Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 29, 2019 | Jun. 29, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | UNICO AMERICAN CORP | ||
Entity Central Index Key | 0000100716 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Is Entity Small Business? | true | ||
Is Entity an Emerging Growth Company? | false | ||
Is Entity a Shell Company? | false | ||
Entity Public Float | $ 20,337,372 | ||
Entity Common Stock, Shares Outstanding | 5,307,103 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Available-for-sale: | ||
Fixed maturities, at fair value (amortized cost: $78,302,588 at December 31, 2018, and amortized cost: $58,153,120 at December 31, 2017) | $ 76,910,137 | $ 57,849,454 |
Held-to-maturity: | ||
Fixed maturities, at amortized cost (fair value: $7,126,000 at December 31, 2018, and fair value: $28,098,000 at December 31, 2017) | 7,126,000 | 28,098,000 |
Short-term investments, at fair value | 4,690,954 | 1,847,778 |
Total Investments | 88,727,091 | 87,795,232 |
Cash, cash equivalents, and restricted cash | 4,917,762 | 9,366,944 |
Accrued investment income | 393,782 | 490,579 |
Receiveable, net | 3,933,068 | 6,005,764 |
Reinsurance Recoverable: | ||
Paid losses and loss adjustment expenses | (1,319) | 126,682 |
Unpaid losses and loss adjustment expenses | 9,531,602 | 8,393,550 |
Deferred policy acquisition costs | 3,489,728 | 4,162,771 |
Property and equipment (net) | 9,560,820 | 10,014,869 |
Deferred income taxes | 4,375,484 | 3,380,806 |
Other assets | 688,948 | 561,561 |
Total Assets | 125,616,966 | 130,298,758 |
LIABILITIES | ||
Unpaid losses and loss adjustment expenses | 51,657,155 | 49,076,991 |
Unearned premium | 15,964,589 | 18,768,264 |
Advance premium and premium deposits | 234,442 | 207,808 |
Accrued expenses and other liabilities | 1,845,358 | 2,300,358 |
Total Liabilities | 69,701,544 | 70,353,421 |
STOCKHOLDERS' EQUITY | ||
Common stock, no par, authorized 10,000,000 shares; issued and outstanding shares 5,307,103 at December 31, 2018, and 5,307,133 at December 31, 2017 | 3,772,857 | 3,772,872 |
Accumulated other comprehensive loss | (1,100,036) | (239,896) |
Retained earnings | 53,242,601 | 56,412,361 |
Total Stockholders Equity | 55,915,422 | 59,945,337 |
Total Liabilities and Stockholders' Equity | $ 125,616,966 | $ 130,298,758 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Consolidated Balance Sheets Parenthetical Abstract | ||
Fixed maturities, available for sale, amortized cost | $ 78,302,588 | $ 58,153,120 |
Fixed maturities, held to maturity, fair value | $ 7,126,000 | $ 28,098,000 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 5,307,103 | 5,307,133 |
Common stock, shares outstanding | 5,307,103 | 5,307,133 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
REVENUES | ||
Net premium earned | $ 28,754,910 | $ 32,343,319 |
Investment income | 1,907,544 | 1,289,736 |
Net realized investments gains | 148 | 528 |
Other income | 365,898 | 338,653 |
Total Insurance Company Operation | 31,028,500 | 33,972,236 |
Other Insurance Operations | ||
Gross commissions and fees | 2,429,382 | 2,744,016 |
Investment income | 229 | 331 |
Finance fees earned | 144,925 | 74,834 |
Other income | 9,760 | 65 |
Total Revenues | 33,612,796 | 36,791,482 |
EXPENSES | ||
Losses and loss adjustment expenses | 23,557,743 | 30,490,507 |
Policy acquisition costs | 5,908,831 | 6,463,681 |
Salaries and employee benefits | 4,592,841 | 5,843,714 |
Commissions to agents/brokers | 176,701 | 166,636 |
Other operating expenses | 3,303,472 | 3,707,165 |
Total Expenses | 37,539,588 | 46,671,703 |
Loss before income taxes | (3,926,792) | (9,880,221) |
Income tax benefit | (757,233) | (1,155,237) |
Net Loss | $ (3,169,559) | $ (8,724,984) |
Basic | ||
Loss per share | $ (0.60) | $ (1.64) |
Weighted average shares | 5,307,121 | 5,307,133 |
Diluted | ||
Loss per share | $ (0.60) | $ (1.64) |
Weighted average shares | 5,307,121 | 5,307,133 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements Of Comprehensive Income | ||
Net loss | $ (3,169,559) | $ (8,724,984) |
Other changes in comprehensive loss, net of tax: | ||
Unrealized losses on securities classified as available-for-sale arising during the period | (1,088,785) | (315,749) |
Income tax benefit related to unrealized losses on securities classified as available-for-sale arising during the period | 228,645 | 67,878 |
Comprehensive Loss | $ (4,029,699) | $ (8,972,855) |
Shareholders Equity
Shareholders Equity - USD ($) | Common Stock | Comprehensive Income / Loss | Retained Earnings / Accumulated Deficit | Total |
Beginning Balance, Value at Dec. 31, 2016 | $ 3,761,320 | $ 7,975 | $ 65,137,345 | $ 68,906,640 |
Beginning Balance, Shares at Dec. 31, 2016 | 5,307,133 | |||
Change in Comprehensive Income, net of Deferred Income Tax | (247,871) | (247,871) | ||
Non-cash stock based compensation | $ 11,552 | 11,552 | ||
Net Income (Loss) | (8,724,984) | (8,724,984) | ||
Ending Balance, Value at Dec. 31, 2017 | $ 3,772,872 | (239,896) | 56,412,361 | 59,945,337 |
Ending Balance, Shares at Dec. 31, 2017 | 5,307,133 | |||
Shares Repurchased, Value | $ 15 | 201 | $ 216 | |
Shares Repurchased, Shares | 30 | 30 | ||
Change in Comprehensive Income, net of Deferred Income Tax | (860,140) | $ (860,140) | ||
Non-cash stock based compensation | 0 | |||
Net Income (Loss) | (3,169,559) | (3,169,559) | ||
Ending Balance, Value at Dec. 31, 2018 | $ 3,772,857 | $ (1,100,036) | $ 53,242,601 | $ 55,915,422 |
Ending Balance, Shares at Dec. 31, 2018 | 5,307,103 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows from Operating Activities: | ||
Net Loss | $ (3,169,559) | $ (8,724,984) |
Adjustments to reconcile net income (loss) to net cash from operations | ||
Depreciation and amortization, gross of asset retirement | 551,183 | 517,199 |
Bond amortization, net | 201,076 | (664,258) |
Non-cash based compensation | 0 | 11,552 |
Net realized investment gains | (148) | (528) |
Bad debt expense | 23,903 | 16,222 |
Net receivables and accrued investment income | 2,145,590 | (318,566) |
Reinsurance recoverable | (1,010,051) | 1,261,482 |
Deferred policy acquisition costs | 673,043 | 269,528 |
Other assets | (124,621) | 400,471 |
Unpaid losses and loss adjustment expenses | 2,580,164 | 2,021,204 |
Unearned premium | (2,803,675) | (606,476) |
Advance premium and premium deposits | 26,634 | (16,247) |
Accrued expenses and other liabilities | (455,000) | (360,625) |
Income taxes current/deferred | (768,799) | (828,206) |
Net Cash Used by Operating Activities | (2,130,260) | (7,022,232) |
Cash Flows from Investing Activities | ||
Purchase of fixed maturity investments | (21,034,427) | (60,292,407) |
Proceeds from maturity of fixed maturity investments | 20,385,735 | 53,936,023 |
Proceeds from sale or call of fixed maturity investments | 1,270,296 | 1,141,892 |
Net increase in short-term investments | (2,843,176) | (749,778) |
Additions to property and equipment, gross of asset retirement | (97,134) | (249,536) |
Net Cash Used by Investing Activities | (2,318,706) | (6,213,806) |
Cash Flows from Financing Activities | ||
Repurchase of common stock | (216) | 0 |
Net Cash Used by Financing Activities | (216) | 0 |
Net decrease in cash and restricted cash | (4,449,182) | (13,236,038) |
Cash and restricted cash at beginning of period | 9,366,944 | 22,602,982 |
Cash and Restricted Cash at End of Period | 4,917,762 | 9,366,944 |
Cash paid during the period for: | ||
Income taxes | $ 8,800 | $ 8,800 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Summary of Significant Accounting Policies | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Unico American Corporation (the “Company” or “Unico”) is an insurance holding company that underwrites property and casualty insurance through its insurance company subsidiary; provides property, casualty, and health insurance through its agency subsidiaries; and provides insurance premium financing and membership association services through its other subsidiaries. References to Unico or the Company include both the corporation and its subsidiaries, all of which are wholly owned. Unico was incorporated under the laws of Nevada in 1969. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Unico American Corporation and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Basis of Presentation The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). As described in Note 14, the Company's insurance subsidiary also files financial statements with regulatory agencies prepared on a statutory basis of accounting that differs from GAAP. Certain reclassifications have been made to prior period amounts to conform to the current year’s presentation. Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect its reported amounts of assets and liabilities and its disclosure of any contingent assets and liabilities at the date of its financial statements, as well as its reported amounts of revenues and expenses during the reporting period. The most significant assumptions in the preparation of these consolidated financial statements relate to losses and loss adjustment expenses. While every effort is made to ensure the integrity of such estimates, actual results may differ. Investments All of the Company’s fixed maturity investments are classified either as held-to-maturity or available-for-sale. The held-to-maturity investments are recorded at amortized cost, reflecting the ability and intent to hold these investments to maturity. The available-for-sale investments are stated at fair value, with unrealized gains or losses, net of applicable deferred income taxes, excluded from earnings and credited or charged to a separate component of equity. Although part of the Company's investments is classified as available-for-sale and the Company may sell investment securities from time to time in response to economic and market conditions, its investment guidelines place primary emphasis on buying and holding high-quality investments to maturity. Interest income on fixed maturity investments and short-term investments is recognized on an accrual basis at each measurement date and is included in net investment income in the Company’s Consolidated Statements of Operations. The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income security whose carrying value may be other-than-temporarily impaired. For each fixed income security in an unrealized loss position, the Company assesses whether it is more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes, or the credit quality of the underlying security. If a security meets this criteria, the security's decline in fair value is considered other than temporary and is recorded as a net realized investment loss in the Consolidated Statements of Operations and in the Consolidated Statements of Comprehensive Income (Loss) based on the specific identification method. There were no realized investments gains (losses) from other than temporary impairments for any of the periods presented in the accompanying Consolidated Statements of Operations. For each fixed income security that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the impairment, if any, from the amount related to all other factors and reports the credit loss component in net realized investment gains (losses). There was no credit loss component for any of the periods presented in the accompanying Consolidated Statements of Operations. The unrealized gains or losses from fixed maturities are reported as “Accumulated other comprehensive income (loss),” which is a separate component of stockholders’ equity, net of any deferred tax effect. The short-term investments include U.S. treasury bills, certificates of deposit, and commercial paper that are all highly rated and have initial maturity between three and twelve months. Fair Value of Financial Instruments The Company employs a fair value hierarchy that prioritizes the inputs for valuation techniques used to measure fair value. The fair value of a financial instrument is the amount 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 (the exit price). Financial assets and financial liabilities recorded on the Consolidated Balance Sheets at fair value are categorized based on the reliability of inputs to the valuation techniques. (See Note 5.) The Company has used the following methods and assumptions in estimating its fair value disclosures for instruments carried at fair value: Investment securities, excluding long-term certificates of deposit, and short-term investments – Fair values are obtained from widely accepted third party vendors. The Company has used the following methods and assumptions for estimating fair value for other financial instruments not carried at fair value: Cash, cash equivalents, and restricted cash – The carrying amounts reported in the Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments. Long-term certificates of deposit – The carrying amounts reported in the Consolidated Balance Sheets for these instruments are at amortized cost which approximates their fair value Receivables, net – The carrying amounts reported in the Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments. Accrued expenses and other liabilities – The carrying amounts reported in the Consolidated Balance Sheets approximate the fair values given the short-term nature of these instruments. Property and Equipment All property and equipment is stated at cost less accumulated depreciation and amortization on the Consolidated Balance Sheets. Depreciation on a building, is computed using the straight line method over 39 years. Improvements to the building structure are amortized over the useful life of the improvements. Depreciation on computed using the straight line method over 3 to 15 years. Amortization of tenant improvements in the Calabasas building is being computed using the shorter of the useful life of the tenant improvements or the remaining years of the lease. Income Taxes The Company and its subsidiaries file consolidated federal and state income tax returns. Pursuant to the tax allocation agreement, Crusader and American Acceptance Corporation (“AAC”), a subsidiary of Unico, are allocated taxes or tax credits in the case of losses, at current corporate rates based on their own taxable income or loss. The Company files income tax returns under U.S. federal and various state jurisdictions. The Company is subject to examination by U.S. federal income tax authorities for tax returns filed starting at taxable year 2015 and California state income tax authorities for tax returns filed starting at taxable year 2014. There are no ongoing examinations of income tax returns by federal or state tax authorities. As a California insurance company, Crusader is obligated to pay a premium tax on direct written premium in all states that Crusader is admitted. Premium taxes are deferred and amortized as the related premium is earned. The premium tax is in lieu of state franchise taxes and is not included in the provision for state taxes. The provision for federal income taxes is computed on the basis of income as reported for financial reporting purposes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and are measured using the enacted tax rates and laws expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Income tax expense provisions increase or decrease in the same period in which a change in tax rates is enacted. At each balance sheet date, management assesses the need to establish a valuation allowance that reduces deferred tax assets when it is more-likely-than-not that any portion of the deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon generating sufficient taxable income of the appropriate character within the carryback and carryforward periods available under the tax law. Management considers the reversal of deferred tax liabilities, projected future taxable income of an appropriate nature and tax-planning strategies when making this assessment. Although realization is not assured, management believes that it is more likely-than-not that the Company’s deferred tax assets net of the valuation allowance will be realized. Earnings Per Share Basic earnings per share exclude the impact of common share equivalents and are based upon the weighted average common shares outstanding. Diluted earnings per share utilize the average market price per share when applying the treasury stock method in determining common share dilution. When outstanding stock options are dilutive, they are treated as common share equivalents for purposes of computing diluted earnings per share and represent the difference between basic and diluted weighted average shares outstanding. In loss periods, the options are excluded from the calculation of diluted earnings per share, as the inclusion of such options would have an anti-dilutive effect. Revenue Recognition a. General Agency Operations Commissions from sales of health insurance are earned in income based on the satisfaction of a single performance obligation. Marketing, selling, billing, collecting, and administering health insurance policies are a series of distinct services combined as a one performance obligation, which is recognized in income monthly over the policy period. Premiums are collected upon the initial sale of health insurance policies and then monthly upon each subsequent periodic payment. As a result there are limited accounts receivable. Policy fee income is recognized on a pro-rata basis over the terms of the policies. b. Insurance Company Operation Premium is earned on a pro-rata basis over the terms of the policies. Premium applicable to the unexpired terms of policies in force are recorded as unearned premium. c. Insurance Premium Financing Operations Premium finance interest may be charged to policyholders who choose to finance insurance premium. Interest may be charged at rates that vary with the amount of premium financed. Premium finance interest, if any, is recognized using a method that approximates the interest (actuarial) method. Other charges and fees earned include late fees, returned check fees and payment processing fees that are earned when recorded. Losses and Loss Adjustment Expenses The liability for unpaid losses and loss adjustment expenses is based upon the accumulation of individual case estimates for losses reported prior to the close of the accounting period plus estimates based on experience and industry data for development of case estimates and for incurred but unreported losses and loss adjustment expenses. There is a high level of uncertainty inherent in the evaluation of the required loss and loss adjustment expense reserves for Crusader. The long-tailed nature of liability claims and the volatility of jury awards exacerbate that uncertainty. Crusader records The ultimate cost of claims is dependent upon future events, the outcomes of which are affected by many factors. Crusader’s claim reserving procedures and settlement philosophy, current and perceived social and economic inflation, current and future court rulings and jury attitudes, improvements in medical technology, and many other economic, scientific, legal, political, and social factors all can have significant effects on the ultimate costs of claims. Changes in Company operations and management philosophy also may cause actual developments to vary from the past. Since the emergence and disposition of claims are subject to uncertainties, the net amounts that will ultimately be paid to settle claims may vary significantly from the estimated amounts provided for in the accompanying consolidated financial statements. Any adjustments to reserves are reflected in the operating results of the periods in which they are made. Management believes that the Restricted Funds Restricted funds are as follows: Year ended December 31 2018 2017 Premium trust funds (1) $ 1,383,451 $ — Assigned to state agencies (2) 710,000 700,000 Total restricted funds $ 2,093,451 $ 700,000 (1) As required by law, the Company segregates from its operating accounts the premium collected from insureds that are payable to insurance companies into separate trust accounts. These amounts are included in cash and short-term investments. (2) $510,000 and $500,000 included in fixed maturity investments as of December 31, 2018 and 2017, respectively, and $200,000 and $200,000 included in short-term investments as of December 31, 2018 and 2017, respectively, are statutory deposits assigned to and held by the California State Treasurer and the Insurance Commissioner of the State of Nevada. These deposits are required for writing certain lines of business in California and for admission in states other than California. Deferred Policy Acquisition Costs Policy acquisition costs consist of commissions, premium taxes, inspection fees, and certain other underwriting costs, which are related to the successful production of Crusader insurance policies. Policy acquisition costs that are eligible for deferral are deferred and amortized as the related premium is earned and are limited to their estimated realizable value Ceding commission applicable to the unexpired terms Reinsurance Crusader employs reinsurance to provide greater diversification of business allowing management to control exposure to potential losses arising from large risks by reinsuring certain levels of risk in various areas of exposure, to reduce the loss that may arise from catastrophes, and to provide additional capacity for growth. Prepaid reinsurance premium and reinsurance receivables are reported as assets and represent ceded unearned premium and reinsurance recoverable on both paid and unpaid losses and loss adjustment expenses, respectively. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. Crusader evaluates each of its ceded reinsurance contracts at its inception to determine if there is sufficient risk transfer to allow the contract to be accounted for as reinsurance under current accounting literature. As of December 31, 2018, all such ceded contracts are accounted for as risk transfer reinsurance. Crusader evaluates and monitors the financial condition of its reinsurers and factors such as collection periods, disputes, applicable coverage defenses and other factors to assess the need for any allowance against anticipated reinsurance recoveries. No such allowance was considered necessary at December 31, 2018 or 2017. Segment Reporting The Company has identified its insurance company operation as its primary reporting segment. Revenues from this segment comprised 92% of consolidated revenues for the years ended December 31, 2018 and 2017. The Company’s remaining operations constitute a variety of specialty insurance services, each with unique characteristics and individually insignificant to consolidated revenues. The insurance company operation is conducted through Crusader, which as of December 31, 2018, was licensed as an admitted insurance carrier in the states of Arizona, California, Nevada, Oregon, and Washington. Crusader is a multiple line property and casualty insurance company, which began transacting business on January 1, 1985. For the years ended December 31, 2018 and 2017, 98% and 99% of Crusader’s business was commercial multiple peril (“CMP”) insurance policies, respectively. CMP policies provide a combination of property and liability coverage for businesses. Commercial property coverage insures against loss or damage to buildings, inventory and equipment from natural disasters, including hurricanes, windstorms, hail, water, explosions, severe winter weather, and other events such as theft and vandalism, fires and storms and financial loss due to business interruption resulting from covered property damage. However, Crusader does not write earthquake coverage. Commercial liability coverage insures against third party liability from accidents occurring on the insured’s premises or arising out of its operations, such as injuries sustained from products sold or the operation of the insured’s premises. In addition to CMP policies, Crusader also writes separate policies to insure commercial property and commercial liability risks on a mono-line basis which provides either commercial property or commercial liability coverage, but not both. Revenues, loss before income taxes and assets by segment are as follows: Year ended December 31 2018 2017 Revenues Insurance company operation $ 31,028,500 $ 33,972,236 Other insurance operations 11,622,824 13,497,345 Intersegment eliminations (1) (9,038,528 ) (10,678,099 ) Total other insurance operations 2,584,296 2,819,246 Total revenues $ 33,612,796 $ 36,791,482 Loss before income taxes Insurance company operation $ (1,369,358 ) $ (7,419,040 ) Other insurance operations (2,557,434 ) (2,461,181 ) Total loss before income taxes $ (3,926,792 ) $ (9,880,221 ) Assets Insurance company operation $ 115,271,728 $ 117,274,626 Intersegment eliminations (2) (3,141,740 ) (2,486,500 ) Total insurance company operation 112,129,988 114,788,126 Other insurance operations 13,486,978 15,510,632 Total assets $ 125,616,966 $ 130,298,758 (1) Intersegment revenue eliminations reflect rents paid by Unico to Crusader for space leased in the Calabasas building and commissions paid by Crusader to Unifax Insurance Systems, Inc. (“Unifax”), a subsidiary of Unico. (2) Intersegment asset eliminations reflect the elimination of Crusader receivables from Unifax and Unifax payables to Crusader. Concentration of Risks 99.8%, and 99.7% of Crusader’s direct written premium was derived from California during the years ended December 31, 2018 and 2017, respectively. In 2018, approximately 37% and 46% of the $958,495 commission income from the Company’s health insurance program was from Guardian Life Insurance Company of America dental and group life plan programs and the Blue Shield Care Trust health and life insurance programs, respectively. In 2017, approximately 42% and 45% of the $1,047,593 commission income from the Company’s health insurance program was from Guardian Life Insurance Company of America dental and group life plan programs and the Blue Shield Care Trust health and life insurance programs, respectively. Crusader’s reinsurance recoverable on paid and unpaid losses and loss adjustment expenses is as follows: Year ended December 31 Name of Reinsurer A.M. Best Rating (1) 2018 2017 Renaissance Reinsurance U.S. Inc. A+ $ 4,911,922 $ 4,464,980 Hannover Ruck SE A+ 4,142,308 3,384,341 TOA Reinsurance Company of America A 476,101 670,337 Other A (48 ) 574 Total $ 9,530,283 $ 8,520,232 (1) A.M. Best ratings are as of December 31, 2018. Stock-Based Compensation Share-based compensation expense for all share-based payment awards is based on the grant-date fair value estimated in accordance with the provisions of ASC Topic 718, “Compensation - Stock Compensation” using the modified prospective transition method. Recently Issued Accounting Standards Recently adopted standards In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 was issued as a result of the enactment of the Tax Cuts and Jobs Act of 2017 (“TCJA”) on December 22, 2017. Accounting guidance required deferred tax items to be revalued based on the new tax laws (the most significant of which reduced the corporate tax rate to 21% percent from 34% percent) and to include the change in income from continuing operations. ASU 2018-02 is effective for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted. The Company adopted ASU 2018-02 for the year ended December 31, 2017 (see Note 16 for impact of ASU 2018-02 adoption to the Company’s consolidated financial statements). In May 2017, FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718), Scope of Modification Accounting." ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 became effective for the Company beginning January 1, 2018. ASU 2017-09 does not have a material impact on the Company’s consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the transaction price for a contract is allocated among separately identifiable performance obligations and a portion of the transaction price is recognized as revenue when the associated performance obligation has been completed or transferred to the customer. The Company adopted ASU 2014-09 effective January 1, 2018. The adoption of ASU 2014-09 did not have a material impact on the Consolidated Statement of Operations and the Consolidated Balance Sheet mostly because the accounting for insurance contracts, lease contracts, and investments is outside of the scope of Topic 606. The revenue outside of the scope of Topic 606 was represented by net earned premium, insurance company operations net investment income and net realized investment gains, policy fee income, and rental income on the Calabasas building, and the total of all revenues outside the scope of Topic 606 was 96.5% of the total revenues for the year ended December 31, 2018. The impact of Topic 606 to the in-scope revenue was immaterial for the year ended December 31, 2018. Standards not yet adopted In June 2016, the FASB issued ASU 2016-13 “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 replaces the current incurred loss methodology for recognizing credit losses with a current expected credit loss model, which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 also requires enhanced disclosures for better understanding of significant estimates and judgments used in estimating credit losses. The Company is currently evaluating the effect ASU 2016-13 will have on the Company's consolidated financial statements, but expects the primary changes to be (i) the use of the expected credit loss model for its premium receivables and reinsurance recoverables and (ii) the presentation of credit losses within the available-for-sale fixed maturities portfolio through an allowance method rather than as a direct write-down. ASU 2016-13 will become effective for fiscal years beginning after December 31, 2019, but provides for an early adoption for fiscal years beginning after December 31, 2018. The Company has not determined when it will adopt ASU 2016-13. In February 2016, the FASB issued ASU 2016-02 “Leases.” ASU 2016-02 requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by all leases, including those historically accounted for as operating leases. The Company is currently evaluating the effect ASU 2016-02 will have on the Company's consolidated financial statements. The guidance is effective for interim and annual periods beginning after December 31, 2018, and will be applied under a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the consolidated financial statements. |
Cash and Restricted Cash
Cash and Restricted Cash | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Cash and Restricted Cash | NOTE 2 – CASH, CASH EQUIVALENTS, AND RESTRICTED CASH The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows: Year ended December 31 2018 2017 Cash $ 2,082,131 $ 774,226 Cash equivalents 2,835,631 8,592,718 Restricted cash — — Cash and restricted cash $ 4,917,762 $ 9,366,944 Cash equivalents were comprised of highly liquid investments with initial maturity of 90 days or less. As of December 31, 2018 and 2017, cash equivalents included custodial trust, bank money market accounts, and a bank savings account. The restricted cash was represented by two cash deposits placed by Crusader with the Los Angeles Superior Court in lieu of appeal bonds. In December 2015, a judgment was finalized on a Crusader policy liability claim. Crusader appealed the judgment. As a part of the appeal, Crusader deposited $7,924,178 in cash with the Los Angeles Superior Court on December 28, 2015, in lieu of an appeal bond. This cash deposit was required to appeal the judgment. In March 2016, an additional judgment for plaintiff’s attorney fees and costs on this Crusader policy liability claim was finalized. Crusader appealed this additional judgment. That additional appeal required an additional $5,449,615 cash deposit, which was made on March 21, 2016, in lieu of an appeal bond. In September 2017, the two judgments were settled between the parties thereto for a total of $7,000,000 which was paid from the two deposits, and the remaining funds on deposit with the Los Angeles Superior Court for the two appeals in the amount of $6,373,793 were returned to Crusader and were invested in fixed maturities, short-term investments, and cash equivalents. |
Advance Premium and Premium Dep
Advance Premium and Premium Deposits | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Advance Premium And Premium Deposits | NOTE 3 – ADVANCE PREMIUM AND PREMIUM DEPOSITS The insurance company operation records an advance premium liability that represents the deposits on written premium on policies that have been submitted to the Company and are bound, billed, and recorded prior to their effective date of coverage. The advance premium is not included in written premium or in the liability for unearned premium. Some of the Company’s health and life programs require payments of premium prior to the effective date of coverage; and, accordingly, invoices are sent out as early as two months prior to the coverage effective date. Insurance premium received for coverage months effective after the |
Investments
Investments | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Investments | NOTE 4 – INVESTMENTS A summary of total investment income, net of investment expenses, and net realized gains is as follows: Year ended December 31 2018 2017 Fixed maturities (1) $ 1,956,963 $ 1,281,984 Short-term investments and cash equivalents 65,042 55,907 Gross investment income 2,022,005 1,337,891 Less investment expenses (114,232 ) (47,824 ) Net investment income 1,907,773 1,290,067 Net realized gains 148 528 Net investment income and realized gains $ 1,907,921 $ 1,290,595 (1) Investment income from fixed maturities included $0 and $133,160 of interest on the restricted cash for the years ended December 31, 2018 and 2017, respectively. The amortized cost and estimated fair value of fixed maturity investments at December 31, 2018, by contractual maturity are as follows: Amortized Cost Estimated Fair Value Due in one year or less $ 9,326,886 $ 9,311,678 Due after one year through five years 43,821,970 43,211,883 Due after five years through ten years 15,876,016 15,497,513 Due after ten years and beyond 16,403,716 16,015,063 Total fixed maturities $ 85,428,588 $ 84,036,137 Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. The amortized cost and estimated fair values of investments in fixed maturities by category are as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value December 31, 2018 Available-for-sale fixed maturities: U.S. treasury securities $ 16,746,832 $ 16,069 $ (143,282 ) $ 16,619,619 Corporate securities 40,804,425 50,422 (851,124 ) 40,003,723 Agency mortgage-backed securities 20,751,331 7,757 (472,293 ) 20,286,795 Held-to-maturity fixed maturities: Certificates of deposit 7,126,000 — — 7,126,000 Total fixed maturities $ 85,428,588 $ 74,248 $ (1,466,699 ) $ 84,036,137 December 31, 2017 Available-for-sale fixed maturities: U.S. treasury securities $ 7,517,901 $ 21 $ (63,697 ) $ 7,454,225 Corporate securities 28,745,223 43,204 (130,787 ) 28,657,640 Agency mortgage-backed securities 21,889,996 — (152,407 ) 21,737,589 Held-to-maturity fixed maturities: Certificates of deposit 28,098,000 — — 28,098,000 Total fixed maturities $ 86,251,120 $ 43,225 $ (346,891 ) $ 85,947,454 A summary of the unrealized gains (losses) on investments carried at fair value and the applicable deferred federal income taxes is as follows: Year ended December 31 2018 2017 Gross unrealized gains of fixed maturities $ 74,248 $ 43,225 Gross unrealized losses of fixed maturities (1,466,699 ) (346,891 ) Net unrealized losses on investments (1,392,451 ) (303,666 ) Deferred federal tax benefit 292,415 63,770 Net unrealized losses, net of deferred income taxes $ (1,100,036 ) $ (239,896 ) A summary of estimated fair value and gross unrealized losses in a gross unrealized loss position by the length of time in which the securities have continually been in that position is shown below: Less than 12 Months 12 Months or Longer Estimated Fair Value Gross Unrealized Losses Number of Securities Estimated Fair Value Gross Unrealized Losses Number of Securities December 31, 2018 U.S. treasury securities $ 1,760,491 $ (20,181 ) 2 $ 8,496,069 $ (123,101 ) 6 Corporate securities 10,878,381 (272,515 ) 17 21,189,487 (578,609 ) 27 Agency mortgage-backed securities — — — 17,034,086 (472,293 ) 15 Total $ 12,638,872 $ (292,696 ) 19 $ 46,719,642 $ (1,174,003 ) 48 Less than 12 Months 12 Months or Longer Estimated Fair Value Gross Unrealized Losses Number of Securities Estimated Fair Value Gross Unrealized Losses Number of Securities December 31, 2017 U.S. treasury securities $ 7,454,204 $ (63,697 ) 6 $ — $ — — Corporate securities 20,335,512 (130,787 ) 26 — — — Agency mortgage-backed securities 21,737,589 (152,407 ) 17 — — — Total $ 49,527,305 $ (346,891 ) 49 $ — $ — — The Company monitors its investments closely. If an unrealized loss is determined to be other-than-temporary, it is written off as a realized loss through the Consolidated Statements of Operations. The Company’s methodology of assessing other-than-temporary impairments is based on security-specific analysis as of the balance sheet date and considers various factors including the length of time to maturity and the extent to which the fair value has been less than the cost, the financial condition and the near-term prospects of the issuer, and whether the debtor is current on its contractually obligated interest and principal payments. The unrealized losses as of December 31, 2018, and December 31, 2017, were determined to be temporary. Although the Company does not intend to sell its fixed maturity investments prior to maturity, the Company may sell investment securities from time to time in response to cash flow requirements, economic and/or market conditions, or investment securities may be called by their issuers prior to the securities’ maturity. Two securities were called prior to their maturity during the year ended December 31, 2018. These securities had amortized cost of $1,269,852. The Company realized a net investment gain of $148 on these calls for the year ended December 31, 2018. Proceeds of the call of these securities were used for general corporate purposes. The Company sold two securities prior to their maturity during the year ended December 31, 2017. These securities had amortized cost of $1,141,338. The Company realized a net investment gain of $554 on these sales for the year ended December 31, 2017. Proceeds of the sales of these securities were used for general corporate purposes. The Company’s investment in certificates of deposit included $6,726,000 and $27,698,000 of brokered certificates of deposit as of December 31, 2018 and 2017, respectively. Brokered certificates of deposit provide the safety and security of a certificate of deposit combined with the convenience gained by one-stop shopping for rates at various institutions. This allows the Company to spread its investments across multiple institutions so that all of its certificates of deposit are insured by the Federal Deposit Insurance Corporation (“FDIC”). Brokered certificates of deposit are purchased through UnionBanc Investment Services, LLC, a registered broker-dealer, investment advisor, member of FINRA/SIPC, and a subsidiary of MUFG Union Bank, N.A. Brokered certificates of deposit are a direct obligation of the issuing depository institution, are bank products of the issuing depository institution, are held by Union Bank Global Custody Services for the benefit of the Company, and are FDIC insured within permissible limits. The following securities from four different banks represent statutory deposits that are assigned to and held by the California State Treasurer and the Insurance Commissioner of the State of Nevada. These deposits are required for writing certain lines of business in California and for admission in the state of Nevada. Year ended December 31 2018 2017 Certificates of deposit $ 200,000 $ 400,000 Short-term investments 200,000 200,000 Total state held deposits $ 400,000 $ 600,000 All of the Company’s brokered and non-brokered certificates of deposit are within the FDIC insured permissible limits. Due to nature of the Company’s business, certain bank accounts may exceed FDIC insured permissible limits. Short-term investments have an initial maturity of one year or less and consist of the following: Year ended December 31 2018 2017 U.S. treasury bills $ 4,490,954 $ 1,148,395 Certificates of deposit 200,000 200,000 Commercial paper — 499,383 Total short-term investments $ 4,690,954 $ 1,847,778 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Fair Value of Financial Instruments | NOTE 5 – FAIR VALUE OF FINANCIAL INSTRUMENTS In determining the fair value of its financial instruments, the Company employs a fair value hierarchy that prioritizes the inputs for the valuation techniques used to measure fair value. The fair value of a financial instrument is the amount 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 (the exit price). Financial assets and financial liabilities recorded on the Consolidated Balance Sheets at fair value are categorized based on the reliability of inputs for the valuation techniques as follows: Level 1 – Financial assets and financial liabilities whose values are based on unadjusted quoted prices in active markets for identical assets or liabilities as of the reporting date. Level 2 – Financial assets and financial liabilities whose values are based on quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in non-active markets; or valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability as of the reporting date. Level 3 – Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities as of the reporting date. The hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the fair value hierarchy level within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Thus, a Level 3 fair value measurement may include inputs that are observable (Level 1 or Level 2) or unobservable (Level 3). The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The following table presents information about the Company’s financial instruments and their estimated fair values, which are measured on a recurring basis, allocated among the three levels within the fair value hierarchy as of December 31, 2018 and 2017: Level 1 Level 2 Level 3 Total December 31, 2018 Financial instruments: Available-for-sale fixed maturities: U.S. treasury securities $ 16,619,619 $ — $ — $ 16,619,619 Corporate securities — 40,003,723 — 40,003,723 Agency mortgage-backed securities — 20,286,795 — 20,286,795 Short-term investments 4,690,954 — — 4,690,954 Total financial instruments at fair value $ 21,310,573 $ 60,290,518 $ — $ 81,601,091 December 31, 2017 Financial instruments: Available-for-sale fixed maturities: U.S. treasury securities $ 7,454,225 $ — $ — $ 7,454,225 Corporate securities — 28,657,640 — 28,657,640 Agency mortgage-backed securities — 21,737,589 — 21,737,589 Short-term investments 1,847,778 — — 1,847,778 Total financial instruments at fair value $ 9,302,003 $ 50,395,229 $ — $ 59,697,232 Fair value measurements are not adjusted for transaction costs. The Company recognizes transfers between levels at either the actual date of the event or a change in circumstances that caused the transfer. The Company did not have any transfers between Levels 1, 2 and 3 of the fair value hierarchy during the years ended December 31, 2018 and 2017. |
Property and Equipment (Net of
Property and Equipment (Net of Accumulated Depreciation) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Property and Equipmentr (Net of Accumulated Depreciation) | NOTE 6 – PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following: Year ended December 31 2018 2017 Building and tenant improvements, located in Calabasas, California $ 8,398,275 $ 8,352,181 Furniture, fixtures, equipment 2,063,549 2,724,775 Computer software 363,016 355,234 Accumulated depreciation and amortization (3,051,505 ) (3,204,806 ) Land located in Calabasas, California 1,787,485 1,787,485 Property and equipment, net $ 9,560,820 $ 10,014,869 Depreciation on the Calabasas building is computed using the straight line method over 39 years. Improvements to the building structure are amortized over the useful life of the improvements. Depreciation on computed using the straight line method over 3 to 15 years. Amortization of tenant improvements in the Calabasas building is being computed using the shorter of the useful life of the tenant improvements or the remaining years of the lease. Depreciation and amortization expense on all property and equipment for the years ended December 31, 2018 and 2017 were $551,183 and $517,199, respectively. For the years ended December 31, 2018 and 2017, the Calabasas building has generated rental revenue in the amount of $1,150,428 and $1,065,104, and incurred operating expenses in the amount of $774,663 and $796,270, which included depreciation, respectively. These amounts are included in “Other income” from insurance company operation and other operating expenses, respectively, in the Company’s Consolidated Statements of Operations. The total square footage of the Calabasas building is 46,884, including common areas. As of December 31, 2018, 14,481 square feet of the Calabasas building was leased to non-affiliated entities. As of December 31, 2018, the Calabasas building was fully occupied. The Company capitalizes certain computer software costs purchased from outside vendors for internal use. These costs also include configuration and customization activities, coding, testing and installation. Training costs and maintenance are expensed as incurred, while upgrade and enhancements are capitalized if it is probable that such expenditure will result in additional functionality. The capitalized costs are not depreciated until the software is placed into production. |
Receivables, Net
Receivables, Net | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Premiums, Commissions and Notes Receivable, Net | NOTE 7 – RECEIVABLES, NET Receivables, net, include premium, commissions and notes receivable and are as follows: Year ended December 31 2018 2017 Premium and commission receivable $ 2,001,732 $ 2,234,166 Premium finance notes receivable 3,148,792 4,967,671 Total premium and notes receivable 5,150,524 7,201,837 Allowance for doubtful accounts (1,217,456 ) (1,196,073 ) Receivables, net $ 3,933,068 $ 6,005,764 Premium receivable and premium finance notes receivables are substantially secured by unearned premium and funds held as security for performance. Premium finance notes receivable represents the balance due to AAC, the Company's premium finance subsidiary, from policyholders who elected to finance their premium over a nine-month term. These notes are net of unearned finance charges and credit loss reserves. Bad debt expense was $23,903 and $16,222 for the years ended December 31, 2018 and 2017, respectively. |
Unpaid Losses and Loss Adjustme
Unpaid Losses and Loss Adjustment Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Unpaid Losses and Loss Adjustment Expenses | NOTE 8 – UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES Crusader’s loss and loss adjustment expense case and incurred but not reported (“IBNR”) reserves are as follows: Year ended December 31 2018 2017 Direct reserves: Case reserves $ 23,648,183 $ 18,948,233 IBNR reserves 28,008,972 30,128,758 Total direct reserves $ 51,657,155 $ 49,076,991 Reserves net of reinsurance: Case reserves $ 19,855,301 $ 14,985,639 IBNR reserves 22,270,252 25,697,802 Total net reserves $ 42,125,553 $ 40,683,441 Reserves for losses and loss adjustment expenses before reinsurance for each of Crusader’s lines of business are as follows: Year ended December 31 Line of Business 2018 2017 CMP $ 50,459,206 97.7 % $ 48,003,282 97.8 % Other liability 1,172,331 2.3 % 1,060,328 2.2 % Other 25,618 0.0 % 13,381 0.0 % Total $ 51,657,155 100.0 % $ 49,076,991 100.0 % The Company‘s consolidated financial statements include estimated reserves for unpaid losses and related loss adjustment expenses of the insurance company operation. Crusader sets loss and loss adjustment expense reserves at each balance sheet date based upon management’s best estimate of the ultimate payments that it anticipates will be made to settle all losses incurred and all related loss adjustment expenses incurred as of that date for both reported and unreported claims. The following table provides an analysis of the roll forward of Crusader’s loss and loss adjustment expense reserves, including a reconciliation of the ending balance sheet liability for the periods indicated: Year ended December 31 2018 2017 Reserve for unpaid losses and loss adjustment expenses at beginning of year – net of reinsurance $ 40,683,441 $ 37,534,817 Incurred losses and loss adjustment expenses: Provision for insured events of current year 20,635,786 23,377,228 Provision for incurred events of prior years 2,921,957 7,113,279 Total incurred losses and loss adjustment expenses 23,557,743 30,490,507 Payments: Losses and loss adjustment expenses attributable to insured events of the current year 6,582,377 7,925,460 Losses and loss adjustment expenses attributable to insured events of prior years 15,533,254 19,416,423 Total payments 22,115,631 27,341,883 Reserve for unpaid losses and loss adjustment expenses at end of year – net of reinsurance 42,125,553 40,683,441 Reinsurance recoverable on unpaid losses and loss adjustment expenses at end of year 9,531,602 8,393,550 Reserve for unpaid losses and loss adjustment expenses at end of year per balance sheet, gross of reinsurance $ 51,657,155 $ 49,076,991 At each review period, actual claims costs that emerge are compared with the claims costs that were expected to emerge during that development period. Sometimes the previous claims costs estimates prove to have been too high; sometimes they prove to have been too low. The fluctuation in development of insured events of prior years underscores the inherent uncertainty in insurance claims costs, especially for a relatively small insurer, such as Crusader. Management reviews claims costs that appear to be different from the historical claims costs to determine whether those differences are a normal part of the process or an indication that a change in reserve assumptions is appropriate. Management concluded that the differences noted above are differences between actual and expected claims costs that emerge from time to time, particularly in an insurer the size of Crusader. The following table presents loss development information by accident year, including cumulative incurred and paid losses and allocated loss adjustment expenses (“ALAE”), net of reinsurance, as well as cumulative claim frequency and the total of incurred but not reported liabilities plus expected development on reported claims as of December 31, 2018: Accident Year Cumulative Incurred Cumulative Paid Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims 2009 $ 17,619,015 $ 17,568,228 $ — 1,013 2010 16,822,859 16,721,059 — 974 2011 19,094,732 19,087,866 — 1,020 2012 18,235,335 17,638,646 153,904 967 2013 22,397,394 21,875,978 171,857 849 2014 18,034,749 16,843,128 594,893 757 2015 21,707,615 17,700,688 1,846,071 725 2016 24,126,775 15,916,432 3,180,439 787 2017 23,453,130 11,503,228 6,990,158 782 2018 19,048,233 4,959,689 9,332,930 528 Total $ 200,539,837 $ 159,814,942 $ 22,270,252 The following table reconciles the above cumulative incurred and paid data to Crusader’s loss and loss adjustment expense reserves: Year ended December 31 2018 2017 Cumulative incurred losses and ALAE $ 200,539,837 $ 196,783,974 Less cumulative paid losses and ALAE (159,814,942 ) (157,445,399 ) Reserve for unpaid losses and ALAE (latest 10 accident years) 40,724,895 39,338,575 Reserves for unpaid losses and ALAE (beyond latest 10 accident years) 67,227 237,800 Reserves for unpaid unallocated loss adjustment expenses 1,333,431 1,107,066 Reserve for unpaid losses and loss adjustment expenses, net of reinsurance 42,125,553 40,683,441 Reinsurance recoverable on unpaid losses and loss adjustment expenses 9,531,602 8,393,550 Reserve for unpaid losses and loss adjustment expenses, gross of reinsurance $ 51,657,155 $ 49,076,991 Crusader’s liability for unpaid loss and loss adjustment expense reserves consists of case reserves and reserves for IBNR claims. Case reserves are established by claims personnel based on a review of the facts known at the time the claim is reported and are subsequently revised as more information about a claim becomes known. IBNR is estimated using various actuarial methods and techniques and includes (1) reserves for losses and loss adjustment expenses on claims that have occurred but for which claims have not yet been reported to Crusader, and (2) a provision for expected future development on case reserves for information not currently known. At the end of each fiscal quarter, Crusader’s reserves for each accident year (i.e., for all claims occurring within each year) are re-evaluated independently by the Company’s president, the Company’s chief financial officer, and an independent consulting actuary. Generally accepted actuarial methods, including the widely used Bornhuetter-Ferguson and loss development methods, are employed to estimate ultimate claims costs. An actuarial central estimate of the ultimate claims costs and IBNR reserves is ultimately determined by management and tested for reasonableness by the independent consulting actuary. The Company determines the number of reported claims based on the number of loss events. A claim is considered a single loss event, per policy, and it may include multiple claimants and multiple coverages on a single policy. The cumulative number of reported claims is a sum of open claims, closed claims, and claims closed without payment. |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Deferred Policy Acquisition Costs | NOTE 9 – DEFERRED POLICY ACQUISITION COSTS The following table provides an analysis of the roll forward of the Company’s deferred policy acquisition costs: Year ended December 31 2018 2017 Deferred policy acquisition costs at beginning of year $ 4,162,771 $ 4,432,299 Policy acquisition costs deferred during year 5,235,788 6,194,153 Policy acquisition costs amortized during year (5,908,831 ) (6,463,681 ) Deferred policy acquisition costs at end of year $ 3,489,728 $ 4,162,771 Deferred policy acquisition costs consist of commissions (net of ceding commission), premium taxes, inspection fees, and certain other underwriting costs, which are related to and vary with the production of Crusader policies. Policy acquisition costs are deferred and amortized as the related premium is earned. Deferred acquisition costs are reviewed to determine if they are recoverable from future income on insurance policies generated from these costs, including investment income. For the year ended December 31, 2017, the Company recognized $45,000 premium deficiency reserve; there was no such reserve for the year ended December 31, 2018. |
Acccrued Expenses and Other Lia
Acccrued Expenses and Other Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Acccrued Expenses and Other Liabilities | NOTE 10 – ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consist of the following: Year ended December 31 2018 2017 Premium payable $ 314,173 $ 438,571 Unearned policy fee income 595,223 759,082 Retirement plans 112,827 156,600 Accrued salaries and employee benefits 415,396 381,577 Commission payable 81,414 81,395 Other 326,325 483,133 Total accrued expenses and other liabilities $ 1,845,358 $ 2,300,358 |
Contingencies
Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Contingencies | NOTE 11 – COMMITMENTS AND CONTINGENCIES The Company, by virtue of the nature of the business conducted by it, becomes involved in numerous legal proceedings as either plaintiff or defendant. The Company is also required to resort to legal proceedings from time to time in order to enforce collection of premium, commissions, The Company establishes reserves for lawsuits, regulatory actions and other contingencies for which the Company is able to estimate its potential exposure and believes a loss is probable. For loss contingencies believed to be reasonably possible, the Company discloses the nature of the loss contingency, an estimate of the possible loss, a range of loss, or a statement that such an estimate cannot be made. Likewise, the Company is sometimes named as a cross-defendant in litigation, which is principally concerning the issuance or non-issuance of individual policies . These items are also handled on a he Company vigorously defends itself unless a reasonable settlement appears appropriate. |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Reinsurance | NOTE 12 – REINSURANCE A reinsurance transaction occurs when an insurance company transfers (cedes) a portion of its reinsurer fails to meet its obligations, the Company must nonetheless pay its policy obligations. Crusader’s primary excess of loss reinsurance agreements during the years ended December 31, 2018 and 2017 are as follows: Loss Year Reinsurers A.M. Best Rating Retention 2018 Renaissance Reinsurance U.S. Inc. A+ $ 500,000 2017 Renaissance Reinsurance U.S. Inc. A $ 500,000 Reinsurance treaties are generally structured in layers, with different negotiated economic terms and retention of participation, or liability, in each layer. In calendar year 2018, Crusader retained a participation in its excess of loss reinsurance treaties of 5% in its 1 st nd st nd Crusader also has catastrophe reinsurance treaties from various risks which Crusader insures. st nd Crusader has no reinsurance recoverable balances in dispute. On most of the premium that Crusader cedes to the reinsurer, the reinsurer pays a commission to Crusader that includes a reimbursement of the cost of acquiring the portion of the premium that is ceded. Crusader does not currently assume any reinsurance. Crusader intends to continue obtaining reinsurance although the availability and cost may vary from time to time. The unpaid losses and loss adjustment expenses ceded to the reinsurer are recorded as an asset on the Consolidate Balance Sheets. The effect of reinsurance on written premium, earned premium, and incurred losses and loss adjustment expenses is as follows: Year ended December 31 2018 2017 Written premium: Direct business $ 32,429,735 $ 38,393,351 Reinsurance ceded (6,555,715 ) (6,765,240 ) Net written premium $ 25,874,020 $ 31,628,111 Earned premium: Direct business $ 35,233,410 $ 38,999,827 Reinsurance ceded (6,478,500 ) (6,656,508 ) Net earned premium $ 28,754,910 $ 32,343,319 Incurred losses and loss adjustment expenses: Direct $ 30,169,562 $ 43,672,969 Ceded (6,611,819 ) (13,182,462 ) Net incurred losses and loss adjustment expenses $ 23,557,743 $ 30,490,507 Ceded earned premium as a percentage of direct earned premium was 18% in 2018 and 17% in 2017. Crusader did not assume any premium or losses during the years ended December 31, 2018 and 2017. |
Retirement Plans
Retirement Plans | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Retirement Plans | NOTE 13 – PROFIT SHARING PLAN The Unico American Corporation Profit Sharing Plan (“Plan”) covers Company’s employees who are at least 21 years of age and have met certain service and eligibility requirements. Unico American Corporation is the Plan sponsor and the Plan administrator. Fidelity Management Trust Company is the Plan trustee. The Plan is intended to be a qualified retirement plan under the Internal Revenue Code. As required by the Plan, on an annual basis, the Company must contribute 3% of participants’ eligible compensation to the account of each participant. In addition, pursuant to the terms of the Plan, the Company may contribute to participants an amount determined by the Board of Directors. Under the Plan, participants have the option to make 401(k) and/or Roth 401(k) deferral contributions which are not matched by the Company. Participants must be employed by the Company on the last day of the Plan year and must have met certain service and eligibility requirements to be eligible for a contribution. Participants are eligible to request a distribution of their vested account balance upon death, retirement, minimum required distributions and termination of employment. Contributions to the Plan are as follows: Year ended December 31, 2018 $ 132,927 Year ended December 31, 2017 $ 178,155 |
Statutory Capital and Surplus
Statutory Capital and Surplus | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Statutory Capital and Surplus | NOTE 14 – STATUTORY CAPITAL AND SURPLUS Crusader is required to file statutory financial statements with insurance regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities. Statutory accounting practices differ in certain respects from GAAP. The more significant of the differences for statutory accounting practices are (a) policy acquisition and commission costs are expensed when incurred rather than over the periods covered by the policies; (b) fixed maturity securities are reported at amortized cost, or the lower of amortized cost or fair value, depending on the quality of the security as specified by the National Association of Insurance Commissioners (NAIC); (c) non-admitted assets are charged directly against surplus; (d) loss and loss adjustment expense reserves and unearned premium reserves are stated net of reinsurance; (e) federal income taxes are recorded when payable and deferred taxes, subject to limitations, are recognized but only to the extent that they do not exceed a specified percentage of statutory surplus; and (f) changes in deferred taxes are recorded directly to surplus as regards policyholders. Additionally, the cash flow presentation is not consistent with GAAP and reconciliation from net income to cash provided by operations is not presented. Comprehensive income is not presented under statutory accounting practices. Crusader’s statutory capital and surplus are as follows: As of December 31, 2018 $ 50,148,258 As of December 31, 2017 $ 50,446,888 Crusader’s statutory net loss is as follows: Year ended December 31, 2018 $ (453,966 ) Year ended December 31, 2017 $ (6,207,351 ) The California Department of Insurance (CA DOI) conducts periodic financial examinations of Crusader. During 2017, the CA DOI completed a financial examination of Crusader’s December 31, 2015, statutory financial statements. On June 23, 2017, a report of examination was officially filed and became part of the records of the CA DOI. The Company has complied with all comments and recommendations identified in the report of examination, and none of the issues in that report of examination had any material effect on Crusader. The Company believes that Crusader’s statutory capital and surplus are sufficient to support the written premium guidelines established by the NAIC. Crusader is restricted in the amount of dividends it may pay to its parent in any 12-month period without prior approval of the CA DOI. Presently, without prior regulatory approval, Crusader may pay a dividend in any 12-month period to Unico up to the greater of (a) 10% of its statutory surplus or (b) its statutory net income for the preceding calendar year. Based on Crusader’s statutory surplus for the year ended December 31, 2018, the maximum dividend that could be made by Crusader to Unico without prior regulatory approval in 2019 is $5,014,826. In the years ended December 31, 2018 and 2017, Crusader paid to Unico cash dividends in the amount of $0 and $3,000,000, respectively. The NAIC uses a Risk-Based Capital (“RBC”) Model Law for property and casualty companies. The RBC Model Law is intended to provide standards for calculating a variable regulatory capital requirement related to a company’s current operations and its risk exposures (asset risk, underwriting risk, credit risk and off-balance sheet risk). These standards are intended to serve as a diagnostic solvency tool for regulators that establishes uniform capital levels and specific authority levels for regulatory intervention when an insurer falls below minimum capital levels. The RBC Model Law specifies four distinct action levels at which a regulator can intervene with increasing degrees of authority over a domestic insurer if its RBC |
Incentive Stock Plans
Incentive Stock Plans | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Stock Plans | NOTE 15 – STOCK PLANS The Unico American Corporation 2011 Incentive Stock Plan (“2011 Plan”) covers 200,000 shares of the Company’s common stock (subject to adjustment in the case of stock splits, reverse stock splits, stock dividends, etc.) and was approved by shareholders on May 26, 2011. No options were granted to employees or non-employees during the years ended December 31, 2018 and 2017. The Company recognized stock-based compensation expense in the amount of $0 and $11,552 for all awards issued under the 2011 Plan in the “Salaries and employee benefits” line item in the Consolidated Statements of Operations in each year ended December 31, 2018 and 2017, respectively. As of December 31, 2018, there was no unrecognized compensation cost. The fair value of each option award is estimated on the date of the grant using the Black-Scholes Option-Pricing Model using a number of complex and subjective variables. These variables include expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, a risk-free interest rate and expected dividends. Expected dividend yield is based on the historical dividend behavior as well as the expected dividend behavior of the Company. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate for periods within the contractual life of the option is based on the U.S. treasury yield curve for a ten-year treasury in effect at the time of grant. The expected term represents an estimate of time the options are expected to remain outstanding. The Company estimates forfeitures at the time of the grant and revises those estimates in subsequent periods if the actual forfeitures differ from those estimates. The average assumptions used to value each option award granted during the years ended December 31, 2012 and 2011 are as follows: Years ended December 31 2012 2011 Weighted-average grant date fair value $ 3.21 $ 2.53 Expected dividend yield 1.91 % 3.12 % Expected volatility 28.01 % 28.74 % Risk-free interest rate 1.94 % 2.02 % Expected term (years) 10.00 10.00 Expected forfeiture 0.00 % 0.00 % There were no stock options outstanding at December 31, 2018 and 2017. |
Taxes on Income
Taxes on Income | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Taxes on Income | NOTE 16 – TAXES ON INCOME The provision for taxes on income consists of the following: Year ended December 31 2018 2017 Federal benefit: Current $ — $ — Deferred (727,333 ) (1,327,602 ) Total tax benefit $ (727,333 ) $ (1,327,602 ) State expense (benefit): Current $ 8,800 $ 8,800 Deferred (38,700 ) 163,565 Total tax expense (benefit) $ (29,900 ) $ 172,365 Total expense (benefit): Current $ 8,800 $ 8,800 Deferred (766,033 ) (1,164,037 ) Total tax benefit $ (757,233 ) $ (1,155,237 ) The income tax provision reflected in the Consolidated Statements of Operations is different than the expected federal income tax rate of 21% and 34% on income for 2018 and 2017, respectively, as shown in the following table: Year ended December 31 2018 2017 Computed income tax benefit at 21% and 34% for 2018 and 2017, respectively $ (824,626 ) $ (3,359,275 ) Tax effect of: Impact of change in tax law — 2,137,385 State tax expense (benefit), net of federal tax benefit (615,802 ) 1,061 Change in valuation allowance – state net operating losses 592,181 (4,679 ) Expired state net operating losses — 117,379 Deferred tax true up 63,481 — Other, including nondeductible expenses 27,533 (47,108 ) Income tax benefit $ (757,233 ) $ (1,155,237 ) The Company recognizes deferred income tax assets and liabilities for the expected future tax effects attributable to temporary differences between the financial statement and tax return bases of assets and liabilities, and expected benefits of utilizing net operating loss carryforwards, based on enacted tax rates and other provisions of the tax law. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized in income in the period in which such change is enacted. Deferred tax assets are reduced by a valuation allowance if it is more-likely-than-not that any portion of the deferred tax assets may not be realized. The ultimate realization of deferred tax assets is dependent upon generating sufficient taxable income of the appropriate character within the carryback and carryforward periods available under the tax law. Management considers the reversal of deferred tax liabilities, projected future taxable income of an appropriate nature, and tax planning strategies in making this assessment. The Company increased its valuation allowance related to deferred tax assets on state net operating losses. Although realization is not assured, management believes that it is more likely-than-not that the Company’s remaining net deferred tax assets will be realized. Significant components of the Company’s net deferred tax assets and liabilities are as follows: Year ended December 31 2018 2017 Deferred tax assets: Discount on loss reserves $ 324,346 $ 264,510 Unearned premium 671,792 794,461 Unearned commission income 388,099 360,443 Unearned policy fee income 166,565 212,419 Net operating loss carryforwards 3,515,221 2,746,927 State net operating loss carryforwards 1,850,934 1,258,753 Unrealized losses on investments 292,415 63,770 Bad debt reserve 340,688 334,705 Other 195,048 255,414 Total gross deferred tax assets 7,745,108 6,291,402 Less valuation allowance 1,850,934 1,258,753 Total deferred tax assets $ 5,894,174 $ 5,032,649 Deferred tax liabilities: Policy acquisition costs $ 867,652 $ 1,036,477 State tax on undistributed insurance company earnings 392,802 372,146 Federal tax liability on state deferred tax assets 81,723 96,368 Depreciation and amortization 176,513 146,852 Total deferred tax liabilities $ 1,518,690 $ 1,651,843 Net deferred tax assets $ 4,375,484 $ 3,380,806 The Company recognizes tax benefits related to positions taken, or expected to be taken, on a tax return only if it is more-likely-than-not that the positions are sustainable. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its consolidated financial statements. As of December 31, 2018, the Company has $16,739,147 of federal net operating loss carryforwards that will begin to expire in 2035. As of December 31, 2018, the Company had deferred tax assets of $1,850,934 generated from state net operating loss carryforwards. For the years ended December 31, 2018 and December 31, 2017, a valuation allowance was established in the amount of $1,850,934 and $1,258,753, respectively, as the Company does not expect to realize a tax benefit from its state net operating losses in future years. For the years ended December 31, 2018 and December 31, 2017 the amount of state net operating losses that expired were $0 and $1,209,784, respectively. The remaining $1,850,934 of state tax carryforwards, expire between 2028 and 2038. The current federal effected state tax rate is 6.98%. TCJA, signed into law on December 22, 2017, reduced the corporate Federal income tax rate from 34% to 21%, effective for years beginning after December 31, 2017. As a result of the TCJA, the Company has recognized a decrease to its net deferred asset as of December 31, 2017 in the amount of $2,176,862. The Company has determined that no other changes are required to the deferred tax asset (liability), and the current income tax expense is unaffected by this change in the law. The Company and its subsidiaries file consolidated federal and state income tax returns. Pursuant to the tax allocation agreement, Crusader and AAC are allocated taxes, or tax credits in the case of losses, at current corporate rates based on their own taxable income or loss. The Company files income tax returns under U.S. federal and various state jurisdictions. The Company is subject to examination by U.S. federal income tax authorities for tax returns filed starting at taxable year 2015 and California state income tax authorities for tax returns filed starting at taxable year 2014. There are no ongoing examinations of income tax returns by federal or state tax authorities. As a California insurance company, Crusader is obligated to pay a premium tax on direct written premium in all states where Crusader is admitted. Premium taxes are deferred and amortized as the related premium is earned. The premium tax is in lieu of state franchise taxes and is not included in the provision for state taxes. As of December 31, 2018, the Company had no unrecognized tax benefits, no unrecognized additional liabilities or reduction in deferred tax asset, and no uncertain tax positions. In addition, the Company had not accrued interest and penalties related to unrecognized tax benefits. However, if interest and penalties would need to be accrued related to unrecognized tax benefits, such amounts would be recognized as a component of federal income tax expense. |
Repurchase of Common Stock
Repurchase of Common Stock | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Repurchase of Common Stock | NOTE 17 – REPURCHASE OF COMMON STOCK – EFFECT ON STOCKHOLDERS’ EQUITY On December 19, 2008, the Board of Directors authorized a stock repurchase program to acquire from time to time up to an aggregate of 500,000 shares of the Company’s common stock. This program has no expiration date and may be terminated by the Board of Directors at any time. As of December 31, 2018, and December 31, 2017, the Company had remaining authority under the 2008 program to repurchase up to an aggregate of 188,625 and 188,655 shares of its common stock, respectively. The 2008 program is the only program under which there is authority to repurchase shares of the Company’s common stock. The Company repurchased 30 shares of stock during the year ended December 31, 2018, in unsolicited transactions at a cost of $216 of which $15 was allocated to capital and $201 was allocated to retained earnings. The Company did not repurchase any stock during the year ended December 31, 2017. The Company has retired and intends to retire all repurchased stock, as applicable. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Related Party Transactions | NOTE 18 – RELATED PARTY TRANSACTIONS Wish Properties Inc., an office of Wish Sotheby’ International Reality, owned by Ernest A. Wish, a member of the Company’s Board of Directors, leased 4,189 square feet at the Calabasas building. The lease commenced on July 13, 2017 and had a six month term. Effective January 8, 2018, the lease was amended to extend its termination date until January 11, 2019, and to allow an option to extend the term of the lease for three additional twelve month terms commencing on January 11, 2019. The lease ended on February 11, 2019. The monthly lease payment was $8,378 through February 11, 2019. The Company believes the terms of the lease were at least as favorable to the Company as could have been obtained from other third parties. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Earnings Per Share | NOTE 19 – LOSS PER SHARE A reconciliation of the numerator and denominator used in the basic and diluted loss per share calculation is presented as follows: Year ended December 31 2018 2017 Basic Loss Per Share Net loss numerator $ (3,169,559 ) $ (8,724,984 ) Weighted average shares outstanding denominator 5,307,121 5,307,133 Per share amount $ (0.60 ) $ (1.64 ) Diluted Loss Per Share Net loss numerator $ (3,169,559 ) $ (8,724,984 ) Weighted average shares outstanding 5,307,121 5,307,133 Effect of diluted securities — — Diluted shares outstanding denominator 5,307,121 5,307,133 Per share amount $ (0.60 ) $ (1.64 ) As of December 31, 2018 and 2017, the Company had 0 common share equivalents that were excluded in the diluted loss per share calculation for years ended December 31, 2018 and 2017. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Selected Quarterly Financial Data (Unaudited) | NOTE 20 – SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Summarized unaudited quarterly financial data for each of the calendar years 2018 and 2017 is as follows: Comparable Period by Quarter Ended March 31 June 30 September 30 December 31 Calendar Year 2018 Total revenues $ 8,806,891 $ 8,643,452 $ 8,161,034 $ 8,001,419 Income (loss) before taxes $ (2,811,931 ) $ 287,032 $ (812,141 ) $ (589,752 ) Net income (loss) $ (2,207,251 ) $ 168,297 $ (661,925 ) $ (468,680 ) Income (loss) per share: Basic $ (0.42 ) $ 0.03 $ (0.12 ) $ (0.09 ) Income (loss) per share: Diluted $ (0.42 ) $ 0.03 $ (0.12 ) $ (0.09 ) Calendar Year 2017 Total revenues $ 8,960,497 $ 9,241,306 $ 9,293,389 $ 9,296,290 Loss before taxes $ (3,267,349 ) $ (1,350,826 ) $ (4,435,225 ) $ (826,821 ) Net loss $ (2,147,252 ) $ (890,735 ) $ (2,927,249 ) $ (2,759,748 ) Loss per share: Basic $ (0.40 ) $ (0.17 ) $ (0.55 ) $ (0.52 ) Loss per share: Diluted $ (0.40 ) $ (0.17 ) $ (0.55 ) $ (0.52 ) |
Supplementary Information on Lo
Supplementary Information on Loss and ALAE Development (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Supplementary Information on Loss and ALAE Development (Unaudited) | NOTE 21 – SUPPLEMENTARY INFORMATION ON LOSS AND ALAE DEVELOPMENT (UNAUDITED) The following table presents cumulative incurred losses and ALAE, net of reinsurance, for years ended December 31: Accident Year 2009 (1) 2010 (1) 2011 (1) 2012 (1) 2013 (1) 2014 (1) 2015 (1) 2016 (1) 2017 2018 2009 21,751,337 21,412,289 21,571,780 21,012,811 20,398,961 19,667,376 19,050,348 18,554,526 17,622,828 17,619,015 2010 21,418,368 20,437,443 19,883,812 19,326,007 18,639,537 18,075,737 17,641,161 16,828,688 16,822,859 2011 18,120,563 17,900,250 17,605,460 17,014,895 17,879,595 18,224,634 19,187,240 19,094,732 2012 18,511,598 19,532,022 18,895,666 18,344,175 18,050,131 17,914,837 18,235,335 2013 19,570,946 20,118,343 20,323,841 21,742,580 22,798,398 22,397,394 2014 16,884,731 15,394,995 14,930,960 17,640,211 18,034,749 2015 20,452,199 20,840,034 22,471,512 21,707,615 2016 21,646,663 22,908,016 24,126,775 2017 21,914,736 23,453,130 2018 19,048,233 (1) The information for the years 2009 through 2016 is presented as unaudited required supplementary information. The following table presents cumulative paid losses and ALAE, net of reinsurance, for years ended December 31: Accident Year 2009 (1) 2010 (1) 2011 (1) 2012 (1) 2013 (1) 2014 (1) 2015 (1) 2016 (1) 2017 2018 2009 4,919,359 9,592,059 13,160,200 16,180,346 17,121,818 17,336,454 17,380,065 17,550,304 17,568,877 17,568,228 2010 7,535,122 10,695,223 12,955,467 14,756,510 15,330,864 16,283,050 16,778,214 16,720,942 16,721,059 2011 4,719,943 8,608,287 11,212,490 14,251,525 16,115,802 17,422,583 19,027,232 19,087,866 2012 6,719,982 11,673,621 13,411,125 15,369,629 16,734,967 17,265,513 17,638,646 2013 7,594,731 10,656,777 14,319,057 19,067,334 21,415,490 21,875,978 2014 3,826,263 6,082,893 9,173,947 14,556,687 16,843,128 2015 6,263,796 11,151,955 14,978,639 17,700,688 2016 7,435,120 12,009,273 15,916,432 2017 6,405,641 11,503,228 2018 4,959,689 (1) The information for the years 2009 through 2016 is presented as unaudited required supplementary information. The following table presents average annual percentage payout of incurred claims by age, net of reinsurance, as of December 31, 2018: Years 1 2 3 4 5 6 7 8 9 10 30.2 % 19.9 % 17.3 % 15.4 % 8.6 % 2.9 % 1.8 % 0.7 % 0.3 % 0.3 % |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Unico American Corporation (the “Company” or “Unico”) is an insurance holding company that underwrites property and casualty insurance through its insurance company subsidiary; provides property, casualty, and health insurance through its agency subsidiaries; and provides insurance premium financing and membership association services through its other subsidiaries. References to Unico or the Company include both the corporation and its subsidiaries, all of which are wholly owned. Unico was incorporated under the laws of Nevada in 1969. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Unico American Corporation and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Basis of Presentation The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). As described in Note 14, the Company's insurance subsidiary also files financial statements with regulatory agencies prepared on a statutory basis of accounting that differs from GAAP. Certain reclassifications have been made to prior period amounts to conform to the current year’s presentation. Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect its reported amounts of assets and liabilities and its disclosure of any contingent assets and liabilities at the date of its financial statements, as well as its reported amounts of revenues and expenses during the reporting period. The most significant assumptions in the preparation of these consolidated financial statements relate to losses and loss adjustment expenses. While every effort is made to ensure the integrity of such estimates, actual results may differ. Investments All of the Company’s fixed maturity investments are classified either as held-to-maturity or available-for-sale. The held-to-maturity investments are recorded at amortized cost, reflecting the ability and intent to hold these investments to maturity. The available-for-sale investments are stated at fair value, with unrealized gains or losses, net of applicable deferred income taxes, excluded from earnings and credited or charged to a separate component of equity. Although part of the Company's investments is classified as available-for-sale and the Company may sell investment securities from time to time in response to economic and market conditions, its investment guidelines place primary emphasis on buying and holding high-quality investments to maturity. Interest income on fixed maturity investments and short-term investments is recognized on an accrual basis at each measurement date and is included in net investment income in the Company’s Consolidated Statements of Operations. The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income security whose carrying value may be other-than-temporarily impaired. For each fixed income security in an unrealized loss position, the Company assesses whether it is more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes, or the credit quality of the underlying security. If a security meets this criteria, the security's decline in fair value is considered other than temporary and is recorded as a net realized investment loss in the Consolidated Statements of Operations and in the Consolidated Statements of Comprehensive Income (Loss) based on the specific identification method. There were no realized investments gains (losses) from other than temporary impairments for any of the periods presented in the accompanying Consolidated Statements of Operations. For each fixed income security that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the impairment, if any, from the amount related to all other factors and reports the credit loss component in net realized investment gains (losses). There was no credit loss component for any of the periods presented in the accompanying Consolidated Statements of Operations. The unrealized gains or losses from fixed maturities are reported as “Accumulated other comprehensive income (loss),” which is a separate component of stockholders’ equity, net of any deferred tax effect. The short-term investments include U.S. treasury bills, certificates of deposit, and commercial paper that are all highly rated and have initial maturity between three and twelve months. Fair Value of Financial Instruments The Company employs a fair value hierarchy that prioritizes the inputs for valuation techniques used to measure fair value. The fair value of a financial instrument is the amount 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 (the exit price). Financial assets and financial liabilities recorded on the Consolidated Balance Sheets at fair value are categorized based on the reliability of inputs to the valuation techniques. (See Note 5.) The Company has used the following methods and assumptions in estimating its fair value disclosures for instruments carried at fair value: Investment securities, excluding long-term certificates of deposit, and short-term investments – Fair values are obtained from widely accepted third party vendors. The Company has used the following methods and assumptions for estimating fair value for other financial instruments not carried at fair value: Cash, cash equivalents, and restricted cash – The carrying amounts reported in the Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments. Long-term certificates of deposit – The carrying amounts reported in the Consolidated Balance Sheets for these instruments are at amortized cost which approximates their fair value Receivables, net – The carrying amounts reported in the Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments. Accrued expenses and other liabilities – The carrying amounts reported in the Consolidated Balance Sheets approximate the fair values given the short-term nature of these instruments. Property and Equipment All property and equipment is stated at cost less accumulated depreciation and amortization on the Consolidated Balance Sheets. Depreciation on a building, is computed using the straight line method over 39 years. Improvements to the building structure are amortized over the useful life of the improvements. Depreciation on computed using the straight line method over 3 to 15 years. Amortization of tenant improvements in the Calabasas building is being computed using the shorter of the useful life of the tenant improvements or the remaining years of the lease. Income Taxes The Company and its subsidiaries file consolidated federal and state income tax returns. Pursuant to the tax allocation agreement, Crusader and American Acceptance Corporation (“AAC”), a subsidiary of Unico, are allocated taxes or tax credits in the case of losses, at current corporate rates based on their own taxable income or loss. The Company files income tax returns under U.S. federal and various state jurisdictions. The Company is subject to examination by U.S. federal income tax authorities for tax returns filed starting at taxable year 2015 and California state income tax authorities for tax returns filed starting at taxable year 2014. There are no ongoing examinations of income tax returns by federal or state tax authorities. As a California insurance company, Crusader is obligated to pay a premium tax on direct written premium in all states that Crusader is admitted. Premium taxes are deferred and amortized as the related premium is earned. The premium tax is in lieu of state franchise taxes and is not included in the provision for state taxes. The provision for federal income taxes is computed on the basis of income as reported for financial reporting purposes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and are measured using the enacted tax rates and laws expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Income tax expense provisions increase or decrease in the same period in which a change in tax rates is enacted. At each balance sheet date, management assesses the need to establish a valuation allowance that reduces deferred tax assets when it is more-likely-than-not that any portion of the deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon generating sufficient taxable income of the appropriate character within the carryback and carryforward periods available under the tax law. Management considers the reversal of deferred tax liabilities, projected future taxable income of an appropriate nature and tax-planning strategies when making this assessment. Although realization is not assured, management believes that it is more likely-than-not that the Company’s deferred tax assets net of the valuation allowance will be realized. Earnings Per Share Basic earnings per share exclude the impact of common share equivalents and are based upon the weighted average common shares outstanding. Diluted earnings per share utilize the average market price per share when applying the treasury stock method in determining common share dilution. When outstanding stock options are dilutive, they are treated as common share equivalents for purposes of computing diluted earnings per share and represent the difference between basic and diluted weighted average shares outstanding. In loss periods, the options are excluded from the calculation of diluted earnings per share, as the inclusion of such options would have an anti-dilutive effect. Revenue Recognition a. General Agency Operations Commissions from sales of health insurance are earned in income based on the satisfaction of a single performance obligation. Marketing, selling, billing, collecting, and administering health insurance policies are a series of distinct services combined as a one performance obligation, which is recognized in income monthly over the policy period. Premiums are collected upon the initial sale of health insurance policies and then monthly upon each subsequent periodic payment. As a result there are limited accounts receivable. Policy fee income is recognized on a pro-rata basis over the terms of the policies. b. Insurance Company Operation Premium is earned on a pro-rata basis over the terms of the policies. Premium applicable to the unexpired terms of policies in force are recorded as unearned premium. c. Insurance Premium Financing Operations Premium finance interest may be charged to policyholders who choose to finance insurance premium. Interest may be charged at rates that vary with the amount of premium financed. Premium finance interest, if any, is recognized using a method that approximates the interest (actuarial) method. Other charges and fees earned include late fees, returned check fees and payment processing fees that are earned when recorded. Losses and Loss Adjustment Expenses The liability for unpaid losses and loss adjustment expenses is based upon the accumulation of individual case estimates for losses reported prior to the close of the accounting period plus estimates based on experience and industry data for development of case estimates and for incurred but unreported losses and loss adjustment expenses. There is a high level of uncertainty inherent in the evaluation of the required loss and loss adjustment expense reserves for Crusader. The long-tailed nature of liability claims and the volatility of jury awards exacerbate that uncertainty. Crusader records The ultimate cost of claims is dependent upon future events, the outcomes of which are affected by many factors. Crusader’s claim reserving procedures and settlement philosophy, current and perceived social and economic inflation, current and future court rulings and jury attitudes, improvements in medical technology, and many other economic, scientific, legal, political, and social factors all can have significant effects on the ultimate costs of claims. Changes in Company operations and management philosophy also may cause actual developments to vary from the past. Since the emergence and disposition of claims are subject to uncertainties, the net amounts that will ultimately be paid to settle claims may vary significantly from the estimated amounts provided for in the accompanying consolidated financial statements. Any adjustments to reserves are reflected in the operating results of the periods in which they are made. Management believes that the Restricted Funds Restricted funds are as follows: Year ended December 31 2018 2017 Premium trust funds (1) $ 1,383,451 $ — Assigned to state agencies (2) 710,000 700,000 Total restricted funds $ 2,093,451 $ 700,000 (1) As required by law, the Company segregates from its operating accounts the premium collected from insureds that are payable to insurance companies into separate trust accounts. These amounts are included in cash and short-term investments. (2) $510,000 and $500,000 included in fixed maturity investments as of December 31, 2018 and 2017, respectively, and $200,000 and $200,000 included in short-term investments as of December 31, 2018 and 2017, respectively, are statutory deposits assigned to and held by the California State Treasurer and the Insurance Commissioner of the State of Nevada. These deposits are required for writing certain lines of business in California and for admission in states other than California. Deferred Policy Acquisition Costs Policy acquisition costs consist of commissions, premium taxes, inspection fees, and certain other underwriting costs, which are related to the successful production of Crusader insurance policies. Policy acquisition costs that are eligible for deferral are deferred and amortized as the related premium is earned and are limited to their estimated realizable value Ceding commission applicable to the unexpired terms Reinsurance Crusader employs reinsurance to provide greater diversification of business allowing management to control exposure to potential losses arising from large risks by reinsuring certain levels of risk in various areas of exposure, to reduce the loss that may arise from catastrophes, and to provide additional capacity for growth. Prepaid reinsurance premium and reinsurance receivables are reported as assets and represent ceded unearned premium and reinsurance recoverable on both paid and unpaid losses and loss adjustment expenses, respectively. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. Crusader evaluates each of its ceded reinsurance contracts at its inception to determine if there is sufficient risk transfer to allow the contract to be accounted for as reinsurance under current accounting literature. As of December 31, 2018, all such ceded contracts are accounted for as risk transfer reinsurance. Crusader evaluates and monitors the financial condition of its reinsurers and factors such as collection periods, disputes, applicable coverage defenses and other factors to assess the need for any allowance against anticipated reinsurance recoveries. No such allowance was considered necessary at December 31, 2018 or 2017. Segment Reporting The Company has identified its insurance company operation as its primary reporting segment. Revenues from this segment comprised 92% of consolidated revenues for the years ended December 31, 2018 and 2017. The Company’s remaining operations constitute a variety of specialty insurance services, each with unique characteristics and individually insignificant to consolidated revenues. The insurance company operation is conducted through Crusader, which as of December 31, 2018, was licensed as an admitted insurance carrier in the states of Arizona, California, Nevada, Oregon, and Washington. Crusader is a multiple line property and casualty insurance company, which began transacting business on January 1, 1985. For the years ended December 31, 2018 and 2017, 98% and 99% of Crusader’s business was commercial multiple peril (“CMP”) insurance policies, respectively. CMP policies provide a combination of property and liability coverage for businesses. Commercial property coverage insures against loss or damage to buildings, inventory and equipment from natural disasters, including hurricanes, windstorms, hail, water, explosions, severe winter weather, and other events such as theft and vandalism, fires and storms and financial loss due to business interruption resulting from covered property damage. However, Crusader does not write earthquake coverage. Commercial liability coverage insures against third party liability from accidents occurring on the insured’s premises or arising out of its operations, such as injuries sustained from products sold or the operation of the insured’s premises. In addition to CMP policies, Crusader also writes separate policies to insure commercial property and commercial liability risks on a mono-line basis which provides either commercial property or commercial liability coverage, but not both. Revenues, loss before income taxes and assets by segment are as follows: Year ended December 31 2018 2017 Revenues Insurance company operation $ 31,028,500 $ 33,972,236 Other insurance operations 11,622,824 13,497,345 Intersegment eliminations (1) (9,038,528 ) (10,678,099 ) Total other insurance operations 2,584,296 2,819,246 Total revenues $ 33,612,796 $ 36,791,482 Loss before income taxes Insurance company operation $ (1,369,358 ) $ (7,419,040 ) Other insurance operations (2,557,434 ) (2,461,181 ) Total loss before income taxes $ (3,926,792 ) $ (9,880,221 ) Assets Insurance company operation $ 115,271,728 $ 117,274,626 Intersegment eliminations (2) (3,141,740 ) (2,486,500 ) Total insurance company operation 112,129,988 114,788,126 Other insurance operations 13,486,978 15,510,632 Total assets $ 125,616,966 $ 130,298,758 (1) Intersegment revenue eliminations reflect rents paid by Unico to Crusader for space leased in the Calabasas building and commissions paid by Crusader to Unifax Insurance Systems, Inc. (“Unifax”), a subsidiary of Unico. (2) Intersegment asset eliminations reflect the elimination of Crusader receivables from Unifax and Unifax payables to Crusader. Concentration of Risks 99.8%, and 99.7% of Crusader’s direct written premium was derived from California during the years ended December 31, 2018 and 2017, respectively. In 2018, approximately 37% and 46% of the $958,495 commission income from the Company’s health insurance program was from Guardian Life Insurance Company of America dental and group life plan programs and the Blue Shield Care Trust health and life insurance programs, respectively. In 2017, approximately 42% and 45% of the $1,047,593 commission income from the Company’s health insurance program was from Guardian Life Insurance Company of America dental and group life plan programs and the Blue Shield Care Trust health and life insurance programs, respectively. Crusader’s reinsurance recoverable on paid and unpaid losses and loss adjustment expenses is as follows: Year ended December 31 Name of Reinsurer A.M. Best Rating (1) 2018 2017 Renaissance Reinsurance U.S. Inc. A+ $ 4,911,922 $ 4,464,980 Hannover Ruck SE A+ 4,142,308 3,384,341 TOA Reinsurance Company of America A 476,101 670,337 Other A (48 ) 574 Total $ 9,530,283 $ 8,520,232 (1) A.M. Best ratings are as of December 31, 2018. Stock-Based Compensation Share-based compensation expense for all share-based payment awards is based on the grant-date fair value estimated in accordance with the provisions of ASC Topic 718, “Compensation - Stock Compensation” using the modified prospective transition method. Recently Issued Accounting Standards Recently adopted standards In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 was issued as a result of the enactment of the Tax Cuts and Jobs Act of 2017 (“TCJA”) on December 22, 2017. Accounting guidance required deferred tax items to be revalued based on the new tax laws (the most significant of which reduced the corporate tax rate to 21% percent from 34% percent) and to include the change in income from continuing operations. ASU 2018-02 is effective for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted. The Company adopted ASU 2018-02 for the year ended December 31, 2017 (see Note 16 for impact of ASU 2018-02 adoption to the Company’s consolidated financial statements). In May 2017, FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718), Scope of Modification Accounting." ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 became effective for the Company beginning January 1, 2018. ASU 2017-09 does not have a material impact on the Company’s consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the transaction price for a contract is allocated among separately identifiable performance obligations and a portion of the transaction price is recognized as revenue when the associated performance obligation has been completed or transferred to the customer. The Company adopted ASU 2014-09 effective January 1, 2018. The adoption of ASU 2014-09 did not have a material impact on the Consolidated Statement of Operations and the Consolidated Balance Sheet mostly because the accounting for insurance contracts, lease contracts, and investments is outside of the scope of Topic 606. The revenue outside of the scope of Topic 606 was represented by net earned premium, insurance company operations net investment income and net realized investment gains, policy fee income, and rental income on the Calabasas building, and the total of all revenues outside the scope of Topic 606 was 96.5% of the total revenues for the year ended December 31, 2018. The impact of Topic 606 to the in-scope revenue was immaterial for the year ended December 31, 2018. Standards not yet adopted In June 2016, the FASB issued ASU 2016-13 “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 replaces the current incurred loss methodology for recognizing credit losses with a current expected credit loss model, which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 also requires enhanced disclosures for better understanding of significant estimates and judgments used in estimating credit losses. The Company is currently evaluating the effect ASU 2016-13 will have on the Company's consolidated financial statements, but expects the primary changes to be (i) the use of the expected credit loss model for its premium receivables and reinsurance recoverables and (ii) the presentation of credit losses within the available-for-sale fixed maturities portfolio through an allowance method rather than as a direct write-down. ASU 2016-13 will become effective for fiscal years beginning after December 31, 2019, but provides for an early adoption for fiscal years beginning after December 31, 2018. The Company has not determined when it will adopt ASU 2016-13. In February 2016, the FASB issued ASU 2016-02 “Leases.” ASU 2016-02 requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by all leases, including those historically accounted for as operating leases. The Company is currently evaluating the effect ASU 2016-02 will have on the Company's consolidated financial statements. The guidance is effective for interim and annual periods beginning after December 31, 2018, and will be applied under a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the consolidated financial statements. |
Nature of Business | Nature of Business Unico American Corporation (the “Company” or “Unico”) is an insurance holding company that underwrites property and casualty insurance through its insurance company subsidiary; provides property, casualty, and health insurance through its agency subsidiaries; and provides insurance premium financing and membership association services through its other subsidiaries. References to Unico or the Company include both the corporation and its subsidiaries, all of which are wholly owned. Unico was incorporated under the laws of Nevada in 1969. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Unico American Corporation and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Basis of Presentation | Basis of Presentation The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). As described in Note 14, the Company's insurance subsidiary also files financial statements with regulatory agencies prepared on a statutory basis of accounting that differs from GAAP. Certain reclassifications have been made to prior period amounts to conform to the current year’s presentation. |
Use of Estimates in the Preparation of the Financial Statements | Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect its reported amounts of assets and liabilities and its disclosure of any contingent assets and liabilities at the date of its financial statements, as well as its reported amounts of revenues and expenses during the reporting period. The most significant assumptions in the preparation of these consolidated financial statements relate to losses and loss adjustment expenses. While every effort is made to ensure the integrity of such estimates, actual results may differ. |
Investments | Investments All of the Company’s fixed maturity investments are classified either as held-to-maturity or available-for-sale. The held-to-maturity investments are recorded at amortized cost, reflecting the ability and intent to hold these investments to maturity. The available-for-sale investments are stated at fair value, with unrealized gains or losses, net of applicable deferred income taxes, excluded from earnings and credited or charged to a separate component of equity. Although part of the Company's investments is classified as available-for-sale and the Company may sell investment securities from time to time in response to economic and market conditions, its investment guidelines place primary emphasis on buying and holding high-quality investments to maturity. Interest income on fixed maturity investments and short-term investments is recognized on an accrual basis at each measurement date and is included in net investment income in the Company’s Consolidated Statements of Operations. The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income security whose carrying value may be other-than-temporarily impaired. For each fixed income security in an unrealized loss position, the Company assesses whether it is more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes, or the credit quality of the underlying security. If a security meets this criteria, the security's decline in fair value is considered other than temporary and is recorded as a net realized investment loss in the Consolidated Statements of Operations and in the Consolidated Statements of Comprehensive Income (Loss) based on the specific identification method. There were no realized investments gains (losses) from other than temporary impairments for any of the periods presented in the accompanying Consolidated Statements of Operations. For each fixed income security that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the impairment, if any, from the amount related to all other factors and reports the credit loss component in net realized investment gains (losses). There was no credit loss component for any of the periods presented in the accompanying Consolidated Statements of Operations. The unrealized gains or losses from fixed maturities are reported as “Accumulated other comprehensive income (loss),” which is a separate component of stockholders’ equity, net of any deferred tax effect. The short-term investments include U.S. treasury bills, certificates of deposit, and commercial paper that are all highly rated and have initial maturity between three and twelve months. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company employs a fair value hierarchy that prioritizes the inputs for valuation techniques used to measure fair value. The fair value of a financial instrument is the amount 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 (the exit price). Financial assets and financial liabilities recorded on the Consolidated Balance Sheets at fair value are categorized based on the reliability of inputs to the valuation techniques. (See Note 5.) The Company has used the following methods and assumptions in estimating its fair value disclosures for instruments carried at fair value: Investment securities, excluding long-term certificates of deposit, and short-term investments – Fair values are obtained from widely accepted third party vendors. The Company has used the following methods and assumptions for estimating fair value for other financial instruments not carried at fair value: Cash, cash equivalents, and restricted cash – The carrying amounts reported in the Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments. Long-term certificates of deposit – The carrying amounts reported in the Consolidated Balance Sheets for these instruments are at amortized cost which approximates their fair value Receivables, net – The carrying amounts reported in the Consolidated Balance Sheets approximate their fair values given the short-term nature of these instruments. Accrued expenses and other liabilities – The carrying amounts reported in the Consolidated Balance Sheets approximate the fair values given the short-term nature of these instruments. |
Property and Equipment | Property and Equipment All property and equipment is stated at cost less accumulated depreciation and amortization on the Consolidated Balance Sheets. Depreciation on a building, is computed using the straight line method over 39 years. Improvements to the building structure are amortized over the useful life of the improvements. Depreciation on computed using the straight line method over 3 to 15 years. Amortization of tenant improvements in the Calabasas building is being computed using the shorter of the useful life of the tenant improvements or the remaining years of the lease. |
Income Taxes | Income Taxes The Company and its subsidiaries file consolidated federal and state income tax returns. Pursuant to the tax allocation agreement, Crusader and American Acceptance Corporation (“AAC”), a subsidiary of Unico, are allocated taxes or tax credits in the case of losses, at current corporate rates based on their own taxable income or loss. The Company files income tax returns under U.S. federal and various state jurisdictions. The Company is subject to examination by U.S. federal income tax authorities for tax returns filed starting at taxable year 2015 and California state income tax authorities for tax returns filed starting at taxable year 2014. There are no ongoing examinations of income tax returns by federal or state tax authorities. As a California insurance company, Crusader is obligated to pay a premium tax on direct written premium in all states that Crusader is admitted. Premium taxes are deferred and amortized as the related premium is earned. The premium tax is in lieu of state franchise taxes and is not included in the provision for state taxes. The provision for federal income taxes is computed on the basis of income as reported for financial reporting purposes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and are measured using the enacted tax rates and laws expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Income tax expense provisions increase or decrease in the same period in which a change in tax rates is enacted. At each balance sheet date, management assesses the need to establish a valuation allowance that reduces deferred tax assets when it is more-likely-than-not that any portion of the deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon generating sufficient taxable income of the appropriate character within the carryback and carryforward periods available under the tax law. Management considers the reversal of deferred tax liabilities, projected future taxable income of an appropriate nature and tax-planning strategies when making this assessment. Although realization is not assured, management believes that it is more likely-than-not that the Company’s deferred tax assets net of the valuation allowance will be realized. |
Earnings Per Share | Earnings Per Share Basic earnings per share exclude the impact of common share equivalents and are based upon the weighted average common shares outstanding. Diluted earnings per share utilize the average market price per share when applying the treasury stock method in determining common share dilution. When outstanding stock options are dilutive, they are treated as common share equivalents for purposes of computing diluted earnings per share and represent the difference between basic and diluted weighted average shares outstanding. In loss periods, the options are excluded from the calculation of diluted earnings per share, as the inclusion of such options would have an anti-dilutive effect. |
Revenue Recognition | Revenue Recognition a. General Agency Operations Commissions from sales of health insurance are earned in income based on the satisfaction of a single performance obligation. Marketing, selling, billing, collecting, and administering health insurance policies are a series of distinct services combined as a one performance obligation, which is recognized in income monthly over the policy period. Premiums are collected upon the initial sale of health insurance policies and then monthly upon each subsequent periodic payment. As a result there are limited accounts receivable. Policy fee income is recognized on a pro-rata basis over the terms of the policies. b. Insurance Company Operation Premium is earned on a pro-rata basis over the terms of the policies. Premium applicable to the unexpired terms of policies in force are recorded as unearned premium. c. Insurance Premium Financing Operations Premium finance interest may be charged to policyholders who choose to finance insurance premium. Interest may be charged at rates that vary with the amount of premium financed. Premium finance interest, if any, is recognized using a method that approximates the interest (actuarial) method. Other charges and fees earned include late fees, returned check fees and payment processing fees that are earned when recorded. |
Loss and Loss Adjustment Expenses | Losses and Loss Adjustment Expenses The liability for unpaid losses and loss adjustment expenses is based upon the accumulation of individual case estimates for losses reported prior to the close of the accounting period plus estimates based on experience and industry data for development of case estimates and for incurred but unreported losses and loss adjustment expenses. There is a high level of uncertainty inherent in the evaluation of the required loss and loss adjustment expense reserves for Crusader. The long-tailed nature of liability claims and the volatility of jury awards exacerbate that uncertainty. Crusader records The ultimate cost of claims is dependent upon future events, the outcomes of which are affected by many factors. Crusader’s claim reserving procedures and settlement philosophy, current and perceived social and economic inflation, current and future court rulings and jury attitudes, improvements in medical technology, and many other economic, scientific, legal, political, and social factors all can have significant effects on the ultimate costs of claims. Changes in Company operations and management philosophy also may cause actual developments to vary from the past. Since the emergence and disposition of claims are subject to uncertainties, the net amounts that will ultimately be paid to settle claims may vary significantly from the estimated amounts provided for in the accompanying consolidated financial statements. Any adjustments to reserves are reflected in the operating results of the periods in which they are made. Management believes that the |
Restricted Funds | Restricted Funds Restricted funds are as follows: Year ended December 31 2018 2017 Premium trust funds (1) $ 1,383,451 $ — Assigned to state agencies (2) 710,000 700,000 Total restricted funds $ 2,093,451 $ 700,000 (1) As required by law, the Company segregates from its operating accounts the premium collected from insureds that are payable to insurance companies into separate trust accounts. These amounts are included in cash and short-term investments. (2) $510,000 and $500,000 included in fixed maturity investments as of December 31, 2018 and 2017, respectively, and $200,000 and $200,000 included in short-term investments as of December 31, 2018 and 2017, respectively, are statutory deposits assigned to and held by the California State Treasurer and the Insurance Commissioner of the State of Nevada. These deposits are required for writing certain lines of business in California and for admission in states other than California. |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs Policy acquisition costs consist of commissions, premium taxes, inspection fees, and certain other underwriting costs, which are related to the successful production of Crusader insurance policies. Policy acquisition costs that are eligible for deferral are deferred and amortized as the related premium is earned and are limited to their estimated realizable value Ceding commission applicable to the unexpired terms |
Reinsurance | Reinsurance Crusader employs reinsurance to provide greater diversification of business allowing management to control exposure to potential losses arising from large risks by reinsuring certain levels of risk in various areas of exposure, to reduce the loss that may arise from catastrophes, and to provide additional capacity for growth. Prepaid reinsurance premium and reinsurance receivables are reported as assets and represent ceded unearned premium and reinsurance recoverable on both paid and unpaid losses and loss adjustment expenses, respectively. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. Crusader evaluates each of its ceded reinsurance contracts at its inception to determine if there is sufficient risk transfer to allow the contract to be accounted for as reinsurance under current accounting literature. As of December 31, 2018, all such ceded contracts are accounted for as risk transfer reinsurance. Crusader evaluates and monitors the financial condition of its reinsurers and factors such as collection periods, disputes, applicable coverage defenses and other factors to assess the need for any allowance against anticipated reinsurance recoveries. No such allowance was considered necessary at December 31, 2018 or 2017. |
Segment Reporting | Segment Reporting The Company has identified its insurance company operation as its primary reporting segment. Revenues from this segment comprised 92% of consolidated revenues for the years ended December 31, 2018 and 2017. The Company’s remaining operations constitute a variety of specialty insurance services, each with unique characteristics and individually insignificant to consolidated revenues. The insurance company operation is conducted through Crusader, which as of December 31, 2018, was licensed as an admitted insurance carrier in the states of Arizona, California, Nevada, Oregon, and Washington. Crusader is a multiple line property and casualty insurance company, which began transacting business on January 1, 1985. For the years ended December 31, 2018 and 2017, 98% and 99% of Crusader’s business was commercial multiple peril (“CMP”) insurance policies, respectively. CMP policies provide a combination of property and liability coverage for businesses. Commercial property coverage insures against loss or damage to buildings, inventory and equipment from natural disasters, including hurricanes, windstorms, hail, water, explosions, severe winter weather, and other events such as theft and vandalism, fires and storms and financial loss due to business interruption resulting from covered property damage. However, Crusader does not write earthquake coverage. Commercial liability coverage insures against third party liability from accidents occurring on the insured’s premises or arising out of its operations, such as injuries sustained from products sold or the operation of the insured’s premises. In addition to CMP policies, Crusader also writes separate policies to insure commercial property and commercial liability risks on a mono-line basis which provides either commercial property or commercial liability coverage, but not both. Revenues, loss before income taxes and assets by segment are as follows: Year ended December 31 2018 2017 Revenues Insurance company operation $ 31,028,500 $ 33,972,236 Other insurance operations 11,622,824 13,497,345 Intersegment eliminations (1) (9,038,528 ) (10,678,099 ) Total other insurance operations 2,584,296 2,819,246 Total revenues $ 33,612,796 $ 36,791,482 Loss before income taxes Insurance company operation $ (1,369,358 ) $ (7,419,040 ) Other insurance operations (2,557,434 ) (2,461,181 ) Total loss before income taxes $ (3,926,792 ) $ (9,880,221 ) Assets Insurance company operation $ 115,271,728 $ 117,274,626 Intersegment eliminations (2) (3,141,740 ) (2,486,500 ) Total insurance company operation 112,129,988 114,788,126 Other insurance operations 13,486,978 15,510,632 Total assets $ 125,616,966 $ 130,298,758 (1) Intersegment revenue eliminations reflect rents paid by Unico to Crusader for space leased in the Calabasas building and commissions paid by Crusader to Unifax Insurance Systems, Inc. (“Unifax”), a subsidiary of Unico. (2) Intersegment asset eliminations reflect the elimination of Crusader receivables from Unifax and Unifax payables to Crusader. |
Concentration of Risk | Concentration of Risks 99.8%, and 99.7% of Crusader’s direct written premium was derived from California during the years ended December 31, 2018 and 2017, respectively. In 2018, approximately 37% and 46% of the $958,495 commission income from the Company’s health insurance program was from Guardian Life Insurance Company of America dental and group life plan programs and the Blue Shield Care Trust health and life insurance programs, respectively. In 2017, approximately 42% and 45% of the $1,047,593 commission income from the Company’s health insurance program was from Guardian Life Insurance Company of America dental and group life plan programs and the Blue Shield Care Trust health and life insurance programs, respectively. Crusader’s reinsurance recoverable on paid and unpaid losses and loss adjustment expenses is as follows: Year ended December 31 Name of Reinsurer A.M. Best Rating (1) 2018 2017 Renaissance Reinsurance U.S. Inc. A+ $ 4,911,922 $ 4,464,980 Hannover Ruck SE A+ 4,142,308 3,384,341 TOA Reinsurance Company of America A 476,101 670,337 Other A (48 ) 574 Total $ 9,530,283 $ 8,520,232 (1) A.M. Best ratings are as of December 31, 2018. |
Stock Based Compensation | Stock-Based Compensation Share-based compensation expense for all share-based payment awards is based on the grant-date fair value estimated in accordance with the provisions of ASC Topic 718, “Compensation - Stock Compensation” using the modified prospective transition method. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Recently adopted standards In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 was issued as a result of the enactment of the Tax Cuts and Jobs Act of 2017 (“TCJA”) on December 22, 2017. Accounting guidance required deferred tax items to be revalued based on the new tax laws (the most significant of which reduced the corporate tax rate to 21% percent from 34% percent) and to include the change in income from continuing operations. ASU 2018-02 is effective for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted. The Company adopted ASU 2018-02 for the year ended December 31, 2017 (see Note 16 for impact of ASU 2018-02 adoption to the Company’s consolidated financial statements). In May 2017, FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718), Scope of Modification Accounting." ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 became effective for the Company beginning January 1, 2018. ASU 2017-09 does not have a material impact on the Company’s consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the transaction price for a contract is allocated among separately identifiable performance obligations and a portion of the transaction price is recognized as revenue when the associated performance obligation has been completed or transferred to the customer. The Company adopted ASU 2014-09 effective January 1, 2018. The adoption of ASU 2014-09 did not have a material impact on the Consolidated Statement of Operations and the Consolidated Balance Sheet mostly because the accounting for insurance contracts, lease contracts, and investments is outside of the scope of Topic 606. The revenue outside of the scope of Topic 606 was represented by net earned premium, insurance company operations net investment income and net realized investment gains, policy fee income, and rental income on the Calabasas building, and the total of all revenues outside the scope of Topic 606 was 96.5% of the total revenues for the year ended December 31, 2018. The impact of Topic 606 to the in-scope revenue was immaterial for the year ended December 31, 2018. Standards not yet adopted In June 2016, the FASB issued ASU 2016-13 “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 replaces the current incurred loss methodology for recognizing credit losses with a current expected credit loss model, which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 also requires enhanced disclosures for better understanding of significant estimates and judgments used in estimating credit losses. The Company is currently evaluating the effect ASU 2016-13 will have on the Company's consolidated financial statements, but expects the primary changes to be (i) the use of the expected credit loss model for its premium receivables and reinsurance recoverables and (ii) the presentation of credit losses within the available-for-sale fixed maturities portfolio through an allowance method rather than as a direct write-down. ASU 2016-13 will become effective for fiscal years beginning after December 31, 2019, but provides for an early adoption for fiscal years beginning after December 31, 2018. The Company has not determined when it will adopt ASU 2016-13. In February 2016, the FASB issued ASU 2016-02 “Leases.” ASU 2016-02 requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by all leases, including those historically accounted for as operating leases. The Company is currently evaluating the effect ASU 2016-02 will have on the Company's consolidated financial statements. The guidance is effective for interim and annual periods beginning after December 31, 2018, and will be applied under a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the consolidated financial statements. |
Resticted Funds (Tables)
Resticted Funds (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Resticted Funds | |
Schedule of Restricted Funds | Restricted funds are as follows: Year ended December 31 2018 2017 Premium trust funds (1) $ 1,383,451 $ — Assigned to state agencies (2) 710,000 700,000 Total restricted funds $ 2,093,451 $ 700,000 (1) As required by law, the Company segregates from its operating accounts the premium collected from insureds that are payable to insurance companies into separate trust accounts. These amounts are included in cash and short-term investments. (2) $510,000 and $500,000 included in fixed maturity investments as of December 31, 2018 and 2017, respectively, and $200,000 and $200,000 included in short-term investments as of December 31, 2018 and 2017, respectively, are statutory deposits assigned to and held by the California State Treasurer and the Insurance Commissioner of the State of Nevada. These deposits are required for writing certain lines of business in California and for admission in states other than California. |
Segment Data (Tables)
Segment Data (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Data | |
Revenues, income before income taxes and assets by segment | Revenues, loss before income taxes and assets by segment are as follows: Year ended December 31 2018 2017 Revenues Insurance company operation $ 31,028,500 $ 33,972,236 Other insurance operations 11,622,824 13,497,345 Intersegment eliminations (1) (9,038,528 ) (10,678,099 ) Total other insurance operations 2,584,296 2,819,246 Total revenues $ 33,612,796 $ 36,791,482 Loss before income taxes Insurance company operation $ (1,369,358 ) $ (7,419,040 ) Other insurance operations (2,557,434 ) (2,461,181 ) Total loss before income taxes $ (3,926,792 ) $ (9,880,221 ) Assets Insurance company operation $ 115,271,728 $ 117,274,626 Intersegment eliminations (2) (3,141,740 ) (2,486,500 ) Total insurance company operation 112,129,988 114,788,126 Other insurance operations 13,486,978 15,510,632 Total assets $ 125,616,966 $ 130,298,758 (1) Intersegment revenue eliminations reflect rents paid by Unico to Crusader for space leased in the Calabasas building and commissions paid by Crusader to Unifax Insurance Systems, Inc. (“Unifax”), a subsidiary of Unico. (2) Intersegment asset eliminations reflect the elimination of Crusader receivables from Unifax and Unifax payables to Crusader. |
Concentration Of Risk - Reinsur
Concentration Of Risk - Reinsurance Recoverable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Concentration Of Risk - Reinsurance Recoverable | |
Reinsurance recoverable | Crusader’s reinsurance recoverable on paid and unpaid losses and loss adjustment expenses is as follows: Year ended December 31 Name of Reinsurer A.M. Best Rating (1) 2018 2017 Renaissance Reinsurance U.S. Inc. A+ $ 4,911,922 $ 4,464,980 Hannover Ruck SE A+ 4,142,308 3,384,341 TOA Reinsurance Company of America A 476,101 670,337 Other A (48 ) 574 Total $ 9,530,283 $ 8,520,232 (1) A.M. Best ratings are as of December 31, 2018. |
Cash and Restricted Cash (Table
Cash and Restricted Cash (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Cash and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows: Year ended December 31 2018 2017 Cash $ 2,082,131 $ 774,226 Cash equivalents 2,835,631 8,592,718 Restricted cash — — Cash and restricted cash $ 4,917,762 $ 9,366,944 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investments Tables Abstract | |
Summary of investment income and net realized gains | A summary of total investment income, net of investment expenses, and net realized gains is as follows: Year ended December 31 2018 2017 Fixed maturities (1) $ 1,956,963 $ 1,281,984 Short-term investments and cash equivalents 65,042 55,907 Gross investment income 2,022,005 1,337,891 Less investment expenses (114,232 ) (47,824 ) Net investment income 1,907,773 1,290,067 Net realized gains 148 528 Net investment income and realized gains $ 1,907,921 $ 1,290,595 (1) Investment income from fixed maturities included $0 and $133,160 of interest on the restricted cash for the years ended December 31, 2018 and 2017, respectively. |
Investments by contractual maturity | The amortized cost and estimated fair value of fixed maturity investments at December 31, 2018, by contractual maturity are as follows: Amortized Cost Estimated Fair Value Due in one year or less $ 9,326,886 $ 9,311,678 Due after one year through five years 43,821,970 43,211,883 Due after five years through ten years 15,876,016 15,497,513 Due after ten years and beyond 16,403,716 16,015,063 Total fixed maturities $ 85,428,588 $ 84,036,137 |
Investments by amortized cost and estimated fair value | The amortized cost and estimated fair values of investments in fixed maturities by category are as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value December 31, 2018 Available-for-sale fixed maturities: U.S. treasury securities $ 16,746,832 $ 16,069 $ (143,282 ) $ 16,619,619 Corporate securities 40,804,425 50,422 (851,124 ) 40,003,723 Agency mortgage-backed securities 20,751,331 7,757 (472,293 ) 20,286,795 Held-to-maturity fixed maturities: Certificates of deposit 7,126,000 — — 7,126,000 Total fixed maturities $ 85,428,588 $ 74,248 $ (1,466,699 ) $ 84,036,137 December 31, 2017 Available-for-sale fixed maturities: U.S. treasury securities $ 7,517,901 $ 21 $ (63,697 ) $ 7,454,225 Corporate securities 28,745,223 43,204 (130,787 ) 28,657,640 Agency mortgage-backed securities 21,889,996 — (152,407 ) 21,737,589 Held-to-maturity fixed maturities: Certificates of deposit 28,098,000 — — 28,098,000 Total fixed maturities $ 86,251,120 $ 43,225 $ (346,891 ) $ 85,947,454 |
Summary of unrealized appreciation (depreciation) on investments | A summary of the unrealized gains (losses) on investments carried at fair value and the applicable deferred federal income taxes is as follows: Year ended December 31 2018 2017 Gross unrealized gains of fixed maturities $ 74,248 $ 43,225 Gross unrealized losses of fixed maturities (1,466,699 ) (346,891 ) Net unrealized losses on investments (1,392,451 ) (303,666 ) Deferred federal tax benefit 292,415 63,770 Net unrealized losses, net of deferred income taxes $ (1,100,036 ) $ (239,896 ) |
Components of investments in unrealized loss position for continuous period of time | A summary of estimated fair value and gross unrealized losses in a gross unrealized loss position by the length of time in which the securities have continually been in that position is shown below: Less than 12 Months 12 Months or Longer Estimated Fair Value Gross Unrealized Losses Number of Securities Estimated Fair Value Gross Unrealized Losses Number of Securities December 31, 2018 U.S. treasury securities $ 1,760,491 $ (20,181 ) 2 $ 8,496,069 $ (123,101 ) 6 Corporate securities 10,878,381 (272,515 ) 17 21,189,487 (578,609 ) 27 Agency mortgage-backed securities — — — 17,034,086 (472,293 ) 15 Total $ 12,638,872 $ (292,696 ) 19 $ 46,719,642 $ (1,174,003 ) 48 Less than 12 Months 12 Months or Longer Estimated Fair Value Gross Unrealized Losses Number of Securities Estimated Fair Value Gross Unrealized Losses Number of Securities December 31, 2017 U.S. treasury securities $ 7,454,204 $ (63,697 ) 6 $ — $ — — Corporate securities 20,335,512 (130,787 ) 26 — — — Agency mortgage-backed securities 21,737,589 (152,407 ) 17 — — — Total $ 49,527,305 $ (346,891 ) 49 $ — $ — — |
Summary of state held deposits | The following securities from four different banks represent statutory deposits that are assigned to and held by the California State Treasurer and the Insurance Commissioner of the State of Nevada. These deposits are required for writing certain lines of business in California and for admission in the state of Nevada. Year ended December 31 2018 2017 Certificates of deposit $ 200,000 $ 400,000 Short-term investments 200,000 200,000 Total state held deposits $ 400,000 $ 600,000 |
Summary of short term investments | Short-term investments have an initial maturity of one year or less and consist of the following: Year ended December 31 2018 2017 U.S. treasury bills $ 4,490,954 $ 1,148,395 Certificates of deposit 200,000 200,000 Commercial paper — 499,383 Total short-term investments $ 4,690,954 $ 1,847,778 |
Fair Value Of Financial Instr_2
Fair Value Of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Of Financial Instruments | |
Fair value of financial instruments | The following table presents information about the Company’s financial instruments and their estimated fair values, which are measured on a recurring basis, allocated among the three levels within the fair value hierarchy as of December 31, 2018 and 2017: Level 1 Level 2 Level 3 Total December 31, 2018 Financial instruments: Available-for-sale fixed maturities: U.S. treasury securities $ 16,619,619 $ — $ — $ 16,619,619 Corporate securities — 40,003,723 — 40,003,723 Agency mortgage-backed securities — 20,286,795 — 20,286,795 Short-term investments 4,690,954 — — 4,690,954 Total financial instruments at fair value $ 21,310,573 $ 60,290,518 $ — $ 81,601,091 December 31, 2017 Financial instruments: Available-for-sale fixed maturities: U.S. treasury securities $ 7,454,225 $ — $ — $ 7,454,225 Corporate securities — 28,657,640 — 28,657,640 Agency mortgage-backed securities — 21,737,589 — 21,737,589 Short-term investments 1,847,778 — — 1,847,778 Total financial instruments at fair value $ 9,302,003 $ 50,395,229 $ — $ 59,697,232 |
Property And Equipment Summary
Property And Equipment Summary (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property And Equipment Summary | |
Property and equipment summary | Property and equipment consist of the following: Year ended December 31 2018 2017 Building and tenant improvements, located in Calabasas, California $ 8,398,275 $ 8,352,181 Furniture, fixtures, equipment 2,063,549 2,724,775 Computer software 363,016 355,234 Accumulated depreciation and amortization (3,051,505 ) (3,204,806 ) Land located in Calabasas, California 1,787,485 1,787,485 Property and equipment, net $ 9,560,820 $ 10,014,869 |
Summary of Receivables (Tables)
Summary of Receivables (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary Of Receivables | |
Summary of Receivables | Receivables, net, include premium, commissions and notes receivable and are as follows: Year ended December 31 2018 2017 Premium and commission receivable $ 2,001,732 $ 2,234,166 Premium finance notes receivable 3,148,792 4,967,671 Total premium and notes receivable 5,150,524 7,201,837 Allowance for doubtful accounts (1,217,456 ) (1,196,073 ) Receivables, net $ 3,933,068 $ 6,005,764 |
Unpaid Losses and Loss Adjust_2
Unpaid Losses and Loss Adjustment Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Unpaid Losses And Loss Adjustment Expenses | |
Unpaid losses and loss adjustment expenses | Crusader’s loss and loss adjustment expense case and incurred but not reported (“IBNR”) reserves are as follows: Year ended December 31 2018 2017 Direct reserves: Case reserves $ 23,648,183 $ 18,948,233 IBNR reserves 28,008,972 30,128,758 Total direct reserves $ 51,657,155 $ 49,076,991 Reserves net of reinsurance: Case reserves $ 19,855,301 $ 14,985,639 IBNR reserves 22,270,252 25,697,802 Total net reserves $ 42,125,553 $ 40,683,441 |
Reserves for loss and loss adjustment expenses by line of business | Reserves for losses and loss adjustment expenses before reinsurance for each of Crusader’s lines of business are as follows: Year ended December 31 Line of Business 2018 2017 CMP $ 50,459,206 97.7 % $ 48,003,282 97.8 % Other liability 1,172,331 2.3 % 1,060,328 2.2 % Other 25,618 0.0 % 13,381 0.0 % Total $ 51,657,155 100.0 % $ 49,076,991 100.0 % |
Rollforward of loss and loss adjustment expense reserves | The following table provides an analysis of the roll forward of Crusader’s loss and loss adjustment expense reserves, including a reconciliation of the ending balance sheet liability for the periods indicated: Year ended December 31 2018 2017 Reserve for unpaid losses and loss adjustment expenses at beginning of year – net of reinsurance $ 40,683,441 $ 37,534,817 Incurred losses and loss adjustment expenses: Provision for insured events of current year 20,635,786 23,377,228 Provision for incurred events of prior years 2,921,957 7,113,279 Total incurred losses and loss adjustment expenses 23,557,743 30,490,507 Payments: Losses and loss adjustment expenses attributable to insured events of the current year 6,582,377 7,925,460 Losses and loss adjustment expenses attributable to insured events of prior years 15,533,254 19,416,423 Total payments 22,115,631 27,341,883 Reserve for unpaid losses and loss adjustment expenses at end of year – net of reinsurance 42,125,553 40,683,441 Reinsurance recoverable on unpaid losses and loss adjustment expenses at end of year 9,531,602 8,393,550 Reserve for unpaid losses and loss adjustment expenses at end of year per balance sheet, gross of reinsurance $ 51,657,155 $ 49,076,991 |
Incurred and paid claim development | The following table presents loss development information by accident year, including cumulative incurred and paid losses and allocated loss adjustment expenses (“ALAE”), net of reinsurance, as well as cumulative claim frequency and the total of incurred but not reported liabilities plus expected development on reported claims as of December 31, 2018: Accident Year Cumulative Incurred Cumulative Paid Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims 2009 $ 17,619,015 $ 17,568,228 $ — 1,013 2010 16,822,859 16,721,059 — 974 2011 19,094,732 19,087,866 — 1,020 2012 18,235,335 17,638,646 153,904 967 2013 22,397,394 21,875,978 171,857 849 2014 18,034,749 16,843,128 594,893 757 2015 21,707,615 17,700,688 1,846,071 725 2016 24,126,775 15,916,432 3,180,439 787 2017 23,453,130 11,503,228 6,990,158 782 2018 19,048,233 4,959,689 9,332,930 528 Total $ 200,539,837 $ 159,814,942 $ 22,270,252 |
Reconciliation of cumulative incurred and paid claims to unpaid losses and loss adjustment expenses | The following table reconciles the above cumulative incurred and paid data to Crusader’s loss and loss adjustment expense reserves: Year ended December 31 2018 2017 Cumulative incurred losses and ALAE $ 200,539,837 $ 196,783,974 Less cumulative paid losses and ALAE (159,814,942 ) (157,445,399 ) Reserve for unpaid losses and ALAE (latest 10 accident years) 40,724,895 39,338,575 Reserves for unpaid losses and ALAE (beyond latest 10 accident years) 67,227 237,800 Reserves for unpaid unallocated loss adjustment expenses 1,333,431 1,107,066 Reserve for unpaid losses and loss adjustment expenses, net of reinsurance 42,125,553 40,683,441 Reinsurance recoverable on unpaid losses and loss adjustment expenses 9,531,602 8,393,550 Reserve for unpaid losses and loss adjustment expenses, gross of reinsurance $ 51,657,155 $ 49,076,991 |
Deferred Policy Acquisition C_2
Deferred Policy Acquisition Costs Roll Forward (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Deferred Policy Acquisition Costs Roll Forward | |
Deferred policy acquisition costs rollforward | The following table provides an analysis of the roll forward of the Company’s deferred policy acquisition costs: Year ended December 31 2018 2017 Deferred policy acquisition costs at beginning of year $ 4,162,771 $ 4,432,299 Policy acquisition costs deferred during year 5,235,788 6,194,153 Policy acquisition costs amortized during year (5,908,831 ) (6,463,681 ) Deferred policy acquisition costs at end of year $ 3,489,728 $ 4,162,771 |
Summary of Accrued Expenses and
Summary of Accrued Expenses and Other Liablilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary Of Accrued Expenses And Other Liablilities | |
Summary of accrued expenses and other liabilities | Accrued expenses and other liabilities consist of the following: Year ended December 31 2018 2017 Premium payable $ 314,173 $ 438,571 Unearned policy fee income 595,223 759,082 Retirement plans 112,827 156,600 Accrued salaries and employee benefits 415,396 381,577 Commission payable 81,414 81,395 Other 326,325 483,133 Total accrued expenses and other liabilities $ 1,845,358 $ 2,300,358 |
Reinsurance Agreements (Tables)
Reinsurance Agreements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Reinsurance Agreements | |
Primary reinsurance agreements | Crusader’s primary excess of loss reinsurance agreements during the years ended December 31, 2018 and 2017 are as follows: Loss Year Reinsurers A.M. Best Rating Retention 2018 Renaissance Reinsurance U.S. Inc. A+ $ 500,000 2017 Renaissance Reinsurance U.S. Inc. A $ 500,000 |
Effect of reinsurance on premiums written, premiums earned, and incurred losses | The effect of reinsurance on written premium, earned premium, and incurred losses and loss adjustment expenses is as follows: Year ended December 31 2018 2017 Written premium: Direct business $ 32,429,735 $ 38,393,351 Reinsurance ceded (6,555,715 ) (6,765,240 ) Net written premium $ 25,874,020 $ 31,628,111 Earned premium: Direct business $ 35,233,410 $ 38,999,827 Reinsurance ceded (6,478,500 ) (6,656,508 ) Net earned premium $ 28,754,910 $ 32,343,319 Incurred losses and loss adjustment expenses: Direct $ 30,169,562 $ 43,672,969 Ceded (6,611,819 ) (13,182,462 ) Net incurred losses and loss adjustment expenses $ 23,557,743 $ 30,490,507 |
Profit Sharing Plan Expenses (T
Profit Sharing Plan Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Profit Sharing Plan Expenses | |
Profit sharing plan expenses | Contributions to the Plan are as follows: Year ended December 31, 2018 $ 132,927 Year ended December 31, 2017 $ 178,155 |
Statutory Net Income And Statut
Statutory Net Income And Statutory Capital And Surplus (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Statutory Net Income And Statutory Capital And Surplus | |
Statutory Capital and Surplus | Crusader’s statutory capital and surplus are as follows: As of December 31, 2018 $ 50,148,258 As of December 31, 2017 $ 50,446,888 |
Statutory Net Loss | Crusader’s statutory net loss is as follows: Year ended December 31, 2018 $ (453,966 ) Year ended December 31, 2017 $ (6,207,351 ) |
Stock Plan (Tables)
Stock Plan (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Stock Plan | |
Average assumptions used to value stock options | The average assumptions used to value each option award granted during the years ended December 31, 2012 and 2011 are as follows: Years ended December 31 2012 2011 Weighted-average grant date fair value $ 3.21 $ 2.53 Expected dividend yield 1.91 % 3.12 % Expected volatility 28.01 % 28.74 % Risk-free interest rate 1.94 % 2.02 % Expected term (years) 10.00 10.00 Expected forfeiture 0.00 % 0.00 % |
Taxes On Income (Tables)
Taxes On Income (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Taxes On Income | |
Provision for taxes | The provision for taxes on income consists of the following: Year ended December 31 2018 2017 Federal benefit: Current $ — $ — Deferred (727,333 ) (1,327,602 ) Total tax benefit $ (727,333 ) $ (1,327,602 ) State expense (benefit): Current $ 8,800 $ 8,800 Deferred (38,700 ) 163,565 Total tax expense (benefit) $ (29,900 ) $ 172,365 Total expense (benefit): Current $ 8,800 $ 8,800 Deferred (766,033 ) (1,164,037 ) Total tax benefit $ (757,233 ) $ (1,155,237 ) |
Reconcilation of income tax provision and expected income tax | The income tax provision reflected in the Consolidated Statements of Operations is different than the expected federal income tax rate of 21% and 34% on income for 2018 and 2017, respectively, as shown in the following table: Year ended December 31 2018 2017 Computed income tax benefit at 21% and 34% for 2018 and 2017, respectively $ (824,626 ) $ (3,359,275 ) Tax effect of: Impact of change in tax law — 2,137,385 State tax expense (benefit), net of federal tax benefit (615,802 ) 1,061 Change in valuation allowance – state net operating losses 592,181 (4,679 ) Expired state net operating losses — 117,379 Deferred tax true up 63,481 — Other, including nondeductible expenses 27,533 (47,108 ) Income tax benefit $ (757,233 ) $ (1,155,237 ) |
Components of net deferred tax assets | Significant components of the Company’s net deferred tax assets and liabilities are as follows: Year ended December 31 2018 2017 Deferred tax assets: Discount on loss reserves $ 324,346 $ 264,510 Unearned premium 671,792 794,461 Unearned commission income 388,099 360,443 Unearned policy fee income 166,565 212,419 Net operating loss carryforwards 3,515,221 2,746,927 State net operating loss carryforwards 1,850,934 1,258,753 Unrealized losses on investments 292,415 63,770 Bad debt reserve 340,688 334,705 Other 195,048 255,414 Total gross deferred tax assets 7,745,108 6,291,402 Less valuation allowance 1,850,934 1,258,753 Total deferred tax assets $ 5,894,174 $ 5,032,649 Deferred tax liabilities: Policy acquisition costs $ 867,652 $ 1,036,477 State tax on undistributed insurance company earnings 392,802 372,146 Federal tax liability on state deferred tax assets 81,723 96,368 Depreciation and amortization 176,513 146,852 Total deferred tax liabilities $ 1,518,690 $ 1,651,843 Net deferred tax assets $ 4,375,484 $ 3,380,806 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share Tables Abstract | |
Basic and diluted earnings per share calculation data | A reconciliation of the numerator and denominator used in the basic and diluted loss per share calculation is presented as follows: Year ended December 31 2018 2017 Basic Loss Per Share Net loss numerator $ (3,169,559 ) $ (8,724,984 ) Weighted average shares outstanding denominator 5,307,121 5,307,133 Per share amount $ (0.60 ) $ (1.64 ) Diluted Loss Per Share Net loss numerator $ (3,169,559 ) $ (8,724,984 ) Weighted average shares outstanding 5,307,121 5,307,133 Effect of diluted securities — — Diluted shares outstanding denominator 5,307,121 5,307,133 Per share amount $ (0.60 ) $ (1.64 ) |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Financial Data | |
Selected quarterly unaudited financial data | Summarized unaudited quarterly financial data for each of the calendar years 2018 and 2017 is as follows: Comparable Period by Quarter Ended March 31 June 30 September 30 December 31 Calendar Year 2018 Total revenues $ 8,806,891 $ 8,643,452 $ 8,161,034 $ 8,001,419 Income (loss) before taxes $ (2,811,931 ) $ 287,032 $ (812,141 ) $ (589,752 ) Net income (loss) $ (2,207,251 ) $ 168,297 $ (661,925 ) $ (468,680 ) Income (loss) per share: Basic $ (0.42 ) $ 0.03 $ (0.12 ) $ (0.09 ) Income (loss) per share: Diluted $ (0.42 ) $ 0.03 $ (0.12 ) $ (0.09 ) Calendar Year 2017 Total revenues $ 8,960,497 $ 9,241,306 $ 9,293,389 $ 9,296,290 Loss before taxes $ (3,267,349 ) $ (1,350,826 ) $ (4,435,225 ) $ (826,821 ) Net loss $ (2,147,252 ) $ (890,735 ) $ (2,927,249 ) $ (2,759,748 ) Loss per share: Basic $ (0.40 ) $ (0.17 ) $ (0.55 ) $ (0.52 ) Loss per share: Diluted $ (0.40 ) $ (0.17 ) $ (0.55 ) $ (0.52 ) |
Supplementary Information on _2
Supplementary Information on Loss and ALAE Development (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Cumulative Incurred Loss and ALAE Development (Tables) | The following table presents cumulative incurred losses and ALAE, net of reinsurance, for years ended December 31: Accident Year 2009 (1) 2010 (1) 2011 (1) 2012 (1) 2013 (1) 2014 (1) 2015 (1) 2016 (1) 2017 2018 2009 21,751,337 21,412,289 21,571,780 21,012,811 20,398,961 19,667,376 19,050,348 18,554,526 17,622,828 17,619,015 2010 21,418,368 20,437,443 19,883,812 19,326,007 18,639,537 18,075,737 17,641,161 16,828,688 16,822,859 2011 18,120,563 17,900,250 17,605,460 17,014,895 17,879,595 18,224,634 19,187,240 19,094,732 2012 18,511,598 19,532,022 18,895,666 18,344,175 18,050,131 17,914,837 18,235,335 2013 19,570,946 20,118,343 20,323,841 21,742,580 22,798,398 22,397,394 2014 16,884,731 15,394,995 14,930,960 17,640,211 18,034,749 2015 20,452,199 20,840,034 22,471,512 21,707,615 2016 21,646,663 22,908,016 24,126,775 2017 21,914,736 23,453,130 2018 19,048,233 (1) The information for the years 2009 through 2016 is presented as unaudited required supplementary information. |
Cumulative Paid Loss and ALAE Development (Tables) | The following table presents cumulative paid losses and ALAE, net of reinsurance, for years ended December 31: Accident Year 2009 (1) 2010 (1) 2011 (1) 2012 (1) 2013 (1) 2014 (1) 2015 (1) 2016 (1) 2017 2018 2009 4,919,359 9,592,059 13,160,200 16,180,346 17,121,818 17,336,454 17,380,065 17,550,304 17,568,877 17,568,228 2010 7,535,122 10,695,223 12,955,467 14,756,510 15,330,864 16,283,050 16,778,214 16,720,942 16,721,059 2011 4,719,943 8,608,287 11,212,490 14,251,525 16,115,802 17,422,583 19,027,232 19,087,866 2012 6,719,982 11,673,621 13,411,125 15,369,629 16,734,967 17,265,513 17,638,646 2013 7,594,731 10,656,777 14,319,057 19,067,334 21,415,490 21,875,978 2014 3,826,263 6,082,893 9,173,947 14,556,687 16,843,128 2015 6,263,796 11,151,955 14,978,639 17,700,688 2016 7,435,120 12,009,273 15,916,432 2017 6,405,641 11,503,228 2018 4,959,689 (1) The information for the years 2009 through 2016 is presented as unaudited required supplementary information. |
Average Annual Percentage Payout of Incurred Cliams (Tables) | The following table presents average annual percentage payout of incurred claims by age, net of reinsurance, as of December 31, 2018: Years 1 2 3 4 5 6 7 8 9 10 30.2 % 19.9 % 17.3 % 15.4 % 8.6 % 2.9 % 1.8 % 0.7 % 0.3 % 0.3 % |
Restricted Funds (Details)
Restricted Funds (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Notes to Financial Statements | ||
Premium trust funds | $ 1,383,451 | $ 0 |
Assigned to state agencies | 710,000 | 700,000 |
Total restricted funds | $ 2,093,451 | $ 700,000 |
Restricted Funds (Details Narra
Restricted Funds (Details Narrative) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Notes to Financial Statements | ||
Statutory Deposit Assigned to California State Treasurer | $ 510,000 | $ 500,000 |
Statutory Deposit Held by Insurance Commissioner of State of Nevada | $ 200,000 | $ 200,000 |
Segment Reporting (Narrative)
Segment Reporting (Narrative) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
Percentage of consolidated revenues from insurance company operations segment | 92.00% | 92.00% |
Percentage of CMP premium | 98.00% | 99.00% |
Segment Reporting - Reconcilati
Segment Reporting - Reconcilation of Revenues From Segments to Consolidated (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | ||||||||||
Insurance company operation | $ 31,028,500 | $ 33,972,236 | ||||||||
Revenues from other insurance operations | 11,622,824 | 13,497,345 | ||||||||
Intersegment revenue eliminations (1) | (9,038,528) | (10,678,099) | ||||||||
Revenues from other insurance operations net of intersegment eliminations | 2,584,296 | 2,819,246 | ||||||||
Total revenues | $ 8,001,419 | $ 8,161,034 | $ 8,643,452 | $ 8,806,891 | $ 9,296,290 | $ 9,293,389 | $ 9,241,306 | $ 8,960,497 | 33,612,796 | 36,791,482 |
Income (Loss) Before Income Taxes | ||||||||||
Loss before taxes from insurance company operation | (1,369,358) | (7,419,040) | ||||||||
Loss before taxes from other insurance operations | (2,557,434) | (2,461,181) | ||||||||
Total loss before income taxes | (589,752) | $ (812,141) | $ 287,032 | $ (2,811,931) | (826,821) | $ (4,435,225) | $ (1,350,826) | $ (3,267,349) | (3,926,792) | (9,880,221) |
Assets | ||||||||||
Insurance company operation assets | 115,271,728 | 117,274,626 | 115,271,728 | 117,274,626 | ||||||
Intersegment asset eliminations | (3,141,740) | (2,486,500) | (3,141,740) | (2,486,500) | ||||||
Total insurance company operation | 112,129,988 | 114,788,126 | 112,129,988 | 114,788,126 | ||||||
Other insurance operations assets | 13,486,978 | 15,510,632 | 13,486,978 | 15,510,632 | ||||||
Total assets | $ 125,616,966 | $ 130,298,758 | $ 125,616,966 | $ 130,298,758 |
Concentration of Risks (Narrati
Concentration of Risks (Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
[CrusaderInsuranceCompany] | ||
Premium written in California_percent of total | 99.80% | 99.70% |
[HealthInsuranceProgramCommissionIncome] | ||
Guardian Life Ins Co of America, percent of total | 37.00% | 42.00% |
Blue Shield Care Trust, percent of total | 46.00% | 45.00% |
Commission income from health insurance program | $ 958,495 | $ 1,047,593 |
Concentration of Risks - By Rei
Concentration of Risks - By Reinsurer (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
[ReinsuranceRecoverables] | $ 9,530,283 | $ 8,520,232 |
Renaissance Reinsurance U.S., Inc. | ||
[ReinsuranceRecoverables] | 4,911,922 | 4,464,980 |
Hannover Rusk SE | ||
[ReinsuranceRecoverables] | 4,142,308 | 3,384,341 |
TOA Re | ||
[ReinsuranceRecoverables] | 476,101 | 670,337 |
Other | ||
[ReinsuranceRecoverables] | $ (48) | $ 574 |
Recently Adopted Accounting Sta
Recently Adopted Accounting Standards (Narrative) | 12 Months Ended |
Dec. 31, 2018 | |
Recently Adopted Accounting Standards | |
Revenues Outside of Scope of Topic 606 | 96.50% |
Cash and Restricted Cash - Cash
Cash and Restricted Cash - Cash and Restricted Cash (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Notes to Financial Statements | ||
Cash | $ 2,082,131 | $ 774,226 |
Cash equivalents | 2,835,631 | 8,592,718 |
Restricted cash | 0 | 0 |
Cash, cash equivalents, and restricted cash | $ 4,917,762 | $ 9,366,944 |
Cash and Restricted Cash (Narra
Cash and Restricted Cash (Narrative) - USD ($) | 1 Months Ended | ||
Sep. 30, 2017 | Mar. 21, 2016 | Dec. 28, 2015 | |
Notes to Financial Statements | |||
Restricted Cash Deposited with Court | $ 5,449,615 | $ 7,924,178 | |
Settlement of Two Judgments | $ 7,000,000 | ||
Return of Cash Deposited with Court | $ 6,373,793 |
Investments - Investment Income
Investments - Investment Income and Net Realized Gains (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
Investment income from fixed maturities | $ 1,956,963 | $ 1,281,984 |
Investment income from short-term investments | 65,042 | 55,907 |
Total investment income | 2,022,005 | 1,337,891 |
Investment expense | 114,232 | 47,824 |
Investment income net of expenses | 1,907,773 | 1,290,067 |
Net realized investment gains (losses) | 148 | 528 |
Investment income and net realized losses | 1,907,921 | 1,290,595 |
Interest income from restricted cash | $ 0 | $ 133,160 |
Investments - Maturity (Details
Investments - Maturity (Details) | Dec. 31, 2018USD ($) |
Investments - Maturity | |
Due in one year or less - Amortized Cost | $ 9,326,886 |
Due in one year or less - Estimated Fair Value | 9,311,678 |
Due in one to five years - Amortized Cost | 43,821,970 |
Due in one to five years - Estimated Fair Value | 43,211,883 |
Due in five to ten years - Amortized Cost | 15,876,016 |
Due in five to ten years - Estimated Fair Falue | 15,497,513 |
Due after ten years and beyond - Amortized Cost | 16,403,716 |
Due after ten years and beyond - Estimated Fair Value | 16,015,063 |
Fixed maturities, at amortized cost | 85,428,588 |
Fixed maturities, at estimated fair value | $ 84,036,137 |
Investments - Fixed Maturities
Investments - Fixed Maturities by Categories (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Amortized cost, fixed maturities, available for sale | $ 78,302,588 | $ 58,153,120 |
Estimated fair value, fixed maturities, available for sale | 76,910,137 | 57,849,454 |
Amortized cost, fixed maturities, held to maturity | 7,126,000 | 28,098,000 |
Estimated fair value, fixed maturities, held to maturity | 7,126,000 | 28,098,000 |
Fixed maturities, at amortized cost | 85,428,588 | |
Fixed maturities, at estimated fair value | 84,036,137 | |
U.S. treasury securities | ||
Amortized cost, fixed maturities, available for sale | 16,746,832 | 7,517,901 |
Gross unrealized gains, fixed maturities, available for sale | 16,069 | 21 |
Gross unrealized losses, fixed maturities, available for sale | (143,282) | (63,697) |
Estimated fair value, fixed maturities, available for sale | 16,619,619 | 7,454,225 |
Corporate securities | ||
Amortized cost, fixed maturities, available for sale | 40,804,425 | 28,745,223 |
Gross unrealized gains, fixed maturities, available for sale | 50,422 | 43,204 |
Gross unrealized losses, fixed maturities, available for sale | (851,124) | (130,787) |
Estimated fair value, fixed maturities, available for sale | 40,003,723 | 28,657,640 |
Agency mortgage backed securities | ||
Amortized cost, fixed maturities, available for sale | 20,751,331 | 21,889,996 |
Gross unrealized gains, fixed maturities, available for sale | 7,757 | 0 |
Gross unrealized losses, fixed maturities, available for sale | (472,293) | (152,407) |
Estimated fair value, fixed maturities, available for sale | 20,286,795 | 21,737,589 |
Certificates of deposit | ||
Amortized cost, fixed maturities, held to maturity | 7,126,000 | 28,098,000 |
Gross unrealized gains, fixed maturities, held to maturity | 0 | 0 |
Gross unrealized losses, fixed maturities, held to maturity | 0 | 0 |
Estimated fair value, fixed maturities, held to maturity | 7,126,000 | 28,098,000 |
Total fixed maturities | ||
Fixed maturities, at amortized cost | 85,428,588 | 86,251,120 |
Gross unrealized gains, fixed maturities | 74,248 | 43,225 |
Gross unrealized losses, fixed maturities | (1,466,699) | (346,891) |
Fixed maturities, at estimated fair value | $ 84,036,137 | $ 85,947,454 |
Investments - Unrealized apprec
Investments - Unrealized appreciation on investments (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Notes to Financial Statements | ||
Gross unrealized appreciation of fixed maturities | $ 74,248 | $ 43,225 |
Gross unrealized (depreciation) of fixed maturities | (1,466,699) | (346,891) |
Net unrealized appreciation (depreciation) on investments | (1,392,451) | (303,666) |
Deferred federal tax expense (benefit) | (292,415) | (63,770) |
Net unrealized appreciation (depreciation), net of deferred income taxes | $ (1,100,036) | $ (239,896) |
Investments - Securities in Unr
Investments - Securities in Unrealized Loss Position (Details) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
U.S. treasury securities | ||
Fair value, less than 12 months | $ 1,760,491 | $ 7,454,204 |
Fair value, 12 months or longer | 8,496,069 | 0 |
Gross unrealized losses, less than 12 months | 20,181 | 63,697 |
Gross unrealized losses, 12 months or longer | $ 123,101 | $ 0 |
Number of securities in unrealized loss positions for less than 12 months | 2 | 6 |
Number of securities in unrealized loss positions for 12 months or longer | 6 | 0 |
Corporate securities | ||
Fair value, less than 12 months | $ 10,878,381 | $ 20,335,512 |
Fair value, 12 months or longer | 21,189,487 | 0 |
Gross unrealized losses, less than 12 months | 272,515 | 130,787 |
Gross unrealized losses, 12 months or longer | $ 578,609 | $ 0 |
Number of securities in unrealized loss positions for less than 12 months | 17 | 26 |
Number of securities in unrealized loss positions for 12 months or longer | 27 | 0 |
Agency mortgage backed securities | ||
Fair value, less than 12 months | $ 0 | $ 21,737,589 |
Fair value, 12 months or longer | 17,034,086 | 0 |
Gross unrealized losses, less than 12 months | 0 | 152,407 |
Gross unrealized losses, 12 months or longer | $ 472,293 | $ 0 |
Number of securities in unrealized loss positions for less than 12 months | 0 | 17 |
Number of securities in unrealized loss positions for 12 months or longer | 15 | 0 |
Total fixed maturities | ||
Fair value, less than 12 months | $ 12,638,872 | $ 49,527,305 |
Fair value, 12 months or longer | 46,719,642 | 0 |
Gross unrealized losses, less than 12 months | 292,696 | 346,891 |
Gross unrealized losses, 12 months or longer | $ 1,174,003 | $ 0 |
Number of securities in unrealized loss positions for less than 12 months | 19 | 49 |
Number of securities in unrealized loss positions for 12 months or longer | 48 | 0 |
Investments - Securities Called
Investments - Securities Called or Soldt (Narrative) | 12 Months Ended | |
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Recently Adopted Accounting Standards | ||
Called securities - amortized cost | $ 1,269,852 | |
Called securities - realized gain | $ 148 | |
Called securites - number | 2 | |
Sold securities - amortized cost | $ 1,141,338 | |
Sold securities - realized gain | $ 554 | |
Sold securities - number | 2 |
Investments - Certificates of D
Investments - Certificates of Deposit (Narrative) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Recently Adopted Accounting Standards | ||
Certificates of deposit brokered | $ 6,726,000 | $ 27,698,000 |
Investments - State Held Deposi
Investments - State Held Deposits (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Notes to Financial Statements | ||
Short-term investments held by state | $ 200,000 | $ 200,000 |
Certificates of deposit held by states | 200,000 | 400,000 |
State held deposits | $ 400,000 | $ 600,000 |
Investments - Short term invesm
Investments - Short term invesmtments (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Notes to Financial Statements | ||
U.S. treasury bills | $ 4,490,954 | $ 1,148,395 |
Commercial paper | 0 | 499,383 |
Certificates of deposit | 200,000 | 200,000 |
Total short-term investments | $ 4,690,954 | $ 1,847,778 |
Fair Vaule of Financial Instrum
Fair Vaule of Financial Instruments - Fair Value of Invested Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
U.S. treasury securities | $ 16,619,619 | $ 7,454,225 |
Corporate securities | 40,003,723 | 28,657,640 |
Agency mortgage-backed securities | 20,286,795 | 21,737,589 |
Short-term investments | 4,690,954 | 1,847,778 |
Total financial instruments | 81,601,091 | 59,697,232 |
Level 1 | ||
U.S. treasury securities | 16,619,619 | 7,454,225 |
Corporate securities | 0 | 0 |
Agency mortgage-backed securities | 0 | 0 |
Short-term investments | 4,690,954 | 1,847,778 |
Total financial instruments | 21,310,573 | 9,302,003 |
Level 2 | ||
U.S. treasury securities | 0 | 0 |
Corporate securities | 40,003,723 | 28,657,640 |
Agency mortgage-backed securities | 20,286,795 | 21,737,589 |
Short-term investments | 0 | 0 |
Total financial instruments | 60,290,518 | 50,395,229 |
Level 3 | ||
U.S. treasury securities | 0 | 0 |
Corporate securities | 0 | 0 |
Agency mortgage-backed securities | 0 | 0 |
Short-term investments | 0 | 0 |
Total financial instruments | $ 0 | $ 0 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property And Equipment | ||
Land | $ 1,787,485 | $ 1,787,485 |
Office building and tenant improvements | 8,398,275 | 8,352,181 |
Furniture, fixtures, equipment and other leasehold improvements | 2,063,549 | 2,724,775 |
Computer software under development | 363,016 | 355,234 |
Accumulated depreciation and amortization | (3,051,505) | (3,204,806) |
Net property and equipment | $ 9,560,820 | $ 10,014,869 |
Property and Equipment (Narrati
Property and Equipment (Narrative) | 12 Months Ended | |
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Property And Equipment Depreciation Abstract | ||
Depreciation and amortization on all property and equipment | $ 551,183 | $ 517,199 |
Square footage of Calabasas office building | 46,884 | |
Square footage of Calabasas office building leased to non-affiliated tenants | 14,481 | |
Square footage vacant in Calabasas office building | 0 | |
Office building revenue from leases | $ 1,150,428 | 1,065,104 |
Office building expenses including depreciation | $ 774,663 | $ 796,270 |
Premiums, Commissions and Notes
Premiums, Commissions and Notes Receiveable (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Notes to Financial Statements | ||
Premium and commission receivable | $ 2,001,732 | $ 2,234,166 |
Premium finance notes receivable | 3,148,792 | 4,967,671 |
Total premium and notes receivable | 5,150,524 | 7,201,837 |
Allowance for doubtful accounts | (1,217,456) | (1,196,073) |
Net Receivables | $ 3,933,068 | $ 6,005,764 |
Allowance for Doubful Account (
Allowance for Doubful Account (Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
Bad debt expense (benefit) | $ 23,903 | $ 16,222 |
Losses and Loss Adjustment Expe
Losses and Loss Adjustment Expenses Reserves (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Direct Reserves | ||
Direct Case Reserves | $ 23,648,183 | $ 18,948,233 |
Direct IBNR Reserves | 28,008,972 | 30,128,758 |
Total Direct Reserves | 51,657,155 | 49,076,991 |
Reserves Net Of Reinsurance | ||
Net Case Reserves | 19,855,301 | 14,985,639 |
Net IBNR Reserves | 22,270,252 | 25,697,802 |
Total Net Reserves | 42,125,553 | 40,683,441 |
Commercial Multi-Peril ($) | 50,459,206 | 48,003,282 |
Other Liability ($) | 1,172,331 | 1,060,328 |
Other Lines ($) | 25,618 | 13,381 |
Total Direct Reserves By Line | $ 51,657,155 | $ 49,076,991 |
Commercial Multi-Peril Percent of Total | 9770.00% | 9780.00% |
Other Liability Percent of Total | 230.00% | 220.00% |
Other Lines Percent Of Total | 0.00% | 0.00% |
Losses and Loss Adjustment Ex_2
Losses and Loss Adjustment Expense Reserves - Rollforward (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Insurance Loss Reserves [Abstract] | |||
Gross reserves | $ 51,657,155 | $ 49,076,991 | |
Reinsurance recoverable on unpaid losses and loss adjustment expenses | 9,531,602 | 8,393,550 | |
Net reserves | 42,125,553 | 40,683,441 | $ 37,534,817 |
Incurred losses and loss adjustment expenses | |||
Current accident year | 20,635,786 | 23,377,228 | |
Prior accident years | 2,921,957 | 7,113,279 | |
Incurred losses and loss adjustment expenses | 23,557,743 | 30,490,507 | |
Paid losses and loss adjustment expenses | |||
Current accident year | 6,582,377 | 7,925,460 | |
Prior accident years | 15,533,254 | 19,416,423 | |
Total payment losses and loss adjustment expenses | $ 22,115,631 | $ 27,341,883 |
Losses And Loss Adjustment Ex_3
Losses And Loss Adjustment Expense Reserves - Incurred and Paid Claims (Details) | Dec. 31, 2018USD ($)Claims | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2012USD ($) | Dec. 31, 2011USD ($) | Dec. 31, 2010USD ($) | Dec. 31, 2009USD ($) |
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 200,539,837 | |||||||||
Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims | 22,270,252 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 159,814,942 | |||||||||
Short-duration Insurance Contracts, Accident Year 2009 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 17,619,015 | $ 17,622,828 | $ 18,554,526 | $ 19,050,348 | $ 19,667,376 | $ 20,398,961 | $ 21,012,811 | $ 21,571,780 | $ 21,412,289 | $ 21,751,337 |
Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims | $ 0 | |||||||||
Cumulative number of reported claims | Claims | 1,013 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 17,568,228 | 17,568,877 | 17,550,304 | 17,380,065 | 17,336,454 | 17,121,818 | 16,180,346 | 13,160,200 | 9,592,059 | $ 4,919,359 |
Short-duration Insurance Contracts, Accident Year 2010 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 16,822,859 | 16,828,688 | 17,641,161 | 18,075,737 | 18,639,537 | 19,326,007 | 19,883,812 | 20,437,443 | 21,418,368 | |
Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims | $ 0 | |||||||||
Cumulative number of reported claims | Claims | 974 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 16,721,059 | 16,720,942 | 16,778,214 | 16,283,050 | 15,330,864 | 14,756,510 | 12,955,467 | 10,695,223 | $ 7,535,122 | |
Short-duration Insurance Contracts, Accident Year 2011 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 19,094,732 | 19,187,240 | 18,224,634 | 17,879,595 | 17,014,895 | 17,605,460 | 17,900,250 | 18,120,563 | ||
Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims | $ 0 | |||||||||
Cumulative number of reported claims | Claims | 1,020 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 19,087,866 | 19,027,232 | 17,422,583 | 16,115,802 | 14,251,525 | 11,212,490 | 8,608,287 | $ 4,719,943 | ||
Short-duration Insurance Contracts, Accident Year 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 18,235,335 | 17,914,837 | 18,050,131 | 18,344,175 | 18,895,666 | 19,532,022 | 18,511,598 | |||
Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims | $ 153,904 | |||||||||
Cumulative number of reported claims | Claims | 967 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 17,638,646 | 17,265,513 | 16,734,967 | 15,369,629 | 13,411,125 | 11,673,621 | $ 6,719,982 | |||
Short-duration Insurance Contracts, Accident Year 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 22,397,394 | 22,798,398 | 21,742,580 | 20,323,841 | 20,118,343 | 19,570,946 | ||||
Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims | $ 171,857 | |||||||||
Cumulative number of reported claims | Claims | 849 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 21,875,978 | 21,415,490 | 19,067,334 | 14,319,057 | 10,656,777 | $ 7,594,731 | ||||
Short-duration Insurance Contracts, Accident Year 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 18,034,749 | 17,640,211 | 14,930,960 | 15,394,995 | 16,884,731 | |||||
Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims | $ 594,893 | |||||||||
Cumulative number of reported claims | Claims | 757 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 16,843,128 | 14,556,687 | 9,173,947 | 6,082,893 | $ 3,826,263 | |||||
Short-duration Insurance Contracts, Accident Year 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 21,707,615 | 22,471,512 | 20,840,034 | 20,452,199 | ||||||
Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims | $ 1,846,071 | |||||||||
Cumulative number of reported claims | Claims | 725 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 17,700,688 | 14,978,639 | 11,151,955 | $ 6,263,796 | ||||||
Short-duration Insurance Contracts, Accident Year 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 24,126,775 | 22,908,016 | 21,646,663 | |||||||
Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims | $ 3,180,439 | |||||||||
Cumulative number of reported claims | Claims | 787 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 15,916,432 | 12,009,273 | $ 7,435,120 | |||||||
Short-duration Insurance Contracts, Accident Year 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 23,453,130 | 21,914,736 | ||||||||
Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims | $ 6,990,158 | |||||||||
Cumulative number of reported claims | Claims | 782 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 11,503,228 | $ 6,405,641 | ||||||||
Short-duration Insurance Contracts, Accident Year 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 19,048,233 | |||||||||
Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims | $ 9,332,930 | |||||||||
Cumulative number of reported claims | Claims | 528 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 4,959,689 |
Losses And Loss Adjustment Ex_4
Losses And Loss Adjustment Expense Reserves - Reconciliation of Incurred and Paid Claims to Unpaid Losses and LAE (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Insurance [Abstract] | |||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 200,539,837 | ||
Less: Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 159,814,942 | ||
Unpaid Losses and ALAE for Last Ten Accident Years | 40,724,895 | ||
Unpaid Losses and ALAE Prior to Last Ten Accident Years | 67,227 | ||
Unpaid Unallocated Loss Adjustment Expenses | 1,333,431 | ||
Net reserves | 42,125,553 | $ 40,683,441 | $ 37,534,817 |
Reinsurance recoverable on unpaid claims | 9,531,602 | $ 8,393,550 | |
Total gross loss and loss adjustment expense reserves | $ 51,657,155 |
Deferred Policy Acquisition C_3
Deferred Policy Acquisition Costs (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | ||
Balance | $ 4,162,771 | $ 4,162,771 |
Acquisition costs deferred | 5,235,788 | 6,194,153 |
Amortization | (5,908,831) | (6,463,681) |
Premium deficiency reserve | $ 0 | $ 45,000 |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilites (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued Expenses And Other Liabilites | ||
Premium payable | $ 314,173 | $ 438,571 |
Unearned policy fee income | 595,223 | 759,082 |
Retirement plan contributions payable | 112,827 | 156,600 |
Salaries and employee beneifits payable | 415,396 | 381,577 |
Commission payable | 81,414 | 81,395 |
Other | 326,325 | 483,133 |
Accrued expenses and other liabilities | $ 1,845,358 | $ 2,300,358 |
Reinsurance - Excess of Loss Re
Reinsurance - Excess of Loss Reinssurance Agreement (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
First layer participation percentage | 5.00% | 5.00% |
First layer lower limit | $ 500,000 | $ 500,000 |
First layer upper limit | $ 1,000,000 | $ 1,000,000 |
Second layer participation percentage | 0.00% | 0.00% |
Second layer lower limit | $ 1,000,000 | $ 1,000,000 |
Second layer upper limit | $ 3,000,000 | $ 4,000,000 |
Clash participation | 0.00% | 0.00% |
Renaissance Reinsurance U.S., Inc. | ||
A.M. Best Rating | A+ | A |
Combined Retention (All Reinsurers) | $ 500,000 | $ 500,000 |
Hannover Ruck SE | ||
A.M. Best Rating | A+ | A+ |
Combined Retention (All Reinsurers) | $ 500,000 | $ 500,000 |
Reinsurance - Catastrophe Reins
Reinsurance - Catastrophe Reinssurance Agreement (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
First layer participation percentage | 5.00% | 5.00% |
First layer lower limit | $ 1,000,000 | $ 1,000,000 |
First layer upper limit | $ 10,000,000 | $ 10,000,000 |
Second layer participation percentage | 0.00% | 0.00% |
Second layer lower limit | $ 10,000,000 | $ 10,000,000 |
Second layer upper limit | $ 46,000,000 | $ 46,000,000 |
Reinsurance - Effect Of Reinsur
Reinsurance - Effect Of Reinsurance (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Premiums written | ||
Direct written | $ 32,429,735 | $ 38,393,351 |
Reinsurance assumed | 0 | 0 |
Reinsurance ceded | (6,555,715) | (6,765,240) |
Net written | 25,874,020 | 31,628,111 |
Premiums earned | ||
Direct earned | 35,233,410 | 38,999,827 |
Reinsurance assumed premiums | 0 | 0 |
Reinsurance ceded premiums | (6,478,500) | (6,656,508) |
Net premium earned | 28,754,910 | 32,343,319 |
Loss And Loss Adjustment Expenses | ||
Direct incurred loss and loss adjustment expenses | 30,169,562 | 43,672,969 |
Assumed loss and loss adjustment expenses | 0 | 0 |
Ceded loss and loss adjustment expenses | (6,611,819) | (13,182,462) |
Incurred losses and loss adjustment expenses | $ 23,557,743 | $ 30,490,507 |
Percent of ceded earned premium to direct earned premium | 18.00% | 17.00% |
Profit Sharing Plan Expenses (D
Profit Sharing Plan Expenses (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Pension Plan Expenses Details Abstract | ||
Profit sharing plan expenses | $ 132,927 | $ 178,155 |
Mandatory plan contribution percentage | 3.00% | 3.00% |
Statutory Balances And Accounti
Statutory Balances And Accounting Practices (Schedule Of Statutory Net Income And Capital And Surplus) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Statutory Balances And Accounting Practices Schedule Of Statutory Net Income And Capital And Surplus | ||
Statutory net loss | $ (453,966) | $ (6,207,351) |
Statutory capital and surplus | 50,148,258 | 50,446,888 |
Intercompany dividend | 0 | $ 3,000,000 |
Maximum 2017 allowable dividend without prior Department of Insurance approval | $ 5,014,826 | |
Adjusted capital to authorized control level risk based capital | 683.00% | |
Authorized control level risk based capital | 200.00% |
Stock Plans - Stock Option Acti
Stock Plans - Stock Option Activity (Details) (USD$) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2012 | Dec. 31, 2011 | |
Number of shares outstanding - roll forward | ||||
Outstanding | 0 | 0 | ||
Granted under 2011 Incentive Stock Plan | 0 | 0 | 8,760 | 91,240 |
Forfeited or expired | 100,000 | |||
Incentive stock plan shares authorized under 2011 Incentive Stock Plan | 200,000 | |||
Compensation cost recognized | $ 0 | $ 11,552 |
Stock Plans - Average Assumptio
Stock Plans - Average Assumptions Used To Value Option Awards (Details) (USD$) - $ / shares | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | |
Stock Plans - Average Assumptions Used To Value Option Awards Details | ||
Weighted average grant date fair value | $ 3.21 | $ 2.53 |
Expected dividend yield | 1.91% | 3.12% |
Expected volatility | 28.01% | 28.74% |
Risk free interest rate | 1.94% | 2.02% |
Expected term (years) | 10 years | 10 years |
Expected forfeiture | 0.00% | 0.00% |
Income Taxes (Components Of Inc
Income Taxes (Components Of Income Tax Expense) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Components of Income Tax Expense (Benefit), Continuing Operations [Abstract] | ||
Current, Federal | $ 0 | $ 0 |
Deferred, Federal | (727,333) | (1,327,602) |
Federal, Total | (727,333) | (1,327,602) |
Current, State | 8,800 | 8,800 |
Deferred, State | (38,700) | 163,565 |
State, Total | (29,900) | 172,365 |
Total, Current | 8,800 | 8,800 |
Total, Deferred | (766,033) | (1,164,037) |
Total | $ (757,233) | $ (1,155,237) |
Income Taxes (Reconciliation Of
Income Taxes (Reconciliation Of Income Taxes) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Components of Income Tax Expense (Benefit), Continuing Operations [Abstract] | ||
Computed tax expense | $ (824,626) | $ (3,359,275) |
Impact of change in tax law | 0 | 2,137,385 |
State tax expense (benefit) | (615,802) | 1,061 |
Change in valuation allowance | 592,181 | (4,679) |
Expired state net operating losses | 0 | 117,379 |
Deferred tax true up | 63,481 | 0 |
Other | 27,533 | (47,108) |
Total | $ (757,233) | $ (1,155,237) |
Federal tax rate | 21.00% | 34.00% |
Deferred Tax Assets And Liabili
Deferred Tax Assets And Liabilities (Details) (USD $) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets | ||
Discounting of loss reserves | $ 324,346 | $ 264,510 |
Net unearned premium | 671,792 | 794,461 |
Unearned Commission | 388,099 | 360,443 |
Unearned policy fees | 166,565 | 212,419 |
Net operating loss caryforwards | 3,515,221 | 2,746,927 |
State income taxes | 1,850,934 | 1,258,753 |
Unrealized losses on investments | 292,415 | 63,770 |
Bad debt reserve | 340,688 | 334,705 |
Other deferred tax assets | 195,048 | 255,414 |
Total deferred tax assets | 7,745,108 | 6,291,402 |
Valuation allowance | 1,850,934 | 1,258,753 |
Deferred tax assets net of valuation allowance | 5,894,174 | 5,032,649 |
Deferred tax liabilities | ||
Policy acquisition costs | 867,652 | 1,036,477 |
State tax on undistributed insurance company earnings | 392,802 | 372,146 |
Federal tax liability on state deferred tax assets | 81,723 | 96,368 |
Depreciation | 176,513 | 146,852 |
Total deferred tax liabilities | 1,518,690 | 1,651,843 |
Net deferred tax assets | $ 4,375,484 | $ 3,380,806 |
Deterred Tax Assets (Narrative)
Deterred Tax Assets (Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Deterred Tax Assets | ||
Federal net operating loss caryforwards beginning to expire in 2035 | $ 16,739,147 | |
Deferred tax assets from state net loss carryforwards | 1,850,934 | |
State tax loss carryforwards expiring between 2028 and 2038 | $ 1,850,934 | |
Federal effected state tax rate | 6.98% | |
Deferred tax asset valuation allowance on state tax loss carryforward | $ 1,850,934 | $ 1,258,753 |
Expired state net operating losses | $ 0 | $ 1,209,784 |
Corporate Federal income tax rate before Tax Cuts and Jobs Act | 34.00% | |
Corporate Federal income tax rate after Tax Cuts and Jobs Act | 21.00% | |
Reduction in deferred tax asset due to Tax Cuts and Jobs Act | $ 2,176,862 |
Repurchase of Common Stock - Ef
Repurchase of Common Stock - Effects on Stockholders' Equity (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
Cost of common stock repurchased | $ 216 | $ 0 |
Share repurchase allocated to paid in capital | 15 | |
Share repurchase allocated to retained earnings | $ 201 | |
Stock repurchase authority remaining | 188,625 | 188,655 |
Repurchase of common stock previoudly authorized | 500,000 | 500,000 |
Number of shares repurchased | 30 |
Related Party Transactions (Det
Related Party Transactions (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Notes to Financial Statements | |
Square footage of office building leased to related party | 4,189 |
Monthly lease payment | $ 8,378 |
Earnings Per Share (Details)
Earnings Per Share (Details) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018USD ($)$ / shares | Sep. 30, 2018USD ($)$ / shares | Jun. 30, 2018USD ($)$ / shares | Mar. 31, 2018USD ($)$ / shares | Dec. 31, 2017USD ($)$ / shares | Sep. 30, 2017USD ($)$ / shares | Jun. 30, 2017USD ($)$ / shares | Mar. 31, 2017USD ($)$ / shares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | |
Notes to Financial Statements | ||||||||||
Loss per share - diluted | $ / shares | $ (0.09) | $ (0.12) | $ 0.03 | $ (0.42) | $ (0.52) | $ (0.55) | $ (0.17) | $ (0.40) | $ (0.60) | $ (1.64) |
Loss per share - basic | $ / shares | $ (0.09) | $ (0.12) | $ 0.03 | $ (0.42) | $ (0.52) | $ (0.55) | $ (0.17) | $ (0.40) | $ (0.60) | $ (1.64) |
Net loss | $ | $ (468,680) | $ (661,925) | $ 168,297 | $ (2,207,251) | $ (2,759,748) | $ (2,927,249) | $ (890,735) | $ (2,147,252) | $ (3,169,559) | $ (8,724,984) |
Weighted average shares outstanding - diluted | shares | 5,307,121 | 5,307,133 | ||||||||
Weighted average shares outstanding - basic | shares | 5,307,121 | 5,307,133 | ||||||||
Common share equivalents excluded from diluted shares | 0 | 0 |
Quarterly Financial Information
Quarterly Financial Information (Summary Of Quarterly Financial Information) (Details) (USD $) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information Summary Of Quarterly Financial Information Details | ||||||||||
Total Revenues | $ 8,001,419 | $ 8,161,034 | $ 8,643,452 | $ 8,806,891 | $ 9,296,290 | $ 9,293,389 | $ 9,241,306 | $ 8,960,497 | $ 33,612,796 | $ 36,791,482 |
Income (Loss) Before Taxes | (589,752) | (812,141) | 287,032 | (2,811,931) | (826,821) | (4,435,225) | (1,350,826) | (3,267,349) | (3,926,792) | (9,880,221) |
Net Income (Loss) | $ (468,680) | $ (661,925) | $ 168,297 | $ (2,207,251) | $ (2,759,748) | $ (2,927,249) | $ (890,735) | $ (2,147,252) | $ (3,169,559) | $ (8,724,984) |
Basic | ||||||||||
Basic Earnings (Loss) Per Share | $ (0.09) | $ (0.12) | $ 0.03 | $ (0.42) | $ (0.52) | $ (0.55) | $ (0.17) | $ (0.40) | $ (0.60) | $ (1.64) |
Diluted | ||||||||||
Diluted Earnings (Loss) Per Share | $ (0.09) | $ (0.12) | $ 0.03 | $ (0.42) | $ (0.52) | $ (0.55) | $ (0.17) | $ (0.40) | $ (0.60) | $ (1.64) |
Supplementary Information on _3
Supplementary Information on Loss and ALAE Development - Incurred and Paid Claims (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2009 |
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 200,539,837 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 159,814,942 | |||||||||
Short-duration Insurance Contracts, Accident Year 2009 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 17,619,015 | $ 17,622,828 | $ 18,554,526 | $ 19,050,348 | $ 19,667,376 | $ 20,398,961 | $ 21,012,811 | $ 21,571,780 | $ 21,412,289 | $ 21,751,337 |
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 17,568,228 | 17,568,877 | 17,550,304 | 17,380,065 | 17,336,454 | 17,121,818 | 16,180,346 | 13,160,200 | 9,592,059 | $ 4,919,359 |
Short-duration Insurance Contracts, Accident Year 2010 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 16,822,859 | 16,828,688 | 17,641,161 | 18,075,737 | 18,639,537 | 19,326,007 | 19,883,812 | 20,437,443 | 21,418,368 | |
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 16,721,059 | 16,720,942 | 16,778,214 | 16,283,050 | 15,330,864 | 14,756,510 | 12,955,467 | 10,695,223 | $ 7,535,122 | |
Short-duration Insurance Contracts, Accident Year 2011 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 19,094,732 | 19,187,240 | 18,224,634 | 17,879,595 | 17,014,895 | 17,605,460 | 17,900,250 | 18,120,563 | ||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 19,087,866 | 19,027,232 | 17,422,583 | 16,115,802 | 14,251,525 | 11,212,490 | 8,608,287 | $ 4,719,943 | ||
Short-duration Insurance Contracts, Accident Year 2012 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 18,235,335 | 17,914,837 | 18,050,131 | 18,344,175 | 18,895,666 | 19,532,022 | 18,511,598 | |||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 17,638,646 | 17,265,513 | 16,734,967 | 15,369,629 | 13,411,125 | 11,673,621 | $ 6,719,982 | |||
Short-duration Insurance Contracts, Accident Year 2013 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 22,397,394 | 22,798,398 | 21,742,580 | 20,323,841 | 20,118,343 | 19,570,946 | ||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 21,875,978 | 21,415,490 | 19,067,334 | 14,319,057 | 10,656,777 | $ 7,594,731 | ||||
Short-duration Insurance Contracts, Accident Year 2014 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 18,034,749 | 17,640,211 | 14,930,960 | 15,394,995 | 16,884,731 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 16,843,128 | 14,556,687 | 9,173,947 | 6,082,893 | $ 3,826,263 | |||||
Short-duration Insurance Contracts, Accident Year 2015 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 21,707,615 | 22,471,512 | 20,840,034 | 20,452,199 | ||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 17,700,688 | 14,978,639 | 11,151,955 | $ 6,263,796 | ||||||
Short-duration Insurance Contracts, Accident Year 2016 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 24,126,775 | 22,908,016 | 21,646,663 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 15,916,432 | 12,009,273 | $ 7,435,120 | |||||||
Short-duration Insurance Contracts, Accident Year 2017 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 23,453,130 | 21,914,736 | ||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 11,503,228 | $ 6,405,641 | ||||||||
Short-duration Insurance Contracts, Accident Year 2018 | ||||||||||
Claims Development [Line Items] | ||||||||||
Cumulative Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 19,048,233 | |||||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 4,959,689 |
Supplementary Information - Ave
Supplementary Information - Average Annual Percentage Payout of Incurred Claims by Age (Details) | Dec. 31, 2018 |
Insurance [Abstract] | |
Short-duration insurance contracts, historical claims duration, year one | 30.20% |
Short-duration insurance contracts, historical claims duration, year two | 19.90% |
Short-duration insurance contracts, historical claims duration, year three | 17.30% |
Short-duration insurance contracts, historical claims duration, year four | 15.40% |
Short-duration insurance contracts, historical claims duration, year five | 8.60% |
Short-duration insurance contracts, historical claims duration, year six | 2.90% |
Short-duration insurance contracts, historical claims duration, year seven | 1.80% |
Short-duration insurance contracts, historical claims duration, year eight | 0.70% |
Short-duration insurance contracts, historical claims duration, year nine | 0.30% |
Short-duration insurance contracts, historical claims duration, year ten | 0.30% |
Uncategorized Items - unam-2018
Label | Element | Value |
Deferred Policy Acquisition Costs and Present Value of Future Insurance Profits, Net | us-gaap_DeferredPolicyAcquisitionCostsAndValueOfBusinessAcquired | $ 3,489,728 |