☒ | 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) | 2,603,350 | ||
Class B (non-voting) | 11,662,517 | |||
14,265,867 |
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 |
September 30 2020 | December 31 2019 | |||||||
Assets | ||||||||
Investments: | ||||||||
Fixed income securities | $ | 851,937 | $ | 795,538 | ||||
Equity securities | 48,417 | 76,812 | ||||||
Limited partnerships | 7,455 | 23,292 | ||||||
Commercial mortgage loans | 11,087 | 11,782 | ||||||
Short-term and other | 1,000 | 1,000 | ||||||
919,896 | 908,424 | |||||||
Cash and cash equivalents | 90,425 | 67,851 | ||||||
Restricted cash and cash equivalents | 10,117 | 21,037 | ||||||
Accounts receivable | 94,820 | 111,762 | ||||||
Reinsurance recoverable | 429,544 | 432,067 | ||||||
Other assets | 91,109 | 86,306 | ||||||
Current federal income taxes recoverable | 3,102 | 4,878 | ||||||
Deferred federal income taxes | 5,810 | 2,035 | ||||||
Total Assets | $ | 1,644,823 | $ | 1,634,360 | ||||
Liabilities and shareholders' equity | ||||||||
Reserves for losses and loss expenses | $ | 1,054,457 | $ | 988,305 | ||||
Reserves for unearned premiums | 63,553 | 74,810 | ||||||
Reinsurance payable | 53,202 | 65,835 | ||||||
Short-term borrowings | 20,000 | 20,000 | ||||||
Accounts payable and other liabilities | 108,947 | 121,094 | ||||||
Total Liabilities | 1,300,159 | 1,270,044 | ||||||
Shareholders' equity: | ||||||||
Common stock-0 par value: | ||||||||
Class A voting -- authorized 3,000,000 shares; outstanding -- 2020 - 2,603,350; 2019 - 2,603,350 | 111 | 111 | ||||||
Class B non-voting -- authorized 20,000,000 shares; outstanding -- 2020 - 11,650,004; 2019 - 11,675,956 | 498 | 499 | ||||||
Additional paid-in capital | 54,160 | 53,349 | ||||||
Accumulated other comprehensive income | 14,185 | 9,369 | ||||||
Retained earnings | 275,710 | 300,988 | ||||||
Total Shareholders' Equity | 344,664 | 364,316 | ||||||
Total Liabilities and Shareholders' Equity | $ | 1,644,823 | $ | 1,634,360 |
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 September 30 | Nine Months Ended September 30 | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues | ||||||||||||||||
Net premiums earned | $ | 117,853 | $ | 110,288 | $ | 325,242 | $ | 335,931 | ||||||||
Net investment income | 5,486 | 6,703 | 19,102 | 19,434 | ||||||||||||
Commissions and other income | 1,469 | 2,716 | 5,020 | 6,761 | ||||||||||||
Net realized gains (losses) on investments, excluding impairment losses | (39 | ) | 1,199 | (8,924 | ) | 1,872 | ||||||||||
Impairment losses on investments | (588 | ) | (58 | ) | (1,046 | ) | (404 | ) | ||||||||
Net unrealized gains (losses) on equity securities and limited partnership investments | 771 | (1,016 | ) | (7,026 | ) | 7,573 | ||||||||||
Net realized and unrealized gains (losses) on investments | 144 | 125 | (16,996 | ) | 9,041 | |||||||||||
124,952 | 119,832 | 332,368 | 371,167 | |||||||||||||
Expenses | ||||||||||||||||
Losses and loss expenses incurred | 84,673 | 84,781 | 234,713 | 262,336 | ||||||||||||
Other operating expenses | 36,952 | 36,070 | 105,259 | 104,386 | ||||||||||||
121,625 | 120,851 | 339,972 | 366,722 | |||||||||||||
Income (loss) before federal income tax expense (benefit) | 3,327 | (1,019 | ) | (7,604 | ) | 4,445 | ||||||||||
Federal income tax expense (benefit) | 46 | (312 | ) | (96 | ) | 869 | ||||||||||
Net income (loss) | $ | 3,281 | $ | (707 | ) | $ | (7,508 | ) | $ | 3,576 | ||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.23 | $ | (0.05 | ) | $ | (0.53 | ) | $ | 0.24 | ||||||
Diluted | $ | 0.23 | $ | (0.05 | ) | $ | (0.53 | ) | $ | 0.24 | ||||||
Weighted average number of shares outstanding: | ||||||||||||||||
Basic | 14,132 | 14,361 | 14,139 | 14,607 | ||||||||||||
Dilutive effect of share equivalents | 169 | n/a | n/a | 77 | ||||||||||||
Diluted | 14,301 | 14,361 | 14,139 | 14,684 |
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 September 30 | Nine Months Ended September 30 | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net income (loss) | $ | 3,281 | $ | (707 | ) | $ | (7,508 | ) | $ | 3,576 | ||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Unrealized net gains on fixed income securities | 6,133 | 1,566 | 5,123 | 16,539 | ||||||||||||
Foreign currency translation adjustments | 159 | (189 | ) | (307 | ) | 402 | ||||||||||
Other comprehensive income | 6,292 | 1,377 | 4,816 | 16,941 | ||||||||||||
Comprehensive income (loss) | $ | 9,573 | $ | 670 | $ | (2,692 | ) | $ | 20,517 |
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, 2019 | 2,603 | $ | 111 | 11,676 | $ | 499 | $ | 53,349 | $ | 9,369 | $ | 300,988 | $ | 364,316 | ||||||||||||||||||
Cumulative effect of the adoption of updated accounting guidance for credit losses, net of tax | – | 0 | – | 0 | 0 | 0 | (12,281 | ) | (12,281 | ) | ||||||||||||||||||||||
Net loss | – | 0 | – | 0 | 0 | 0 | (7,508 | ) | (7,508 | ) | ||||||||||||||||||||||
Foreign currency translation adjustment, net of tax | – | 0 | – | 0 | 0 | (307 | ) | 0 | (307 | ) | ||||||||||||||||||||||
Change in unrealized gain (loss) on investments, net of tax | – | 0 | – | 0 | 0 | 5,123 | 0 | 5,123 | ||||||||||||||||||||||||
Common stock dividends | – | 0 | – | 0 | 0 | 0 | (4,275 | ) | (4,275 | ) | ||||||||||||||||||||||
Repurchase of common shares | 0 | 0 | (127 | ) | (5 | ) | (563 | ) | 0 | (1,214 | ) | (1,782 | ) | |||||||||||||||||||
Restricted stock grants | 0 | 0 | 101 | 4 | 1,374 | 0 | 0 | 1,378 | ||||||||||||||||||||||||
Balance at September 30, 2020 | 2,603 | $ | 111 | 11,650 | $ | 498 | $ | 54,160 | $ | 14,185 | $ | 275,710 | $ | 344,664 |
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 June 30, 2020 | 2,603 | $ | 111 | 11,610 | $ | 496 | $ | 53,692 | $ | 7,893 | $ | 273,846 | $ | 336,038 | ||||||||||||||||||
Net income | – | 0 | – | 0 | 0 | 0 | 3,281 | 3,281 | ||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax | – | 0 | – | 0 | 0 | 159 | 0 | 159 | ||||||||||||||||||||||||
Change in unrealized gain (loss) on investments, net of tax | – | 0 | – | 0 | 0 | 6,133 | 0 | 6,133 | ||||||||||||||||||||||||
Common stock dividends | – | 0 | – | 0 | 0 | 0 | (1,417 | ) | (1,417 | ) | ||||||||||||||||||||||
Repurchase of common shares | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Restricted stock grants | 0 | 0 | 40 | 2 | 468 | 0 | 0 | 470 | ||||||||||||||||||||||||
Balance at September 30, 2020 | 2,603 | $ | 111 | 11,650 | $ | 498 | $ | 54,160 | $ | 14,185 | $ | 275,710 | $ | 344,664 |
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 | – | 0 | – | 0 | 0 | 0 | 3,576 | 3,576 | ||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax | – | 0 | – | 0 | 0 | 402 | 0 | 402 | ||||||||||||||||||||||||
Change in unrealized gain (loss) on investments, net of tax | – | 0 | – | 0 | 0 | 16,539 | 0 | 16,539 | ||||||||||||||||||||||||
Common stock dividends | – | 0 | – | 0 | 0 | 0 | (4,429 | ) | (4,429 | ) | ||||||||||||||||||||||
Repurchase of common shares | (6 | ) | 0 | (595 | ) | (24 | ) | (2,590 | ) | 0 | (7,669 | ) | (10,283 | ) | ||||||||||||||||||
Restricted stock grants | 0 | 0 | 80 | 3 | 1,540 | 0 | 0 | 1,543 | ||||||||||||||||||||||||
Balance at September 30, 2019 | 2,609 | $ | 112 | 11,739 | $ | 501 | $ | 53,670 | $ | 9,594 | $ | 299,553 | $ | 363,430 |
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 June 30, 2019 | 2,612 | $ | 112 | 11,932 | $ | 509 | $ | 54,065 | $ | 8,217 | $ | 304,513 | $ | 367,416 | ||||||||||||||||||
Net loss | – | 0 | – | 0 | 0 | 0 | (707 | ) | (707 | ) | ||||||||||||||||||||||
Foreign currency translation adjustment, net of tax | – | 0 | – | 0 | 0 | (189 | ) | 0 | (189 | ) | ||||||||||||||||||||||
Change in unrealized gain (loss) on investments, net of tax | – | 0 | – | 0 | 0 | 1,566 | 0 | 1,566 | ||||||||||||||||||||||||
Common stock dividends | – | 0 | – | 0 | 0 | 0 | (1,442 | ) | (1,442 | ) | ||||||||||||||||||||||
Repurchase of common shares | (3 | ) | 0 | (224 | ) | (9 | ) | (976 | ) | 0 | (2,811 | ) | (3,796 | ) | ||||||||||||||||||
Restricted stock grants | 0 | 0 | 31 | 1 | 581 | 0 | 0 | 582 | ||||||||||||||||||||||||
Balance at September 30, 2019 | 2,609 | $ | 112 | 11,739 | $ | 501 | $ | 53,670 | $ | 9,594 | $ | 299,553 | $ | 363,430 |
Nine Months Ended September 30 | ||||||||
2020 | 2019 | |||||||
Operating activities | ||||||||
Net income (loss) | $ | (7,508 | ) | $ | 3,576 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | 50,599 | 58,746 | ||||||
Net cash provided by operating activities | 43,091 | 62,322 | ||||||
Investing activities | ||||||||
Purchases of fixed income and equity securities | (271,741 | ) | (342,299 | ) | ||||
Distributions from limited partnerships | 14,636 | 33,395 | ||||||
Proceeds from maturities | 95,454 | 64,536 | ||||||
Proceeds from sales of fixed income securities | 89,746 | 118,725 | ||||||
Proceeds from sales of equity securities | 47,171 | 19,408 | ||||||
Purchase of commercial mortgage loans | (410 | ) | (2,746 | ) | ||||
Proceeds from commercial mortgage loans | 909 | 0 | ||||||
Purchases of property and equipment | (838 | ) | (1,659 | ) | ||||
Proceeds from disposals of property and equipment | 0 | 4 | ||||||
Net cash used in investing activities | (25,073 | ) | (110,636 | ) | ||||
Financing activities | ||||||||
Dividends paid to shareholders | (4,275 | ) | (4,429 | ) | ||||
Repurchase of common shares | (1,782 | ) | (10,283 | ) | ||||
Net cash used in financing activities | (6,057 | ) | (14,712 | ) | ||||
Effect of foreign exchange rates on cash and cash equivalents | (307 | ) | 402 | |||||
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents | 11,654 | (62,624 | ) | |||||
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period | 88,888 | 170,811 | ||||||
Cash, cash equivalents and restricted cash and cash equivalents at end of period | $ | 100,542 | $ | 108,187 |
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) | ||||||||||||||||
September 30, 2020 | ||||||||||||||||||||
Fixed income securities | ||||||||||||||||||||
Agency collateralized mortgage obligations | $ | 10,106 | $ | 9,992 | $ | 401 | $ | (287 | ) | $ | 114 | |||||||||
Agency mortgage-backed securities | 98,651 | 95,597 | 3,079 | (25 | ) | 3,054 | ||||||||||||||
Asset-backed securities | 102,193 | 104,985 | 579 | (3,371 | ) | (2,792 | ) | |||||||||||||
Bank loans | 8,580 | 9,605 | 0 | (1,025 | ) | (1,025 | ) | |||||||||||||
Certificates of deposit | 520 | 520 | 0 | 0 | 0 | |||||||||||||||
Collateralized mortgage obligations | 6,034 | 6,167 | 56 | (189 | ) | (133 | ) | |||||||||||||
Corporate securities | 324,116 | 310,689 | 14,579 | (1,152 | ) | 13,427 | ||||||||||||||
Mortgage-backed securities | 43,233 | 47,780 | 1,051 | (5,598 | ) | (4,547 | ) | |||||||||||||
Municipal obligations | 43,920 | 42,266 | 1,694 | (40 | ) | 1,654 | ||||||||||||||
Non-U.S. government obligations | 29,718 | 28,896 | 822 | 0 | 822 | |||||||||||||||
U.S. government obligations | 184,866 | 176,464 | 8,422 | (20 | ) | 8,402 | ||||||||||||||
Total fixed income securities | $ | 851,937 | $ | 832,961 | $ | 30,683 | $ | (11,707 | ) | $ | 18,976 |
Fair Value | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Net Unrealized Gains (Losses) | ||||||||||||||||
December 31, 2019 | ||||||||||||||||||||
Fixed income securities | ||||||||||||||||||||
Agency collateralized mortgage obligations | $ | 12,093 | $ | 11,557 | $ | 536 | $ | 0 | $ | 536 | ||||||||||
Agency mortgage-backed securities | 56,280 | 54,286 | 2,005 | (11 | ) | 1,994 | ||||||||||||||
Asset-backed securities | 106,397 | 107,028 | 499 | (1,130 | ) | (631 | ) | |||||||||||||
Bank loans | 14,568 | 14,932 | 106 | (470 | ) | (364 | ) | |||||||||||||
Certificates of deposit | 2,835 | 2,835 | 0 | 0 | 0 | |||||||||||||||
Collateralized mortgage obligations | 5,616 | 5,123 | 493 | 0 | 493 | |||||||||||||||
Corporate securities | 281,381 | 274,340 | 7,492 | (451 | ) | 7,041 | ||||||||||||||
Mortgage-backed securities | 47,463 | 46,685 | 1,047 | (269 | ) | 778 | ||||||||||||||
Municipal obligations | 36,286 | 35,749 | 684 | (147 | ) | 537 | ||||||||||||||
Non-U.S. government obligations | 24,179 | 23,889 | 290 | 0 | 290 | |||||||||||||||
U.S. government obligations | 208,440 | 206,623 | 2,891 | (1,074 | ) | 1,817 | ||||||||||||||
Total fixed income securities | $ | 795,538 | $ | 783,047 | $ | 16,043 | $ | (3,552 | ) | $ | 12,491 |
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 |
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||
Number of Securities | Fair Value | Gross Unrealized Loss | Number of Securities | Fair Value | Gross Unrealized Loss | |||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||
12 months or less | 155 | $ | 149,489 | $ | (8,214 | ) | 88 | $ | 108,387 | $ | (2,452 | ) | ||||||||||||
Greater than 12 months | 25 | 28,495 | (3,493 | ) | 69 | 66,860 | (1,100 | ) | ||||||||||||||||
Total fixed income securities | 180 | $ | 177,984 | $ | (11,707 | ) | 157 | $ | 175,247 | $ | (3,552 | ) | ||||||||||||
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 | $ | 92,882 | $ | 92,080 | ||||
Excess of one year to five years | 337,419 | 324,886 | ||||||
Excess of five years to ten years | 144,672 | 135,091 | ||||||
Excess of ten years | 22,781 | 22,550 | ||||||
Contractual maturities | 597,754 | 574,607 | ||||||
Asset-backed securities | 254,183 | 258,354 | ||||||
Total | $ | 851,937 | $ | 832,961 |
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 September 30 | Nine Months Ended September 30 | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Gross gains on available-for-sale fixed income securities sold during the period | $ | 2,875 | $ | 2,407 | $ | 8,088 | $ | 9,710 | ||||||||
Gross losses on available-for-sale fixed income securities sold during the period | (2,662 | ) | (2,728 | ) | (7,552 | ) | (9,409 | ) | ||||||||
Impairment losses on investments | (588 | ) | (58 | ) | (1,046 | ) | (404 | ) | ||||||||
Change in value of limited partnership investments | 62 | 278 | (1,201 | ) | 1,000 | |||||||||||
Gains on equity securities: | ||||||||||||||||
Realized gains (losses) on equity securities sold during the period | (252 | ) | 1,520 | (9,460 | ) | 1,571 | ||||||||||
Unrealized gains (losses) on equity securities held at the end of the period | 709 | (1,294 | ) | (5,825 | ) | 6,573 | ||||||||||
Realized and unrealized gains (losses) on equity securities during the period | 457 | 226 | (15,285 | ) | 8,144 | |||||||||||
Net realized and unrealized gains (losses) on investments | $ | 144 | $ | 125 | $ | (16,996 | ) | $ | 9,041 |
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 |
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 | 2020 | 2019 | |||||||||||||
Three months ended September 30: | ||||||||||||||||
Premiums ceded to reinsurers | $ | 34,025 | $ | 30,996 | $ | 26,825 | $ | 29,957 | ||||||||
Losses and loss expenses | ||||||||||||||||
ceded to reinsurers | 30,531 | 21,237 | ||||||||||||||
Losses and loss expenses ceded to reinsurers | 27,270 | 27,228 | ||||||||||||||
Commissions from reinsurers | 7,205 | 11,898 | 7,206 | 7,820 | ||||||||||||
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 |
2020 | 2019 | |||||||
Nine months ended September 30: | ||||||||
Premiums ceded to reinsurers | $ | 83,508 | $ | 92,556 | ||||
Losses and loss expenses ceded to reinsurers | 75,201 | 86,876 | ||||||
Commissions from reinsurers | 21,785 | 23,229 | ||||||
2017 | 2016 | Nine Months Ended | ||||||||||||||
Reserves, gross of reinsurance | ||||||||||||||||
recoverable, at the beginning of the year | $ | 576,330 | $ | 513,596 | ||||||||||||
September 30 | ||||||||||||||||
2020 | 2019 | |||||||||||||||
Reserves, gross of reinsurance recoverable, at the beginning of the year | $ | 988,305 | $ | 865,339 | ||||||||||||
Reinsurance recoverable on unpaid losses at the beginning of the year | 251,563 | 211,843 | 398,305 | 375,935 | ||||||||||||
Reserves at the beginning of the year | 324,767 | 301,753 | 590,000 | 489,404 | ||||||||||||
Provision for losses and loss expenses: | ||||||||||||||||
Claims occurring during the current period | 164,546 | 129,404 | 234,718 | 263,925 | ||||||||||||
Claims occurring during prior periods | 16,480 | 8,712 | (5 | ) | (1,589 | ) | ||||||||||
Total incurred | 181,026 | 138,116 | 234,713 | 262,336 | ||||||||||||
Loss and loss expense payments: | ||||||||||||||||
Claims occurring during the current period | 41,616 | 30,932 | 47,852 | 53,836 | ||||||||||||
Claims occurring during prior periods | 109,616 | 81,427 | 136,231 | 133,196 | ||||||||||||
Total paid | 151,232 | 112,359 | 184,083 | 187,032 | ||||||||||||
Reserves at the end of the period | 354,561 | 327,510 | 640,630 | 564,708 | ||||||||||||
Reinsurance recoverable on unpaid losses at the end of the period | 301,445 | 238,049 | 413,827 | 395,987 | ||||||||||||
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 | $ | 1,054,457 | $ | 960,695 |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September 30 | September 30 | |||||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Net premiums earned | $ | 89,100 | $ | 71,235 | $ | 231,070 | $ | 206,870 | $ | 117,853 | $ | 110,288 | $ | 325,242 | $ | 335,931 | ||||||||||||||||
Net investment income | 4,027 | 3,513 | 12,434 | 10,501 | 5,486 | 6,703 | 19,102 | 19,434 | ||||||||||||||||||||||||
Net realized gains on investments | 5,944 | 7,732 | 15,534 | 17,024 | ||||||||||||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 144 | 125 | (16,996 | ) | 9,041 | |||||||||||||||||||||||||||
Commissions and other income | 1,407 | 1,207 | 3,789 | 4,035 | 1,469 | 2,716 | 5,020 | 6,761 | ||||||||||||||||||||||||
Total revenues | $ | 100,478 | $ | 83,687 | $ | 262,827 | $ | 238,430 | $ | 124,952 | $ | 119,832 | $ | 332,368 | $ | 371,167 |
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 | $ | 10,106 | $ | 0 | $ | 10,106 | $ | 0 | ||||||||
Agency mortgage-backed securities | 98,651 | 0 | 98,651 | 0 | ||||||||||||
Asset-backed securities | 102,193 | 0 | 102,193 | 0 | ||||||||||||
Bank loans | 8,580 | 0 | 8,580 | 0 | ||||||||||||
Certificates of deposit | 520 | 520 | 0 | 0 | ||||||||||||
Collateralized mortgage obligations | 6,034 | 0 | 6,034 | 0 | ||||||||||||
Corporate securities | 318,874 | 0 | 318,874 | 0 | ||||||||||||
Options embedded in convertible securities | 5,242 | 0 | 5,242 | 0 | ||||||||||||
Mortgage-backed securities | 43,233 | 0 | 43,233 | 0 | ||||||||||||
Municipal obligations | 43,920 | 0 | 43,920 | 0 | ||||||||||||
Non-U.S. government obligations | 29,718 | 0 | 29,718 | 0 | ||||||||||||
U.S. government obligations | 184,866 | 0 | 184,866 | 0 | ||||||||||||
Total fixed income securities | 851,937 | 520 | 851,417 | 0 | ||||||||||||
Equity securities: | ||||||||||||||||
Consumer | 11,220 | 11,220 | 0 | 0 | ||||||||||||
Energy | 1,059 | 1,059 | 0 | 0 | ||||||||||||
Financial | 22,357 | 22,357 | 0 | 0 | ||||||||||||
Industrial | 4,072 | 4,072 | 0 | 0 | ||||||||||||
Technology | 2,481 | 2,481 | 0 | 0 | ||||||||||||
Funds (e.g., mutual funds, closed end funds, ETFs) | 0 | 0 | 0 | 0 | ||||||||||||
Other | 7,228 | 7,228 | 0 | 0 | ||||||||||||
Total equity securities | 48,417 | 48,417 | 0 | 0 | ||||||||||||
Short-term investments | 1,000 | 1,000 | 0 | 0 | ||||||||||||
Cash equivalents | 78,401 | 0 | 78,401 | 0 | ||||||||||||
Total | $ | 979,755 | $ | 49,937 | $ | 929,818 | $ | 0 |
Description | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Fixed income securities: | ||||||||||||||||
Agency collateralized mortgage obligations | $ | 12,093 | $ | 0 | $ | 12,093 | $ | 0 | ||||||||
Agency mortgage-backed securities | 56,280 | 0 | 56,280 | 0 | ||||||||||||
Asset-backed securities | 106,397 | 0 | 106,397 | 0 | ||||||||||||
Bank loans | 14,568 | 0 | 14,568 | 0 | ||||||||||||
Certificates of deposit | 2,835 | 2,835 | 0 | 0 | ||||||||||||
Collateralized mortgage obligations | 5,616 | 0 | 5,616 | 0 | ||||||||||||
Corporate securities | 276,087 | 0 | 276,087 | 0 | ||||||||||||
Options embedded in convertible securities | 5,294 | 0 | 5,294 | 0 | ||||||||||||
Mortgage-backed securities | 47,463 | 0 | 47,463 | 0 | ||||||||||||
Municipal obligations | 36,286 | 0 | 36,286 | 0 | ||||||||||||
Non-U.S. government obligations | 24,179 | 0 | 24,179 | 0 | ||||||||||||
U.S. government obligations | 208,440 | 0 | 208,440 | 0 | ||||||||||||
Total fixed income securities | 795,538 | 2,835 | 792,703 | 0 | ||||||||||||
Equity securities: | ||||||||||||||||
Consumer | 16,707 | 16,707 | 0 | 0 | ||||||||||||
Energy | 3,074 | 3,074 | 0 | 0 | ||||||||||||
Financial | 31,577 | 31,577 | 0 | 0 | ||||||||||||
Industrial | 4,927 | 4,927 | 0 | 0 | ||||||||||||
Technology | 2,817 | 2,817 | 0 | 0 | ||||||||||||
Funds (e.g., mutual funds, closed end funds, ETFs) | 9,460 | 9,460 | 0 | 0 | ||||||||||||
Other | 8,250 | 8,250 | 0 | 0 | ||||||||||||
Total equity securities | 76,812 | 76,812 | 0 | 0 | ||||||||||||
Short-term investments | 1,000 | 1,000 | 0 | 0 | ||||||||||||
Cash equivalents | 59,780 | 0 | 59,780 | 0 | ||||||||||||
Total | $ | 933,130 | $ | 80,647 | $ | 852,483 | $ | 0 |
As of December 31, 2016: | ||||||||||||||||
Description | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Fixed maturities: | ||||||||||||||||
Agency collateralized mortgage obligations | $ | 6,171 | $ | - | $ | 6,171 | $ | - | ||||||||
Agency mortgage-backed securities | 4,770 | - | 4,770 | - | ||||||||||||
Asset-backed securities | 45,183 | - | 37,919 | 7,264 | ||||||||||||
Bank loans | 10,349 | - | - | 10,349 | ||||||||||||
Certificates of deposit | 3,117 | 3,117 | - | - | ||||||||||||
Collateralized mortgage obligations | 9,104 | - | 6,409 | 2,695 | ||||||||||||
Corporate securities | 137,932 | - | 135,794 | 2,138 | ||||||||||||
Options embedded in convertible securities | 4,751 | - | 4,751 | - | ||||||||||||
Mortgage-backed securities | 24,571 | - | 22,206 | 2,365 | ||||||||||||
Municipal obligations | 129,335 | - | 129,190 | 145 | ||||||||||||
Non-U.S. government obligations | 24,681 | - | 24,419 | 262 | ||||||||||||
U.S. government obligations | 91,940 | - | 91,940 | - | ||||||||||||
Total fixed maturities | 491,904 | 3,117 | 463,569 | 25,218 | ||||||||||||
Equity securities: | ||||||||||||||||
Consumer | 32,576 | 32,576 | - | - | ||||||||||||
Energy | 12,842 | 12,842 | - | - | ||||||||||||
Financial | 31,186 | 30,943 | 243 | - | ||||||||||||
Industrial | 21,145 | 20,262 | 883 | - | ||||||||||||
Technology | 8,858 | 8,858 | - | - | ||||||||||||
Mutual fund | 6,995 | - | 6,995 | - | ||||||||||||
Other | 6,343 | 6,343 | - | - | ||||||||||||
Total equity securities | 119,945 | 111,824 | 8,121 | - | ||||||||||||
Short-term | 1,500 | 1,500 | - | - | ||||||||||||
Cash equivalents | 59,683 | - | 59,683 | - | ||||||||||||
Total | $ | 673,032 | $ | 116,441 | $ | 531,373 | $ | 25,218 |
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 | ||||||||||||||||
September 30, 2020 | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Limited partnerships | $ | 7,455 | $ | 0 | $ | 0 | $ | 7,455 | $ | 7,455 | ||||||||||
Commercial mortgage loans | 11,087 | 0 | 0 | 11,707 | 11,707 | |||||||||||||||
Liabilities: | ||||||||||||||||||||
Short-term borrowings | 20,000 | 0 | 20,000 | 0 | 20,000 | |||||||||||||||
December 31, 2019 | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Limited partnerships | $ | 23,292 | $ | 0 | $ | 0 | $ | 23,292 | $ | 23,292 | ||||||||||
Commercial mortgage loans | 11,782 | 0 | 0 | 12,068 | 12,068 | |||||||||||||||
Liabilities: | ||||||||||||||||||||
Short-term borrowings | 20,000 | 0 | 20,000 | 0 | 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 | |||||
5/8/2018 | 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 | ||||
5/5/2020 | 42,220 | 5/5/2021 | 7/1/2020 - 6/30/2021 | $ | 14.21 |
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, 2019 | $ | (494 | ) | $ | 9,863 | $ | 9,369 | |||||
Other comprehensive income (loss) before reclassifications | (307 | ) | 4,678 | 4,371 | ||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 445 | 445 | |||||||||
Net current-period other comprehensive income (loss) | (307 | ) | 5,123 | 4,816 | ||||||||
Ending balance at September 30, 2020 | $ | (801 | ) | $ | 14,986 | $ | 14,185 |
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, 2018 | $ | (1,139 | ) | $ | (6,208 | ) | $ | (7,347 | ) | |||
Other comprehensive income (loss) before reclassifications | 402 | 16,588 | 16,990 | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | (49 | ) | (49 | ) | |||||||
Net current-period other comprehensive income (loss) | 402 | 16,539 | 16,941 | |||||||||
Ending balance at September 30, 2019 | $ | (737 | ) | $ | 10,331 | $ | 9,594 |
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 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
(dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Income (loss) before federal income tax expense (benefit) | $ | 3,327 | $ | (1,019 | ) | $ | (7,604 | ) | $ | 4,445 | ||||||
Less: Net realized and unrealized gains (losses) on investments | 144 | 125 | (16,996 | ) | 9,041 | |||||||||||
Less: Net investment income | 5,486 | 6,703 | 19,102 | 19,434 | ||||||||||||
Less: Corporate charges and CECL allowance adjustment included in other operating expenses 1 | (1,939 | ) | - | (3,639 | ) | - | ||||||||||
Underwriting loss | $ | (364 | ) | $ | (7,847 | ) | $ | (6,071 | ) | $ | (24,030 | ) | ||||
Other operating expenses | 36,952 | 36,070 | 105,259 | 104,386 | ||||||||||||
Less: Corporate charges and CECL allowance adjustment 1 | 1,939 | - | 3,639 | - | ||||||||||||
Other operating expenses, excluding corporate charges and CECL allowance adjustment | 35,013 | 36,070 | 101,620 | 104,386 | ||||||||||||
Ratios | ||||||||||||||||
Losses and loss expenses incurred | $ | 84,673 | $ | 84,781 | $ | 234,713 | $ | 262,336 | ||||||||
Net premiums earned | 117,853 | 110,288 | 325,242 | 335,931 | ||||||||||||
Loss ratio | 71.8 | % | 76.9 | % | 72.2 | % | 78.1 | % | ||||||||
Other operating expenses | $ | 36,952 | $ | 36,070 | $ | 105,259 | $ | 104,386 | ||||||||
Less: Commissions and other income | 1,469 | 2,716 | 5,020 | 6,761 | ||||||||||||
Other operating expenses, less commissions and other income | 35,483 | 33,354 | 100,239 | 97,625 | ||||||||||||
Net premiums earned | 117,853 | 110,288 | 325,242 | 335,931 | ||||||||||||
Expense ratio | 30.1 | % | 30.2 | % | 30.8 | % | 29.1 | % | ||||||||
Impact of corporate charges and CECL allowance adjustment | (1.7 | )% | - | (1.1 | )% | - | ||||||||||
Expense ratio, excluding corporate charges and CECL allowance adjustment | 28.4 | % | 30.2 | % | 29.7 | % | 29.1 | % | ||||||||
Combined ratio | 101.9 | % | 107.1 | % | 103.0 | % | 107.2 | % | ||||||||
Combined ratio, excluding corporate charges and CECL allowance adjustment | 100.2 | % | 107.1 | % | 101.9 | % | 107.2 | % |
2020 | 2019 | Change | % Change | |||||||||||||
Gross premiums written | $ | 148,039 | $ | 137,145 | $ | 10,894 | 7.9 | % | ||||||||
Ceded premiums written | (26,827 | ) | (27,853 | ) | 1,026 | (3.7 | )% | |||||||||
Net premiums written | $ | 121,212 | $ | 109,292 | $ | 11,920 | 10.9 | % | ||||||||
Net premiums earned | $ | 117,853 | $ | 110,288 | $ | 7,565 | 6.9 | % | ||||||||
Net investment income | 5,486 | 6,703 | (1,217 | ) | (18.2 | )% | ||||||||||
Commissions and other income | 1,469 | 2,716 | (1,247 | ) | (45.9 | )% | ||||||||||
Net realized and unrealized gains on investments | 144 | 125 | 19 | 15.2 | % | |||||||||||
Total revenue | 124,952 | 119,832 | ||||||||||||||
Losses and loss expenses incurred | 84,673 | 84,781 | (108 | ) | (0.1 | )% | ||||||||||
Other operating expenses | 36,952 | 36,070 | 882 | 2.4 | % | |||||||||||
Total expenses | 121,625 | 120,851 | ||||||||||||||
Income (loss) before federal income tax expense (benefit) | 3,327 | (1,019 | ) | 4,346 | ||||||||||||
Federal income tax expense (benefit) | 46 | (312 | ) | 358 | ||||||||||||
Net income (loss) | $ | 3,281 | $ | (707 | ) | $ | 3,988 | |||||||||
2020 | 2019 | Change | % Change | |||||||||||||
Gross premiums written | $ | 397,494 | $ | 433,191 | $ | (35,697 | ) | (8.2 | )% | |||||||
Ceded premiums written | (77,769 | ) | (92,882 | ) | 15,113 | (16.3 | )% | |||||||||
Net premiums written | $ | 319,725 | $ | 340,309 | $ | (20,584 | ) | (6.0 | )% | |||||||
Net premiums earned | $ | 325,242 | $ | 335,931 | $ | (10,689 | ) | (3.2 | )% | |||||||
Net investment income | 19,102 | 19,434 | (332 | ) | (1.7 | )% | ||||||||||
Commissions and other income | 5,020 | 6,761 | (1,741 | ) | (25.8 | )% | ||||||||||
Net realized and unrealized gains (losses) on investments | (16,996 | ) | 9,041 | (26,037 | ) | (288.0 | )% | |||||||||
Total revenue | 332,368 | 371,167 | ||||||||||||||
Losses and loss expenses incurred | 234,713 | 262,336 | (27,623 | ) | (10.5 | )% | ||||||||||
Other operating expenses | 105,259 | 104,386 | 873 | 0.8 | % | |||||||||||
Total expenses | 339,972 | 366,722 | ||||||||||||||
Income (loss) before federal income tax expense (benefit) | (7,604 | ) | 4,445 | (12,049 | ) | |||||||||||
Federal income tax expense (benefit) | (96 | ) | 869 | (965 | ) | |||||||||||
Net income (loss) | $ | (7,508 | ) | $ | 3,576 | $ | (11,084 | ) | ||||||||
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 continued volatility 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; |
● | the effects of the COVID-19 pandemic and associated government actions on our operating and financial performance; |
● | our ability to obtain adequate premium rates and manage our growth strategy; |
● | increasing competition in the sale of our insurance products and services resulting from the entrance of new competitors into, or the expansion of the operations of existing competitors in, our markets and our ability to retain existing customers; |
● | other changes in the markets for our insurance products; |
● | the impact of technological advances, including those specific to the transportation industry; |
● | changes in the legal or regulatory environment, which may affect the manner in which claims are adjusted or litigated, including loss and loss adjustment expense; |
● | legal or regulatory changes or actions, including those relating to the regulation of the sale, underwriting and pricing of insurance products and services and capital requirements; |
● | the impact of a downgrade in our financial strength rating; |
● | technology or network security disruptions or breaches; |
● | adequacy of insurance reserves; |
● | availability of reinsurance and ability of reinsurers to pay their obligations; |
● | our ability to attract and retain qualified employees; |
● | tax law and accounting changes; and |
● | legal actions brought against us. |
Fair Value | Estimated Change in Fair Value | |||||||
200 basis point increase | $ | 803,764 | $ | (48,173 | ) | |||
100 basis point increase | 827,851 | (24,086 | ) | |||||
Current fair value | 851,937 | – | ||||||
100 basis point decrease | 876,023 | 24,086 | ||||||
200 basis point decrease | 900,110 | 48,173 |
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 |
• | Net premiums earned. We expect the impact of COVID-19 on general economic activity will continue to negatively impact our premium volumes. We did not experience a material effect on our net premiums earned in the first quarter of 2020, but saw a more significant impact in the second and third quarters of 2020 primarily due to the reduction in miles driven, which is the basis of premiums we receive, by our commercial automobile insureds, as well as an overall reduction in public transportation units insured. This impact could further persist for the remainder of 2020 and beyond, but the degree of the impact will depend on the extent and duration of the economic contraction. |
• | Losses and loss expenses incurred. We have seen a favorable impact on our losses and loss expenses incurred in commercial automobile during the first nine months of 2020 as a result of declines in accident frequency due to lower traffic density, but in the future we may incur higher claim and claim adjustment expenses in certain lines of business as a result of COVID-19 due to increases in frequency and/or severity of claims. For example, we may experience elevated frequency and severity in our workers’ compensation lines related to compensable claims by workers who demonstrate that the injury or illness arose both out of and in the course of their employment. We may also experience elevated frequency and severity in our liability coverages as a result of plaintiffs’ lawyers seeking to generate COVID-19-related claim activity against our insureds. Additionally, the anticipated and unknown risks related to COVID-19 may cause additional uncertainty in the process of estimating claims and claim adjustment expense reserves. For example, the behavior of claimants and policyholders may change in unexpected ways, the disruption to the court system may impact the timing and amounts of claims settlements and the actions taken by governmental bodies, both legislative and regulatory, in reaction to COVID-19 and their related impacts are hard to predict. As a result, our estimated level of claims and claim adjustment expense reserves may change. We are also subject to credit risk in our insurance operations, which may be exacerbated in times of economic distress. |
• | Investments. The volatility in the global financial markets related to COVID-19 has contributed to net realized and unrealized investment losses, primarily due to the impact of changes in fair value on our equity investments. Our corporate fixed income portfolio may be adversely impacted by ratings downgrades, increased bankruptcies and credit spread widening in distressed industries, such as energy, gaming, lodging and leisure, autos, airlines and retail. Our money market investments have been impacted by lower interest rates and may continue to be impacted by these lower rates. Our investment portfolio also includes commercial mortgage-backed securities, which could be adversely impacted by declines in real estate valuations and/or financial market disruption. Further volatility in the global financial markets due to the continuing impact of COVID-19 could result in future net realized and unrealized investment losses, including potential impairments in our fixed income portfolio. In addition, declines in fixed income yields would result in decreases in net investment income from future investment activity, including re-investments. |
• | Liquidity. Collection of premiums, deductibles or self-insured retentions from our policyholders and reinsurance recoverables from our reinsurers may become increasingly difficult. At the state level, insurance departments throughout the country have issued bulletins and regulations urging or requiring insurers to extend grace periods for the payment of policy premiums and to refrain from canceling or non-renewing policies for the non-payment of policy premiums for policyholders adversely affected by COVID-19. It is uncertain what impact these government mandates may have on our ability to recover unpaid premiums on the affected policies or what our obligations may be for the payment of claims made under policies for which we have not received premium payments. |
• | Adverse Legislative and/or Regulatory Action. Federal, state and local government actions to address and contain the impact of COVID-19 may adversely affect us. A number of states have instituted, and other states are considering instituting, changes designed to effectively expand workers' compensation coverage by creating presumptions of compensability of claims for certain types of workers. Regulatory restrictions or requirements could also impact pricing, risk selection and our rights and obligations with respect to our policies and insureds, including our ability to cancel policies or our right to collect premiums. |
• | Operational Disruptions and Heightened Cybersecurity Risks. Our operations could be disrupted if key members of our senior management or a significant percentage of our workforce or the workforce of our agents, brokers, suppliers or outsourcing providers are unable to continue to work because of illness, government directives or otherwise. In addition, the interruption of our or their system capabilities could result in a deterioration of our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions. Having shifted to primarily remote working arrangements, we also face a heightened risk of cybersecurity attacks or data security incidents and are more dependent on internet and telecommunications access and capabilities. We have not experienced any operational interruptions or cybersecurity disruptions during this time. |
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 through May 14, 2020, incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on May 14, 2020. | ||
Form of Long-Term Incentive Plan Award Agreement, effective July 6, 2020, by and between Protective Insurance Corporation and certain Executives, dated as of July 6, 2020, incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed August 5, 2020. | ||
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 | |
104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101) |
By: | /s/ Jeremy D. Edgecliffe-Johnson | |
Jeremy D. Edgecliffe-Johnson | ||
Chief Executive Officer |
By: | /s/ John R. Barnett | |
John R. Barnett | ||
Chief Financial Officer |