified under Rule 10b5-1 of the Exchange Act. The Rule 10b5-1 plan expires on August 8, 2019. No duration has been placed on our share repurchase program, and we reserve the right to amend, suspend or discontinue it at any time. The share repurchase program does not commit us to repurchase any shares of our Common Stock. We have funded, and intend to continue to fund, the share repurchase program from cash on hand. |
Description | ||
Amended and Restated Articles of Incorporation of Protective Insurance Corporation, incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed August 8, 2018. | ||
Code of By-Laws of Protective Insurance Corporation, as amended effective May 17, 2019. | ||
Employment Agreement, effective as of May 22, 2019, by and between the Company and Jeremy D. Edgecliffe-Johnson, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed May 22, 2019. | ||
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
101 | The following materials from |
By: | /s/ Jeremy D. Edgecliffe-Johnson | |
Jeremy D. Edgecliffe-Johnson | ||
Chief Executive Officer |
By: | /s/ William C. Vens | |
William C. Vens | ||
Chief Financial Officer |