UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

(Mark One)

☒	Quarterly report pursuant to section 13 or 15 (d) of the Securities Exchange Act of 1934

For the Quarterly Period ended ~~September~~June 30, ~~2019.~~2020.

☐	Transition report pursuant to section 13 or 15 (d) of the Securities Exchange Act of 1934.

For the transition period from to .

Commission file number000-28249

AMERINST INSURANCE GROUP, LTD.

(Exact Name of Registrant as Specified in its Charter)


BERMUDA		98-0207447
(State or other jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

c/o Citadel Management Bermuda Limited 25 Church Street, Continental Building P.O. Box HM 1601, Hamilton, Bermuda		HMGX
(Address of Principal Executive Offices)		(Zip Code)

(441) 295-6015

(Telephone number)

~~Securities registered pursuant to Section 12(b) of the Act:~~

~~Title of each class~~

~~Trading~~

~~Symbol(s)~~

~~Name of each exchange~~

~~on which registered~~

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See the definitions of “accelerated filer,” “large accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of The Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). YES ☐ NO ☒.

Securities registered pursuant to Section 12(b) of the Act: None.

As of ~~November~~August 1, ~~2019,~~2020, the Registrant had 995,253 common shares, $1.00 par value per share, outstanding.

Introductory Note

Caution Concerning Forward-Looking Statements

Certain statements contained in this Form10-Q, or otherwise made by our officers, including statements related to our future performance, our outlook for our businesses and respective markets, projections, statements of our management’s plans or objectives, forecasts of market trends and other matters, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and contain information relating to us that is based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. The words “expect,” “believe,” “may,” “could,” “should,” “would,” “estimate,” “anticipate,” “intend,” “plan,” “target,” “goal” and similar expressions as they relate to us or our management are intended to identify forward-looking statements. Such statements reflect our management’s current views with respect to future events and are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those reflected in any forward-looking statements. Our actual future results may differ materially from those set forth in our forward-looking statements. Factors that might cause such actual results to differ materially from those reflected in any forward-looking statements include, but are not limited to the factors discussed in detail in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form10-Q, as well as:

the magnitude and duration of the COVID-19 pandemic and its impact on the global economy, financial and insurance market conditions and our business, results of operations and financial condition;

our ability to generate increased revenues and positive earnings in future periods;

the occurrence of catastrophic events with a frequency or severity exceeding our expectations;

~~the legislative~~a worsening global economic market and ~~administrative impact~~changing rates of ~~the current United States administration on our business;~~inflation and other economic conditions;

subjection of ournon-U.S. companies to regulation and/or taxation in the United States;

a decrease in the level of demand for professional liability insurance and reinsurance or an increase in the supply of professional liability insurance and reinsurance capacity;

our ability to meet the performance goals and metrics set forth in our business plan without a significant depletion of our cash resources while maintaining sufficient capital levels;

the effects of security breaches, cyber-attacks or computer viruses that may affect our computer systems or those of our customers, third-party managers and service providers;

~~a worsening of the current global economic market conditions and changing rates of inflation and other economic conditions;~~

increased competitive pressures, including the consolidation and increased globalization of reinsurance providers;

actual losses and loss expenses exceeding our loss reserves, which are necessarily based on the actuarial and statistical projections of ultimate losses;

increased or decreased rate pressure on premiums;

adequacy of our risk management and loss limitation methods;

the successful integration of businesses we may acquire or new business ventures we may start;

acts of terrorism, political unrest, outbreak of war and other hostilities or othernon-forecasted and unpredictable events;

changes in Bermuda law or regulation or the political stability of Bermuda;

compliance with and changes in the legal or regulatory environments in which we operate; and

other risks, including those risks identified in any of our other filings with the Securities and Exchange Commission.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect our management’s analysis only as of the date they are made. We undertake no obligation to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Part I—FINANCIAL INFORMATION

Item 1.

Financial Statements.

AMERINST INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, expressed in U.S. dollars)


	As of September 30, 2019			As of December 31, 2018			As of June 30, 2020			As of December 31, 2019
ASSETS
Investments:
Fixed maturity investments, at fair value (amortized cost $14,801,687 and $14,806,427)	$	14,918,441		$	14,588,080
Equity securities, at fair value (cost $12,002,872, and $12,145,120)		15,914,233			13,445,226
Fixed maturity investments, at fair value (amortized cost $15,666,805 and $15,564,687)							$	16,205,591		$	15,668,317
Equity securities, at fair value (cost $10,162,313 and $10,889,683)								11,440,297			15,365,299

TOTAL INVESTMENTS		30,832,674			28,033,306			27,645,888			31,033,616
Cash and cash equivalents		5,978,562			5,498,914			5,042,529			6,589,810
Restricted cash and cash equivalents		930,874			472,132			1,227,924			1,169,805
Assumed reinsurance premiums receivables		2,886,098			2,651,863
Assumed reinsurance premiums receivable								2,888,481			5,695,847
Accrued investment income		105,660			88,569			129,678			104,935
Property and equipment		983,448			776,382			1,160,757			1,105,513
Deferred income taxes		2,785,000			2,730,000			2,472,000			2,564,000
Deferred policy acquisition costs		2,111,128			1,869,368			2,213,152			1,964,052
Prepaid expenses and other assets		1,974,296			1,981,913			2,001,387			2,019,622

TOTAL ASSETS	$	48,587,740		$	44,102,447		$	44,781,796		$	52,247,200

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Unpaid losses and loss adjustment expenses	$	15,797,403		$	12,989,260		$	14,490,375		$	13,966,044
Unearned premiums		5,705,725			5,051,847			5,981,486			5,308,398
Assumed reinsurance payable		1,077,067			2,171,767			1,068,854			6,756,177
Accrued expenses and other liabilities		5,764,045			5,934,408			5,480,796			5,873,130

TOTAL LIABILITIES	$	28,344,240		$	26,147,282		$	27,021,511		$	31,903,749

COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Common shares, $1 par value, 2019 and 2018: 2,000,000 shares authorized, 995,253 issued and outstanding	$	995,253		$	995,253
Common shares, $1 par value, 2020 and 2019: 2,000,000 shares authorized, 995,253 issued and outstanding							$	995,253		$	995,253
Additionalpaid-in-capital		6,444,036			6,393,730			6,454,626			6,465,776
Retained earnings		21,558,508			19,725,581			18,830,067			21,842,409
Accumulated other comprehensive income		116,754			(218,348	)		538,786			103,630
Shares held by Subsidiary (362,699 and 365,198 shares) at cost		(8,871,051	)		(8,941,051	)
Shares held by Subsidiary (369,576 and 369,576 shares) at cost								(9,058,447	)		(9,063,617	)

TOTAL SHAREHOLDERS’ EQUITY		20,243,500			17,955,165			17,760,285			20,343,451

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	48,587,740		$	44,102,447		$	44,781,796		$	52,247,200

See the accompanying notes to the unaudited condensed consolidated financial statements.

AMERINST INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS, COMPREHENSIVE (LOSS) INCOME

AND RETAINED EARNINGS

(Unaudited, expressed in U.S. dollars)


	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018			Three Months Ended September 30, 2019			Three Months Ended September 30, 2018			Six Months Ended June 30, 2020			Six Months Ended June 30, 2019			Three Months Ended June 30, 2020		Three Months Ended June 30, 2019
REVENUE
Net premiums earned	$	8,141,526		$	7,224,922		$	2,815,917		$	2,554,044		$	5,510,514		$	5,325,609		$	2,930,898	$	2,862,026
Commission income		4,395,855			4,091,561			1,450,367			1,334,352			3,105,297			2,945,488			1,467,696		1,389,684
Net investment income		355,143			267,908			125,491			92,215			208,835			229,652			97,024		106,610
Net realized and unrealized gains on investments		2,595,789			895,340			72,492			567,054
Net realized and unrealized (loss) gain on investments														(2,752,862	)		2,523,297			1,625,128		775,972

TOTAL REVENUE		15,488,313			12,479,731			4,464,267			4,547,665			6,071,784			11,024,046			6,120,746		5,134,292

LOSSES AND EXPENSES
Losses and loss adjustment expenses		5,210,575			4,660,077			1,802,187			1,647,362			3,526,729			3,408,388			1,875,775		1,831,695
Policy acquisition costs		3,012,548			2,673,143			1,041,890			944,994			2,038,831			1,970,658			1,084,434		1,058,950
Operating and management expenses		5,138,604			4,874,487			1,636,073			1,515,854			3,426,311			3,502,531			1,664,027		1,770,889

TOTAL LOSSES AND EXPENSES		13,361,727			12,207,707			4,480,150			4,108,210			8,991,871			8,881,577			4,624,236		4,661,534

NET INCOME (LOSS) BEFORE TAX		2,126,586			272,024			(15,883	)		439,455
NET (LOSS) INCOME BEFORE TAX														(2,920,087	)		2,142,469			1,496,510		472,758
Income tax (benefit) expense		(32,032	)		—			6,654			—			92,255			(38,686	)		31,255		(38,686	)
NET INCOME (LOSS) AFTER TAX	$	2,158,618		$	272,024		$	(22,537	)	$	439,455
NET (LOSS) INCOME AFTER TAX													$	(3,012,342	)	$	2,181,155		$	1,465,255	$	511,444

OTHER COMPREHENSIVE INCOME (LOSS)
Net unrealized holding gains (losses) arising during the period		335,102			(207,907	)		68,341			(18,529	)
Reclassification adjustment for gains included in net income		—			—			—			—
OTHER COMPREHENSIVE INCOME
Net unrealized holding gains arising during the period														517,617			266,761			206,382		126,352
Reclassification adjustment for gains included in net (loss) income														(82,461	)		—			—		—

OTHER COMPREHENSIVE INCOME (LOSS)		335,102			(207,907	)		68,341			(18,529	)
OTHER COMPREHENSIVE INCOME														435,156			266,761			206,382		126,352

COMPREHENSIVE INCOME	$	2,493,720		$	64,117		$	45,804		$	420,926
COMPREHENSIVE (LOSS) INCOME													$	(2,577,186	)	$	2,447,916		$	1,671,637	$	637,796

RETAINED EARNINGS, BEGINNING OF PERIOD	$	19,725,581		$	15,812,419		$	21,581,045		$	20,424,521		$	21,842,409		$	19,725,581		$	17,364,812	$	21,395,292
Net income (loss)		2,158,618			272,024			(22,537	)		439,455
Net (loss) income														(3,012,342	)		2,181,155			1,465,255		511,444
Dividends		(325,691	)		(313,417	)		—			—			—			(325,691	)		—		(325,691	)
Cumulative effect of adoption of accounting guidance (ASU2016-01)		—			5,092,950			—			—

RETAINED EARNINGS, END OF PERIOD	$	21,558,508		$	20,863,976		$	21,558,508		$	20,863,976		$	18,830,067		$	21,581,045		$	18,830,067	$	21,581,045

Per share amounts
Net Income (loss) per share
Net (loss) income per share
Basic	$	3.41		$	0.42		$	(0.04	)	$	0.68		$	(4.81	)	$	3.45		$	2.34	$	0.81
Diluted	$	3.40		$	0.42		$	(0.04	)	$	0.68		$	(4.81	)	$	3.44		$	2.34	$	0.80

Dividends	$	0.50		$	0.50		$	0.00		$	0.00		$	—		$	0.50		$	—	$	0.50

Weighted average number of shares outstanding for the entire period
Basic		631,721			645,485			632,554			646,647			625,677			631,305			625,677		632,554
Diluted		634,276			648,167			632,554			648,605			625,677			633,787			625,677		637,058

See the accompanying notes to the unaudited condensed consolidated financial statements.

AMERINST INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited, expressed in U.S. dollars)

As of ~~September~~June 30, ~~2019~~2020

   Common
Shares    Additional
Paid-in
Capital    Retained
Earnings Accumulated
Other
Comprehensive
Income (Losses) Shares
Held by
Subsidiary Total
Shareholders’
Equity
BALANCE AT JANUARY 1, 2019
   $ 995,253    $ 6,393,730    $ 19,725,581 $ (218,348 ) $ (8,941,051 ) $ 17,955,165
Net income
   —      —      1,669,711 —   —   1,669,711
Other comprehensive income

Unrealized gains on securities, net of reclassification adjustment
   —      —      —   140,409 —   140,409






BALANCE AT MARCH 31, 2019
   $ 995,253    $ 6,393,730    $ 21,395,292 $ (77,939 ) $ (8,941,051 ) $ 19,765,285






Net income
   —      —      511,444 —   —   511,444
Issuance of stock option awards
   —      32,266    —   —   —   32,266
Other comprehensive income

Unrealized gain on securities, net of reclassification adjustment
   —      —      —   126,352 —   126,352
Issuance of shares by subsidiary, net
   —      —      —   —   70,000 70,000
Dividends ($0.50 per share)
   —      —      (325,691 ) —   —   (325,691 )






BALANCE AT JUNE 30, 2019
   $ 995,253    $ 6,425,996    $ 21,581,045 $ 48,413 $ (8,871,051 ) $ 20,179,656






Net loss
   —      —      (22,537 ) —   —   (22,537 )
Issuance of stock option awards
   —      18,040    —   —   —   18,040
Other comprehensive income

Unrealized gain on securities, net of reclassification adjustment
   —      —      —   68,341 —   68,341






BALANCE AT SEPTEMBER 30, 2019
   $ 995,253    $ 6,444,036    $ 21,558,508 $ 116,754 $ (8,871,051 ) $ 20,243,500


	Common Shares		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Losses)			Shares Held by Subsidiary			Total Shareholders’ Equity
BALANCE AT JANUARY 1, 2020	$	995,253	$	6,465,776		$	21,842,409		$	103,630		$	(9,063,617	)	$	20,343,451
Net loss		—		—			(4,477,597	)		—			—			(4,477,597	)
Stock option awards expense		—		(11,955	)		—			—			—			(11,955	)
Other comprehensive income
Unrealized gains on securities, net of reclassification adjustment		—		—			—			228,774			—			228,774
Purchase of shares by subsidiary, net		—		—			—			—			5,170			5,170

BALANCE AT MARCH 31, 2020	$	995,253	$	6,453,821		$	17,364,812		$	332,404		$	(9,058,447	)	$	16,087,843

Net income		—		—			1,465,255			—			—			1,465,255
Stock option awards expense		—		805			—			—			—			805
Other comprehensive income
Unrealized gains on securities, net of reclassification adjustment		—		—			—			206,382			—			206,382

BALANCE AT JUNE 30, 2020	$	995,253	$	6,454,626		$	18,830,067		$	538,786		$	(9,058,447	)	$	17,760,285


As of June 30, 2019
	Common Shares		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Losses)			Shares Held by Subsidiary			Total Shareholders’ Equity
BALANCE AT JANUARY 1, 2019	$	995,253	$	6,393,730		$	19,725,581		$	(218,348	)	$	(8,941,051	)	$	17,955,165
Net income		—		—			1,669,711			—			—			1,669,711
Other comprehensive income
Unrealized gains on securities, net of reclassification adjustment		—		—			—			140,409			—			140,409

BALANCE AT MARCH 31, 2019	$	995,253	$	6,393,730		$	21,395,292		$	(77,939	)	$	(8,941,051	)	$	19,765,285

Net income		—		—			511,444			—			—			511,444
Issuance of stock option awards		—		32,266			—			—			—			32,266
Other comprehensive income
Unrealized gains on securities, net of reclassification adjustment		—		—			—			126,352			—			126,352
Purchase of shares by subsidiary, net		—		—			—			—			70,000			70,000
Dividends ($.50 per share)		—		—			(325,691	)		—			—			(325,691	)

BALANCE AT JUNE 30, 2019	$	995,253	$	6,425,996		$	21,581,045		$	48,413		$	(8,871,051	)	$	20,179,656
						��

See the accompanying notes to the unaudited condensed consolidated financial ~~statements~~statements.

AMERINST INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CHANGES IN SHAREHOLDERS’ EQUITY~~CASH FLOWS

(Unaudited, expressed in U.S. dollars)

~~As of September 30, 2018~~

   Common
Shares    Additional
Paid-in
Capital    Retained
Earnings Accumulated
Other
Comprehensive
Income (Losses) Shares
Held by
Subsidiary Total
Shareholders’
Equity
BALANCE AT JANUARY 1, 2018
   $ 995,253    $ 6,323,450    $ 15,812,419 $ 5,029,160 $ (8,454,506 ) $ 19,705,776
Net loss
   —      —      (315,167 ) —   —   (315,167 )
Other comprehensive loss

Unrealized (losses) on securities, net of reclassification adjustment
   —      —      —   (164,192 ) —   (164,192 )
Cumulative effect of adoption of accounting guidance(ASU 2016-01))
   —      —      5,092,950 (5,092,950 ) —   —






BALANCE AT MARCH 31, 2018
   $ 995,253    $ 6,323,450    $ 20,590,202 $ (227,982 ) $ (8,454,506 ) $ 19,226,417






Net income
   —      —      147,736 —   —   147,736
Issuance of stock option awards
   —      18,700    —   —   —   18,700
Other comprehensive loss

Unrealized (losses) on securities, net of reclassification adjustment
   —      —      —   (25,186 ) —   (25,186 )
Purchase of shares by subsidiary, net
   —      —      —   —   12,542 12,542
Dividends ($0.50 per share)
   —      —      (313,417 ) —   —   (313,417 )






BALANCE AT JUNE 30, 2018
   $ 995,253    $ 6,342,150    $ 20,424,521 $ (253,168 ) $ (8,441,964 ) $ 19,066,792






Net income
   —      —      439,455 —   —   439,455
Other comprehensive loss

Unrealized (losses) on securities, net of reclassification adjustment
   —      —      —   (18,530 ) —   (18,530 )






BALANCE AT SEPTEMBER 30, 2018
   $ 995,253    $ 6,342,150    $ 20,863,976 $ (271,697 ) $ (8,441,964 ) $ 19,487,718


	Six Months Ended June 30, 2020			Six Months Ended June 30, 2019
OPERATING ACTIVITIES
Net Cash (used in) provided by Operating Activities	$	(2,376,822	)	$	1,040,966

INVESTING ACTIVITIES
Purchases of property and equipment		(149,796	)		(427,800	)
Purchases of available-for-sale securities		(5,356,925	)		(3,485,934	)
Proceeds from sales of available-for-sale securities		2,084,199			1,802,726
Proceeds from redemptions of fixed maturity investments		3,100,012			—
Proceeds from maturities of fixed maturity investments		1,205,000			2,250,000

Net Cash provided by Investing Activities		882,490			138,992

FINANCING ACTIVITIES
Dividends paid		—			(325,691	)
Purchase of shares by subsidiary, net		5,170			—

Net Cash provided by (used in) Financing Activities		5,170			(325,691	)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(1,489,162	)		854,267
CASH, CASH EQUIVALENTS AND RESTRCITED CASH AT BEGINNING OF PERIOD	$	7,759,615		$	5,971,046

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	6,270,453		$	6,825,313

See the accompanying notes to the unaudited condensed consolidated financial statements.

AMERINST INSURANCE GROUP, LTD.

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited, expressed in U.S. dollars)~~

   Nine Months
Ended
September 30, 2019 Nine Months
Ended
September 30, 2018
OPERATING ACTIVITIES

Net Cash provided by Operating Activities
   $ 1,603,447 $ 861,395


INVESTING ACTIVITIES

Purchases of property and equipment
   (434,250 ) (396,674 )
Purchases ofavailable-for-sale securities
   (5,492,708 ) (6,035,248 )
Proceeds from sales ofavailable-for-sale securities
   2,232,592 3,419,578
Proceeds from redemptions of hedge fund investments
   —   3,085
Proceeds from redemptions of fixed maturity investments
   265,000 —
Proceeds from maturities of fixed maturity investments
   3,090,000 2,370,000


Net Cash used in Investing Activities
   (339,366 ) (639,259 )


FINANCING ACTIVITIES

Dividends paid
   (325,691 ) (313,417 )


Net Cash used in Financing Activities
   (325,691 ) (313,417 )


NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
   938,390 (91,281 )
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD
   $ 5,971,046 $ 5,718,956


CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD
   $ 6,909,436 $ 5,627,675

~~See the accompanying notes to the unaudited condensed consolidated financial statements.~~

~~AMERINST INSURANCE GROUP, LTD.~~

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2019~~2020

1. BASIS OF PREPARATION AND CONSOLIDATION

The condensed consolidated financial statements included herein have been prepared by AmerInst Insurance Group, Ltd. (“AmerInst”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). These financial statements reflect all adjustments consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations as of the end of and for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany transactions and balances have been eliminated on consolidation. These statements are condensed and do not incorporate all the information required under U.S. GAAP to be included in a full set of financial statements. In these notes, the terms “we”, “us”, “our” or the “Company” refer to AmerInst and its subsidiaries. These condensed statements should be read in conjunction with the audited consolidated financial statements at and for the year ended December 31, ~~2018~~2019 and notes thereto, included in AmerInst’s Annual Report on Form10-K for the year then ended.

New Accounting Pronouncements

New Accounting Standards Adopted in ~~2019~~2020

~~Leases~~

~~In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2016-02,~~ ~~which is codified~~No new accounting standards adopted in Accounting Standards Codification (“ASC”) 842, amending the guidance on the classification, measurement and disclosure of leases for both lessors and lessees. The ASU requires lessees to recognize a~~right-of-use~~ ~~asset and an offsetting lease liability on the balance sheet and to disclose qualitative and quantitative information about leasing arrangements. Subsequently, in July 2018, the FASB issued ASU2018-10,~~ which clarifies how to apply certain aspects of ASC 842. The amendments in the ASU address a number of issues in the new leases guidance, including (1) the rate implicit in the lease, (2) impairment of the net investment in the lease, (3) lessee reassessment of lease classification, (4) lessor reassessment of lease term and purchase options, (5) variable payments that depend on an index or rate, and (6) certain transition adjustments.

~~In July 2018, the FASB also issued ASU2018-11,~~ ~~which adds a transition option for all entities and a practical expedient only for lessors to ASU2016-02.~~ The transition option, which we elected on adoption of the guidance, allows entities to choose not to apply the new leases standard in the comparative periods they present in their financial statements in the year of adoption. Under the transition option, entities can instead opt to continue to apply the legacy guidance in ASC 840—Leases, including its disclosure requirements, in the comparative periods presented in the year they adopt the new leases standard. This means that entities that elect this option will only provide annual disclosures for the comparative periods because ASC 840 does not require interim disclosures. Entities that elect this transition option will still be required to adopt the new leases standard using the modified retrospective transition method required by the standard, but they will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The practical expedient provides lessors with an option to not separate the~~non-lease~~ components from the associated lease components when certain criteria are met and requires them to account for the combined component in accordance with the revenue recognition standard in ASC 606 if the associated~~non-lease~~ ~~components are the predominant components.~~

The Company adopted the new leasing standard and the related amendments on January 1, 2019. The Company believes the most significant change relates to the recognition of new right of use assets and lease liabilities on the consolidated balance sheet for Protexure’s real estate operating lease. These assets and liabilities, which are included in the “Prepaid expenses and other assets “line and “Accrued expenses and other liabilities” line of the Condensed Consolidated Balance Sheets, respectively, represent less than 1% of the Company’s total assets and total liabilities. The adoption did not have a material impact on its consolidated financial statements.2020.

Accounting Standards Not Yet Adopted

Financial Instruments Credit Losses-Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU2016-13, which amends the guidance on impairment of financial instruments and significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The ASU will replace the existing “incurred loss” approach, with an “expected loss” model for instruments measured at amortized cost and require entities to record allowances foravailable-for-sale debt securities rather than reduce the carrying amount under the existing other-than temporary-impairment model. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. The Company’s insurance premium balances receivables are also more significant financial assets within the scope of ASU 2016-13. The guidance requires financial assets to be presented at the net amount expected to be collected. The tentative effective date for the ASU is January 1, 2023. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~

~~In February 2018, the FASB issued ASU2018-02~~ “Income Statement—Reporting Comprehensive Income (Topic 220)—Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” in response to a financial reporting issue that arose as a consequence of the U.S. federal government tax bill, H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (“U.S. Tax Reform”) which became law on December 22, 2017.

U.S. GAAP currently requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date. This guidance is applicable even in situations in which the related income tax effects of items in accumulated other comprehensive income were originally recognized in other comprehensive income rather than in income from continuing operations. As the adjustment of deferred taxes due to the reduction of the historical corporate income tax rate to the newly enacted corporate income tax rate is required to be included in income from continuing operations, the tax effects of items within accumulated other comprehensive income (referred to as stranded tax effects for purposes of this update) do not reflect the appropriate tax rate.

The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from U.S. Tax Reform. Consequently, the amendments eliminate the stranded tax effects resulting from U.S. Tax Reform and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of U.S. Tax Reform, the underlying guidance that requires the effect of a change in tax laws or rates be included in income from continuing operations is not affected.

~~Changes to the Disclosure Requirements for Fair Value Measurements~~

~~In August 2018, the FASB issued ASU2018-13,~~ which amended the fair value measurement guidance in ASC 820—Fair Value Measurement, by removing and modifying certain existing disclosure requirements, while also adding new disclosure requirements. The ASU is effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted, with the amendments being applied either prospectively or retrospectively, as specified in the ASU. In addition, an entity may elect to early adopt the removal or modification of disclosures immediately and delay the adoption of the new disclosure requirements until the effective date. We are currently assessing the impact of adopting this guidance. However, we do not expect the new or modified disclosures to have a material impact on our consolidated financial statements.

2. INVESTMENTS

The cost or amortized cost, gross unrealized holding gains and losses, and estimated fair value of the Company’s fixed maturity investments, by major security type, and equity securities as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 are as follows:


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
As of September 30, 2019
June 30, 2020
Fixed maturity investments:
U.S. government agency securities	$	4,524,710	$	48,329	$	(725	)	$	4,572,314	$	2,331,794	$	57,823	$	—		$	2,389,617
Obligations of U.S. states and political subdivisions		2,947,364		32,641		—			2,980,005		5,955,805		266,302		(1,166	)		6,220,941
Corporate debt securities		7,329,613		41,628		(5,119	)		7,366,122		7,379,206		215,827		—			7,595,033

Total fixed maturity investments		14,801,687		122,598		(5,844	)		14,918,441		15,666,805		539,952		(1,166	)		16,205,591

Equity securities		12,002,872		4,456,663		(545,302	)		15,914,233		10,162,313		2,759,171		(1,481,187	)		11,440,297

Total equity securities		12,002,872		4,456,663		(545,302	)		15,914,233		10,162,313		2,759,171		(1,481,187	)		11,440,297

Total investments	$	26,804,559	$	4,579,261	$	(551,146	)	$	30,832,674	$	25,829,118	$	3,299,123		$(1,482,353)		$	27,645,888


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
As of December 31, 2018
Fixed maturity investments:
U.S. government agency securities	$	6,739,840	$	287	$	(66,395	)	$	6,673,732
Obligations of U.S. states and political subdivisions		1,908,719		7,735		(13,514	)		1,902,940
Corporate debt securities		6,157,868		—		(146,460	)		6,011,408

Total fixed maturity investments		14,806,427		8,022		(226,369	)		14,588,080

Equity securities		12,145,120		2,596,269		(1,296,163	)		13,445,226

Total equity securities		12,145,120		2,596,269		(1,296,163	)		13,445,226

Total investments	$	26,951,547	$	2,604,291	$	(1,522,532	)	$	28,033,306


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2019
Fixed maturity investments:
U.S. government agency securities	$	4,731,181	$	38,524	$	(1,086	)	$	4,768,619
Obligations of U.S. states and political subdivisions		3,188,217		29,521		(5,936	)		3,211,802
Corporate debt securities		7,645,289		45,080		(2,473	)		7,687,896

Total fixed maturity investments		15,564,687		113,125		(9,495	)		15,668,317

Equity securities		10,889,683		4,854,179		(378,563	)		15,365,299

Total equity securities		10,889,683		4,854,179		(378,563	)		15,365,299

Total investments	$	26,454,370	$	4,967,304	$	(388,058	)	$	31,033,616

The following tables summarize the Company’s fixed maturity and equity securities in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:


	12 months or greater					Less than 12 months					Total					12 months or greater					Less than 12 months					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
As of September 30, 2019
June 30, 2020
Fixed maturity investments:
U.S. government agency securities	$	—	$	—		$	249,275	$	(725	)	$	249,275	$	(725	)	$	—	$	—		$	—	$	—		$	—	$	—
Obligations of states and political subdivisions		—		—			—		—			—		—			—		—			410,580		(1,166	)		410,580		(1,166	)
Corporate debt securities		2,125,346		(5,119	)		—		—			2,125,346		(5,119	)		—		—			—		—			—		—

Total fixed maturity investments		2,125,346		(5,119	)		249,275		(725	)		2,374,621		(5,844	)		—		—			410,580		(1,166	)		410,580		(1,166	)

Equity securities		710,251		(357,984	)		3,013,455		(187,318	)		3,723,706		(545,302	)		1,172,994		(629,553	)		2,996,311		(851,634	)		4,169,305		(1,481,187	)

Total equity securities		710,251		(357,984	)		3,013,455		(187,318	)		3,723,706		(545,302	)		1,172,994		(629,553	)		2,996,311		(851,634	)		4,169,305		(1,481,187	)

Total investments	$	2,835,597	$	(363,103	)	$	3,262,730	$	(188,043	)	$	6,098,327	$	(551,146	)	$	1,172,994	$	(629,553	)	$	3,406,891		$(852,800)		$	4,579,885	$	(1,482,353	)

108


	12 months or greater					Less than 12 months					Total					12 months or greater					Less than 12 months					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
As of December 31, 2018
December 31, 2019
Fixed maturity investments:
U.S. government agency securities	$	3,389,369	$	(55,015	)	$	2,788,235	$	(11,380	)	$	6,177,604	$	(66,395	)	$	—	$	—		$	1,528,838	$	(1,086	)	$	1,528,838	$	(1,086	)
Obligations of states and political subdivisions		766,118		(13,166	)		139,651		(348	)		905,769		(13,514	)		—		—			601,053		(5,936	)		601,053		(5,936	)
Corporate debt securities		4,498,396		(125,689	)		1,513,012		(20,771	)		6,011,408		(146,460	)		743,360		(2,473	)		—		—			743,360		(2,473	)

Total fixed maturity investments		8,653,883		(193,870	)		4,440,898		(32,499	)		13,094,781		(226,369	)		743,360		(2,473	)		2,129,891		(7,022	)		2,873,251		(9,495	)

Equity securities		97,708		(40,981	)		5,683,065		(1,255,182	)		5,780,773		(1,296,163	)		336,321		(119,313	)		1,496,152		(259,250	)		1,832,473		(378,563	)

Total equity securities		97,708		(40,981	)		5,683,065		(1,255,182	)		5,780,773		(1,296,163	)		336,321		(119,313	)		1,496,152		(259,250	)		1,832,473		(378,563	)

Total investments	$	8,751,591	$	(234,851	)	$	10,123,963	$	(1,287,681	)	$	18,875,554	$	(1,522,532	)	$	1,079,681	$	(121,786	)	$	3,626,043	$	(266,272	)	$	4,705,724	$	(388,058	)

As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, there were ~~six~~one and 35eight fixed income securities in an unrealized loss position with an estimated fair value of ~~$2,374,621~~$410,580 and ~~$13,094,781,~~$2,873,251, respectively. As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018, five~~2019, none and 21two of these fixed income securities had been in an unrealized loss position for 12 months or greater, respectively. As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, none of the fixed income securities were considered to be ~~other-than-temporarily impaired.~~other than-temporarily-impaired. The Company has the intent to hold these fixed income securities and it is not more likely than not that the Company will be required to sell these fixed income securities before their fair values recover above the adjusted cost. The unrealized losses from these fixed income securities were not a result of credit, collateral or structural issues.

Other-Than-Temporary Impairment Process

The Company assesses whether declines in the fair value of its fixed maturity investments classified asavailable-for-sale represent impairments that are other-than-temporary by reviewing each fixed maturity investment that is impaired and (1) determining if the Company has the intent to sell the fixed maturity investment or if it is more likely than not that the Company will be required to sell the fixed maturity investment before its anticipated recovery; and (2) assessing whether a credit loss exists, that is, where the Company expects that the present value of the cash flows expected to be collected from the fixed maturity investment are less than the amortized cost basis of the investment.

The Company had no planned sales of its fixed maturity investments classified asavailable-for-sale that were in an unrealized loss position at ~~September~~June 30, ~~2019.~~2020. In assessing whether it is more likely than not that the Company will be required to sell a fixed maturity investment before its anticipated recovery, the Company considers various factors including its future cash flow requirements, legal and regulatory requirements, the level of its cash, cash equivalents, short term investments and fixed maturity investments available for sale in an unrealized gain position, and other relevant factors.

In evaluating credit losses, the Company considers a variety of factors in the assessment of a fixed maturity investment including: (1) the time period during which there has been a significant decline below cost; (2) the extent of the decline below cost and par; (3) the potential for the fixed maturity investment to recover in value; (4) an analysis of the financial condition of the issuer; (5) the rating of the issuer; and (6) failure of the issuer of the fixed maturity investment to make scheduled interest or principal payments.

If we conclude a fixed income investment is other-than-temporarily impaired, we write down the amortized cost of the security to fair value, with a charge to net realized investment gains (losses) in the Consolidated Statement of Operations. Gross unrealized losses on the ~~Company’s fixed maturity investments~~investment portfolio as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, relating to ~~six~~one and 35eight fixed maturity securities, amounted to ~~$5,844~~$1,166 and ~~$226,369,~~$9,495, respectively. The unrealized losses on these available for sale fixed maturity securities were not as a result of credit, collateral or structural issues. During the ~~nine~~six months ~~ended~~ and three months ended ~~September~~June 30, ~~2019,~~2020, no other-than-temporary impairment charges were recorded.

119

Fair Value of Investments

Under existing U.S. GAAP, we are required to recognize certain assets at their fair value in our consolidated balance sheets. This includes our fixed maturity investments and equity securities. In accordance with the Fair Value Measurements and Disclosures Topic of ~~FASB’s ASC~~Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon whether the inputs to the valuation of an asset or liability are observable or unobservable in the market at the measurement date, with quoted market prices being the highest level (Level 1) and unobservable inputs being the lowest level (Level 3). A fair value measurement will fall within the level of the hierarchy based on the inputs that are significant to determining such measurement. The three levels are defined as follows:

Level 1: Observable inputs to the valuation methodology that are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2: Observable inputs to the valuation methodology other than quoted market prices (unadjusted) for identical assets or liabilities in active markets. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Inputs to the valuation methodology that are unobservable for the asset or liability.

At each measurement date, we estimate the fair value of the security using various valuation techniques. We utilize, to the extent available, quoted market prices in active markets or observable market inputs in estimating the fair value of our investments. When quoted market prices or observable market inputs are not available, we utilize valuation techniques that rely on unobservable inputs to estimate the fair value of investments. The following describes the valuation techniques we used to determine the fair value of investments held as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 and what level within the fair value hierarchy each valuation technique resides:

U.S. government agency securities: Comprised primarily of bonds issued by the Federal Home Loan Bank, the Federal Home Loan Mortgage Corporation, Federal Farm Credit Bank and the Federal National Mortgage Association. The fair values of U.S. government agency securities are priced using the spread above the risk-free U.S. Treasury yield curve. As the yields for the risk-free U.S. Treasury yield curve are observable market inputs, the fair values of U.S. government agency securities are classified as Level 2 in the fair value hierarchy. AmerInst considers a liquid market to exist for these types of securities held. Broker quotes are not used for fair value pricing.

Obligations of state and political subdivisions: Comprised of fixed income obligations of state and local governmental municipalities. The fair values of these securities are based on quotes and current market spread relationships, and are classified as Level 2 in the fair value hierarchy. AmerInst considers a liquid market to exist for these types of securities held. Broker quotes are not used for fair value pricing.

Corporate debt securities: Comprised of bonds issued by corporations. The fair values of these securities are based on quotes and current market spread relationships, and are classified as Level 2 in the fair value hierarchy. AmerInst considers a liquid market to exist for these types of securities held. Broker quotes are not used for fair value pricing.

Equity securities, at fair value: Comprised primarily of investments in the common stock of publicly traded companies in the U.S. All of the Company’s equities are classified as Level 1 in the fair value hierarchy. ~~AmerInst~~The Company receives prices based on closing exchange prices from independent pricing sources to measure fair values for the equities.

While we obtain pricing from independent pricing services, management is ultimately responsible for determining the fair value measurements for all securities. To ensure fair value measurement is applied consistently and in accordance with U.S. GAAP, we periodically update our understanding of the pricing methodologies used by the independent pricing services. We also undertake further analysis with respect to prices we believe may not be representative of fair value under current market conditions. Our review process includes, but is not limited to: (i) initial and ongoing evaluation of the pricing methodologies and valuation models used by outside parties to calculate fair value; (ii) quantitative analysis; (iii) a review of multiple quotes obtained in the pricing process and the range of resulting fair values for each security, if available, and (iv) randomly selecting purchased or sold securities and comparing the executed prices to the fair value estimates provided by the independent pricing sources.

There have been no material changes to our valuation techniques from what was used as of December 31, ~~2018.~~2019. Since the fair value of a security is an estimate of what a willing buyer would pay for such security if we sold it, we cannot know the ultimate value of our securities until they are sold. We believe the valuation techniques utilized provide us with a reasonable estimate of the price that would be received if we were to sell our assets or transfer our liabilities in an orderly market transaction between participants at the measurement date. The following tables show the fair value of the Company’s investments in accordance with ASC 820 as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

   Carrying
amount    Total fair
value    Fair value measurement using:
   Quoted prices
in active
markets
(Level 1)    Significant other
observable inputs
(Level 2)    Significant
unobservable inputs
(Level 3)
As of September 30, 2019

U.S. government agency securities
   $ 4,572,314    $ 4,572,314    $ —      $ 4,572,314    $ —
Obligations of U.S. state and political subdivisions
   2,980,005    2,980,005       2,980,005
Corporate debt securities
   7,366,122    7,366,122       7,366,122





Total fixed maturity investments
   14,918,441    14,918,441





Equity securities
   15,914,233    15,914,233    15,914,233





Total equity securities
   15,914,233    15,914,233










Total investments
   $ 30,832,674    $ 30,832,674    $ 15,914,233    $ 14,918,441    $ —










   Carrying
amount    Total fair
value    Fair value measurement using:
   Quoted prices
in active
markets
(Level 1)    Significant other
observable inputs
(Level 2)    Significant
unobservable inputs
(Level 3)
As of December 31, 2018

U.S. government agency securities
   $ 6,673,732    $ 6,673,732    $ —      $ 6,673,732    $ —
Obligations of U.S. state and political subdivisions
   1,902,940    1,902,940       1,902,940
Corporate debt securities
   6,011,408    6,011,408       6,011,408





Total fixed maturity investments
   14,588,080    14,588,080





Equity securities
   13,445,226    13,445,226    13,445,226





Total equity securities
   13,445,226    13,445,226










Total investments
   $ 28,033,306    $ 28,033,306    $ 13,445,226    $ 14,588,080    $ —


	Carrying amount		Total fair value		Fair value measurement using:
	Carrying amount		Total fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
June 30, 2020
U.S. government agency securities	$	2,389,617	$	2,389,617	$	—	$	2,389,617	$	—
Obligations of U.S. state and political subdivisions		6,220,941		6,220,941				6,220,941
Corporate debt securities		7,595,033		7,595,033				7,595,033

Total fixed maturity investments		16,205,591		16,205,591

Equity securities		11,440,297		11,440,297		11,440,297

Total equity securities		11,440,297		11,440,297

Total investments	$	27,645,888	$	27,645,888	$	11,440,297	$	16,205,591	$	—


	Carrying amount		Total fair value		Fair value measurement using:
	Carrying amount		Total fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
December 31, 2019
U.S. government agency securities	$	4,768,619	$	4,768,619	$	—	$	4,768,619	$	—
Obligations of U.S. state and political subdivisions		3,211,802		3,211,802				3,211,802
Corporate debt securities		7,687,896		7,687,896				7,687,896

Total fixed maturity investments		15,668,317		15,668,317

Equity securities		15,365,299		15,365,299		15,365,299

Total equity securities		15,365,299		15,365,299

Total investments	$	31,033,616	$	31,033,616	$	15,365,299	$	15,668,317	$	—

There were no transfers between Levels 1 and 2 during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and the year ended December 31, ~~2018.~~2019.

1311

Contractual Maturities

The cost or amortized cost and estimated fair value of fixed maturity investments as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 by contractual maturity are shown below. Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations without penalties.


	Amortized Cost			Estimated Fair Value			Amortized Cost		Estimated Fair Value
September 30, 2019
June 30, 2020
Due in one year or less		$	2,795,026		$	2,798,831	$	3,679,418	$	3,713,782
Due after one year through five years			11,496,703			11,608,575		9,748,209		10,120,009
Due after five years through ten years			509,958			511,035		1,778,689		1,892,373
Due after ten years								460,489		479,427

Total		$	14,801,687		$	14,918,441	$	15,666,805	$	16,205,591


	Amortized Cost			Estimated Fair Value
December 31, 2018
Due in one year or less		$	4,434,013		$	4,429,510
Due after one year through five years			9,851,410			9,644,270
Due after five years through ten years			521,004			514,300

Total		$	14,806,427		$	14,588,080


	Amortized Cost		Estimated Fair Value
December 31, 2019
Due in one year or less	$	2,539,709	$	2,542,229
Due after one year through five years		12,518,738		12,619,593
Due after five years through ten years		506,240		506,495

Total	$	15,564,687	$	15,668,317

Information on sales and maturity of investments and net unrealized gains (losses) on equity investments during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are as follows:


	September 30, 2019				September 30, 2018				June 30, 2020			June 30, 2019
Total proceeds from sales ofavailable-for-sale securities		$	2,232,592			$	3,419,578
Proceeds from redemptions of hedge fund investments			—				3,085
Total proceeds on sales of available-for-sale securities									$	2,084,199		$	1,802,726
Proceeds from redemptions of fixed maturity investments			265,000				—			3,100,012			—
Total proceeds from maturities of fixed maturity investments			3,090,000				2,370,000			1,205,000			2,250,000
Gross gains on sales			570,563				1,448,841			829,688			522,735
Gross losses on sales			(586,028	)			(13,983	)		(384,918	)		(93,604	)
Net unrealized gains (losses) on equity investments			2,611,254				(539,518	)		(3,197,632	)		2,094,166

Total		$	2,595,789			$	895,340		$	(2,752,862	)	$	2,523,297

Information on sales and maturity of investments and net unrealized gains (losses) on equity investments during the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are as follows:


	September 30, 2019			September 30, 2018			June 30, 2020			June 30, 2019
Total proceeds from sales ofavailable-for-sale securities	$	429,866		$	489,440
Total proceeds on sales of available-for-sale securities							$	516,681		$	1,627,022
Proceeds from redemptions of fixed maturity investments		265,000			—			1,267,932			—
Total proceeds from maturities of fixed maturity investments		840,000			400,000			—			1,000,000
Gross gains on sales		47,828			135,997			6,366			484,667
Gross losses on sales		(492,424	)		(13,367	)		(216,445	)		(81,058	)
Net unrealized gains on equity investments		517,088			444,424
Net unrealized gains (losses) on equity investments								1,835,207			372,363

Total	$	72,492		$	567,054		$	1,625,128		$	775,972

1412

Net Investment Income

Major categories of net investment income during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are summarized as follows:


	September 30, 2019				September 30, 2018				June 30, 2020			June 30, 2019
Interest earned:
Fixed maturity investments		$	263,575			$	249,287		$	176,566		$	171,885
Short-term investments and cash and cash equivalents			55,362				10,876
Short term investments and cash and cash equivalents										10,281			35,874
Dividends earned			138,543				116,432			87,985			93,972
Investment expenses			(102,337	)			(108,687	)		(65,997	)		(72,079	)

Net investment income		$	355,143			$	267,908		$	208,835		$	229,652

Major categories of net investment income during the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are summarized as follows:


	September 30, 2019				September 30, 2018				June 30, 2020			June 30, 2019
Interest earned:
Fixed maturity investments		$	91,690			$	83,688		$	87,293		$	87,862
Short-term investments and cash and cash equivalents			19,488				5,287
Short term investments and cash and cash equivalents										2,271			18,274
Dividends earned			44,571				40,362			45,253			46,495
Investment expenses			(30,258	)			(37,122	)		(37,793	)		(46,021	)

Net investment income		$	125,491			$	92,215		$	97,024		$	106,610

3. LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

The following table presents a reconciliation of the beginning and ending balances for the liability for unpaid losses and loss adjustment expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018:~~2019:


	September 30, 2019				September 30, 2018				June 30, 2020			June 30, 2019
Liability—beginning of year		$	12,989,260			$	11,228,507		$	13,966,044		$	12,989,260
Incurred related to:
Current year			5,210,575				4,660,077			3,526,729			3,408,388
Prior years			—				—			—			—

Total incurred			5,210,575				4,660,077			3,526,729			3,408,388

Paid related to:
Current year			(94,416	)			(202,620	)		—			(94,416	)
Prior years			(2,308,016	)			(3,083,995	)		(3,002,398	)		(2,308,015	)

Total paid			(2,402,432	)			(3,286,615	)		(3,002,398	)		(2,402,431	)

Liability—end of year		$	15,797,403			$	12,601,969		$	14,490,375		$	13,995,217

As incurred losses for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 are derived by multiplying our estimated loss ratio of 64.0% and the net premiums earned, as stated in Results of Operations below, all incurred losses are assumed to be current year losses.

4. SEGMENT INFORMATION

AmerInst has two reportable segments: (1) reinsurance activity, which also includes investments and other activities, and (2) insurance activity, which offers professional liability solutions to professional service firms under the Agency Agreement with C&F, as defined in the “Overview” section below.

The tables below summarize the results of our reportable segments as of and for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018.~~2019.


	As of and for the Nine Months Ended September 30, 2019						As of and for the Six Months Ended June 30, 2020
	Reinsurance Segment		Insurance Segment		Total		Reinsurance Segment			Insurance Segment		Total
Revenues	$	11,053,834	$	4,434,479	$	15,488,313	$	2,962,862		$	3,108,922	$	6,071,784
Total losses and expenses		9,241,760		4,087,935		13,329,695		6,190,518			2,893,608		9,084,126
Segment income		1,812,074		346,544		2,158,618
Segment (loss) income								(3,227,656	)		215,314		(3,012,342	)
Identifiable assets		—		983,448		983,448		—			1,160,757		1,160,757

	As of and for the Nine Months Ended September 30, 2018
	Reinsurance Segment		Insurance Segment		Total
Revenues	$	8,385,269	$	4,094,462	$	12,479,731
Total losses and expenses		8,318,960		3,888,747		12,207,707
Segment income		66,309		205,715		272,024
Identifiable assets		—		636,500		636,500


	As of and for the Six Months Ended June 30, 2019
	Reinsurance Segment		Insurance Segment		Total
Revenues	$	8,052,556	$	2,971,490	$	11,024,046
Total losses and expenses		6,121,178		2,721,713		8,842,891
Segment income		1,931,378		249,777		2,181,155
Identifiable assets		—		1,056,273		1,056,273

The tables below summarize the results of our reportable segments as of and for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018.~~2019.


	As of and for the Three Months Ended September 30, 2019
	Reinsurance Segment			Insurance Segment		Total
Revenues	$	3,001,278		$	1,462,989	$	4,464,267
Total losses and expenses		3,120,582			1,366,222		4,486,804
Segment (loss) income		(119,304	)		96,767		(22,537	)
Identifiable assets		—			983,448		983,448

	As of and for the Three Months Ended September 30, 2018									As of and for the Three Months Ended June 30, 2020
	Reinsurance Segment			Insurance Segment		Total				Reinsurance Segment		Insurance Segment		Total
Revenues	$	3,212,326		$	1,335,339	$	4,547,665		��	$	4,652,755	$	1,467,991	$	6,120,746
Total losses and expenses		2,842,754			1,265,456		4,108,210				3,254,075		1,401,416		4,655,491
Segment income		369,572			69,883		439,455				1,398,680		66,575		1,465,255
Identifiable assets		—			636,500		636,500				—		1,160,757		1,160,757


	As of and for the Three Months Ended June 30, 2019
	Insurance Segment		Insurance Segment		Insurance Segment
Revenues	$	3,731,115	$	1,403,177	$	5,134,292
Total losses and expenses		3,287,517		1,335,331		4,622,848
Segment income		443,598		67,846		511,444
Identifiable assets		—		1,056,273		1,056,273

5. STOCK COMPENSATION

Phantom Shares:

Protexure Insurance Agency, Inc. (“Protexure”) ~~(formerly AmerInst Professional Services, Limited)~~, a subsidiary of AmerInst, has employment agreements with ~~four~~three key members of senior management, which grant them phantom shares of the Company. Under these agreements, these employees were initially granted an aggregate of ~~75,018~~63,765 phantom shares of the Company on the date of their employment, subject to certain vesting requirements. The phantom shares are eligible for phantom dividends payable at the same rate as regular dividends on the Company’s common shares. The phantom dividends may be used only to purchase additional phantom shares with the purchase price of such phantom shares being the net book value of the Company’s actual common shares as of the end of the previous quarter. During the ~~nine~~six months ~~ended September 30, 2019, 1,397 phantom shares were granted, arising from the dividends declared on the Company’s common shares. During the~~and three months ended ~~September~~June 30, ~~2019,~~2020, no phantom shares were granted. ~~89,033~~76,403 phantom shares were outstanding at ~~September~~June 30, 2020 and December 31, 2019.

1614

For these three ~~of these~~ employees, the phantom shares initially granted, as well as any additional shares granted from dividends declared, vested on January 1, 2015. ~~For the fourth employee, the phantom shares initially granted, as well as any additional shares granted from dividends declared, vested on January 1, 2018.~~ The liability payable to each of these employees under the phantom share agreements is equal to the value of the phantom shares based on the net book value of the Company’s actual common shares at the end of the previous quarter less the value of phantom shares initially granted and is payable in cash upon (i) the ~~earlier~~participant’s death, termination of employment due to disability, retirement at or after age 65 or resignation for good reason, (ii) termination of the ~~employee attaining 65 years of age~~participant by the Company without cause, (iii) termination by Participant without good reason or ~~within 60 days of such employee’s death or permanent disability.~~(iv) change in control.

The liability relating to these phantom shares is recalculated quarterly based on the net book value of our common shares at the end of each quarter. As a result of the overall decrease in the net book value of our common shares since the grant dates, we have not recorded any liability relating to these phantom shares at ~~September~~June 30, ~~2019.~~2020.

Stock Option Plan:

The Company has a nonqualified stock option plan to advance the development, growth and financial condition of the Company. This plan provides incentives through participation in the appreciation of its common stock in order to secure, retain and motivate directors and employees and align such person’s interests with those of its shareholders. A total of 100,000 shares are authorized under the stock option plan.

A summary of the status of the stock option plan as of ~~September~~June 30, ~~2019~~2020 is as follows:


	Vested Shares		Weighted Average Exercise Price Per Share		Non-vested Shares			Weighted Average Exercise Price Per Share		Total Shares		Weighted Average Exercise Price Per Share		Vested Shares		Weighted Average Exercise Price Per Share		Non-vested Shares			Weighted Average Exercise Price Per Share		Total Shares		Weighted Average Exercise Price Per Share
Outstanding—January 1, 2019		7,000	$	27.99		40,000		$	28.71		47,000	$	28.60
Outstanding—January 1, 2020															16,400	$	28.34		28,600		$	28.65		45,000	$	28.54
Granted		—		—		—			—		—		—		—		—		—			—		—		—
Forfeited		—		—		—			—		—		—		—		—		—			—		—		—
Exercised		—		—		—			—		—		—		—		—		—			—		—		—
Vested		8,400		28.42		(8,400	)		28.42		—		—		8,400		28.42		(8,400	)		28.42		—		—
Outstanding—September 30, 2019		15,400	$	28.23		31,600		$	28.79		47,000	$	28.60
Outstanding—June 30, 2020															24,800	$	28.37		20,200		$	28.74		45,000	$	28.54
Options exercisable at year end		—		—		—			—		—		—		—		—		—			—		—		—
Weighted average fair value of options per share granted during the year		—		—	$	—			—	$	—		—		—		—	$	—			—	$	—		—
Remaining contractual life (years)		3.3				3.7					3.6				2.7				2.9					2.8

A summary of the status of the stock option plan as of December 31, ~~2018~~2019 is as follows:


	Vested Shares		Weighted Average Exercise Price Per Share		Non-vested Shares			Weighted Average Exercise Price Per Share		Total Shares		Weighted Average Exercise Price Per Share		Vested Shares		Weighted Average Exercise Price Per Share		Non-vested Shares			Weighted Average Exercise Price Per Share		Total Shares			Weighted Average Exercise Price Per Share
Outstanding—January 1, 2018		—		—		35,000		$	27.99		35,000	$	27.99
Outstanding—January 1, 2019															7,000	$	27.99		40,000		$	28.71		47,000		$	28.60
Granted		—		—		12,000			30.40		12,000		30.40		—		—		—			—		—			—
Forfeited		—		—		—			—		—		—		—		—		(2,000	)		30.14		(2,000	)		30.14
Exercised		—		—		—			—		—		—		—		—		—			—		—			—
Vested		7,000		27.99		(7,000	)		27.99		—		—		9,400		28.60		(9,400	)		28.60		—			—
Outstanding—December 31, 2018		7,000	$	27.99		40,000		$	28.71		47,000	$	28.60
Outstanding—December 31, 2019															16,400	$	28.34		28,600		$	28.65		45,000		$	28.54
Options exercisable at year end		—		—		—			—		—		—		—		—		—			—		—			—
Weighted average fair value of options per share granted during the year		—		—	$	—			—	$	—		—		—		—	$	—			—	$	—			—
Remaining contractual life (years)		4.0				4.4					4.4				3.2				3.3					3.3

The Company accounts for these options in accordance with GAAP, which requires that the fair value of the equity awards be recognized as compensation expense over the period during which the employee is required to provide service in exchange for such an award. The Company is amortizing compensation expense over the vesting period, ofor five years. The Company recognized ~~$50,306~~$(11,150) and ~~$70,280~~$72,046 of compensation expense for stock options for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and for the year ended December 31, ~~2018,~~2019, respectively.

1715

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis (“MD&A”) provides supplemental information, which sets forth the major factors that have affected our financial condition and results of operation and should be read in conjunction with our condensed consolidated financial statements and notes thereto included in this Form10-Q.

Certain statements contained in this Form10-Q, including this MD&A section, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and contain information relating to us that is based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. The words “expect,” “believe,” “may,” “could,” “should,” “would,” “estimate,” “anticipate,” “intend,” “plan,” “target,” “goal” and similar expressions as they relate to us or our management are intended to identify forward-looking statements.

All forward-looking statements, by their nature, are subject to risks and uncertainties. Our actual future results may differ materially from those set forth in our forward-looking statements. Please see the Introductory Note and Item 1A “Risk Factors” of our ~~2018~~2019 Annual Report on Form10-K, as updated in our subsequent quarterly reports filed on Form10-Q, and in our other filings made from time to time with the Commission after the date of this report for a discussion of factors that could cause our actual results to differ materially from those in the forward-looking statements. However, the risk factors listed in Item 1A “Risk Factors” of our ~~2018~~2019 Annual Report on Form10-K or discussed in this Quarterly Report on Form10-Q should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect our management’s analysis only as of the date they are made. We undertake no obligation to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

The following discussion addresses our financial condition and results of operations for the periods and as of the dates indicated.

OVERVIEW

Unless otherwise indicated by the context in this quarterly report, we refer to AmerInst Insurance Group, Ltd. and its subsidiaries as the “Company,” “AmerInst,” “we” or “us.” “AMIC Ltd.” means AmerInst’s wholly owned subsidiary, AmerInst Insurance Company, Ltd. “Protexure” means Protexure Insurance Agency, Inc., a Delaware corporation and wholly owned subsidiary of AmerInst Mezco, Ltd. which is a wholly owned subsidiary of AmerInst. “Investco” means AmerInst Investment Company, Ltd., a wholly owned subsidiary of AMIC Ltd. Our principal offices are c/o Citadel Management Bermuda Limited, 25 Church Street, Continental Building, P.O. Box HM 1601, Hamilton, Bermuda, HM GX.

AmerInst Insurance Group, Ltd. is a Bermuda holding company formed in 1998 that provides insurance protection for professional service firms and engages in investment activities. AmerInst has two reportable segments: (1) reinsurance activity, which includes investments and other activities, and (2) insurance activity, which offers professional liability solutions to professional service firms. The revenues of the reinsurance activity reportable segment and the insurance activity reportable segment were ~~$11,053,834~~$2,962,862 and ~~$4,434,479,~~$3,108,922, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$8,385,269~~$8,052,556 and ~~$4,094,462,~~$2,971,490, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The revenues for both reportable segments were derived from business operations in the United States other than interest income on bank accounts maintained in Bermuda.

Entry into Agency Agreement

On September 25, 2009, Protexure entered into an agency agreement (the “Agency Agreement”) with The North River Insurance Company, United States Fire Insurance Company, Crum & Forster Indemnity Company, Crum and Forster Insurance Company, and Crum & Forster Specialty Insurance Company (collectively, “C&F”) pursuant to which C&F appointed Protexure as its exclusive agent for the purposes of soliciting, underwriting, quoting, binding, issuing, cancelling,non-renewing and endorsing accountants’ professional liability and lawyers’ professional liability insurance coverage in all 50 states of the United States and the District of Columbia. The initial term of the Agency Agreement was for four years with automaticone-year renewals thereafter. The Agency Agreement automatically renewed on September 25, 2019.

1816

Entry into Reinsurance Agreement

We conduct our reinsurance business through AMIC Ltd., our subsidiary, which is a registered insurer in Bermuda. On September 25, 2009, AMIC Ltd. entered into a professional liability quota share agreement with C&F (the “Reinsurance Agreement”) pursuant to which C&F agreed to cede, and AMIC Ltd. agreed to accept as reinsurance, a 50% quota share of C&F’s liability under insurance written by Protexure on behalf of C&F and classified by C&F as accountants’ professional liability and lawyers’ professional liability, subject to AMIC Ltd.’s surplus limitations. The term of the Reinsurance Agreement is ~~indefinite~~continuous and may be terminated by either party upon at least 120 days’ prior written notice to the other party.

Third-party Managers and Service Providers

Citadel Management Bermuda Limited ~~(formerly Cedar Management Limited)~~ provides theday-to-day services necessary for the administration of our business. Our agreement with Citadel Management Bermuda Limited renewed for one year beginning January 1, ~~2019~~2020 and ending December 31, ~~2019.~~2020. Mr. Thomas R. McMahon, our Treasurer and Chief Financial Officer, is a shareholder, officer, director and employee of Citadel Management Bermuda ~~Limited. Mr. Stuart Grayston, our President, was formerly a director and officer of Cedar Management~~ Limited.

The Country Club Bank of Kansas City, Missouri, provides portfolio management of fixed-income securities and directs our investments pursuant to guidelines approved by us. Harris Associates L.P. and Tower Wealth Managers, Inc. provide discretionary investment advice with respect to our equity investments. We have retained Oliver Wyman, an independent casualty actuarial consulting firm, to render advice regarding actuarial matters.

Outlook

During the six months ended June 30, 2020, worldwide social and economic activity became severely impacted by the spread and threat of COVID-19. Actions to minimize risk to those employed with Protexure and those employed with our management company in Bermuda, Citadel Management Bermuda Limited, have been taken, including restricting travel and instituting extensive work-from-home protocols. This leveraged our existing operational contingency plans at every level of the organization, which ensured business process and control continuity. These actions have helped prevent major disruption to our clients and operations.

There was no significant impact on our insurance premiums and losses during the six months ended June 30, 2020 relating to the COVID-19 global pandemic nor do we anticipate, at this time, that this global catastrophic event will have a significant impact on our insurance premiums and losses in future quarters due to the types of insurance products we offer and our client base of professional service firms, among other factors. With regard to investments, our investment portfolios that hold equity securities incurred significant negative valuation adjustments during the first quarter of 2020 as spreads widened and perceived risks elevated as was reflected in first quarter financial results. During the second quarter of 2020, our investment portfolio partially recovered as markets responded to unprecedented monetary and fiscal stimulus in the U.S. and around the world. We expect there will be continued volatility for the remainder of the year.

The Company will continue to evaluate the impact of COVID-19 on its operations over the coming quarters.

RESULTS OF OPERATIONS

~~Nine~~Six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019

We recorded a net ~~income~~loss of ~~$2,158,618~~$3,012,342 for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to net income of ~~$272,024~~$2,181,155 for the same period in ~~2018.~~2019. The ~~increase~~decrease in net income was mainly attributable to the ~~increase~~decrease in net realized and unrealized gains on investments of ~~$1,700,449 (from $895,340~~$5,276,159 – from a gain of $2,523,297 for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 to ~~$2,595,789~~a $2,752,862 loss for the ~~nine~~six months ended ~~September~~June 30, ~~2019) and~~2020, which is due to unfavorable market conditions attributable to the impact of the COVID-19 coronavirus pandemic on the worldwide economy. This was partially offset by the increase in commission income of ~~$304,294 (from $4,091,561~~$159,809 – from $2,945,488 for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 to ~~$4,395,855~~$3,105,297 for the ~~nine~~six months ended ~~September~~June 30, ~~2019)~~2020 as a result of a higher volume of premiums written under the Agency Agreement. This was partially offset by the increase in operating and management expenses of $264,117 (from $4,874,487 for the nine months ended September 30, 2018 to $5,138,604 for the nine months ended September 30, 2019), as discussed in further detail below.

Our net premiums earned for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 were ~~$8,141,526~~$5,510,514 compared to ~~$7,224,922~~$5,325,609 for the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, an increase of ~~$916,604~~$184,905 or ~~12.7%~~3.5%. The net premiums earned for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 were attributable to cessions from C&F under the Reinsurance Agreement. The increase in net premiums earned under the Reinsurance Agreement during the first ~~nine~~six months of ~~2019~~2020 compared to the same period in ~~2018~~2019 resulted from increased cessions from C&F in ~~2019,~~2020, arising from a higher level of underwriting activity under the Agency Agreement due to the continued marketing of the program by Protexure which resulted in greater penetration in targeted markets.

During the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, we recorded commission income under the Agency Agreement of ~~$4,395,855~~$3,105,297 and ~~$4,091,561,~~$2,945,488, respectively, an increase of ~~$304,294~~$159,809 or ~~7.4%~~5.4%. This increase resulted from a higher volume of premiums written under the Agency Agreement in ~~2019~~2020 due to the continued marketing of the program by Protexure which resulted in greater penetration in the targeted markets.

We recorded net investment income of ~~$355,143~~$208,835 for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$267,908~~$229,652 for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The ~~increase~~decrease in net investment income was attributable to ~~higher yielding fixed income securities held~~a decrease in interest earned on short term investments and cash and cash equivalents as the ~~Company’s investment portfolio~~result of lower interest rates in place during the first ~~nine~~six months of ~~2019~~2020 compared to the same period in ~~2018 and to certain higher yielding equity securities held in our investment portfolio during the first nine months of 2019 compared to the same period in 2018.~~2019. The annualized investment yield, calculated as total interest and dividends divided by the net average amount of total investments and cash and cash equivalents, was ~~1.3%~~1.2% for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the ~~1.0%~~1.3% yield earned for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019.

We recorded a net realized and unrealized ~~gains~~loss on investments of ~~$2,595,789~~$2,752,862 during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to net realized gains of ~~$895,340~~$2,523,297 during the ~~nine~~six months ended ~~September~~June 30, ~~2018, an increase~~2019, a decrease of ~~$1,700,449~~$5,276,159 or ~~189.9%~~209.1%. The ~~increase~~decrease was primarily related to the ~~increase~~decrease in the fair value of our equity investments of ~~$2,611,254~~$3,197,632 during the ~~first nine~~six months ended ~~September~~June 30, ~~2019, which was~~2020, due to unfavorable market conditions attributable to ~~favorable market conditions.~~the impact of the COVID-19 coronavirus pandemic on the worldwide economy. During the first quarter of 2020, our investment portfolios that hold equity securities incurred significant negative valuation adjustments as spreads widened and perceived risks elevated as was reflected in first quarter financial results. During the second quarter of 2020, our investment portfolio partially recovered as markets responded to unprecedented monetary and fiscal stimulus in the U.S. and around the world.

For the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we recorded loss and loss adjustment expenses of ~~$5,210,575~~$3,526,729 derived by multiplying our estimated loss ratio of 64.0% and the net premiums earned under the Reinsurance Agreement of ~~$8,141,526.~~$5,510,514. For the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we recorded loss and loss adjustment expenses of ~~$4,660,077~~$3,408,388 derived by multiplying our estimated loss ratio of ~~64.5%~~64.0% and the net premiums earned under the Reinsurance Agreement of ~~$7,224,922.~~$5,325,609. The increase in loss and loss adjustment expense was ~~primarily~~ due to an increase in net premiums earned during the ~~first nine~~six months ~~of 2019~~ended June 30, 2020 compared to the corresponding period in 2018, partially offset by a reduction of our estimated loss ratio. The decrease in the estimated loss ratio was primarily the result of better than expected loss emergence in accident years 2015 and 2016.2019.

We recorded policy acquisition costs of ~~$3,012,548~~$2,038,831 for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$2,673,143~~$1,970,658 for the same period in ~~2018.~~2019. Policy acquisition costs, which are primarily ceding commissions paid to the ceding insurer, are established as a percentage of premiums earned. Therefore, any increase or decrease in premiums earned will result in a similar increase or decrease in policy acquisition costs. The policy acquisition costs recorded during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 were 37% of the net premiums earned under the Reinsurance Agreement of ~~$8,141,526~~$5,510,514 and ~~$7,224,922,~~$5,325,609, respectively.

We expensed operating and management expenses of ~~$5,138,604~~$3,426,311 for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$4,874,487~~$3,502,531 for the same period in ~~2018, an increase~~2019, a decrease of ~~$264,117~~$76,220 or ~~5.4%~~2.2%. The ~~increase~~decrease was primarily attributable to ~~increased salaries~~decreased board and committee meetings related ~~costs associated with Protexure’s hiring of additional personnel during 2019 and the last three months of 2018.~~

We recorded an income tax benefit of $32,032 for the nine months ended September 30, 2019 compared to $0 for the same period in 2018. At December 31, 2018, management believed there was sufficient evidence to support the reversal of the full valuation allowance against Protexure’s deferred tax assets. The release of this allowance resulted in the recognition of Protexure’s deferred tax assets andexpenses due to the ~~recording~~reduction in physical meetings held during the second quarter as the result of ~~income tax benefits.~~travel restrictions imposed in relation to COVID-19.

The tables below summarize the results of the following AmerInst reportable segments: (1) reinsurance activity, which also includes investments and other activities, and (2) insurance activity, which offers professional liability solutions to professional service firms under the Agency Agreement with C&F.


	As of and for the Nine Months Ended September 30, 2019						As of and for the Six Months Ended June 30, 2020
	Reinsurance Segment		Insurance Segment		Total		Reinsurance Segment			Insurance Segment		Total
Revenues	$	11,053,834	$	4,434,479	$	15,488,313	$	2,962,862		$	3,108,922	$	6,071,784
Total losses and expenses		9,241,760		4,087,935		13,329,695		6,190,518			2,893,608		9,084,126
Segment income		1,812,074		346,544		2,158,618
Segment (loss) income								(3,227,656	)		215,314		(3,012,342	)
Identifiable assets		—		983,448		983,448		—			1,160,757		1,160,757

	As of and for the Nine Months Ended September 30, 2018
	Reinsurance Segment		Insurance Segment		Total
Revenues	$	8,385,269	$	4,094,462	$	12,479,731
Total losses and expenses		8,318,960		3,888,747		12,207,707
Segment income		66,309		205,715		272,024
Identifiable assets		—		636,500		636,500


	As of and for the Six Months Ended June 30, 2019
	Reinsurance Segment		Insurance Segment		Total
Revenues	$	8,052,556	$	2,971,490	$	11,024,046
Total losses and expenses		6,121,178		2,721,713		8,842,891
Segment income		1,931,378		249,777		2,181,155
Identifiable assets		—		1,056,273		1,056,273

Three months ended ~~September~~June 30, ~~2019~~2020 compared to three months ended ~~September~~June 30, ~~2018~~2019

We recorded a net ~~loss~~income of ~~$22,537~~$1,465,255 for the three months ended ~~September~~June 30, ~~2019~~2020 compared to net income of ~~$439,455~~$511,444 for the same period in ~~2018.~~2019. The ~~decrease~~increase in net income was mainly attributable to the ~~decrease~~increase in net realized and unrealized gains on investments of ~~$494,562 (from~~$849,156 – from a ~~$567,054~~$775,972 gain for the three months ended ~~September~~June 30, ~~2018~~2019 to a ~~$72,492~~$1,625,128 gain for the three months ended ~~September~~June 30, ~~2019) and~~2020. The increase was primarily related to the increase in ~~operating and management expenses~~the fair value of ~~$120,219 (from $1,515,854 for~~our equity investments during the three months ended ~~September~~June 30, ~~2018~~2020 due to ~~$1,636,073 for~~favorable market conditions attributable to the ~~three months ended September 30, 2019), as discussed~~unprecedented monetary and fiscal stimulus in ~~further detail below. The decrease was partially offset by~~ the ~~increase in commission income~~U.S. and around the world to counter the negative impact of ~~$116,015 (from $1,334,352 for~~ the ~~three months ended September 30, 2018 to $1,450,367 for~~COVID-19 coronavirus pandemic on the ~~three months ended September 30, 2019) as a result of a higher volume of premiums written under the Agency Agreement.~~worldwide economy.

Our net premiums earned for the ~~third~~second quarter of 2020 were $2,930,898 compared to $2,862,026 for the second quarter of 2019, ~~were $2,815,917 compared to $2,554,044 for the third quarter of 2018,~~ an increase of ~~$261,873~~$68,872 or ~~10.3%~~2.4%. The net premiums earned during the quarters ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 were attributable to cessions from C&F under the Reinsurance Agreement. The increased cessions arose from a higher level of underwriting activity under the Agency Agreement due to the continued marketing of the program by Protexure, which resulted in increased penetration in targeted markets.

For the quarters ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, we recorded commission income under the Agency Agreement of ~~$1,450,367~~$1,467,696 and ~~$1,334,352,~~$1,389,684, respectively, an increase of ~~$116,015~~$78,012 or ~~8.7%~~5.6%. This increase resulted from a higher volume of premiums written under the Agency Agreement in ~~2019,~~2020, as referred to above.

We recorded net investment income of ~~$125,491~~$97,024 for the quarter ended ~~September~~June 30, ~~2019~~2020 compared to ~~$92,215~~$106,610, for the quarter ended ~~September~~June 30, ~~2018.~~2019. The ~~increase~~decrease in net investment income was attributable to ~~higher yielding fixed income securities held~~a decrease in interest earned on short term investments and cash and cash equivalents as the ~~Company’s investment portfolio~~result of lower interest rates in place during the ~~third~~second quarter of ~~2019~~2020 compared to the same period in ~~2018 and to certain higher yielding equity securities held in our investment portfolio during the third quarter of 2019 compared to the same period in 2018.~~2019. The annualized investment yield, calculated as total interest and dividends divided by the net average amount of total investments and cash and cash equivalents, was ~~1.3%~~1.2% for the ~~quarter~~quarters ended ~~September~~June 30, ~~2019, compared to the 1.0% yield earned for the quarter ended September 30, 2018.~~2020 and 2019.

We recorded net realized and unrealized gains on investments of ~~$72,492~~$1,625,128 during the quarter ended ~~September~~June 30, ~~2019~~2020 compared to net realized and unrealized gains of ~~$567,054~~$775,972 during the quarter ended ~~September~~June 30, ~~2018, a decrease~~2019, an increase of ~~$494,562~~$849,156 or ~~87.2%~~109.4%. The ~~decrease~~increase was primarily related to ~~a loss realized~~the increase in the fair value of our equity investments during the quarter ended ~~September~~June 30, ~~2019 associated with~~2020, due to favorable market conditions attributable to the ~~sale~~unprecedented monetary and fiscal stimulus in the U.S. and around the world to counter the negative impact of ~~a certain equity security whose recovery was deemed to be remote.~~the COVID-19 coronavirus pandemic on the worldwide economy.

For the quarter ended ~~September~~June 30, ~~2019,~~2020, we recorded loss and loss adjustment expenses of ~~$1,802,187~~$1,875,775 derived by multiplying our estimated loss ratio of 64.0% and the net premiums earned under the Reinsurance Agreement of ~~$2,815,917.~~$2,930,898. For the quarter ended ~~September~~June 30, ~~2018,~~2019, we recorded loss and loss adjustment expenses of ~~$1,647,362~~$1,831,695 derived by multiplying our estimated loss ratio of ~~64.5%~~64.0% and the net premiums earned under the Reinsurance Agreement of ~~$2,554,044.~~$2,862,026. The increase in loss and loss adjustment expense was ~~primarily~~ due to an increase in net premiums earned during the ~~quarter~~three months ended ~~September~~June 30, ~~2019~~2020 compared to the corresponding period in 2018, partially offset by a reduction of our estimated loss ratio. The decrease in the estimated loss ratio was primarily the result of better than expected loss emergence in accident years 2015 and 2016.2019.

We recorded policy acquisition costs of ~~$1,041,890~~$1,084,434 in the ~~third~~second quarter of ~~2019~~2020 compared to ~~$944,994~~$1,058,950 for the same period in ~~2018.~~2019. Policy acquisition costs, which are primarily ceding commissions paid to the ceding insurer, are established as a percentage of premiums ~~earned. Therefore,~~earned; therefore, any increase or decrease in premiums earned will result in a similar increase or decrease in policy acquisition costs. The policy acquisition costs recorded during the ~~third~~second quarter of ~~2019~~2020 and ~~2018~~2019 were 37% of the net premiums earned under the Reinsurance Agreement of ~~$2,815,917~~$2,930,898 and ~~$2,554,044,~~$2,862,026, respectively.

We incurred operating and management expenses of ~~$1,636,073~~$1,664,027 in the ~~third~~second quarter ~~2019~~2020 compared to ~~$1,515,854~~$1,770,889 for the same period in ~~2018, an increase~~2019, a decrease of ~~$120,219~~$106,862 or ~~7.9%~~6%. The ~~increase~~decrease was primarily attributable to ~~increased salaries~~decreased board and committee meetings related ~~costs associated with Protexure’s hiring~~expenses due to the reduction in physical meetings held during the second quarter as the result of ~~additional personnel during 2019.~~

~~We recorded a negative $6,654 adjustment~~travel restrictions imposed in relation to our income tax benefit for the quarter ended September 30, 2019 compared to $0 for the same period in 2018. At December 31, 2018, management believed there was sufficient evidence to support the reversal of the full valuation allowance against Protexure’s deferred tax assets. The release of this allowance has resulted in the recognition of Protexure’s deferred tax assets.COVID-19.

   As of and for the Three Months Ended September 30, 2019
   Reinsurance
Segment    Insurance
Segment    Total
Revenues
   $ 3,001,278    $ 1,462,989    $ 4,464,267
Total losses and expenses
   3,120,582    1,366,222    4,486,804
Segment (loss) income
   (119,304 )    96,767    (22,537 )
Identifiable assets
   —      983,448    983,448
   As of and for the Three Months Ended September 30, 2018
   Reinsurance
Segment    Insurance
Segment    Total
Revenues
   $ 3,212,326    $ 1,335,339    $ 4,547,665
Total losses and expenses
   2,842,754    1,265,456    4,108,210
Segment income
   369,572    69,883    439,455
Identifiable assets
   —      636,500    636,500

2119


	As of and for the Three Months Ended June 30, 2020
	Reinsurance Segment		Insurance Segment		Total
Revenues	$	4,652,755	$	1,467,991	$	6,120,746
Total losses and expenses		3,254,075		1,401,416		4,655,491
Segment income		1,398,680		66,575		1,465,255
Identifiable assets		—		1,160,757		1,160,757


	As of and for the Three Months Ended June 30, 2019
	Insurance Segment		Insurance Segment		Insurance Segment
Revenues	$	3,731,115	$	1,403,177	$	5,134,292
Total losses and expenses		3,287,517		1,335,331		4,622,848
Segment income		443,598		67,846		511,444
Identifiable assets		—		1,056,273		1,056,273

FINANCIAL CONDITION

As of ~~September~~June 30, ~~2019,~~2020, our total investments were ~~$30,832,674, an increase~~$27,645,888, a decrease of ~~$2,799,368~~$3,387,728 or ~~10%~~10.9%, from ~~$28,033,306~~$31,033,616 at December 31, ~~2018.~~2019. This ~~increase~~decrease was primarily due to the ~~increase~~decrease in the fair value of certain equity securities as a result of ~~favorable~~unfavorable market ~~conditions.~~conditions attributable to the impact of the COVID-19 coronavirus pandemic on the worldwide economy. The cash and cash equivalents balance ~~increased~~decreased from ~~$5,498,914~~$6,589,810 at December 31, ~~2018~~2019 to ~~$5,978,562~~$5,042,529 at ~~September~~June 30, ~~2019, an increase~~2020, a decrease of ~~$479,648 or 8.7%~~$1,547,281or 23.5%. ~~The amount of cash and cash equivalents varies depending on~~This decrease was primarily due to net losses paid under the ~~maturities of fixed term investments and~~Reinsurance Agreement during the ~~level of funds invested in money market funds. The~~six months ended June 30, 2020.The restricted cash and cash equivalents balance increased from ~~$472,132~~$1,169,805 at December 31, ~~2018~~2019 to ~~$930,874~~$1,227,924 at ~~September~~June 30, ~~2019,~~2020, an increase of ~~$458,742~~$58,119 or ~~97.2%~~5%. The increase was due to the timing of sales and maturities of investments held as restricted cash at ~~September~~June 30, ~~2019~~2020 that have not been reinvested. The ratio of cash, total investments and other invested assets to total liabilities at ~~September~~June 30, ~~2019~~2020 was ~~1.33:~~1.26:1, compared to a ratio of ~~1.30:~~1.22:1 at December 31, ~~2018.~~2019.

The assumed reinsurance balances receivable represents the current assumed premiums receivable from the fronting carriers. As of ~~September~~June 30, ~~2019,~~2020, the balance was ~~$2,886,098~~$2,888,481 compared to ~~$2,651,683~~$5,695,847 as of December 31, ~~2018. The increase resulted~~2019. This balance fluctuates due to the timing of the net premium received from ~~a higher level of premiums assumed~~C&F under the Reinsurance ~~Agreement during 2019.~~Agreement.

The assumed reinsurance payable represents current reinsurance losses payable and commissions payable to the fronting carriers. As of ~~September~~June 30, ~~2019,~~2020, the balance was ~~$1,077,067~~$1,068,854 compared to ~~$2,171,767~~$6,756,177 as of December 31, ~~2018.~~2019. This balance fluctuates due to the timing of losses reported to us.

Deferred policy acquisition costs, which represent the deferral of ceding commission expense related to premiums not yet earned, increased from ~~$1,869,368~~$1,964,052 at December 31, ~~2018~~2019 to ~~$2,111,128~~$2,213,152 at ~~September~~June 30, ~~2019.~~2020. The increase in deferred policy acquisition costs in ~~2019~~2020 was due to the increase in both net premiums written and unearned premiums assumed under the Reinsurance Agreement compared to the prior year. The ceding commission rate under the Reinsurance Agreement is 37%.

Prepaid expenses and other assets were ~~$1,974,296~~$2,001,387 at ~~September~~June 30, ~~2019~~2020 compared to ~~$1,981,913~~$2,019,622 as of December 31, ~~2018.~~2019. The balance primarily relates to (1) prepaid directors’ and officers’ liability insurance costs, (2) the directors’ prepaid annual retainer, (3) prepaid professional fees and (4) premiums due to Protexure under the Agency Agreement. This balance fluctuates due to the timing of the prepayments and to the timing of the premium receipts by Protexure.

Accrued expenses and other liabilities primarily represent premiums payable by Protexure to C&F under the Agency Agreement and expenses accrued relating largely to professional fees. The balance decreased from ~~$5,934,408~~$5,873,130 at December 31, ~~2018~~2019 to ~~$5,764,045~~$5,480,796 at ~~September~~June 30, ~~2019,~~2020, a decrease of ~~$170,363~~$392,334 or ~~2.9%~~6.7%. This balance fluctuates due to the timing of the premium payments to C&F and payments of professional fees.

LIQUIDITY AND CAPITAL RESOURCES

Our cash needs consist of settlement of losses and expenses under our reinsurance treaties and fundingday-to-day operations. In continuing the implementation of our business plan, our management expects to meet these cash needs from cash flows arising from our investment portfolio. Because substantially all of our assets are marketable securities, we expect that we will have sufficient flexibility to provide for unbudgeted cash needs that may arise from time to time without resorting to borrowing, subject to Bermuda statutory limitations as discussed in our ~~2018~~2019 Form10-K.

Total cash, investments and other invested assets ~~increased~~decreased from ~~$34,004,352~~$38,793,231 at December 31, ~~2018~~2019 to ~~$37,742,110~~$33,916,341 at ~~September~~June 30, ~~2019, an increase~~2020, a decrease of ~~$3,737,758~~$4,876,890 or ~~11%~~12.6%. The net ~~increase~~decrease resulted primarily from ~~favorable~~the decrease in the fair value of certain equity securities as a result of unfavorable market conditions attributable to the impact of the COVID-19 coronavirus pandemic on the worldwide economy and ~~positive cash inflows derived from~~to net ~~investment activities and net premiums received~~losses paid under the Reinsurance ~~Agreement in the amount of $1.809,731.~~Agreement.

The Bermuda Monetary Authority has authorized Investco to purchase our common shares, on a negotiated basis, from shareholders who have died or retired from the practice of public accounting. During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, no such transactions occurred. From inception through ~~September~~June 30, ~~2019,~~2020, Investco had repurchased ~~217,661~~224,538 common shares from shareholders who had died or retired for a total purchase price of ~~$6,186,730.~~$6,379,286. From time to time, Investco has also purchased shares in privately negotiated transactions. From inception through ~~September~~June 30, ~~2019,~~2020, Investco had purchased an additional 75,069 common shares in such privately negotiated transactions for a total purchase price of $1,109,025. During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, no such transactions occurred.

Cash Dividends

~~During~~We paid no dividends during the second quarter of 2019, we declared a dividend of $0.50 per share to be paid to our shareholders on or before December 1, 2019, which amounted to total ordinary cash dividends of $352,459. The dividends to be paid in 2019 have been reduced by $26,768, which represents a write-back of uncashed dividends issued prior to 2014 to shareholders that we have been unable to locate.six months ended June 30, 2020. Since we began paying dividends in 1995, our original shareholders have received $22.87 in cumulative dividends per share. When measured by a total rate of return calculation, this has resulted in an effective annual rate of return of approximately ~~8.6%~~8.3% from our inception, based on a per share purchase price of $8.33 paid by the original shareholders, and using an unaudited net book value of ~~$32.00~~$28.39 per share as of ~~September~~June 30, ~~2019.~~2020. Although we have paid cash dividends on a regular basis in the past, the declaration and payment of cash dividends in the future will be at the discretion of our board of directors, subject to the requirements of applicable law, and will depend on, among other things, our financial condition, results of operations, current and anticipated cash needs and other factors that our board of directors considers relevant.

OFF-BALANCE SHEET ARRANGEMENTS

The Company is not a party to anyoff-balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form10-K for the year ended December 31, ~~2018~~2019 and is incorporated herein by reference.

We have identified accounting for the liability for losses and loss adjustment expenses as our most critical accounting policy and estimate in that it is important to the portrayal of our financial condition and results, and it requires our subjective and complex judgment as a result of the need to make estimates about the effects of matters that are inherently uncertain. This accounting policy, including the nature of the estimates and types of assumptions used, are described throughout this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form10-K for the year ended December 31, ~~2018.~~2019.

Available Information

We file annual, quarterly, and current reports, proxy statements and other information with the Commission. You may read any public document we file with the Commission at the Commission’s public reference room at 100 F Street, NE, Washington, DC 20549. Please call the Commission at1-800-SEC-0330 for information on the public reference room. The Commission maintains an internet site that contains annual, quarterly, and current reports, proxy and information statements and other information that issuers (including AmerInst) file electronically with the Commission. The Commission’s internet site iswww.sec.gov.

Our internet site iswww.amerinst.bm. We make available free of charge through our internet site our annual report onForm 10-K, quarterly reports on Form10-Q, current reports on Form8-K and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Commission. We also make available, through our internet site, via links to the Commission’s internet site, statements of beneficial ownership of our equity securities filed by our directors, officers, 10% or greater shareholders and others under Section 16 of the Securities Exchange Act. In addition, we post onwww.amerinst.bm our Memorandum of Association, ourBye-Laws, our Statement of Share Ownership Policy, Charters for our Audit Committee and Governance and Nominations Committee, as well as our Code of Business Conduct and Ethics. You can request a copy of these documents, excluding exhibits, at no cost, by writing or telephoning us c/o Citadel Management Bermuda Limited, 25 Church Street, Continental Building, P.O. Box HM 1601 Hamilton, Bermuda HM GX, Attention: Investor Relations(441) 295-6015. The information on our internet site is not incorporated by reference into this report.

2321

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of ~~September~~June 30, ~~2019,~~2020, the end of the period covered by this Form10-Q, our management, including our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined inRule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer each concluded that as of ~~September~~June 30, ~~2019,~~2020, the end of the period covered by this Form10-Q, we maintained effective disclosure controls and procedures.

Changes in Internal Control over Financial Reporting

Our management, including our Principal Executive Officer and Principal Financial Officer, has reviewed our internal control over financial reporting (as defined in Rule13a-15(f) under the Securities Exchange Act of 1934). There have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II—OTHER INFORMATION

Item 1.

Legal Proceedings

We are party to various legal proceedings generally arising in the normal course of our business. While any proceeding contains an element of uncertainty, we do not believe that the eventual outcome of any litigation or arbitration proceeding to which we are presently a party will have a material adverse effect on our financial condition or business. Pursuant to our insurance and reinsurance agreements, disputes are generally required to be finally settled by arbitration.

Item 1A.

Risk Factors

In addition to the other information set forth in this Quarterly Report on Form10-Q, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our ~~2018~~2019 Annual Report on Form10-K, as updated in our subsequent quarterly reports. The risks described in our ~~2018~~2019 Annual Report on Form10-K and our subsequent quarterly reports are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None.

2422

Item 6.

Exhibits

(a) Exhibits


Exhibit Number		Description

31.1		Certification of Stuart H. Grayston pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Thomas R. McMahon pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Stuart H. Grayston pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Thomas R. McMahon pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

2523

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Dated: ~~November~~August 13, ~~2019~~2020	AMERINST INSURANCE GROUP, LTD.
	(Registrant)

	By:	/s/ S~~TUART~~STUART H. G~~RAYSTON~~GRAYSTON
		Stuart H. Grayston
		President (Principal Executive Officer, duly authorized to sign this Report in such capacity and on behalf of the Registrant)

	By:	/s/ T~~HOMAS~~THOMAS R. M~~CMAHON~~MCMAHON
		Thomas R. McMahon
		Chief Financial Officer (Principal Financial Officer, duly authorized to sign this Report in such capacity and on behalf of the Registrant)


	Common Shares		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Losses)			Shares Held by Subsidiary			Total Shareholders’ Equity
BALANCE AT JANUARY 1, 2019	$	995,253	$	6,393,730	$	19,725,581		$	(218,348	)	$	(8,941,051	)	$	17,955,165
Net income		—		—		1,669,711			—			—			1,669,711
Other comprehensive income
Unrealized gains on securities, net of reclassification adjustment		—		—		—			140,409			—			140,409

BALANCE AT MARCH 31, 2019	$	995,253	$	6,393,730	$	21,395,292		$	(77,939	)	$	(8,941,051	)	$	19,765,285

Net income		—		—		511,444			—			—			511,444
Issuance of stock option awards		—		32,266		—			—			—			32,266
Other comprehensive income
Unrealized gain on securities, net of reclassification adjustment		—		—		—			126,352			—			126,352
Issuance of shares by subsidiary, net		—		—		—			—			70,000			70,000
Dividends ($0.50 per share)		—		—		(325,691	)		—			—			(325,691	)

BALANCE AT JUNE 30, 2019	$	995,253	$	6,425,996	$	21,581,045		$	48,413		$	(8,871,051	)	$	20,179,656

Net loss		—		—		(22,537	)		—			—			(22,537	)
Issuance of stock option awards		—		18,040		—			—			—			18,040
Other comprehensive income
Unrealized gain on securities, net of reclassification adjustment		—		—		—			68,341			—			68,341

BALANCE AT SEPTEMBER 30, 2019	$	995,253	$	6,444,036	$	21,558,508		$	116,754		$	(8,871,051	)	$	20,243,500


	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018
OPERATING ACTIVITIES
Net Cash provided by Operating Activities	$	1,603,447		$	861,395

INVESTING ACTIVITIES
Purchases of property and equipment		(434,250	)		(396,674	)
Purchases ofavailable-for-sale securities		(5,492,708	)		(6,035,248	)
Proceeds from sales ofavailable-for-sale securities		2,232,592			3,419,578
Proceeds from redemptions of hedge fund investments		—			3,085
Proceeds from redemptions of fixed maturity investments		265,000			—
Proceeds from maturities of fixed maturity investments		3,090,000			2,370,000

Net Cash used in Investing Activities		(339,366	)		(639,259	)

FINANCING ACTIVITIES
Dividends paid		(325,691	)		(313,417	)

Net Cash used in Financing Activities		(325,691	)		(313,417	)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		938,390			(91,281	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	$	5,971,046		$	5,718,956

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	6,909,436		$	5,627,675


	Carrying amount		Total fair value		Fair value measurement using:
	Carrying amount		Total fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
As of September 30, 2019
U.S. government agency securities	$	4,572,314	$	4,572,314	$	—	$	4,572,314	$	—
Obligations of U.S. state and political subdivisions		2,980,005		2,980,005				2,980,005
Corporate debt securities		7,366,122		7,366,122				7,366,122

Total fixed maturity investments		14,918,441		14,918,441

Equity securities		15,914,233		15,914,233		15,914,233

Total equity securities		15,914,233		15,914,233

Total investments	$	30,832,674	$	30,832,674	$	15,914,233	$	14,918,441	$	—


	Carrying amount		Total fair value		Fair value measurement using:
	Carrying amount		Total fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
As of December 31, 2018
U.S. government agency securities	$	6,673,732	$	6,673,732	$	—	$	6,673,732	$	—
Obligations of U.S. state and political subdivisions		1,902,940		1,902,940				1,902,940
Corporate debt securities		6,011,408		6,011,408				6,011,408

Total fixed maturity investments		14,588,080		14,588,080

Equity securities		13,445,226		13,445,226		13,445,226

Total equity securities		13,445,226		13,445,226

Total investments	$	28,033,306	$	28,033,306	$	13,445,226	$	14,588,080	$	—

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