Document and Entity Information
Document and Entity Information Statement - shares | 3 Months Ended | |
Mar. 31, 2019 | May 02, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | NGHC | |
Entity Registrant Name | NATIONAL GENERAL HOLDINGS CORP. | |
Entity Central Index Key | 0001578735 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 113,168,026 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Investments: | ||
Debt securities, available-for-sale, at fair value (Exchanges - $299,282 and $297,083) | $ 3,635,347 | $ 3,561,032 |
Equity securities, at fair value | 10,285 | 10,949 |
Short-term investments (Exchanges - $19,632 and $17,328) | 390,052 | 348,549 |
Other investments (related parties - $233,555 and $233,723) | 305,971 | 306,276 |
Total investments | 4,341,655 | 4,226,806 |
Cash and cash equivalents | 188,064 | 193,858 |
Restricted cash and cash equivalents (Exchanges - $293 and $200) | 32,208 | 39,725 |
Accrued investment income (related parties - $1,188 and $2,362) (Exchanges - $2,135 and $1,596) | 26,451 | 27,177 |
Premiums and other receivables, net (Exchanges - $60,293 and $61,327) | 1,608,251 | 1,399,812 |
Deferred acquisition costs (Exchanges - $20,305 and $20,007) | 268,177 | 251,408 |
Reinsurance recoverable (related parties - $6,136 and $7,425) (Exchanges - $125,722 and $117,068) | 1,489,565 | 1,611,738 |
Prepaid reinsurance premiums (Exchanges - $127,210 and $136,433) | 637,024 | 665,674 |
Premises and equipment, net (Exchanges - $1,183 and $1,695) | 413,180 | 308,004 |
Intangible assets, net (Exchanges - $3,360 and $3,405) | 372,812 | 379,937 |
Goodwill | 180,183 | 180,183 |
Prepaid and other assets (Exchanges - $5,592 and $4,581) | 73,997 | 154,958 |
Total assets | 9,631,567 | 9,439,280 |
Liabilities: | ||
Unpaid loss and loss adjustment expense reserves (Exchanges - $196,022 and $178,470) | 2,870,323 | 2,957,159 |
Unearned premiums and other revenue (Exchanges - $258,701 and $265,763) | 2,440,280 | 2,280,728 |
Reinsurance payable (Exchanges - $31,579 and $40,393) | 524,859 | 656,265 |
Accounts payable and accrued expenses (related parties - $19,196 and $69,874) (Exchanges - $6,160 and $7,720) | 362,267 | 398,058 |
Debt | 710,196 | 705,795 |
Other liabilities (Exchanges - $58,539 and $61,640) | 392,160 | 240,404 |
Total liabilities | 7,300,085 | 7,238,409 |
Stockholders’ equity: | ||
Common stock, $0.01 par value - authorized 150,000,000 shares, issued and outstanding 113,137,346 shares - 2019; authorized 150,000,000 shares, issued and outstanding 112,940,595 shares - 2018. | 1,131 | 1,129 |
Preferred stock, $0.01 par value - authorized 10,000,000 shares, issued and outstanding 2,565,120 shares - 2019; authorized 10,000,000 shares, issued and outstanding 2,565,120 shares - 2018. Aggregate liquidation preference $450,000 - 2019, $450,000 - 2018. | 450,000 | 450,000 |
Additional paid-in capital | 1,058,061 | 1,057,783 |
Accumulated other comprehensive income: | ||
Unrealized foreign currency translation adjustment, net of tax | (17,825) | (14,461) |
Unrealized gain (loss) on investments, net of tax | 18,406 | (37,669) |
Total accumulated other comprehensive income (loss) | 581 | (52,130) |
Retained earnings | 843,415 | 764,056 |
Total National General Holdings Corp. Stockholders’ Equity | 2,353,188 | 2,220,838 |
Non-controlling interest | (21,706) | (19,967) |
Total stockholders’ equity | 2,331,482 | 2,200,871 |
Total liabilities and stockholders’ equity | $ 9,631,567 | $ 9,439,280 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Debt securities, available-for-sale | $ 3,635,347 | $ 3,561,032 |
Short-term investments | 390,052 | 348,549 |
Other investments | 305,971 | 306,276 |
Restricted cash and cash equivalents | 32,208 | 39,725 |
Accrued investment income | 26,451 | 27,177 |
Premiums and other receivables, net | 1,608,251 | 1,399,812 |
Deferred acquisition costs | 268,177 | 251,408 |
Reinsurance recoverable | 1,489,565 | 1,611,738 |
Prepaid reinsurance premiums | 637,024 | 665,674 |
Premises and equipment, net | 413,180 | 308,004 |
Intangible assets, net | 372,812 | 379,937 |
Prepaid and other assets | 73,997 | 154,958 |
Unpaid loss and loss adjustment expense reserves | 2,870,323 | 2,957,159 |
Unearned premiums and other revenue | 2,440,280 | 2,280,728 |
Reinsurance payable | 524,859 | 656,265 |
Accounts payable and accrued expenses | 362,267 | 398,058 |
Other liabilities | $ 392,160 | $ 240,404 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 113,137,346 | 112,940,595 |
Common stock, shares outstanding | 113,137,346 | 112,940,595 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 2,565,120 | 2,565,120 |
Preferred stock, shares outstanding | 2,565,120 | 2,565,120 |
Aggregate liquidation preference | $ 450,000 | $ 450,000 |
Related Parties | ||
Other investments | 233,555 | 233,723 |
Accrued investment income | 1,188 | 2,362 |
Reinsurance recoverable | 6,136 | 7,425 |
Accounts payable and accrued expenses | 19,196 | 69,874 |
Reciprocal Exchanges | ||
Debt securities, available-for-sale | 299,282 | 297,083 |
Short-term investments | 19,632 | 17,328 |
Restricted cash and cash equivalents | 293 | 200 |
Accrued investment income | 2,135 | 1,596 |
Premiums and other receivables, net | 60,293 | 61,327 |
Deferred acquisition costs | 20,305 | 20,007 |
Reinsurance recoverable | 125,722 | 117,068 |
Prepaid reinsurance premiums | 127,210 | 136,433 |
Premises and equipment, net | 1,183 | 1,695 |
Intangible assets, net | 3,360 | 3,405 |
Prepaid and other assets | 5,592 | 4,581 |
Unpaid loss and loss adjustment expense reserves | 196,022 | 178,470 |
Unearned premiums and other revenue | 258,701 | 265,763 |
Reinsurance payable | 31,579 | 40,393 |
Accounts payable and accrued expenses | 6,160 | 7,720 |
Other liabilities | $ 58,539 | $ 61,640 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||
Net earned premium | $ 964,157 | $ 905,538 |
Ceding commission income | 69,534 | 44,468 |
Service and fee income | 165,507 | 142,122 |
Net investment income | 33,445 | 25,011 |
Net gain on investments | 22 | 118 |
Total revenues | 1,232,665 | 1,117,257 |
Expenses: | ||
Loss and loss adjustment expense | 651,809 | 634,166 |
Acquisition costs and other underwriting expenses | 211,918 | 168,710 |
General and administrative expenses | 248,094 | 231,005 |
Interest expense | 12,999 | 11,154 |
Total expenses | 1,124,820 | 1,045,035 |
Income before provision for income taxes | 107,845 | 72,222 |
Provision for income taxes | 22,506 | 16,202 |
Net income | 85,339 | 56,020 |
Net (income) loss attributable to non-controlling interest | 6,419 | 12,188 |
Net income attributable to NGHC | 91,758 | 68,208 |
Dividends on preferred stock | (7,875) | (7,875) |
Net income attributable to NGHC common stockholders | $ 83,883 | $ 60,333 |
Earnings per common share (“EPS”): | ||
Basic (usd per share) | $ 0.74 | $ 0.57 |
Diluted (usd per share) | $ 0.72 | $ 0.55 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 85,339 | $ 56,020 |
Other comprehensive income: | ||
Foreign currency translation adjustment | (4,253) | (907) |
Income tax effect | 889 | 188 |
Total foreign currency translation adjustment, net of tax | (3,364) | (719) |
Gross unrealized gain (loss) on investments before reclassifications | 76,785 | (53,206) |
Income tax effect | (16,125) | 11,173 |
Total change in net unrealized gain (loss) on investments, net of tax | 60,660 | (42,033) |
Reclassification adjustments for investments gain/loss to net income: | ||
Net realized loss on investments | 120 | 2 |
Income tax effect | (25) | 0 |
Total loss on investments reclassifications to net income, net of tax | 95 | 2 |
Other comprehensive income (loss) before income tax effect | 72,652 | (54,111) |
Income tax effect | (15,261) | 11,361 |
Other comprehensive income (loss), net of tax | 57,391 | (42,750) |
Comprehensive income | 142,730 | 13,270 |
Comprehensive (income) loss attributable to non-controlling interest | 1,739 | 17,292 |
Comprehensive income attributable to NGHC | $ 144,469 | $ 30,562 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Preferred Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Non-controlling Interest |
Common stock, shares outstanding, beginning balance at Dec. 31, 2017 | 106,697,648 | ||||||
Common stock, amount, beginning balance at Dec. 31, 2017 | $ 1,067 | ||||||
Preferred stock, shares outstanding, beginning balance at Dec. 31, 2017 | 2,565,000 | ||||||
Preferred stock, amount, beginning balance at Dec. 31, 2017 | $ 420,000 | ||||||
Total stockholders' equity, amount, beginning balance at Dec. 31, 2017 | $ 1,953,425 | $ 917,751 | $ (8,112) | $ 597,863 | $ 24,856 | ||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 56,020 | 68,208 | (12,188) | ||||
Foreign currency translation adjustment, net of tax | (719) | (719) | |||||
Change in unrealized gain (loss) on investments, net of tax | (42,031) | (36,927) | (5,104) | ||||
Common stock dividends declared ($0.04 per share) | (4,277) | (4,277) | |||||
Preferred stock dividends declared (Series A - $0.46875, Series B and C - $18.75 and Series D - $0 per share) | (7,875) | (7,875) | |||||
Common stock issued under employee stock plans and exercises of stock options, shares | 251,491 | ||||||
Common stock issued under employee stock plans and exercises of stock options, value | 492 | $ 2 | 490 | ||||
Shares withheld related to net share settlement, shares | (61,573) | ||||||
Shares withheld related to net share settlement | (1,342) | (1,342) | |||||
Stock-based compensation | 2,130 | 2,130 | |||||
Common stock, shares outstanding, ending balance at Mar. 31, 2018 | 106,887,566 | ||||||
Common stock, amount, ending balance at Mar. 31, 2018 | $ 1,069 | ||||||
Preferred stock, shares outstanding, ending balance at Mar. 31, 2018 | 2,565,000 | ||||||
Preferred stock, amount, ending balance at Mar. 31, 2018 | $ 420,000 | ||||||
Total stockholders' equity, amount, ending balance at Mar. 31, 2018 | 1,964,653 | 919,029 | (45,722) | 662,713 | 7,564 | ||
Increase (Decrease) in Stockholders' Equity | |||||||
Cumulative-effect adjustment of change in accounting principles | $ 8,830 | 36 | 8,794 | ||||
Common stock, shares outstanding, beginning balance at Dec. 31, 2018 | 112,940,595 | 112,940,595 | |||||
Common stock, amount, beginning balance at Dec. 31, 2018 | $ 1,129 | ||||||
Preferred stock, shares outstanding, beginning balance at Dec. 31, 2018 | 2,565,120 | 2,565,120 | |||||
Preferred stock, amount, beginning balance at Dec. 31, 2018 | $ 450,000 | ||||||
Total stockholders' equity, amount, beginning balance at Dec. 31, 2018 | $ 2,200,871 | 1,057,783 | (52,130) | 764,056 | (19,967) | ||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 85,339 | 91,758 | (6,419) | ||||
Foreign currency translation adjustment, net of tax | (3,364) | (3,364) | |||||
Change in unrealized gain (loss) on investments, net of tax | 60,755 | 56,075 | 4,680 | ||||
Common stock dividends declared ($0.04 per share) | (4,524) | (4,524) | |||||
Preferred stock dividends declared (Series A - $0.46875, Series B and C - $18.75 and Series D - $0 per share) | (7,875) | (7,875) | |||||
Common stock issued under employee stock plans and exercises of stock options, shares | 292,276 | ||||||
Common stock issued under employee stock plans and exercises of stock options, value | 93 | $ 2 | 91 | ||||
Shares withheld related to net share settlement, shares | (95,525) | ||||||
Shares withheld related to net share settlement | (2,435) | (2,435) | |||||
Stock-based compensation | $ 2,622 | 2,622 | |||||
Common stock, shares outstanding, ending balance at Mar. 31, 2019 | 113,137,346 | 113,137,346 | |||||
Common stock, amount, ending balance at Mar. 31, 2019 | $ 1,131 | ||||||
Preferred stock, shares outstanding, ending balance at Mar. 31, 2019 | 2,565,120 | 2,565,120 | |||||
Preferred stock, amount, ending balance at Mar. 31, 2019 | $ 450,000 | ||||||
Total stockholders' equity, amount, ending balance at Mar. 31, 2019 | $ 2,331,482 | $ 1,058,061 | $ 581 | $ 843,415 | $ (21,706) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - Retained Earnings - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Common Stock | ||
Common stock dividends declared | $ 0.04 | $ 0.04 |
Series A Preferred Stock | ||
Preferred stock dividends declared | 0.46875 | 0.46875 |
Series B Preferred Stock | ||
Preferred stock dividends declared | 18.75 | 18.75 |
Series C Preferred Stock | ||
Preferred stock dividends declared | 18.75 | $ 18.75 |
Series D Preferred Stock | ||
Preferred stock dividends declared | $ 0 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 85,339 | $ 56,020 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||
Net (gain) loss on investments | (22) | (118) |
Bad debt expense | 20,967 | 20,184 |
Depreciation and amortization | 27,135 | 20,141 |
Stock-compensation expense | 2,622 | 2,130 |
Other, net | (1,251) | (7,088) |
Changes in assets and liabilities: | ||
Accrued investment income | 658 | (1,082) |
Premiums and other receivables | (228,239) | (200,150) |
Deferred acquisition costs | (17,020) | (20,755) |
Reinsurance recoverable | 121,500 | (40,537) |
Prepaid reinsurance premiums | 28,058 | (11,648) |
Prepaid expenses and other assets | 82,591 | 38,712 |
Unpaid loss and loss adjustment expense reserves | (83,073) | 17,044 |
Unearned premiums and other revenue | 161,680 | 213,465 |
Reinsurance payable | (130,353) | 39,036 |
Accounts payable and accrued expenses | 9,458 | (52,811) |
Other liabilities | 35,160 | (20,601) |
Net cash provided by operating activities | 115,210 | 51,942 |
Cash flows from investing activities: | ||
Purchases of Debt securities, available-for-sale | (94,525) | (310,241) |
Purchases of Short-term investments | (678,000) | (906,325) |
Purchases of Other investments | (110) | (2,979) |
Purchases of Premises and equipment | (57,622) | (5,716) |
Proceeds from Sale and maturity of debt securities, available-for-sale | 83,138 | 193,733 |
Proceeds from Sale of equity securities | 1,700 | 0 |
Proceeds from Sale of short-term investments | 637,682 | 904,788 |
Proceeds from Sale and return of other investments | 1,105 | 109,793 |
Net cash used in investing activities | (106,632) | (16,947) |
Cash flows from financing activities: | ||
Payments of debt issuance costs | (1,726) | 0 |
Repayments of debt and principal payments under capital leases obligations | (3,034) | 0 |
Issuance of common stock — employee share options | 93 | 492 |
Taxes paid related to net share settlement of equity awards | (2,435) | (1,342) |
Dividends paid to common shareholders | (4,518) | (4,268) |
Dividends paid to preferred shareholders | (8,867) | (7,875) |
Net cash used in financing activities | (20,487) | (12,993) |
Effect of exchange rate changes on cash and cash equivalents | (1,402) | (1,433) |
Net (decrease) increase in cash, cash equivalents, and restricted cash | (13,311) | 20,569 |
Cash, cash equivalents, and restricted cash at beginning of the period | 233,583 | 357,484 |
Cash, cash equivalents, and restricted cash at end of the period | 220,272 | 378,053 |
Common Stock | ||
Dividends Payable | ||
Dividends Payable | 4,524 | 4,277 |
Preferred Stock | ||
Dividends Payable | ||
Dividends Payable | $ 7,875 | $ 7,875 |
Basis of Reporting
Basis of Reporting | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Reporting | Basis of Reporting The accompanying unaudited interim condensed consolidated financial statements include the accounts of National General Holdings Corp. and its subsidiaries (the “Company” or “NGHC”) and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 previously filed with the SEC on February 25, 2019 . The balance sheet at December 31, 2018 , has been derived from the audited consolidated financial statements at that date. These interim condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim period and all such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative, if annualized, of those to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The unaudited condensed consolidated financial statements include the accounts and operations of Adirondack Insurance Exchange, a New York reciprocal insurer, and New Jersey Skylands Insurance Association, a New Jersey reciprocal insurer (together with their subsidiaries, the “Exchanges” or “Reciprocal Exchanges”). The Company has no ownership interest in the Reciprocal Exchanges but manages their business operations and has the ability to direct their activities through its wholly-owned management companies. The Reciprocal Exchanges are property and casualty insurers. As of December 31, 2018 , the Company reclassified finance lease liabilities in the amount of $30,346 from “Other liabilities” to “Debt” on the Condensed Consolidated Balance Sheets to conform to the current-year presentation. A detailed description of the Company’s significant accounting policies and management judgments is located in the notes to the audited consolidated financial statements, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 |
Basis of Accounting, Policy | The accompanying unaudited interim condensed consolidated financial statements include the accounts of National General Holdings Corp. and its subsidiaries (the “Company” or “NGHC”) and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 previously filed with the SEC on February 25, 2019 . The balance sheet at December 31, 2018 , has been derived from the audited consolidated financial statements at that date. These interim condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim period and all such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative, if annualized, of those to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted During 2019 Standard Description Date of Adoption Effect on the Company ASU 2016-02, Leases (Topic 842) and related amendments. This standard was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. January 1, 2019 The Company adopted the standard as of the beginning of the year of adoption using the modified retrospective transition approach and did not adjust prior comparative periods. The Company recorded the recognition of the ROU asset and lease liability net of deferred rent and inducement costs in both total assets and liabilities in the Condensed Consolidated Balance Sheets of $85,000, net of the deferred tax impact. The adoption of this guidance did not have a material effect on the Company’s Condensed Consolidated Statements of Income and had no impact on cash flows. See Note 9, “Leases” for additional information. Not Yet Adopted With the exception of the adopted or not yet adopted accounting pronouncements discussed here, there have been no recent accounting pronouncements, or quantitative or qualitative progress made towards implementation of outstanding accounting pronouncements during the three months ended March 31, 2019 , as compared to those described in Note 2, “Significant Accounting Policies” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 , that are of significance, or potential significance, to the Company. Standard Description Effective Date Effect on the Company ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. Companies will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Companies will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” the amendment to ASU 2016-13 which clarifies that receivables arising from operating leases are not within the scope of Topic 326 and impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. January 1, 2020 Based on the financial instruments currently held by the Company, it does not expect a material effect on the Company’s consolidated financial condition, results of operations, cash flows and disclosures if the new guidance were able to be adopted in the current accounting period. The impact on the Company’s consolidated financial condition, results of operations, cash flows and disclosures at the date of adoption of the updated guidance will be determined by the financial instruments held by the Company and the economic conditions at that time. The Company’s implementation and evaluation process to date includes, but is not limited to, identifying the financial assets within the scope of the guidance and assessing models for the relevant financial assets. ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This standard establishes a one-step process for testing the value of the goodwill which an entity carries. ASU 2017-04 requires the goodwill impairment to be measured as the excess of the reporting unit’s carrying amount over its fair value. Early adoption is permitted for interim or annual goodwill impairment tests. January 1, 2020 Based on the goodwill currently held by the Company, there would not be a material effect on the Company’s consolidated financial condition, results of operations, cash flows and disclosures if the new guidance were able to be adopted in the current accounting period. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments (a) Available-For-Sale Debt Securities The amortized cost, gross unrealized gains and losses, and fair value of available-for-sale debt securities were as follows: March 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury $ 61,814 $ 1,348 $ (179 ) $ 62,983 Federal agencies 25,611 22 (17 ) 25,616 States and political subdivision bonds 258,204 3,222 (523 ) 260,903 Foreign government 142,324 2,894 — 145,218 Corporate bonds 1,332,739 23,098 (6,287 ) 1,349,550 Residential mortgage-backed securities 937,003 3,844 (9,837 ) 931,010 Commercial mortgage-backed securities 547,557 14,281 (4,766 ) 557,072 Asset-backed securities 61,198 941 (53 ) 62,086 Structured securities 245,552 179 (4,822 ) 240,909 Total $ 3,612,002 $ 49,829 $ (26,484 ) $ 3,635,347 NGHC $ 3,312,760 $ 47,687 $ (24,382 ) $ 3,336,065 Reciprocal Exchanges 299,242 2,142 (2,102 ) 299,282 Total $ 3,612,002 $ 49,829 $ (26,484 ) $ 3,635,347 December 31, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury $ 64,829 $ 1,026 $ (262 ) $ 65,593 Federal agencies 37,842 22 (389 ) 37,475 States and political subdivision bonds 274,367 1,369 (3,539 ) 272,197 Foreign government 151,443 993 (70 ) 152,366 Corporate bonds 1,283,061 3,094 (25,450 ) 1,260,705 Residential mortgage-backed securities 944,365 716 (19,965 ) 925,116 Commercial mortgage-backed securities 548,192 3,757 (6,974 ) 544,975 Asset-backed securities 60,563 705 (121 ) 61,147 Structured securities 249,947 99 (8,588 ) 241,458 Total $ 3,614,609 $ 11,781 $ (65,358 ) $ 3,561,032 NGHC $ 3,311,639 $ 11,206 $ (58,896 ) $ 3,263,949 Reciprocal Exchanges 302,970 575 (6,462 ) 297,083 Total $ 3,614,609 $ 11,781 $ (65,358 ) $ 3,561,032 As of March 31, 2019 and December 31, 2018 , the Company had no other-than-temporary impairments (“OTTI”) in AOCI related to available-for-sale debt securities. The amortized cost and fair value of available-for-sale debt securities held as of March 31, 2019 , by contractual maturity, are shown in the table below. Actual maturities may differ from contractual maturities because some borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. NGHC Reciprocal Exchanges Total March 31, 2019 Amortized Fair Amortized Fair Amortized Fair Due in one year or less $ 30,231 $ 30,138 $ 300 $ 300 $ 30,531 $ 30,438 Due after one year through five years 803,464 811,067 157,364 156,838 960,828 967,905 Due after five years through ten years 775,802 788,585 44,621 45,048 820,423 833,633 Due after ten years 242,711 241,384 11,751 11,819 254,462 253,203 Mortgage-backed securities 1,460,552 1,464,891 85,206 85,277 1,545,758 1,550,168 Total $ 3,312,760 $ 3,336,065 $ 299,242 $ 299,282 $ 3,612,002 $ 3,635,347 (b) Gross Unrealized Losses The tables below summarize the gross unrealized losses on debt securities classified as available for sale, by length of time the security has continuously been in an unrealized loss position. Less Than 12 Months 12 Months or More Total March 31, 2019 Fair Unrealized Fair Unrealized Fair Unrealized U.S. Treasury $ 17,811 $ (5 ) $ 19,397 $ (174 ) $ 37,208 $ (179 ) Federal agencies 4,897 (3 ) 719 (14 ) 5,616 (17 ) States and political subdivision bonds 9,247 (32 ) 73,312 (491 ) 82,559 (523 ) Foreign government 500 — — — 500 — Corporate bonds 50,725 (196 ) 368,397 (6,091 ) 419,122 (6,287 ) Residential mortgage-backed securities 91,162 (1,655 ) 485,077 (8,182 ) 576,239 (9,837 ) Commercial mortgage-backed securities — — 151,359 (4,766 ) 151,359 (4,766 ) Asset-backed securities 340 — 1,752 (53 ) 2,092 (53 ) Structured securities 165,574 (3,796 ) 21,169 (1,026 ) 186,743 (4,822 ) Total $ 340,256 $ (5,687 ) $ 1,121,182 $ (20,797 ) $ 1,461,438 $ (26,484 ) NGHC $ 315,312 $ (5,452 ) $ 965,236 $ (18,930 ) $ 1,280,548 $ (24,382 ) Reciprocal Exchanges 24,944 (235 ) 155,946 (1,867 ) 180,890 (2,102 ) Total $ 340,256 $ (5,687 ) $ 1,121,182 $ (20,797 ) $ 1,461,438 $ (26,484 ) Less Than 12 Months 12 Months or More Total December 31, 2018 Fair Unrealized Fair Unrealized Fair Unrealized U.S. Treasury $ 474 $ (2 ) $ 21,540 $ (260 ) $ 22,014 $ (262 ) Federal agencies 23,729 (351 ) 1,493 (38 ) 25,222 (389 ) States and political subdivision bonds 57,090 (902 ) 119,759 (2,637 ) 176,849 (3,539 ) Foreign government 45,748 (70 ) — — 45,748 (70 ) Corporate bonds 586,359 (12,891 ) 321,115 (12,559 ) 907,474 (25,450 ) Residential mortgage-backed securities 234,396 (1,637 ) 551,623 (18,328 ) 786,019 (19,965 ) Commercial mortgage-backed securities 13,229 (239 ) 148,700 (6,735 ) 161,929 (6,974 ) Asset-backed securities 25,978 (78 ) 1,494 (43 ) 27,472 (121 ) Structured securities 222,154 (8,136 ) 6,167 (452 ) 228,321 (8,588 ) Total $ 1,209,157 $ (24,306 ) $ 1,171,891 $ (41,052 ) $ 2,381,048 $ (65,358 ) NGHC $ 1,115,823 $ (22,668 ) $ 1,018,975 $ (36,228 ) $ 2,134,798 $ (58,896 ) Reciprocal Exchanges 93,334 (1,638 ) 152,916 (4,824 ) 246,250 (6,462 ) Total $ 1,209,157 $ (24,306 ) $ 1,171,891 $ (41,052 ) $ 2,381,048 $ (65,358 ) There were 857 and 1,662 individual security lots at March 31, 2019 and December 31, 2018 , respectively, that accounted for the gross unrealized loss, none of which are deemed by the Company to be other-than-temporary impairments. As of March 31, 2019 and December 31, 2018 , of the $20,797 and $41,052 , respectively, of unrealized losses in unrealized loss positions for a period of twelve or more consecutive months, none of those securities were greater than or equal to 25% of its amortized cost. Factors influencing management’s determination that none of these securities were OTTI included the length of time and/or magnitude of unrealized losses in relation to cost, the nature of the investment, the current financial condition of the issuer and its future prospects, the ability to recover to cost in the near term, and management’s intent not to sell these securities and it being more likely than not that the Company will not be required to sell these investments before anticipated recovery of fair value to the Company’s cost basis. The Company regularly monitors its investments that have fair values less than cost or amortized cost for indicators of OTTI, an assessment that requires management judgment regarding the evidence known. Such judgments could change in the future as more information becomes known, which could negatively impact the amounts reported. The Company’s debt securities portfolio is sensitive to interest rate fluctuations, which impact the fair value of individual securities. Unrealized losses on debt securities reported above were primarily caused by the effects of the interest rate environment. Therefore, the Company does not believe the unrealized losses represent an OTTI as of March 31, 2019 and December 31, 2018 . (c) Equity Securities The fair values of equity securities were as follows: March 31, 2019 December 31, 2018 Common stock $ 10,285 $ 10,949 Total $ 10,285 $ 10,949 NGHC $ 10,285 $ 10,949 Reciprocal Exchanges — — Total $ 10,285 $ 10,949 (d) Investment Income The components of net investment income consisted of the following: Three Months Ended March 31, 2019 2018 Cash and short-term investments $ 1,497 $ 187 Debt securities 29,467 24,256 Equity securities 2 155 Other, net (related parties - $254 and $(295)) 3,506 1,821 Investment income 34,472 26,419 Investment expenses (1,027 ) (1,408 ) Net investment income $ 33,445 $ 25,011 NGHC $ 31,275 $ 22,867 Reciprocal Exchanges 2,170 2,144 Net investment income $ 33,445 $ 25,011 (e) Net Realized Gains (Losses) The table below indicates realized gains and losses on investments, including foreign exchange. Purchases and sales of investments are recorded on a trade date basis. Realized gains and losses are determined based on the specific identification method. Three Months Ended March 31, 2019 2018 Debt securities, available-for-sale: Gross gains $ 136 $ 1,169 Gross losses (256 ) (1,171 ) Net realized gain (loss) on debt securities, available-for-sale (120 ) (2 ) Equity securities 1,036 (1,048 ) Short-term and other investments (1 ) (4 ) Foreign currency transactions (893 ) 1,172 Net realized gain on investments $ 22 $ 118 NGHC $ 766 $ 249 Reciprocal Exchanges (744 ) (131 ) Net realized gain on investments $ 22 $ 118 Net gains and losses recognized during the reporting period on equity securities still held at the reporting date were as follows: Three Months Ended March 31, 2019 2018 Net gains (losses) recognized during the period $ 1,036 $ (1,048 ) Less: Net gains (losses) recognized during the period on securities sold during the period — — Net gains (losses) recognized during the reporting period on securities still held at the reporting date $ 1,036 $ (1,048 ) (f) Credit Quality of Investments The tables below summarize the credit quality of debt securities, as rated by Standard & Poor’s (“S&P”). If a security is not rated by S&P, an S&P equivalent is determined based on ratings from similar rating agencies. Securities that are not rated are included in the “BB+ and lower” category. NGHC Reciprocal Exchanges March 31, 2019 Amortized Cost Fair Value Percentage Amortized Cost Fair Value Percentage U.S. Treasury $ 48,823 $ 49,736 1.5 % $ 12,991 $ 13,247 4.4 % AAA 574,775 589,125 17.7 % 18,283 18,408 6.2 % AA, AA+, AA- 1,368,935 1,363,545 40.9 % 129,590 129,337 43.2 % A, A+, A- 615,601 621,717 18.6 % 127,511 127,668 42.7 % BBB, BBB+, BBB- 664,992 673,198 20.2 % 10,835 10,590 3.5 % BB+ and lower 39,634 38,744 1.1 % 32 32 — % Total $ 3,312,760 $ 3,336,065 100.0 % $ 299,242 $ 299,282 100.0 % NGHC Reciprocal Exchanges December 31, 2018 Amortized Fair Percentage Amortized Fair Percentage U.S. Treasury $ 52,122 $ 52,759 1.6 % $ 12,707 $ 12,834 4.3 % AAA 586,639 589,078 18.0 % 18,335 18,109 6.1 % AA, AA+, AA- 1,385,709 1,358,528 41.6 % 142,525 140,114 47.2 % A, A+, A- 591,219 581,106 17.8 % 118,535 115,618 38.9 % BBB, BBB+, BBB- 653,645 641,554 19.7 % 10,834 10,374 3.5 % BB+ and lower 42,305 40,924 1.3 % 34 34 — % Total $ 3,311,639 $ 3,263,949 100.0 % $ 302,970 $ 297,083 100.0 % The tables below summarize the investment quality of the corporate bond holdings and industry concentrations. March 31, 2019 AAA AA+, A+,A,A- BBB+, BB+ or Fair % of Financial Institutions — % 4.4 % 24.1 % 14.5 % 0.7 % $ 589,699 43.7 % Industrials 0.4 % 5.5 % 21.3 % 26.5 % 0.6 % 733,355 54.3 % Utilities/Other — % — % 1.6 % 0.4 % — % 26,496 2.0 % Total 0.4 % 9.9 % 47.0 % 41.4 % 1.3 % $ 1,349,550 100.0 % NGHC — % 6.7 % 37.6 % 40.6 % 1.3 % $ 1,163,549 86.2 % Reciprocal Exchanges 0.4 % 3.2 % 9.4 % 0.8 % — % 186,001 13.8 % Total 0.4 % 9.9 % 47.0 % 41.4 % 1.3 % $ 1,349,550 100.0 % December 31, 2018 AAA AA+, A+,A,A- BBB+, BB+ or Fair % of Financial Institutions — % 4.3 % 23.1 % 14.2 % 0.9 % $ 535,373 42.5 % Industrials 0.4 % 6.1 % 21.5 % 26.7 % 0.6 % 697,324 55.3 % Utilities/Other — % — % 1.8 % 0.4 % — % 28,008 2.2 % Total 0.4 % 10.4 % 46.4 % 41.3 % 1.5 % $ 1,260,705 100.0 % NGHC — % 6.3 % 37.3 % 40.6 % 1.4 % $ 1,079,099 85.6 % Reciprocal Exchanges 0.4 % 4.1 % 9.1 % 0.7 % 0.1 % 181,606 14.4 % Total 0.4 % 10.4 % 46.4 % 41.3 % 1.5 % $ 1,260,705 100.0 % (g) Cash and Cash Equivalents, Restricted Cash and Restricted Investments The Company, in order to conduct business in certain states, is required to maintain letters of credit or assets on deposit to support state mandated regulatory requirements and certain third party agreements. The Company also utilizes trust accounts to collateralize business with its reinsurance counterparties. These assets are held primarily in the form of cash or certain high grade securities. Cash, cash equivalents, and restricted cash are as follows: March 31, 2019 December 31, 2018 Cash and cash equivalents $ 188,064 $ 193,858 Restricted cash and cash equivalents 32,208 39,725 Total cash, cash equivalents and restricted cash $ 220,272 $ 233,583 Restricted investments are as follows: March 31, 2019 December 31, 2018 Securities on deposit with state regulatory authorities $ 76,215 $ 73,119 Restricted investments to trusts in certain reinsurance transactions 66,894 70,470 Total restricted investments $ 143,109 $ 143,589 (h) Short-term and Other Investments Short-term investments include investments with maturities between 91 days and less than one year at the date of acquisition. Short-term investments also consist of commercial paper, U.S. Treasury bills and money market funds that are held within the Company’s longer term investment portfolios. The table below summarizes the composition of other investments: March 31, 2019 December 31, 2018 Equity method investments (related parties - $105,097 and $106,031) $ 142,707 $ 142,921 Notes receivable (related parties - $128,458 and $127,692) 129,474 128,893 Long-term Certificates of Deposit (CDs), at cost 20,151 20,252 Investments, at fair value 5,971 6,542 Investments, at cost or amortized cost 7,668 7,668 Total $ 305,971 $ 306,276 Equity method investments represent limited liability companies and limited partnership investments in real estate. Investments at fair value, primarily represent the Company’s right to receive the excess servicing spread related to servicing rights, for which the Company has elected the fair value option with changes in fair value recorded in earnings. Investments at cost or amortized cost, represent limited partnerships, loans and trusts. The Company believes its exposure to risk associated with these investments is generally limited to the investment carrying amounts. The Company’s other investments are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. For both the three months ended March 31, 2019 and 2018 , the Company did not record OTTI on other investments. Equity Method Investments - Related Parties The significant shareholder of the Company has an ownership interest in AmTrust Financial Services, Inc. (“AmTrust”) and ACP Re Ltd. (“ACP Re”). Limited Liability Companies and Limited Partnerships The following entities are considered by the Company to be VIEs, for which the Company is not the primary beneficiary. The Company accounts for these entities using the equity method of accounting. The Company believes its exposure to risk associated with these investments is generally limited to the investment carrying amounts. LSC Entity The Company has a 50% ownership interest in an entity (the “LSC Entity”) initially formed to acquire life settlement contracts, with AmTrust owning the remaining 50% . The LSC Entity used the contributed capital to pay premiums and purchase policies. A life settlement contract is a contract between the owner of a life insurance policy and a third party who obtains the ownership and beneficiary rights of the underlying life insurance policy. The LSC Entity has a 30% non-controlling equity interest in a limited partnership. As of March 31, 2019 , the LSC Entity directly held one life settlement contract. The life settlement contract is accounted for using the fair value method. The following table presents the Company’s 50% investment activity in the LSC Entity: Three Months Ended March 31, 2019 2018 Beginning of the period $ 48,324 $ 160,683 Distributions — (107,035 ) Contributions — 2,000 Equity in earnings (losses) 586 700 Change in equity method investments 586 (104,335 ) End of the period $ 48,910 $ 56,348 800 Superior, LLC The Company holds an investment in 800 Superior, LLC, a limited liability company that owns an office building in Cleveland, Ohio, with AmTrust. AmTrust has been appointed managing member of 800 Superior, LLC. The Company and AmTrust each have a 50% ownership interest in 800 Superior, LLC. Additionally, the Company entered into an office lease with 800 Superior, LLC. The Company paid 800 Superior, LLC $742 and $722 in rent for the three months ended March 31, 2019 and 2018 , respectively. The Company’s equity interest in 800 Superior, LLC as of March 31, 2019 and December 31, 2018 was $510 and $816 , respectively. For the three months ended March 31, 2019 and 2018 , the Company recorded equity in earnings (losses) from 800 Superior, LLC of $(306) and $(1,070) , respectively. East Ninth & Superior, LLC The Company holds an investment in East Ninth & Superior, LLC and 800 Superior NMTC Investment Fund II, LLC with AmTrust (collectively “East Ninth & Superior”). The Company and AmTrust each have a 50% ownership interest in East Ninth and Superior, LLC and a 24.5% ownership interest in 800 Superior NMTC Investment Fund II, LLC. The Company’s equity interest in East Ninth & Superior as of March 31, 2019 and December 31, 2018 was $4,322 and $4,309 , respectively. For the three months ended March 31, 2019 and 2018 , the Company recorded equity in earnings (losses) from East Ninth & Superior of $13 and $16 , respectively. North Dearborn Building Company, L.P. The Company holds an investment in North Dearborn Building Company, L.P. (“North Dearborn”), a limited partnership that owns an office building in Chicago, Illinois. AmTrust is also a limited partner in North Dearborn, and the general partner is NA Advisors GP LLC (“NA Advisors”), a related party, owned by Karfunkel family members which is managed by an unrelated third party. The Company and AmTrust each hold a 45% limited partnership interest in North Dearborn, while NA Advisors holds a 10% general partnership interest and a 10% profit interest, which NA Advisors pays to the unrelated third party manager. North Dearborn appointed NA Advisors as the general manager to oversee the day-to-day operations of the office building. The Company’s equity interest in North Dearborn as of March 31, 2019 and December 31, 2018 was $6,186 and $6,214 , respectively. For the three months ended March 31, 2019 and 2018 , the Company recorded equity in earnings (losses) from North Dearborn of $(28) and $(9) , respectively. 4455 LBJ Freeway, LLC The Company holds an investment in 4455 LBJ Freeway, LLC, a limited liability company that owns an office building in Dallas, Texas, with AmTrust. AmTrust has been appointed managing member of 4455 LBJ Freeway, LLC. The Company and AmTrust each have a 50% ownership interest in 4455 LBJ Freeway, LLC. Additionally, the Company entered into a lease agreement with 4455 LBJ Freeway, LLC. The Company paid 4455 LBJ Freeway, LLC $555 and $574 in rent for the three months ended March 31, 2019 and 2018 , respectively. The Company’s equity interest in 4455 LBJ Freeway, LLC as of March 31, 2019 and December 31, 2018 was $816 and $793 , respectively. For the three months ended March 31, 2019 and 2018 , the Company recorded equity in earnings (losses) from 4455 LBJ Freeway, LLC of $23 and $2 , respectively. Illinois Center Building, L.P. The Company holds an investment in Illinois Center Building, L.P. (“Illinois Center”), a limited partnership that owns an office building in Chicago, Illinois. AmTrust and ACP Re are also limited partners in Illinois Center and the general partner is NA Advisors. The Company and AmTrust each hold a 37.5% limited partnership interest in Illinois Center, while ACP Re holds a 15.0% limited partnership interest. NA Advisors holds a 10.0% general partnership interest and a 10.0% profit interest, which NA Advisors pays to the unrelated third party manager. Illinois Center appointed NA Advisors as the general manager to oversee the day-to-day operations of the office building. The Company’s equity interest in Illinois Center as of March 31, 2019 and December 31, 2018 was $44,353 and $45,575 , respectively. For the three months ended March 31, 2019 and 2018 , the Company recorded equity in earnings (losses) from Illinois Center of $(1,222) and $(1,109) |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company carries certain financial instruments at fair value. Assets and liabilities recorded at fair value in the Condensed Consolidated Balance Sheets are measured and classified in accordance with a fair value hierarchy consisting of three “levels” based on the observability of valuation inputs: Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities as of the measurement date. Additionally, the entity must have the ability to access the active market and the quoted prices cannot be adjusted by the entity. Level 2 - Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices in active markets for similar assets or liabilities; quoted prices in inactive markets for identical or similar assets or liabilities; or inputs that are observable or can be corroborated by observable market data by correlation or other means for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs are supported by little or no market activity. The unobservable inputs represent management’s best assumptions of how market participants would price the assets or liabilities. Generally, Level 3 assets and liabilities are valued using pricing models, discounted cash flow methodologies, or similar techniques that require significant judgment or estimation. The following describes the valuation techniques used by the Company to determine the fair value measurements on a recurring basis of financial instruments held as of March 31, 2019 and December 31, 2018 . The Company utilizes a pricing service (“pricing service”) to estimate fair value measurements for all its debt and equity securities. Level 1 measurements: • U.S. Treasury and federal agencies. The fair values of U.S. government securities are based on quoted market prices in active markets. The Company believes the market for U.S. government securities is an actively traded market given the high level of daily trading volume. • Common stock. The pricing service utilizes market quotations for equity securities that have quoted market prices in active markets and their respective quoted prices are provided at fair value. • Short-term investments. Comprised of money market funds that are traded in active markets and fair values are based on quoted market prices. Level 2 measurements: • States and political subdivision bonds, and foreign government. The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active. • Corporate bonds. Comprised of bonds issued by corporations, public and privately placed. The fair values of short-term corporate bonds are priced using the spread above the London Interbank Offering Rate (“LIBOR”) yield curve, and the fair value of long-term corporate bonds are priced using the spread above the risk-free yield curve. The spreads are sourced from broker dealers, trade prices and the new issue market. Where pricing is unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers. The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active. • Residential and commercial mortgage-backed securities, asset-backed securities and structured securities. The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads. Level 3 measurements: • States and political subdivision bonds. The Company holds certain municipal bonds that finance economic development, infrastructure and environmental projects which do not have an active market. These bonds are valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. • Corporate bonds. The Company holds certain structured notes and term loans that do not have an active market. These bonds are valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. • Common stock and preferred stock. From time to time, the Company also holds certain equity securities that are issued by privately-held entities or direct equity investments that do not have an active market. The Company estimates the fair value of these securities primarily based on inputs such as third-party broker quotes, issuers’ book value, market multiples, and other inputs. These bonds are valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. • Other investments, at fair value. Comprised of the Company’s right to receive the Excess Servicing Spread (“ESS”) related to servicing rights. The Company uses a discounted cash flow method to estimate their fair value. The key inputs used in the estimation of ESS include prepayment speed and discount rate. Changes in the fair value of the ESS are recorded in earnings. Assets measured at fair value on a recurring basis are as follows: March 31, 2019 Level 1 Level 2 Level 3 Total Available-for-sale debt securities: U.S. Treasury $ 62,983 $ — $ — $ 62,983 Federal agencies 25,616 — — 25,616 States and political subdivision bonds — 257,243 3,660 260,903 Foreign government — 145,218 — 145,218 Corporate bonds — 1,337,716 11,834 1,349,550 Residential mortgage-backed securities — 931,010 — 931,010 Commercial mortgage-backed securities — 557,072 — 557,072 Asset-backed securities — 62,086 — 62,086 Structured securities — 240,909 — 240,909 Total available-for-sale debt securities 88,599 3,531,254 15,494 3,635,347 Equity securities: Common stock 9,068 — 1,217 10,285 Total equity securities 9,068 — 1,217 10,285 Short-term investments 390,052 — — 390,052 Other investments — — 5,971 5,971 Total $ 487,719 $ 3,531,254 $ 22,682 $ 4,041,655 NGHC $ 454,840 $ 3,245,219 $ 22,682 $ 3,722,741 Reciprocal Exchanges 32,879 286,035 — 318,914 Total $ 487,719 $ 3,531,254 $ 22,682 $ 4,041,655 December 31, 2018 Level 1 Level 2 Level 3 Total Available-for-sale debt securities: U.S. Treasury $ 65,593 $ — $ — $ 65,593 Federal agencies 37,475 — — 37,475 States and political subdivision bonds — 268,601 3,596 272,197 Foreign government — 152,366 — 152,366 Corporate bonds — 1,248,938 11,767 1,260,705 Residential mortgage-backed securities — 925,116 — 925,116 Commercial mortgage-backed securities — 544,975 — 544,975 Asset-backed securities — 61,147 — 61,147 Structured securities — 241,458 — 241,458 Total available-for-sale debt securities 103,068 3,442,601 15,363 3,561,032 Equity securities: Common stock 9,898 — 1,051 10,949 Total equity securities 9,898 — 1,051 10,949 Short-term investments 348,549 — — 348,549 Other investments — — 6,542 6,542 Total $ 461,515 $ 3,442,601 $ 22,956 $ 3,927,072 NGHC $ 429,502 $ 3,160,203 $ 22,956 $ 3,612,661 Reciprocal Exchanges 32,013 282,398 — 314,411 Total $ 461,515 $ 3,442,601 $ 22,956 $ 3,927,072 The following tables provide a reconciliation of recurring fair value measurements of the Level 3 financial assets: States and Corporate Common Other Total Balance as of January 1, 2019 $ 3,596 $ 11,767 $ 1,051 $ 6,542 $ 22,956 Transfers into Level 3 — — — — — Transfers out of Level 3 — — — — — Total gains (losses) for the period: Included in net income (1) — — 166 (571 ) (405 ) Included in other comprehensive income (2) 64 67 — — 131 Purchases — — — — — Sales — — — — — Balance as of March 31, 2019 $ 3,660 $ 11,834 $ 1,217 $ 5,971 $ 22,682 Change in unrealized gains (losses) for the period included in net income for assets held at the end of the reporting period $ — $ — $ 166 $ (571 ) $ (405 ) Change in unrealized gains (losses) for the period included in other comprehensive income for assets held at the end of the reporting period $ 64 $ 67 $ — $ — $ 131 States and Corporate Common Preferred Other Total Balance as of January 1, 2018 $ 4,081 $ 24,545 $ 5,052 $ 270 $ 10,782 $ 44,730 Transfers into Level 3 — — — — — — Transfers out of Level 3 — — — — — — Total gains (losses) for the period: Included in net income (1) — — (1,186 ) 12 794 (380 ) Included in other comprehensive income (2) 46 (32 ) — — — 14 Purchases — — — — — — Sales — — — — (526 ) (526 ) Balance as of March 31, 2018 $ 4,127 $ 24,513 $ 3,866 $ 282 $ 11,050 $ 43,838 Change in unrealized gains (losses) for the period included in net income for assets held at the end of the reporting period $ — $ — $ (1,186 ) $ 12 $ 794 $ (380 ) (1) Gains and losses recognized in net income are reported within Net investment income. (2) Gains and losses recognized in other comprehensive income are reported within unrealized gains (losses) on investments, net of tax. During the three months ended March 31, 2019 and 2018 , there were no transfers between Level 2 and Level 3. At March 31, 2019 and December 31, 2018 , the carrying values of the Company’s cash and cash equivalents, premiums and other receivables, and accounts payable approximate the fair value given their short-term nature and were classified as Level 1. Fair value information about financial instruments not measured at fair value Debt - The amount reported in the accompanying Condensed Consolidated Balance Sheets for these financial instruments represents the carrying value of the debt. See Note 8 , “ Debt ” for additional information. The following table presents the carrying amount and estimated fair value of debt not carried at fair value, excluding capital lease liabilities, as well as the input level used to determine the fair value are indicated below: March 31, 2019 December 31, 2018 Input Level Carrying amount Fair value Carrying amount Fair value 7.625% Notes Level 2 $ 96,863 $ 102,000 $ 96,842 $ 90,400 6.75% Notes Level 3 346,600 357,879 346,439 353,756 Subordinated Debentures Level 3 72,168 72,114 72,168 72,109 Credit Agreement Level 3 — — 160,000 163,222 2019 Credit Agreement Level 3 160,000 168,964 — — |
Deferred Acquisition Costs
Deferred Acquisition Costs | 3 Months Ended |
Mar. 31, 2019 | |
Deferred Acquisition Costs [Abstract] | |
Deferred Policy Acquisition Costs | Deferred Acquisition Costs The following table reflects the amounts of policy acquisition costs deferred and amortized: Three Months Ended March 31, 2019 2018 Property Accident Total Property Accident Total Beginning of the period $ 226,188 $ 25,220 $ 251,408 $ 198,283 $ 18,106 $ 216,389 Additions 145,979 25,101 171,080 139,132 5,940 145,072 Amortization (136,008 ) (18,303 ) (154,311 ) (120,332 ) (7,529 ) (127,861 ) Change in DAC 9,971 6,798 16,769 18,800 (1,589 ) 17,211 End of the period $ 236,159 $ 32,018 $ 268,177 $ 217,083 $ 16,517 $ 233,600 NGHC $ 215,854 $ 32,018 $ 247,872 $ 195,448 $ 16,517 $ 211,965 Reciprocal Exchanges 20,305 — 20,305 21,635 — 21,635 End of the period $ 236,159 $ 32,018 $ 268,177 $ 217,083 $ 16,517 $ 233,600 |
Unpaid Losses and Loss Adjustme
Unpaid Losses and Loss Adjustment Expense Reserves | 3 Months Ended |
Mar. 31, 2019 | |
Insurance [Abstract] | |
Unpaid Losses and Loss Adjustment Expenses | Unpaid Losses and Loss Adjustment Expense Reserves The unpaid losses and loss adjustment expense (“LAE”) reserves are the result of ongoing analysis of recent loss development trends and emerging historical experience. Original estimates are increased or decreased as additional information becomes known regarding individual claims. In setting its reserves, the Company reviews its loss data to estimate expected loss development. Management believes that its use of standard actuarial methodology applied to its analyses of its historical experience provides a reasonable estimate of future losses. However, actual future losses may differ from the Company’s estimate, and future events beyond the control of management, such as changes in law, judicial interpretations of law and inflation, may favorably or unfavorably impact the ultimate settlement of the Company’s losses and LAE. The anticipated effect of inflation is implicitly considered when estimating liabilities for losses and LAE. In addition to inflation, the average severity of claims is affected by a number of factors that may vary by types and features of policies written. Future average severities are projected from historical trends, adjusted for implemented changes in underwriting standards and policy provisions, and general economic trends. These estimated trends are monitored and revised as necessary based on actual development. The tables below show the roll forward of loss reserves on a gross and net of reinsurance basis, reflecting changes in losses incurred and paid losses: Three Months Ended March 31, 2019 Property Accident NGHC Reciprocal Total Unpaid losses and LAE, gross of related reinsurance recoverable at beginning of the period $ 2,507,409 $ 271,280 $ 2,778,689 $ 178,470 $ 2,957,159 Less: Reinsurance recoverable at beginning of the period (1,182,588 ) (24,575 ) (1,207,163 ) (77,979 ) (1,285,142 ) Net balance at beginning of the period 1,324,821 246,705 1,571,526 100,491 1,672,017 Incurred losses and LAE related to: Current year 530,549 95,601 626,150 39,973 666,123 Prior year (5,514 ) (10,852 ) (16,366 ) 2,052 (14,314 ) Total incurred 525,035 84,749 609,784 42,025 651,809 Paid losses and LAE related to: Current year (130,395 ) (33,681 ) (164,076 ) (14,949 ) (179,025 ) Prior year (422,560 ) (53,310 ) (475,870 ) (21,478 ) (497,348 ) Total paid (552,955 ) (86,991 ) (639,946 ) (36,427 ) (676,373 ) Effect of foreign exchange rates — 1,094 1,094 — 1,094 Net balance at end of the period 1,296,901 245,557 1,542,458 106,089 1,648,547 Plus: Reinsurance recoverable at end of the period 1,103,114 28,729 1,131,843 89,933 1,221,776 Gross balance at end of period $ 2,400,015 $ 274,286 $ 2,674,301 $ 196,022 $ 2,870,323 Three Months Ended March 31, 2018 Property Accident NGHC Reciprocal Total Unpaid losses and LAE, gross of related reinsurance recoverable at beginning of the period $ 2,270,551 $ 249,653 $ 2,520,204 $ 143,353 $ 2,663,557 Less: Reinsurance recoverable at beginning of the period (1,067,495 ) (9,840 ) (1,077,335 ) (52,408 ) (1,129,743 ) Net balance at beginning of the period 1,203,056 239,813 1,442,869 90,945 1,533,814 Incurred losses and LAE related to: Current year 513,526 94,661 608,187 45,917 654,104 Prior year (15,169 ) (3,383 ) (18,552 ) (1,386 ) (19,938 ) Total incurred 498,357 91,278 589,635 44,531 634,166 Paid losses and LAE related to: Current year (202,967 ) (20,290 ) (223,257 ) (19,686 ) (242,943 ) Prior year (306,126 ) (47,992 ) (354,118 ) (17,455 ) (371,573 ) Total paid (509,093 ) (68,282 ) (577,375 ) (37,141 ) (614,516 ) Effect of foreign exchange rates — (1,679 ) (1,679 ) — (1,679 ) Net balance at end of the period 1,192,320 261,130 1,453,450 98,335 1,551,785 Plus: Reinsurance recoverable at end of the period 1,058,106 8,565 1,066,671 60,461 1,127,132 Gross balance at end of period $ 2,250,426 $ 269,695 $ 2,520,121 $ 158,796 $ 2,678,917 Prior year loss development, net of reinsurance Prior year development is based upon numerous estimates by line of business and accident year. No additional premiums or return premiums have been accrued as a result of the prior year effects. 2019 . Loss and LAE for the three months ended March 31, 2019 included $14,314 of favorable development on prior accident year loss and LAE reserves. The $3,462 of favorable development in the property and casualty segment (including $2,052 of unfavorable development for the Reciprocal Exchanges) was driven by the Company’s homeowners business, while the $10,852 of favorable development in the accident and health segment was primarily driven by the Company’s domestic products, specifically the Stop Loss business. 2018 . Loss and LAE for the three months ended March 31, 2018 included $19,938 of favorable development on prior accident year loss and LAE reserves. The $16,555 of favorable development in the property and casualty segment (including $1,386 of favorable development for the Reciprocal Exchanges) was primarily driven by favorable development in the Company’s auto physical damage and homeowners business, while $3,383 of favorable |
Reinsurance
Reinsurance | 3 Months Ended |
Mar. 31, 2019 | |
Insurance [Abstract] | |
Reinsurance | Reinsurance The Company utilizes reinsurance agreements to transfer portions of the underlying risk of the business the Company writes to various reinsurance companies. Reinsurance does not discharge or diminish the Company’s obligation to pay claims covered by the insurance policies it issues; however, it does permit the Company to recover certain incurred losses from its reinsurers and the Company’s reinsurance recoveries reduce the maximum loss that it may incur as a result of a covered loss event. The Company’s reinsurers generally carry at least an A.M. Best Company, Inc. rating of “A-” (Excellent) or are fully collateralized at the time they enter into the Company’s reinsurance agreements. The Company also enters into reinsurance relationships with third-party captives formed by agents as a mechanism for sharing risk and profit. The total amount, cost and limits relating to the reinsurance coverage the Company purchases may vary from year to year based upon a variety of factors, including the availability of quality reinsurance at an acceptable price and the level of risk that the Company chooses to retain for its own account. The Company assumes and cedes insurance risks under various reinsurance agreements, on both a pro rata basis and excess of loss basis. The Company purchases reinsurance to mitigate the volatility of direct and assumed business, which may be caused by the aggregate value or the concentration of written exposures in a particular geographic area or business segment and may arise from catastrophes or other events. The Company pays a premium as consideration for ceding the risk. Reinsurance recoverable summary is as follows: March 31, 2019 December 31, 2018 Reinsurance recoverable on paid losses $ 267,789 $ 326,596 Reinsurance recoverable on unpaid losses 1,221,776 1,285,142 Reinsurance recoverable $ 1,489,565 $ 1,611,738 The following is the effect of reinsurance on unpaid loss and LAE reserves and unearned premiums: March 31, 2019 December 31, 2018 Assumed Ceded Assumed Ceded Unpaid Loss and LAE reserves $ 76,123 $ 1,221,776 $ 84,469 $ 1,285,142 Unearned premiums 20,604 637,024 21,015 665,674 The following is a summary of effects of reinsurance on premiums and losses: Three Months Ended March 31, 2019 2018 Premium: Written Earned Written Earned Direct $ 1,489,188 $ 1,315,705 $ 1,413,877 $ 1,191,327 Assumed 20,590 21,000 19,253 29,051 Total Gross Premium 1,509,778 1,336,705 1,433,130 1,220,378 Ceded (345,114 ) (372,548 ) (326,487 ) (314,840 ) Net Premium $ 1,164,664 $ 964,157 $ 1,106,643 $ 905,538 Three Months Ended March 31, 2019 2018 Assumed Ceded Assumed Ceded Loss and LAE $ 5,322 $ 209,322 $ (1,321 ) $ 197,317 Quota Share Agreements Effective July 1, 2017 , the Company entered into an Auto Quota Share Agreement (the “Auto Quota Share Agreement”) covering the Company’s auto lines of business, under which the Company cedes 15.0% of net liability under auto policies in force as of the effective date and new and renewal policies issued during the two -year term of the agreement to an unaffiliated third-party reinsurance provider. Under the Auto Quota Share Agreement, the Company receives a 31.2% provisional ceding commission on premiums ceded to the reinsurer during the term of the Auto Quota Share Agreement, subject to a sliding scale adjustment to a maximum of 32.8% if the loss ratio for the reinsured business is 63.4% or less and a minimum of 29.6% if the loss ratio is 66.6% or higher. The liability of the reinsurer is capped at $5,000 per risk or $70,000 per event. The Company retains the flexibility, under certain conditions, to increase the cession percentage up to a maximum cession of 30.0% and to decrease the cession percentage to a minimum cession of 5.0% during 2019. Effective January 1, 2019, the Company cedes 7.0% of net liability under new and renewal auto policies written. Effective July 1, 2017 , the Company entered into a Homeowners Quota Share Agreement (the “HO Quota Share Agreement”) covering the Company’s homeowners line of business, under which the Company cedes 29.6% of net liability under homeowners policies, including lender-placed property policies, in force as of the effective date and new and renewal policies issued during the two -year term of the agreement to unaffiliated third-party reinsurance providers. Under the HO Quota Share Agreement, the Company receives a 42.5% ceding commission on premiums ceded to the reinsurers during the term of the HO Quota Share Agreement. The liability of the reinsurers is capped at $5,000 per risk or $70,000 per event. Effective May 1, 2018 , the Company cedes an additional 12.4% of net liability (for a total cession of 42.0% ) and receives a 38.0% ceding commission on the additional 12.4% in ceded premiums. Catastrophe Reinsurance As of May 1, 2018 , the Company’s reinsurance property catastrophe excess of loss program, protecting the Company against catastrophic events and other large losses, provides a total of $575,000 in coverage with a $70,000 retention, with one reinstatement. Effective May 1, 2019 , the Company’s reinsurance property catastrophe excess of loss program, protecting the Company against catastrophic events and other large losses, provides a total of $650,000 in coverage with one reinstatement with a $70,000 retention for the first event and $50,000 for the second event. Effective July 1, 2018 , the casualty program provides $35,000 in coverage in excess of a $5,000 retention. The Company pays a premium as consideration for ceding the risk. As of July 1, 2017 , a reinsurance property catastrophe excess of loss program went into effect protecting the Reciprocal Exchanges against accumulations of losses resulting from a catastrophic event. The property catastrophe program provided a total of $375,000 in coverage with a $20,000 retention, with one reinstatement. Effective July 1, 2018, the Reciprocal Exchanges renewed their property catastrophe excess of loss program providing a total of $475,000 in coverage with a $20,000 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt The following table represents the Company’s debt: Interest Rate Maturity March 31, 2019 December 31, 2018 Fixed-rate: 6.75% Notes 6.75% 2024 $ 350,000 $ 350,000 7.625% Notes 7.625% 2055 100,000 100,000 Floating-rate: Subordinated Debentures I LIBOR + 3.40% 2035 41,238 41,238 Subordinated Debentures II LIBOR + 4.25% 2037 30,930 30,930 Credit Agreement (1) LIBOR + 2.00% 2020 — 160,000 2019 Credit Agreement (2) LIBOR + 1.75% 2023 160,000 — Finance lease liabilities Various Various 20,568 14,824 Other 3.5% Various 13,997 15,522 Unamortized debt issuance costs and unamortized discount (6,537 ) (6,719 ) Total carrying amount of debt $ 710,196 $ 705,795 (1) The weighted average interest rate on the amount outstanding as of December 31, 2018 was 4.58% . (2) The weighted average interest rate on the amount outstanding as of March 31, 2019 was 4.27% . The following table presents the Company’s interest expense: Three Months Ended March 31, Interest Payment Frequency 2019 2018 6.75% Notes Semiannually $ 5,906 $ 5,906 7.625% Notes Quarterly 1,906 1,906 Subordinated Debentures Quarterly 1,163 986 Credit Agreement Quarterly 1,211 1,684 2019 Credit Agreement Quarterly 529 — Finance lease liabilities Various 294 164 Other (1) Various 1,990 508 Total interest expense $ 12,999 $ 11,154 (1) Other includes interest for other liabilities, interest credited on funds held balances and accretion of debt issuance costs. Senior Notes The 6.75% Notes are the Company’s general unsecured obligations and rank equally in right of payment with its other existing and future senior unsecured indebtedness and senior in right of payment to any of its indebtedness that is contractually subordinated to the 6.75% Notes. The 6.75% Notes are also effectively subordinated to any of the Company’s existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness and are structurally subordinated to the existing and future indebtedness of the Company’s subsidiaries (including trade payables). The 6.75% Notes mature on May 15, 2024, unless earlier redeemed or purchased by the Company. The 7.625% Notes are the Company’s subordinated unsecured obligations and rank (i) senior in right of payment to any future junior subordinated debt, (ii) equal in right of payment with any unsecured, subordinated debt that the Company incurs in the future that ranks equally with the 7.625% Notes, and (iii) subordinate in right of payment to any of the Company’s existing and future senior debt, including amounts outstanding under the Company’s revolving credit facility, the Company’s 6.75% notes and certain of the Company’s other obligations. In addition, the 7.625% Notes are structurally subordinated to all existing and future indebtedness, liabilities and other obligations of the Company’s subsidiaries. The 7.625% Notes mature on September 15, 2055, unless earlier redeemed or purchased by the Company. Subordinated Debentures The Company, through a subsidiary, is the issuer of junior subordinated debentures (the “Subordinated Debentures”) relating to an issuance of trust preferred securities. The Subordinated Debentures require interest-only payments to be made on a quarterly basis, with principal due at maturity. The Subordinated Debentures’ principal amounts of $41,238 and $30,930 mature on 2035 and 2037, respectively, and bear interest at an annual rate equal to LIBOR plus 3.40% and LIBOR plus 4.25% , respectively. The Subordinated Debentures are redeemable by the Company at a redemption price equal to 100% of their principal amount. Credit Agreement On February 25, 2019 , the Company refinanced its existing credit agreement and entered into a new credit agreement (the “ 2019 Credit Agreement ”), with JPMorgan Chase Bank, N.A., as Administrative Agent, KeyBank National Association and Fifth Third Bank, as Co-Syndication Agents, and the various lending institutions party thereto. The 2019 Credit Agreement is currently a $340,000 base revolving credit facility with a letter of credit sublimit of $150,000 and an expansion feature of up to $50,000 . Borrowings under the 2019 Credit Agreement bear interest at either the Alternate Base Rate (“ABR”) or the LIBO rate. ABR borrowings under the 2019 Credit Agreement will bear interest at (x) the greatest of (a) the prime rate in effect on such day, (b) the federal funds effective rate on such day plus 0.5 percent or (c) the adjusted LIBO rate for a one-month interest period on such day plus 1 percent . Eurodollar borrowings under the 2019 Credit Agreement will bear interest at the adjusted LIBO rate plus the Eurodollar spread for the interest period in effect. Fees payable by the Company under the 2019 Credit Agreement include a letter of credit participation fee, a letter of credit fronting fee with respect to each letter of credit ( 0.125% ) and a commitment fee on the available commitments of the lenders (a range of 0.175% to 0.25% based on the Company’s consolidated leverage ratio, and which rate was 0.225% as of March 31, 2019 ). The 2019 Credit Agreement has a maturity date of February 25, 2023. Maturities of the Company’s debt for the years subsequent to March 31, 2019 are as follows: 2019 (remaining nine months) 2020 2021 2022 2023 2024 Thereafter Total 6.75% Notes $ — $ — $ — $ — $ — $ 350,000 $ — $ 350,000 7.625% Notes — — — — — — 100,000 100,000 Subordinated Debentures I — — — — — — 41,238 41,238 Subordinated Debentures II — — — — — — 30,930 30,930 2019 Credit Agreement — — — — 160,000 — — 160,000 Finance lease liabilities 4,866 5,585 3,370 1,756 1,192 1,242 2,557 20,568 Other 4,655 6,399 2,943 — — — — 13,997 Total principal amount of debt $ 9,521 $ 11,984 $ 6,313 $ 1,756 $ 161,192 $ 351,242 $ 174,725 $ 716,733 Unamortized debt issuance costs and unamortized discount (6,537 ) Carrying amount of debt $ 710,196 Covenants and Compliance The indenture relating to the 6.75% Notes and 7.625% Notes contains customary covenants, such as reporting of annual and quarterly financial results, and restrictions on certain mergers and consolidations, as well as covenants relating to the incurrence of debt if the Company’s consolidated leverage ratio would exceed 0.35 to 1.00 , a limitation on liens, a limitation on the disposition of stock of certain of the Company’s subsidiaries and a limitation on transactions with certain of the Company’s affiliates. The 2019 Credit Agreement contains certain restrictive covenants customary for facilities of this type (subject to negotiated exceptions and baskets), including restrictions on indebtedness, liens, acquisitions and investments, restricted payments and dispositions. There are also financial covenants that require the Company to maintain a minimum consolidated net worth, a maximum consolidated leverage ratio, a minimum risk-based capital and a minimum rating. The 2019 Credit Agreement also provides for customary events of default, with grace periods where customary, including failure to pay principal when due, failure to pay interest or fees within three business days after becoming due, failure to comply with covenants, breaches of representations and warranties, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, or a change in control of the Company. Upon the occurrence and during the continuation of an event of default, the administrative agent, upon the request of the requisite percentage of the lenders, may terminate the obligations of the lenders to make loans and to issue letters of credit under the 2019 Credit Agreement , declare the Company’s obligations under the 2019 Credit Agreement to become immediately due and payable and/or exercise any and all remedies and other rights under the 2019 Credit Agreement . As of March 31, 2019 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company determines if an arrangement is a lease at inception. Operating lease ROU assets and operating leases liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses an incremental borrowing rate at commencement date in determining the present value of future payments. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. The Company elected the package of practical expedients permitted under the transition guidance within the new standard. Application of the package of practical expedients allowed the Company not to reassess a) whether any expired or existing contracts contain leases, b) existing lease classification, c) initial direct cost for existing leases, and d) land easements that exist before the Company's adoption of the new standard. The Company leases certain retail stores, office space, land, and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheets; the Company recognizes lease expense for these leases over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of the Company's lease agreements include rental payments adjusted periodically for inflation. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company rents or subleases certain real estate to third parties. Supplemental balance sheet information related to leases is as follow: Leases Classification March 31, 2019 Assets: Finance Buildings and improvements $ 11,296 Finance Vehicle 6,209 Finance Hardware, software and other equipment 5,760 Total finance 23,265 Operating Operating lease assets 104,089 Total lease assets Premises and equipment, net (1) $ 127,354 Liabilities: Finance Debt $ 20,568 Operating Other liabilities 112,907 Total lease liabilities $ 133,475 (1) As of March 31, 2019 , accumulated depreciation and amortization for Buildings and improvements, Vehicle, Hardware, software and other equipment, and Operating lease assets was $995 , $4,709 , $649 and $6,254 , respectively. The components of lease cost are as follows: Lease Cost Classification Three Months Ended March 31, 2019 Finance lease cost: Amortization of leased assets General and administrative expenses $ 1,758 Interest on lease liabilities Interest expense 294 Finance lease cost $ 2,052 Operating lease cost General and administrative expenses $ 8,818 Maturities of the Company’s lease liabilities for the years subsequent to March 31, 2019 are as follows: Operating Leases Finance Leases Total 2019 (remaining nine months) $ 23,189 $ 5,508 $ 28,697 2020 25,770 6,230 32,000 2021 19,791 3,808 23,599 2022 15,925 2,083 18,008 2023 13,495 1,446 14,941 2024 10,915 1,428 12,343 Thereafter 25,675 2,847 28,522 Total lease payments $ 134,760 $ 23,350 $ 158,110 Less: Interest (21,853 ) (2,782 ) Present value of lease liabilities $ 112,907 $ 20,568 Supplemental information related to term and discount rate is as follow: Leases Classification March 31, 2019 Weighted-average remaining lease term (years): Finance Buildings and improvements 7.7 years Finance Vehicle 2.2 years Finance Hardware, software and other equipment 1.5 years Operating Operating lease assets 5.8 years Weighted-average discount rate: Finance Buildings and improvements 5.8 % Finance Vehicle 4.2 % Finance Hardware, software and other equipment 4.2 % Operating Operating lease assets 5.9 % Supplemental cash flow information related to leases is as follow: Three Months Ended March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 294 Financing cash flows from finance leases 1,509 Operating cash flows from operating leases 6,020 Leased assets obtained in exchange for new finance lease liabilities 7,253 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation The Company’s insurance subsidiaries are named as defendants in various legal actions arising principally from claims made under insurance policies and contracts. Those actions are considered by the Company in estimating the loss and LAE reserves. The Company’s management believes the resolution of those actions will not have a material adverse effect on the Company’s financial position or results of operations. The Company as a defendant and the other parties involved in the consolidated multi-district class action litigation in the United States District Court for the Central District of California with respect to allegations of improper practices in the placement of insurance in the historical and no longer existing collateral protection insurance program for Wells Fargo have recently reached agreement upon a preliminary settlement of the litigation subject to final documentation and court approval. As of December 31, 2018 , the Company accrued a net liability relating to the settlement of $10,000 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company files a consolidated Federal income tax return. The Reciprocal Exchanges are not included in the Company’s consolidated tax return as the Company does not have an ownership interest in the Reciprocal Exchanges, and they are not a part of the consolidated tax sharing agreement among the Company and its subsidiaries. The Company uses the estimated annual effective tax rate method. Certain items, including those deemed to be unusual, infrequent or that cannot be reliably estimated, are excluded from the estimated annual effective tax rate. In these cases, the actual tax expense or benefit is reported in the same period as the related item. Certain tax effects are also not reflected in the estimated annual effective tax rate, primarily certain changes in the realizability of deferred tax assets and uncertain tax positions. The Company’s consolidated effective tax rate decreased from 22.4% for the three months ended March 31, 2018 to 20.9% for the three months ended March 31, 2019 . The decrease was primarily driven by the impact of foreign operations. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation The Company currently has two equity incentive plans (the “Plans”). The Plans authorize up to an aggregate of 7,435,000 shares of Company stock for awards of options to purchase shares of the Company’s common stock, stock appreciation rights, restricted stock, restricted stock units (“RSU”), unrestricted stock and other performance awards. The aggregate number of shares of common stock for which awards may be issued may not exceed 7,435,000 shares, subject to the authority of the Company’s Board of Directors to adjust this amount in the event of a consolidation, reorganization, stock dividend, recapitalization or similar transaction affecting the Company’s common stock. As of March 31, 2019 , 29,451 shares of the Company’s common stock remained available for grants under the Plans. A summary of the stock option awards is shown below: Shares Subject to Options Outstanding Three Months Ended March 31, 2019 Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) Outstanding at beginning of period 3,184,352 $ 9.53 Exercised (25,216 ) 3.67 Outstanding and exercisable at end of period 3,159,136 $ 9.58 3.8 $ 44,718 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing price of the Company’s common stock of $23.73 , as reported on the Nasdaq Global Select Market on March 29, 2019 . No options were granted, forfeited or expired during the three months ended March 31, 2019 . The total intrinsic value of the options exercised for the three months ended March 31, 2019 and 2018 was $526 and $1,502 , respectively. The total fair value of stock options vested for the three months ended March 31, 2019 and 2018 was $37 and $221 , respectively. A summary of the RSUs is shown below: RSUs Three Months Ended March 31, 2019 Number of RSUs Weighted-Average Grant Date Fair Value Non-vested at beginning of period 938,795 $ 22.28 Granted 497,741 25.60 Vested (267,060 ) 21.70 Forfeited (5,881 ) 24.44 Non-vested at end of period 1,163,595 $ 23.82 The weighted-average grant date fair value of RSUs granted for the three months ended March 31, 2019 and 2018 was $25.60 and $20.15 , respectively. The total fair value of the RSUs vested for the three months ended March 31, 2019 and 2018 was $5,796 and $3,882 , respectively. Compensation expense, included in general and administrative expenses, for all share-based compensation plans was $2,622 and $2,130 for the three months ended March 31, 2019 and 2018 , respectively. As of March 31, 2019 , the Company had approximately $24,051 of unrecognized share-based compensation expense, all of which was related to RSUs. This unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately 1.7 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following is a summary of the elements used in calculating basic and diluted earnings per common share: Three Months Ended March 31, 2019 2018 Numerator: Net income attributable to NGHC $ 91,758 $ 68,208 Preferred stock dividends - nonconvertible (7,875 ) (7,875 ) Preferred stock dividends - convertible — — Numerator for basic EPS 83,883 60,333 Effect of dilutive securities: Preferred stock dividends - convertible — — Numerator for diluted EPS - after assumed conversions $ 83,883 $ 60,333 Denominator: Denominator for basic EPS - weighted-average shares outstanding 113,014,711 106,758,641 Effect of dilutive securities: Employee stock options 1,939,844 1,922,885 RSUs 331,198 269,458 Convertible preferred stock 789,473 — Dilutive potential common shares 3,060,515 2,192,343 Denominator for diluted EPS - weighted-average shares outstanding and assumed conversions 116,075,226 108,950,984 Basic EPS $ 0.74 $ 0.57 Diluted EPS $ 0.72 $ 0.55 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The significant shareholder of the Company has an ownership interest in AmTrust, Maiden Holdings Ltd. (“Maiden”) and ACP Re. The Company provides and receives services to and from these related entities as follows: Agreements with AmTrust Asset Purchase and Master Services Agreements On September 13, 2017 , the Company entered into an asset purchase and license agreement (the “Agreement”) with AmTrust, pursuant to which the Company acquired ownership of a policy management system and the related intellectual property, as well as a non-exclusive perpetual license to certain software programs used by the system (the “System”), for a purchase price of $200,000 , including license fees which would have been payable for use of the System during the third quarter 2017. The System has been fully transferred to the Company’s operating environment and the purchase price has been fully paid. The Agreement also terminated the existing master services agreement between the Company and AmTrust. AmTrust will continue to provide management of the premium receipts from its lockbox facilities during a transition period pursuant to the Agreement under the same terms as those provided under the master services agreement. The Company recorded expenses related to this agreement of $425 and $3,756 for the three months ended March 31, 2019 and 2018 , respectively. NGHC Quota Share Agreement The Company participated in a quota share reinsurance treaty with ACP Re, Maiden and AmTrust, whereby the Company ceded 50% of the total net earned premiums, net of a ceding commission, and net incurred losses and LAE on business with effective dates after March 1, 2010 (“NGHC Quota Share”). In August 2013, the Company terminated the NGHC Quota Share agreement on a run-off basis. The net reinsurance recoverable is $6,136 and $7,425 at March 31, 2019 and December 31, 2018 , respectively. The net recovery under the agreement was $456 and $97 for the three months ended March 31, 2019 and 2018 , respectively. ACP Re and Maiden held assets in trust for the benefit of the Company in the amount of $2,397 and $8,034 , respectively, as of March 31, 2019 and $3,796 and $8,644 , respectively, as of December 31, 2018 . Equity Method Investments The Company has an ownership interest in an LSC Entity, limited liability companies and limited partnerships with related parties. See Note 3 , “ Investments - Equity Method Investments - Related Parties” for additional information. Agreements with ACP Re Credit Agreement The Company is party to a credit agreement (the “ACP Re Credit Agreement”) by and among AmTrust, as administrative agent, ACP Re Holdings, LLC, a Delaware limited liability company owned by a related party trust, the Michael Karfunkel Family 2005 Trust (the “Trust”), as borrower, and AmTrust and the Company, as lenders of $250,000 ( $125,000 each lender). The amounts borrowed are secured by equity interests, cash and, other investments held by ACP Re Holdings, LLC in an amount equal to 115% of the outstanding loan balance. The maturity date of the loan is September 20, 2036. The interest rate on the outstanding principal balance is a fixed annual rate of 3.7% , provided that up to 1.2% thereof may be paid in kind. The Trust is required to cause ACP Re Holdings, LLC to maintain assets having a value greater than 115% of the outstanding loan balance, and if there is a shortfall, the Trust will make a contribution to ACP Re Holdings, LLC of assets having a market value of at least the shortfall (the “Maintenance Covenant”). Commencing on September 20, 2026, and for each year thereafter, two percent of the then outstanding principal balance of the loan (inclusive of any amounts previously paid in kind) is due and payable. A change of control of greater than 50% and an uncured breach of the Maintenance Covenant are included as events of default. As of March 31, 2019 and December 31, 2018 the Company had a receivable principal amount related to the ACP Re Credit Agreement of $128,458 and $127,692 , respectively. The Company recorded interest income of $1,188 and $1,174 for the three months ended March 31, 2019 and 2018 , respectively, under the ACP Re Credit Agreement. Management determined no impairment reserve was needed for the carrying value of the loan at March 31, 2019 and December 31, 2018 based on the collateral levels maintained. Other Related Party Transactions Operating Lease Agreements The Company leases office space at 59 Maiden Lane in New York, New York from 59 Maiden Lane Associates LLC, an entity that is wholly-owned by the Karfunkel family. The lease term is through 2022. The Company paid $207 and $207 in rent for the three months ended March 31, 2019 and 2018 , respectively. The Company leases office space at 30 North LaSalle Street, Chicago, Illinois from 30 North LaSalle Street Partners LLC, an entity that is wholly-owned by the Karfunkel family. The lease term is through 2025. The Company paid $76 and $75 in rent for the three months ended March 31, 2019 and 2018 , respectively. Use of the Company Aircraft The Company and Barry Karfunkel, Chief Executive Officer of the Company, are parties to a time sharing agreement for the use of the Company’s plane. During the three months ended March 31, 2019 and 2018 , Mr. Barry Karfunkel reimbursed the Company $15 and $40 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company currently operates two business segments, “Property and Casualty” and “Accident and Health.” The “Corporate and Other” column represents the activities of the holding company, as well as income from the Company’s investment portfolio. The Company evaluates segment profits attributable to the performance of activities within the segment separately from the results of the Company’s investment portfolio. Other operating expenses allocated to the segments are called “General and administrative expenses” which are allocated on an actual basis except corporate salaries and benefits where management’s judgment is applied. In determining total assets by segment, the Company identifies those assets that are attributable to a particular segment such as premiums, deferred acquisition costs, reinsurance recoverable, prepaid reinsurance premiums, intangible assets and goodwill, while the remaining assets are allocated to Corporate and Other. The Property and Casualty segment, which includes the Reciprocal Exchanges and the management companies, reports the management fees earned by the Company from the Reciprocal Exchanges for underwriting, investment management and other services as service and fee income. The effects of these transactions between the Company and the Reciprocal Exchanges are eliminated in consolidation to derive consolidated net income. However, the management fee income is reported in net income attributable to NGHC and included in the basic and diluted earnings per share. The following tables summarize the results of operations of the operating segments: Three Months Ended March 31, 2019 Property and Casualty Accident and Health Corporate and Other Total Underwriting revenues: Gross premium written $ 1,251,234 $ 258,544 $ — $ 1,509,778 Ceded premiums (286,751 ) (58,363 ) — (345,114 ) Net premium written 964,483 200,181 — 1,164,664 Change in unearned premium (161,906 ) (38,601 ) — (200,507 ) Net earned premium 802,577 161,580 — 964,157 Ceding commission income 66,943 2,591 — 69,534 Service and fee income 104,495 61,012 — 165,507 Total underwriting revenues 974,015 225,183 — 1,199,198 Underwriting expenses: Loss and loss adjustment expense 567,060 84,749 — 651,809 Acquisition costs and other underwriting expenses 154,070 57,848 — 211,918 General and administrative expenses 189,456 58,638 — 248,094 Total underwriting expenses 910,586 201,235 — 1,111,821 Underwriting income 63,429 23,948 — 87,377 Net investment income — — 33,445 33,445 Net gain on investments — — 22 22 Interest expense — — (12,999 ) (12,999 ) Provision for income taxes — — (22,506 ) (22,506 ) Net (income) loss attributable to non-controlling interest — — 6,419 6,419 Net income attributable to NGHC $ 63,429 $ 23,948 $ 4,381 $ 91,758 Three Months Ended March 31, 2018 Property Accident Corporate Total Underwriting revenues: Gross premium written $ 1,199,354 $ 233,776 $ — $ 1,433,130 Ceded premiums (316,064 ) (10,423 ) — (326,487 ) Net premium written 883,290 223,353 — 1,106,643 Change in unearned premium (131,628 ) (69,477 ) — (201,105 ) Net earned premium 751,662 153,876 — 905,538 Ceding commission income 44,210 258 — 44,468 Service and fee income 96,935 45,187 — 142,122 Total underwriting revenues 892,807 199,321 — 1,092,128 Underwriting expenses: Loss and loss adjustment expense 542,888 91,278 — 634,166 Acquisition costs and other underwriting expenses 125,102 43,608 — 168,710 General and administrative expenses 180,397 50,608 — 231,005 Total underwriting expenses 848,387 185,494 — 1,033,881 Underwriting income 44,420 13,827 — 58,247 Net investment income — — 25,011 25,011 Net gain on investments — — 118 118 Interest expense — — (11,154 ) (11,154 ) Provision for income taxes — — (16,202 ) (16,202 ) Net (income) loss attributable to non-controlling interest — — 12,188 12,188 Net income attributable to NGHC $ 44,420 $ 13,827 $ 9,961 $ 68,208 The following tables summarize the financial position of the operating segments: March 31, 2019 Property and Casualty Accident and Health Corporate and Other Total Premiums and other receivables, net $ 1,388,282 $ 216,278 $ 3,691 $ 1,608,251 Deferred acquisition costs 236,159 32,018 — 268,177 Reinsurance recoverable 1,457,778 31,787 — 1,489,565 Prepaid reinsurance premiums 602,498 34,526 — 637,024 Intangible assets, net and Goodwill 438,009 114,986 — 552,995 Prepaid and other assets 22,660 25,196 26,141 73,997 Corporate and other assets — — 5,001,558 5,001,558 Total assets $ 4,145,386 $ 454,791 $ 5,031,390 $ 9,631,567 December 31, 2018 Property and Casualty Accident and Health Corporate and Other Total Premiums and other receivables, net $ 1,245,530 $ 153,896 $ 386 $ 1,399,812 Deferred acquisition costs 226,188 25,220 — 251,408 Reinsurance recoverable 1,585,008 26,730 — 1,611,738 Prepaid reinsurance premiums 665,660 14 — 665,674 Intangible assets, net and Goodwill 443,163 116,957 — 560,120 Prepaid and other assets 20,941 22,472 111,545 154,958 Corporate and other assets — — 4,795,570 4,795,570 Total assets $ 4,186,490 $ 345,289 $ 4,907,501 $ 9,439,280 The following table shows an analysis of the premiums by geographical location: Three Months Ended March 31, 2019 2018 NGHC Reciprocal Total NGHC Reciprocal Total Gross premium written - North America $ 1,294,794 $ 105,569 $ 1,400,363 $ 1,232,772 $ 97,689 $ 1,330,461 Gross premium written - Europe 109,415 — 109,415 102,669 — 102,669 Total $ 1,404,209 $ 105,569 $ 1,509,778 $ 1,335,441 $ 97,689 $ 1,433,130 Net premium written - North America $ 1,053,601 $ 48,955 $ 1,102,556 $ 953,396 $ 50,578 $ 1,003,974 Net premium written - Europe 62,108 — 62,108 102,669 — 102,669 Total $ 1,115,709 $ 48,955 $ 1,164,664 $ 1,056,065 $ 50,578 $ 1,106,643 Net earned premium - North America $ 893,117 $ 45,658 $ 938,775 $ 825,112 $ 46,055 $ 871,167 Net earned premium - Europe 25,382 — 25,382 34,371 — 34,371 Total $ 918,499 $ 45,658 $ 964,157 $ 859,483 $ 46,055 $ 905,538 The following table summarizes service and fee income by source within each operating segment: Three Months Ended March 31, 2019 2018 Property Accident Total Property Accident Total Commission revenue $ 27,210 $ 24,771 $ 51,981 $ 21,709 $ 17,524 $ 39,233 Finance and processing fees 32,436 2,024 34,460 32,060 1,255 33,315 Installment fees 24,170 — 24,170 21,302 — 21,302 Group health administrative fees — 23,505 23,505 — 19,291 19,291 Late payment fees 8,293 87 8,380 7,558 25 7,583 Other service and fee income 12,386 10,625 23,011 14,306 7,092 21,398 Total $ 104,495 $ 61,012 $ 165,507 $ 96,935 $ 45,187 $ 142,122 NGHC $ 103,125 $ 61,012 $ 164,137 $ 94,489 $ 45,187 $ 139,676 Reciprocal Exchanges 1,370 — 1,370 2,446 — 2,446 Total $ 104,495 $ 61,012 $ 165,507 $ 96,935 $ 45,187 $ 142,122 The following tables show an analysis of premiums and fee income by product line: Three Months Ended March 31, Gross Premium Written 2019 2018 Property and Casualty Personal Auto $ 766,681 $ 724,645 Homeowners 152,042 140,253 RV/Packaged 51,851 49,464 Small Business Auto 85,878 86,244 Lender-placed Insurance 75,938 84,934 Other 13,275 16,125 Total Property and Casualty 1,145,665 1,101,665 Accident and Health Group 64,938 56,060 Individual 84,192 75,048 International 109,414 102,668 Total Accident and Health 258,544 233,776 Total NGHC $ 1,404,209 $ 1,335,441 Reciprocal Exchanges Personal Auto $ 36,862 $ 34,297 Homeowners 67,800 62,521 Other 907 871 Total Reciprocal Exchanges $ 105,569 $ 97,689 Total Gross Premium Written $ 1,509,778 $ 1,433,130 Three Months Ended March 31, Net Premium Written 2019 2018 Property and Casualty Personal Auto $ 658,920 $ 553,997 Homeowners 85,245 92,596 RV/Packaged 51,597 49,189 Small Business Auto 74,186 64,727 Lender-placed Insurance 42,070 63,214 Other 3,510 8,989 Total Property and Casualty 915,528 832,712 Accident and Health Group 53,950 45,637 Individual 84,123 75,048 International 62,108 102,668 Total Accident and Health 200,181 223,353 Total NGHC $ 1,115,709 $ 1,056,065 Reciprocal Exchanges Personal Auto $ 15,645 $ 13,495 Homeowners 33,016 36,808 Other 294 275 Total Reciprocal Exchanges $ 48,955 $ 50,578 Total Net Premium Written $ 1,164,664 $ 1,106,643 Three Months Ended March 31, Net Earned Premium 2019 2018 Property and Casualty Personal Auto $ 510,554 $ 454,216 Homeowners 84,058 82,195 RV/Packaged 50,305 45,689 Small Business Auto 67,633 58,562 Lender-placed Insurance 41,718 60,469 Other 2,651 4,476 Total Property and Casualty 756,919 705,607 Accident and Health Group 53,963 45,639 Individual 82,235 73,866 International 25,382 34,371 Total Accident and Health 161,580 153,876 NGHC Total $ 918,499 $ 859,483 Reciprocal Exchanges Personal Auto $ 15,861 $ 12,997 Homeowners 29,491 32,771 Other 306 287 Total Reciprocal Exchanges 45,658 46,055 Total Net Earned Premium $ 964,157 $ 905,538 Three Months Ended March 31, Fee Income 2019 2018 Property and Casualty Service and Fee Income $ 103,125 $ 94,489 Ceding Commission Income 48,409 32,700 Total Property and Casualty 151,534 127,189 Accident and Health Service and Fee Income Group 30,374 24,814 Individual 2,136 1,297 Third Party Fee 28,502 19,076 Total Service and Fee Income 61,012 45,187 Ceding Commission Income 2,591 258 Total Accident and Health 63,603 45,445 NGHC Total $ 215,137 $ 172,634 Reciprocal Exchanges Service and Fee Income $ 1,370 $ 2,446 Ceding Commission Income 18,534 11,510 Total Reciprocal Exchanges $ 19,904 $ 13,956 Total Fee Income $ 235,041 $ 186,590 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted During 2019 Standard Description Date of Adoption Effect on the Company ASU 2016-02, Leases (Topic 842) and related amendments. This standard was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. January 1, 2019 The Company adopted the standard as of the beginning of the year of adoption using the modified retrospective transition approach and did not adjust prior comparative periods. The Company recorded the recognition of the ROU asset and lease liability net of deferred rent and inducement costs in both total assets and liabilities in the Condensed Consolidated Balance Sheets of $85,000, net of the deferred tax impact. The adoption of this guidance did not have a material effect on the Company’s Condensed Consolidated Statements of Income and had no impact on cash flows. See Note 9, “Leases” for additional information. Not Yet Adopted With the exception of the adopted or not yet adopted accounting pronouncements discussed here, there have been no recent accounting pronouncements, or quantitative or qualitative progress made towards implementation of outstanding accounting pronouncements during the three months ended March 31, 2019 , as compared to those described in Note 2, “Significant Accounting Policies” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 , that are of significance, or potential significance, to the Company. Standard Description Effective Date Effect on the Company ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. Companies will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Companies will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” the amendment to ASU 2016-13 which clarifies that receivables arising from operating leases are not within the scope of Topic 326 and impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. January 1, 2020 Based on the financial instruments currently held by the Company, it does not expect a material effect on the Company’s consolidated financial condition, results of operations, cash flows and disclosures if the new guidance were able to be adopted in the current accounting period. The impact on the Company’s consolidated financial condition, results of operations, cash flows and disclosures at the date of adoption of the updated guidance will be determined by the financial instruments held by the Company and the economic conditions at that time. The Company’s implementation and evaluation process to date includes, but is not limited to, identifying the financial assets within the scope of the guidance and assessing models for the relevant financial assets. ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This standard establishes a one-step process for testing the value of the goodwill which an entity carries. ASU 2017-04 requires the goodwill impairment to be measured as the excess of the reporting unit’s carrying amount over its fair value. Early adoption is permitted for interim or annual goodwill impairment tests. January 1, 2020 Based on the goodwill currently held by the Company, there would not be a material effect on the Company’s consolidated financial condition, results of operations, cash flows and disclosures if the new guidance were able to be adopted in the current accounting period. |
Recent Accounting Pronounceme_3
Recent Accounting Pronouncements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | Adopted During 2019 Standard Description Date of Adoption Effect on the Company ASU 2016-02, Leases (Topic 842) and related amendments. This standard was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. January 1, 2019 The Company adopted the standard as of the beginning of the year of adoption using the modified retrospective transition approach and did not adjust prior comparative periods. The Company recorded the recognition of the ROU asset and lease liability net of deferred rent and inducement costs in both total assets and liabilities in the Condensed Consolidated Balance Sheets of $85,000, net of the deferred tax impact. The adoption of this guidance did not have a material effect on the Company’s Condensed Consolidated Statements of Income and had no impact on cash flows. See Note 9, “Leases” for additional information. Not Yet Adopted With the exception of the adopted or not yet adopted accounting pronouncements discussed here, there have been no recent accounting pronouncements, or quantitative or qualitative progress made towards implementation of outstanding accounting pronouncements during the three months ended March 31, 2019 , as compared to those described in Note 2, “Significant Accounting Policies” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 , that are of significance, or potential significance, to the Company. Standard Description Effective Date Effect on the Company ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. Companies will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Companies will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” the amendment to ASU 2016-13 which clarifies that receivables arising from operating leases are not within the scope of Topic 326 and impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. January 1, 2020 Based on the financial instruments currently held by the Company, it does not expect a material effect on the Company’s consolidated financial condition, results of operations, cash flows and disclosures if the new guidance were able to be adopted in the current accounting period. The impact on the Company’s consolidated financial condition, results of operations, cash flows and disclosures at the date of adoption of the updated guidance will be determined by the financial instruments held by the Company and the economic conditions at that time. The Company’s implementation and evaluation process to date includes, but is not limited to, identifying the financial assets within the scope of the guidance and assessing models for the relevant financial assets. ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This standard establishes a one-step process for testing the value of the goodwill which an entity carries. ASU 2017-04 requires the goodwill impairment to be measured as the excess of the reporting unit’s carrying amount over its fair value. Early adoption is permitted for interim or annual goodwill impairment tests. January 1, 2020 Based on the goodwill currently held by the Company, there would not be a material effect on the Company’s consolidated financial condition, results of operations, cash flows and disclosures if the new guidance were able to be adopted in the current accounting period. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Available-for-Sale Debt Securities | The amortized cost, gross unrealized gains and losses, and fair value of available-for-sale debt securities were as follows: March 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury $ 61,814 $ 1,348 $ (179 ) $ 62,983 Federal agencies 25,611 22 (17 ) 25,616 States and political subdivision bonds 258,204 3,222 (523 ) 260,903 Foreign government 142,324 2,894 — 145,218 Corporate bonds 1,332,739 23,098 (6,287 ) 1,349,550 Residential mortgage-backed securities 937,003 3,844 (9,837 ) 931,010 Commercial mortgage-backed securities 547,557 14,281 (4,766 ) 557,072 Asset-backed securities 61,198 941 (53 ) 62,086 Structured securities 245,552 179 (4,822 ) 240,909 Total $ 3,612,002 $ 49,829 $ (26,484 ) $ 3,635,347 NGHC $ 3,312,760 $ 47,687 $ (24,382 ) $ 3,336,065 Reciprocal Exchanges 299,242 2,142 (2,102 ) 299,282 Total $ 3,612,002 $ 49,829 $ (26,484 ) $ 3,635,347 December 31, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury $ 64,829 $ 1,026 $ (262 ) $ 65,593 Federal agencies 37,842 22 (389 ) 37,475 States and political subdivision bonds 274,367 1,369 (3,539 ) 272,197 Foreign government 151,443 993 (70 ) 152,366 Corporate bonds 1,283,061 3,094 (25,450 ) 1,260,705 Residential mortgage-backed securities 944,365 716 (19,965 ) 925,116 Commercial mortgage-backed securities 548,192 3,757 (6,974 ) 544,975 Asset-backed securities 60,563 705 (121 ) 61,147 Structured securities 249,947 99 (8,588 ) 241,458 Total $ 3,614,609 $ 11,781 $ (65,358 ) $ 3,561,032 NGHC $ 3,311,639 $ 11,206 $ (58,896 ) $ 3,263,949 Reciprocal Exchanges 302,970 575 (6,462 ) 297,083 Total $ 3,614,609 $ 11,781 $ (65,358 ) $ 3,561,032 |
Available-for-Sale Debt Securities by Contractual Maturity | The amortized cost and fair value of available-for-sale debt securities held as of March 31, 2019 , by contractual maturity, are shown in the table below. Actual maturities may differ from contractual maturities because some borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. NGHC Reciprocal Exchanges Total March 31, 2019 Amortized Fair Amortized Fair Amortized Fair Due in one year or less $ 30,231 $ 30,138 $ 300 $ 300 $ 30,531 $ 30,438 Due after one year through five years 803,464 811,067 157,364 156,838 960,828 967,905 Due after five years through ten years 775,802 788,585 44,621 45,048 820,423 833,633 Due after ten years 242,711 241,384 11,751 11,819 254,462 253,203 Mortgage-backed securities 1,460,552 1,464,891 85,206 85,277 1,545,758 1,550,168 Total $ 3,312,760 $ 3,336,065 $ 299,242 $ 299,282 $ 3,612,002 $ 3,635,347 |
Gross Unrealized Losses | The tables below summarize the gross unrealized losses on debt securities classified as available for sale, by length of time the security has continuously been in an unrealized loss position. Less Than 12 Months 12 Months or More Total March 31, 2019 Fair Unrealized Fair Unrealized Fair Unrealized U.S. Treasury $ 17,811 $ (5 ) $ 19,397 $ (174 ) $ 37,208 $ (179 ) Federal agencies 4,897 (3 ) 719 (14 ) 5,616 (17 ) States and political subdivision bonds 9,247 (32 ) 73,312 (491 ) 82,559 (523 ) Foreign government 500 — — — 500 — Corporate bonds 50,725 (196 ) 368,397 (6,091 ) 419,122 (6,287 ) Residential mortgage-backed securities 91,162 (1,655 ) 485,077 (8,182 ) 576,239 (9,837 ) Commercial mortgage-backed securities — — 151,359 (4,766 ) 151,359 (4,766 ) Asset-backed securities 340 — 1,752 (53 ) 2,092 (53 ) Structured securities 165,574 (3,796 ) 21,169 (1,026 ) 186,743 (4,822 ) Total $ 340,256 $ (5,687 ) $ 1,121,182 $ (20,797 ) $ 1,461,438 $ (26,484 ) NGHC $ 315,312 $ (5,452 ) $ 965,236 $ (18,930 ) $ 1,280,548 $ (24,382 ) Reciprocal Exchanges 24,944 (235 ) 155,946 (1,867 ) 180,890 (2,102 ) Total $ 340,256 $ (5,687 ) $ 1,121,182 $ (20,797 ) $ 1,461,438 $ (26,484 ) Less Than 12 Months 12 Months or More Total December 31, 2018 Fair Unrealized Fair Unrealized Fair Unrealized U.S. Treasury $ 474 $ (2 ) $ 21,540 $ (260 ) $ 22,014 $ (262 ) Federal agencies 23,729 (351 ) 1,493 (38 ) 25,222 (389 ) States and political subdivision bonds 57,090 (902 ) 119,759 (2,637 ) 176,849 (3,539 ) Foreign government 45,748 (70 ) — — 45,748 (70 ) Corporate bonds 586,359 (12,891 ) 321,115 (12,559 ) 907,474 (25,450 ) Residential mortgage-backed securities 234,396 (1,637 ) 551,623 (18,328 ) 786,019 (19,965 ) Commercial mortgage-backed securities 13,229 (239 ) 148,700 (6,735 ) 161,929 (6,974 ) Asset-backed securities 25,978 (78 ) 1,494 (43 ) 27,472 (121 ) Structured securities 222,154 (8,136 ) 6,167 (452 ) 228,321 (8,588 ) Total $ 1,209,157 $ (24,306 ) $ 1,171,891 $ (41,052 ) $ 2,381,048 $ (65,358 ) NGHC $ 1,115,823 $ (22,668 ) $ 1,018,975 $ (36,228 ) $ 2,134,798 $ (58,896 ) Reciprocal Exchanges 93,334 (1,638 ) 152,916 (4,824 ) 246,250 (6,462 ) Total $ 1,209,157 $ (24,306 ) $ 1,171,891 $ (41,052 ) $ 2,381,048 $ (65,358 ) |
Equity Securities | The fair values of equity securities were as follows: March 31, 2019 December 31, 2018 Common stock $ 10,285 $ 10,949 Total $ 10,285 $ 10,949 NGHC $ 10,285 $ 10,949 Reciprocal Exchanges — — Total $ 10,285 $ 10,949 |
Investment Income | The components of net investment income consisted of the following: Three Months Ended March 31, 2019 2018 Cash and short-term investments $ 1,497 $ 187 Debt securities 29,467 24,256 Equity securities 2 155 Other, net (related parties - $254 and $(295)) 3,506 1,821 Investment income 34,472 26,419 Investment expenses (1,027 ) (1,408 ) Net investment income $ 33,445 $ 25,011 NGHC $ 31,275 $ 22,867 Reciprocal Exchanges 2,170 2,144 Net investment income $ 33,445 $ 25,011 |
Net Realized Gains (Losses) | The table below indicates realized gains and losses on investments, including foreign exchange. Purchases and sales of investments are recorded on a trade date basis. Realized gains and losses are determined based on the specific identification method. Three Months Ended March 31, 2019 2018 Debt securities, available-for-sale: Gross gains $ 136 $ 1,169 Gross losses (256 ) (1,171 ) Net realized gain (loss) on debt securities, available-for-sale (120 ) (2 ) Equity securities 1,036 (1,048 ) Short-term and other investments (1 ) (4 ) Foreign currency transactions (893 ) 1,172 Net realized gain on investments $ 22 $ 118 NGHC $ 766 $ 249 Reciprocal Exchanges (744 ) (131 ) Net realized gain on investments $ 22 $ 118 Net gains and losses recognized during the reporting period on equity securities still held at the reporting date were as follows: Three Months Ended March 31, 2019 2018 Net gains (losses) recognized during the period $ 1,036 $ (1,048 ) Less: Net gains (losses) recognized during the period on securities sold during the period — — Net gains (losses) recognized during the reporting period on securities still held at the reporting date $ 1,036 $ (1,048 ) |
Credit Quality of Investments | The tables below summarize the credit quality of debt securities, as rated by Standard & Poor’s (“S&P”). If a security is not rated by S&P, an S&P equivalent is determined based on ratings from similar rating agencies. Securities that are not rated are included in the “BB+ and lower” category. NGHC Reciprocal Exchanges March 31, 2019 Amortized Cost Fair Value Percentage Amortized Cost Fair Value Percentage U.S. Treasury $ 48,823 $ 49,736 1.5 % $ 12,991 $ 13,247 4.4 % AAA 574,775 589,125 17.7 % 18,283 18,408 6.2 % AA, AA+, AA- 1,368,935 1,363,545 40.9 % 129,590 129,337 43.2 % A, A+, A- 615,601 621,717 18.6 % 127,511 127,668 42.7 % BBB, BBB+, BBB- 664,992 673,198 20.2 % 10,835 10,590 3.5 % BB+ and lower 39,634 38,744 1.1 % 32 32 — % Total $ 3,312,760 $ 3,336,065 100.0 % $ 299,242 $ 299,282 100.0 % NGHC Reciprocal Exchanges December 31, 2018 Amortized Fair Percentage Amortized Fair Percentage U.S. Treasury $ 52,122 $ 52,759 1.6 % $ 12,707 $ 12,834 4.3 % AAA 586,639 589,078 18.0 % 18,335 18,109 6.1 % AA, AA+, AA- 1,385,709 1,358,528 41.6 % 142,525 140,114 47.2 % A, A+, A- 591,219 581,106 17.8 % 118,535 115,618 38.9 % BBB, BBB+, BBB- 653,645 641,554 19.7 % 10,834 10,374 3.5 % BB+ and lower 42,305 40,924 1.3 % 34 34 — % Total $ 3,311,639 $ 3,263,949 100.0 % $ 302,970 $ 297,083 100.0 % The tables below summarize the investment quality of the corporate bond holdings and industry concentrations. March 31, 2019 AAA AA+, A+,A,A- BBB+, BB+ or Fair % of Financial Institutions — % 4.4 % 24.1 % 14.5 % 0.7 % $ 589,699 43.7 % Industrials 0.4 % 5.5 % 21.3 % 26.5 % 0.6 % 733,355 54.3 % Utilities/Other — % — % 1.6 % 0.4 % — % 26,496 2.0 % Total 0.4 % 9.9 % 47.0 % 41.4 % 1.3 % $ 1,349,550 100.0 % NGHC — % 6.7 % 37.6 % 40.6 % 1.3 % $ 1,163,549 86.2 % Reciprocal Exchanges 0.4 % 3.2 % 9.4 % 0.8 % — % 186,001 13.8 % Total 0.4 % 9.9 % 47.0 % 41.4 % 1.3 % $ 1,349,550 100.0 % December 31, 2018 AAA AA+, A+,A,A- BBB+, BB+ or Fair % of Financial Institutions — % 4.3 % 23.1 % 14.2 % 0.9 % $ 535,373 42.5 % Industrials 0.4 % 6.1 % 21.5 % 26.7 % 0.6 % 697,324 55.3 % Utilities/Other — % — % 1.8 % 0.4 % — % 28,008 2.2 % Total 0.4 % 10.4 % 46.4 % 41.3 % 1.5 % $ 1,260,705 100.0 % NGHC — % 6.3 % 37.3 % 40.6 % 1.4 % $ 1,079,099 85.6 % Reciprocal Exchanges 0.4 % 4.1 % 9.1 % 0.7 % 0.1 % 181,606 14.4 % Total 0.4 % 10.4 % 46.4 % 41.3 % 1.5 % $ 1,260,705 100.0 % |
Cash, Cash Equivalents and Restricted Cash | Cash, cash equivalents, and restricted cash are as follows: March 31, 2019 December 31, 2018 Cash and cash equivalents $ 188,064 $ 193,858 Restricted cash and cash equivalents 32,208 39,725 Total cash, cash equivalents and restricted cash $ 220,272 $ 233,583 |
Restricted Investments | Restricted investments are as follows: March 31, 2019 December 31, 2018 Securities on deposit with state regulatory authorities $ 76,215 $ 73,119 Restricted investments to trusts in certain reinsurance transactions 66,894 70,470 Total restricted investments $ 143,109 $ 143,589 |
Other Investments | The table below summarizes the composition of other investments: March 31, 2019 December 31, 2018 Equity method investments (related parties - $105,097 and $106,031) $ 142,707 $ 142,921 Notes receivable (related parties - $128,458 and $127,692) 129,474 128,893 Long-term Certificates of Deposit (CDs), at cost 20,151 20,252 Investments, at fair value 5,971 6,542 Investments, at cost or amortized cost 7,668 7,668 Total $ 305,971 $ 306,276 |
LSC Entity | The following table presents the Company’s 50% investment activity in the LSC Entity: Three Months Ended March 31, 2019 2018 Beginning of the period $ 48,324 $ 160,683 Distributions — (107,035 ) Contributions — 2,000 Equity in earnings (losses) 586 700 Change in equity method investments 586 (104,335 ) End of the period $ 48,910 $ 56,348 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value, by Balance Sheet Grouping | Assets measured at fair value on a recurring basis are as follows: March 31, 2019 Level 1 Level 2 Level 3 Total Available-for-sale debt securities: U.S. Treasury $ 62,983 $ — $ — $ 62,983 Federal agencies 25,616 — — 25,616 States and political subdivision bonds — 257,243 3,660 260,903 Foreign government — 145,218 — 145,218 Corporate bonds — 1,337,716 11,834 1,349,550 Residential mortgage-backed securities — 931,010 — 931,010 Commercial mortgage-backed securities — 557,072 — 557,072 Asset-backed securities — 62,086 — 62,086 Structured securities — 240,909 — 240,909 Total available-for-sale debt securities 88,599 3,531,254 15,494 3,635,347 Equity securities: Common stock 9,068 — 1,217 10,285 Total equity securities 9,068 — 1,217 10,285 Short-term investments 390,052 — — 390,052 Other investments — — 5,971 5,971 Total $ 487,719 $ 3,531,254 $ 22,682 $ 4,041,655 NGHC $ 454,840 $ 3,245,219 $ 22,682 $ 3,722,741 Reciprocal Exchanges 32,879 286,035 — 318,914 Total $ 487,719 $ 3,531,254 $ 22,682 $ 4,041,655 December 31, 2018 Level 1 Level 2 Level 3 Total Available-for-sale debt securities: U.S. Treasury $ 65,593 $ — $ — $ 65,593 Federal agencies 37,475 — — 37,475 States and political subdivision bonds — 268,601 3,596 272,197 Foreign government — 152,366 — 152,366 Corporate bonds — 1,248,938 11,767 1,260,705 Residential mortgage-backed securities — 925,116 — 925,116 Commercial mortgage-backed securities — 544,975 — 544,975 Asset-backed securities — 61,147 — 61,147 Structured securities — 241,458 — 241,458 Total available-for-sale debt securities 103,068 3,442,601 15,363 3,561,032 Equity securities: Common stock 9,898 — 1,051 10,949 Total equity securities 9,898 — 1,051 10,949 Short-term investments 348,549 — — 348,549 Other investments — — 6,542 6,542 Total $ 461,515 $ 3,442,601 $ 22,956 $ 3,927,072 NGHC $ 429,502 $ 3,160,203 $ 22,956 $ 3,612,661 Reciprocal Exchanges 32,013 282,398 — 314,411 Total $ 461,515 $ 3,442,601 $ 22,956 $ 3,927,072 |
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation | The following tables provide a reconciliation of recurring fair value measurements of the Level 3 financial assets: States and Corporate Common Other Total Balance as of January 1, 2019 $ 3,596 $ 11,767 $ 1,051 $ 6,542 $ 22,956 Transfers into Level 3 — — — — — Transfers out of Level 3 — — — — — Total gains (losses) for the period: Included in net income (1) — — 166 (571 ) (405 ) Included in other comprehensive income (2) 64 67 — — 131 Purchases — — — — — Sales — — — — — Balance as of March 31, 2019 $ 3,660 $ 11,834 $ 1,217 $ 5,971 $ 22,682 Change in unrealized gains (losses) for the period included in net income for assets held at the end of the reporting period $ — $ — $ 166 $ (571 ) $ (405 ) Change in unrealized gains (losses) for the period included in other comprehensive income for assets held at the end of the reporting period $ 64 $ 67 $ — $ — $ 131 States and Corporate Common Preferred Other Total Balance as of January 1, 2018 $ 4,081 $ 24,545 $ 5,052 $ 270 $ 10,782 $ 44,730 Transfers into Level 3 — — — — — — Transfers out of Level 3 — — — — — — Total gains (losses) for the period: Included in net income (1) — — (1,186 ) 12 794 (380 ) Included in other comprehensive income (2) 46 (32 ) — — — 14 Purchases — — — — — — Sales — — — — (526 ) (526 ) Balance as of March 31, 2018 $ 4,127 $ 24,513 $ 3,866 $ 282 $ 11,050 $ 43,838 Change in unrealized gains (losses) for the period included in net income for assets held at the end of the reporting period $ — $ — $ (1,186 ) $ 12 $ 794 $ (380 ) (1) Gains and losses recognized in net income are reported within Net investment income. (2) Gains and losses recognized in other comprehensive income are reported within unrealized gains (losses) on investments, net of tax. |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The following table presents the carrying amount and estimated fair value of debt not carried at fair value, excluding capital lease liabilities, as well as the input level used to determine the fair value are indicated below: March 31, 2019 December 31, 2018 Input Level Carrying amount Fair value Carrying amount Fair value 7.625% Notes Level 2 $ 96,863 $ 102,000 $ 96,842 $ 90,400 6.75% Notes Level 3 346,600 357,879 346,439 353,756 Subordinated Debentures Level 3 72,168 72,114 72,168 72,109 Credit Agreement Level 3 — — 160,000 163,222 2019 Credit Agreement Level 3 160,000 168,964 — — |
Deferred Acquisition Costs (Tab
Deferred Acquisition Costs (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Deferred Acquisition Costs [Abstract] | |
Deferred Policy Acquisition Costs | The following table reflects the amounts of policy acquisition costs deferred and amortized: Three Months Ended March 31, 2019 2018 Property Accident Total Property Accident Total Beginning of the period $ 226,188 $ 25,220 $ 251,408 $ 198,283 $ 18,106 $ 216,389 Additions 145,979 25,101 171,080 139,132 5,940 145,072 Amortization (136,008 ) (18,303 ) (154,311 ) (120,332 ) (7,529 ) (127,861 ) Change in DAC 9,971 6,798 16,769 18,800 (1,589 ) 17,211 End of the period $ 236,159 $ 32,018 $ 268,177 $ 217,083 $ 16,517 $ 233,600 NGHC $ 215,854 $ 32,018 $ 247,872 $ 195,448 $ 16,517 $ 211,965 Reciprocal Exchanges 20,305 — 20,305 21,635 — 21,635 End of the period $ 236,159 $ 32,018 $ 268,177 $ 217,083 $ 16,517 $ 233,600 |
Unpaid Losses and Loss Adjust_2
Unpaid Losses and Loss Adjustment Expense Reserves (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Insurance [Abstract] | |
Schedule of Liability for Unpaid Claims and Claims Adjustment Expense | The tables below show the roll forward of loss reserves on a gross and net of reinsurance basis, reflecting changes in losses incurred and paid losses: Three Months Ended March 31, 2019 Property Accident NGHC Reciprocal Total Unpaid losses and LAE, gross of related reinsurance recoverable at beginning of the period $ 2,507,409 $ 271,280 $ 2,778,689 $ 178,470 $ 2,957,159 Less: Reinsurance recoverable at beginning of the period (1,182,588 ) (24,575 ) (1,207,163 ) (77,979 ) (1,285,142 ) Net balance at beginning of the period 1,324,821 246,705 1,571,526 100,491 1,672,017 Incurred losses and LAE related to: Current year 530,549 95,601 626,150 39,973 666,123 Prior year (5,514 ) (10,852 ) (16,366 ) 2,052 (14,314 ) Total incurred 525,035 84,749 609,784 42,025 651,809 Paid losses and LAE related to: Current year (130,395 ) (33,681 ) (164,076 ) (14,949 ) (179,025 ) Prior year (422,560 ) (53,310 ) (475,870 ) (21,478 ) (497,348 ) Total paid (552,955 ) (86,991 ) (639,946 ) (36,427 ) (676,373 ) Effect of foreign exchange rates — 1,094 1,094 — 1,094 Net balance at end of the period 1,296,901 245,557 1,542,458 106,089 1,648,547 Plus: Reinsurance recoverable at end of the period 1,103,114 28,729 1,131,843 89,933 1,221,776 Gross balance at end of period $ 2,400,015 $ 274,286 $ 2,674,301 $ 196,022 $ 2,870,323 Three Months Ended March 31, 2018 Property Accident NGHC Reciprocal Total Unpaid losses and LAE, gross of related reinsurance recoverable at beginning of the period $ 2,270,551 $ 249,653 $ 2,520,204 $ 143,353 $ 2,663,557 Less: Reinsurance recoverable at beginning of the period (1,067,495 ) (9,840 ) (1,077,335 ) (52,408 ) (1,129,743 ) Net balance at beginning of the period 1,203,056 239,813 1,442,869 90,945 1,533,814 Incurred losses and LAE related to: Current year 513,526 94,661 608,187 45,917 654,104 Prior year (15,169 ) (3,383 ) (18,552 ) (1,386 ) (19,938 ) Total incurred 498,357 91,278 589,635 44,531 634,166 Paid losses and LAE related to: Current year (202,967 ) (20,290 ) (223,257 ) (19,686 ) (242,943 ) Prior year (306,126 ) (47,992 ) (354,118 ) (17,455 ) (371,573 ) Total paid (509,093 ) (68,282 ) (577,375 ) (37,141 ) (614,516 ) Effect of foreign exchange rates — (1,679 ) (1,679 ) — (1,679 ) Net balance at end of the period 1,192,320 261,130 1,453,450 98,335 1,551,785 Plus: Reinsurance recoverable at end of the period 1,058,106 8,565 1,066,671 60,461 1,127,132 Gross balance at end of period $ 2,250,426 $ 269,695 $ 2,520,121 $ 158,796 $ 2,678,917 |
Reinsurance (Tables)
Reinsurance (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Insurance [Abstract] | |
Schedule of Reinsurance Recoverable | Reinsurance recoverable summary is as follows: March 31, 2019 December 31, 2018 Reinsurance recoverable on paid losses $ 267,789 $ 326,596 Reinsurance recoverable on unpaid losses 1,221,776 1,285,142 Reinsurance recoverable $ 1,489,565 $ 1,611,738 |
Schedule of Effect of Reinsurance on Unpaid Loss and LAE Reserves and Unearned Premiums | The following is the effect of reinsurance on unpaid loss and LAE reserves and unearned premiums: March 31, 2019 December 31, 2018 Assumed Ceded Assumed Ceded Unpaid Loss and LAE reserves $ 76,123 $ 1,221,776 $ 84,469 $ 1,285,142 Unearned premiums 20,604 637,024 21,015 665,674 |
Schedule of Effect of Reinsurance on Premiums | The following is a summary of effects of reinsurance on premiums and losses: Three Months Ended March 31, 2019 2018 Premium: Written Earned Written Earned Direct $ 1,489,188 $ 1,315,705 $ 1,413,877 $ 1,191,327 Assumed 20,590 21,000 19,253 29,051 Total Gross Premium 1,509,778 1,336,705 1,433,130 1,220,378 Ceded (345,114 ) (372,548 ) (326,487 ) (314,840 ) Net Premium $ 1,164,664 $ 964,157 $ 1,106,643 $ 905,538 |
Schedule of Effect of Reinsurance on Losses | Three Months Ended March 31, 2019 2018 Assumed Ceded Assumed Ceded Loss and LAE $ 5,322 $ 209,322 $ (1,321 ) $ 197,317 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Instruments | The following table represents the Company’s debt: Interest Rate Maturity March 31, 2019 December 31, 2018 Fixed-rate: 6.75% Notes 6.75% 2024 $ 350,000 $ 350,000 7.625% Notes 7.625% 2055 100,000 100,000 Floating-rate: Subordinated Debentures I LIBOR + 3.40% 2035 41,238 41,238 Subordinated Debentures II LIBOR + 4.25% 2037 30,930 30,930 Credit Agreement (1) LIBOR + 2.00% 2020 — 160,000 2019 Credit Agreement (2) LIBOR + 1.75% 2023 160,000 — Finance lease liabilities Various Various 20,568 14,824 Other 3.5% Various 13,997 15,522 Unamortized debt issuance costs and unamortized discount (6,537 ) (6,719 ) Total carrying amount of debt $ 710,196 $ 705,795 (1) The weighted average interest rate on the amount outstanding as of December 31, 2018 was 4.58% . (2) The weighted average interest rate on the amount outstanding as of March 31, 2019 was 4.27% |
Schedule of Interest Expense | The following table presents the Company’s interest expense: Three Months Ended March 31, Interest Payment Frequency 2019 2018 6.75% Notes Semiannually $ 5,906 $ 5,906 7.625% Notes Quarterly 1,906 1,906 Subordinated Debentures Quarterly 1,163 986 Credit Agreement Quarterly 1,211 1,684 2019 Credit Agreement Quarterly 529 — Finance lease liabilities Various 294 164 Other (1) Various 1,990 508 Total interest expense $ 12,999 $ 11,154 (1) Other includes interest for other liabilities, interest credited on funds held balances and accretion of debt issuance costs. |
Schedule of Maturities of Long-term Debt | Maturities of the Company’s debt for the years subsequent to March 31, 2019 are as follows: 2019 (remaining nine months) 2020 2021 2022 2023 2024 Thereafter Total 6.75% Notes $ — $ — $ — $ — $ — $ 350,000 $ — $ 350,000 7.625% Notes — — — — — — 100,000 100,000 Subordinated Debentures I — — — — — — 41,238 41,238 Subordinated Debentures II — — — — — — 30,930 30,930 2019 Credit Agreement — — — — 160,000 — — 160,000 Finance lease liabilities 4,866 5,585 3,370 1,756 1,192 1,242 2,557 20,568 Other 4,655 6,399 2,943 — — — — 13,997 Total principal amount of debt $ 9,521 $ 11,984 $ 6,313 $ 1,756 $ 161,192 $ 351,242 $ 174,725 $ 716,733 Unamortized debt issuance costs and unamortized discount (6,537 ) Carrying amount of debt $ 710,196 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases is as follow: Leases Classification March 31, 2019 Assets: Finance Buildings and improvements $ 11,296 Finance Vehicle 6,209 Finance Hardware, software and other equipment 5,760 Total finance 23,265 Operating Operating lease assets 104,089 Total lease assets Premises and equipment, net (1) $ 127,354 Liabilities: Finance Debt $ 20,568 Operating Other liabilities 112,907 Total lease liabilities $ 133,475 (1) As of March 31, 2019 , accumulated depreciation and amortization for Buildings and improvements, Vehicle, Hardware, software and other equipment, and Operating lease assets was $995 , $4,709 , $649 and $6,254 |
Schedule of Lease Cost | The components of lease cost are as follows: Lease Cost Classification Three Months Ended March 31, 2019 Finance lease cost: Amortization of leased assets General and administrative expenses $ 1,758 Interest on lease liabilities Interest expense 294 Finance lease cost $ 2,052 Operating lease cost General and administrative expenses $ 8,818 |
Schedule of Maturity of Financing Lease Liabilities | Maturities of the Company’s lease liabilities for the years subsequent to March 31, 2019 are as follows: Operating Leases Finance Leases Total 2019 (remaining nine months) $ 23,189 $ 5,508 $ 28,697 2020 25,770 6,230 32,000 2021 19,791 3,808 23,599 2022 15,925 2,083 18,008 2023 13,495 1,446 14,941 2024 10,915 1,428 12,343 Thereafter 25,675 2,847 28,522 Total lease payments $ 134,760 $ 23,350 $ 158,110 Less: Interest (21,853 ) (2,782 ) Present value of lease liabilities $ 112,907 $ 20,568 |
Schedule of Maturity of Operating Lease Liabilities | Maturities of the Company’s lease liabilities for the years subsequent to March 31, 2019 are as follows: Operating Leases Finance Leases Total 2019 (remaining nine months) $ 23,189 $ 5,508 $ 28,697 2020 25,770 6,230 32,000 2021 19,791 3,808 23,599 2022 15,925 2,083 18,008 2023 13,495 1,446 14,941 2024 10,915 1,428 12,343 Thereafter 25,675 2,847 28,522 Total lease payments $ 134,760 $ 23,350 $ 158,110 Less: Interest (21,853 ) (2,782 ) Present value of lease liabilities $ 112,907 $ 20,568 |
Schedule of Lease Term and Discount Rate | Supplemental information related to term and discount rate is as follow: Leases Classification March 31, 2019 Weighted-average remaining lease term (years): Finance Buildings and improvements 7.7 years Finance Vehicle 2.2 years Finance Hardware, software and other equipment 1.5 years Operating Operating lease assets 5.8 years Weighted-average discount rate: Finance Buildings and improvements 5.8 % Finance Vehicle 4.2 % Finance Hardware, software and other equipment 4.2 % Operating Operating lease assets 5.9 % |
Schedule of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases is as follow: Three Months Ended March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 294 Financing cash flows from finance leases 1,509 Operating cash flows from operating leases 6,020 Leased assets obtained in exchange for new finance lease liabilities 7,253 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Compensation, Stock Options, Activity | A summary of the stock option awards is shown below: Shares Subject to Options Outstanding Three Months Ended March 31, 2019 Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) Outstanding at beginning of period 3,184,352 $ 9.53 Exercised (25,216 ) 3.67 Outstanding and exercisable at end of period 3,159,136 $ 9.58 3.8 $ 44,718 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing price of the Company’s common stock of $23.73 , as reported on the Nasdaq Global Select Market on March 29, 2019 |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | A summary of the RSUs is shown below: RSUs Three Months Ended March 31, 2019 Number of RSUs Weighted-Average Grant Date Fair Value Non-vested at beginning of period 938,795 $ 22.28 Granted 497,741 25.60 Vested (267,060 ) 21.70 Forfeited (5,881 ) 24.44 Non-vested at end of period 1,163,595 $ 23.82 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following is a summary of the elements used in calculating basic and diluted earnings per common share: Three Months Ended March 31, 2019 2018 Numerator: Net income attributable to NGHC $ 91,758 $ 68,208 Preferred stock dividends - nonconvertible (7,875 ) (7,875 ) Preferred stock dividends - convertible — — Numerator for basic EPS 83,883 60,333 Effect of dilutive securities: Preferred stock dividends - convertible — — Numerator for diluted EPS - after assumed conversions $ 83,883 $ 60,333 Denominator: Denominator for basic EPS - weighted-average shares outstanding 113,014,711 106,758,641 Effect of dilutive securities: Employee stock options 1,939,844 1,922,885 RSUs 331,198 269,458 Convertible preferred stock 789,473 — Dilutive potential common shares 3,060,515 2,192,343 Denominator for diluted EPS - weighted-average shares outstanding and assumed conversions 116,075,226 108,950,984 Basic EPS $ 0.74 $ 0.57 Diluted EPS $ 0.72 $ 0.55 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information by Segment | The following tables summarize the results of operations of the operating segments: Three Months Ended March 31, 2019 Property and Casualty Accident and Health Corporate and Other Total Underwriting revenues: Gross premium written $ 1,251,234 $ 258,544 $ — $ 1,509,778 Ceded premiums (286,751 ) (58,363 ) — (345,114 ) Net premium written 964,483 200,181 — 1,164,664 Change in unearned premium (161,906 ) (38,601 ) — (200,507 ) Net earned premium 802,577 161,580 — 964,157 Ceding commission income 66,943 2,591 — 69,534 Service and fee income 104,495 61,012 — 165,507 Total underwriting revenues 974,015 225,183 — 1,199,198 Underwriting expenses: Loss and loss adjustment expense 567,060 84,749 — 651,809 Acquisition costs and other underwriting expenses 154,070 57,848 — 211,918 General and administrative expenses 189,456 58,638 — 248,094 Total underwriting expenses 910,586 201,235 — 1,111,821 Underwriting income 63,429 23,948 — 87,377 Net investment income — — 33,445 33,445 Net gain on investments — — 22 22 Interest expense — — (12,999 ) (12,999 ) Provision for income taxes — — (22,506 ) (22,506 ) Net (income) loss attributable to non-controlling interest — — 6,419 6,419 Net income attributable to NGHC $ 63,429 $ 23,948 $ 4,381 $ 91,758 Three Months Ended March 31, 2018 Property Accident Corporate Total Underwriting revenues: Gross premium written $ 1,199,354 $ 233,776 $ — $ 1,433,130 Ceded premiums (316,064 ) (10,423 ) — (326,487 ) Net premium written 883,290 223,353 — 1,106,643 Change in unearned premium (131,628 ) (69,477 ) — (201,105 ) Net earned premium 751,662 153,876 — 905,538 Ceding commission income 44,210 258 — 44,468 Service and fee income 96,935 45,187 — 142,122 Total underwriting revenues 892,807 199,321 — 1,092,128 Underwriting expenses: Loss and loss adjustment expense 542,888 91,278 — 634,166 Acquisition costs and other underwriting expenses 125,102 43,608 — 168,710 General and administrative expenses 180,397 50,608 — 231,005 Total underwriting expenses 848,387 185,494 — 1,033,881 Underwriting income 44,420 13,827 — 58,247 Net investment income — — 25,011 25,011 Net gain on investments — — 118 118 Interest expense — — (11,154 ) (11,154 ) Provision for income taxes — — (16,202 ) (16,202 ) Net (income) loss attributable to non-controlling interest — — 12,188 12,188 Net income attributable to NGHC $ 44,420 $ 13,827 $ 9,961 $ 68,208 The following tables summarize the financial position of the operating segments: March 31, 2019 Property and Casualty Accident and Health Corporate and Other Total Premiums and other receivables, net $ 1,388,282 $ 216,278 $ 3,691 $ 1,608,251 Deferred acquisition costs 236,159 32,018 — 268,177 Reinsurance recoverable 1,457,778 31,787 — 1,489,565 Prepaid reinsurance premiums 602,498 34,526 — 637,024 Intangible assets, net and Goodwill 438,009 114,986 — 552,995 Prepaid and other assets 22,660 25,196 26,141 73,997 Corporate and other assets — — 5,001,558 5,001,558 Total assets $ 4,145,386 $ 454,791 $ 5,031,390 $ 9,631,567 December 31, 2018 Property and Casualty Accident and Health Corporate and Other Total Premiums and other receivables, net $ 1,245,530 $ 153,896 $ 386 $ 1,399,812 Deferred acquisition costs 226,188 25,220 — 251,408 Reinsurance recoverable 1,585,008 26,730 — 1,611,738 Prepaid reinsurance premiums 665,660 14 — 665,674 Intangible assets, net and Goodwill 443,163 116,957 — 560,120 Prepaid and other assets 20,941 22,472 111,545 154,958 Corporate and other assets — — 4,795,570 4,795,570 Total assets $ 4,186,490 $ 345,289 $ 4,907,501 $ 9,439,280 |
Revenue from External Customers by Geographic Areas | The following table shows an analysis of the premiums by geographical location: Three Months Ended March 31, 2019 2018 NGHC Reciprocal Total NGHC Reciprocal Total Gross premium written - North America $ 1,294,794 $ 105,569 $ 1,400,363 $ 1,232,772 $ 97,689 $ 1,330,461 Gross premium written - Europe 109,415 — 109,415 102,669 — 102,669 Total $ 1,404,209 $ 105,569 $ 1,509,778 $ 1,335,441 $ 97,689 $ 1,433,130 Net premium written - North America $ 1,053,601 $ 48,955 $ 1,102,556 $ 953,396 $ 50,578 $ 1,003,974 Net premium written - Europe 62,108 — 62,108 102,669 — 102,669 Total $ 1,115,709 $ 48,955 $ 1,164,664 $ 1,056,065 $ 50,578 $ 1,106,643 Net earned premium - North America $ 893,117 $ 45,658 $ 938,775 $ 825,112 $ 46,055 $ 871,167 Net earned premium - Europe 25,382 — 25,382 34,371 — 34,371 Total $ 918,499 $ 45,658 $ 964,157 $ 859,483 $ 46,055 $ 905,538 |
Revenue from External Customers by Product Type | The following table summarizes service and fee income by source within each operating segment: Three Months Ended March 31, 2019 2018 Property Accident Total Property Accident Total Commission revenue $ 27,210 $ 24,771 $ 51,981 $ 21,709 $ 17,524 $ 39,233 Finance and processing fees 32,436 2,024 34,460 32,060 1,255 33,315 Installment fees 24,170 — 24,170 21,302 — 21,302 Group health administrative fees — 23,505 23,505 — 19,291 19,291 Late payment fees 8,293 87 8,380 7,558 25 7,583 Other service and fee income 12,386 10,625 23,011 14,306 7,092 21,398 Total $ 104,495 $ 61,012 $ 165,507 $ 96,935 $ 45,187 $ 142,122 NGHC $ 103,125 $ 61,012 $ 164,137 $ 94,489 $ 45,187 $ 139,676 Reciprocal Exchanges 1,370 — 1,370 2,446 — 2,446 Total $ 104,495 $ 61,012 $ 165,507 $ 96,935 $ 45,187 $ 142,122 The following tables show an analysis of premiums and fee income by product line: Three Months Ended March 31, Gross Premium Written 2019 2018 Property and Casualty Personal Auto $ 766,681 $ 724,645 Homeowners 152,042 140,253 RV/Packaged 51,851 49,464 Small Business Auto 85,878 86,244 Lender-placed Insurance 75,938 84,934 Other 13,275 16,125 Total Property and Casualty 1,145,665 1,101,665 Accident and Health Group 64,938 56,060 Individual 84,192 75,048 International 109,414 102,668 Total Accident and Health 258,544 233,776 Total NGHC $ 1,404,209 $ 1,335,441 Reciprocal Exchanges Personal Auto $ 36,862 $ 34,297 Homeowners 67,800 62,521 Other 907 871 Total Reciprocal Exchanges $ 105,569 $ 97,689 Total Gross Premium Written $ 1,509,778 $ 1,433,130 Three Months Ended March 31, Net Premium Written 2019 2018 Property and Casualty Personal Auto $ 658,920 $ 553,997 Homeowners 85,245 92,596 RV/Packaged 51,597 49,189 Small Business Auto 74,186 64,727 Lender-placed Insurance 42,070 63,214 Other 3,510 8,989 Total Property and Casualty 915,528 832,712 Accident and Health Group 53,950 45,637 Individual 84,123 75,048 International 62,108 102,668 Total Accident and Health 200,181 223,353 Total NGHC $ 1,115,709 $ 1,056,065 Reciprocal Exchanges Personal Auto $ 15,645 $ 13,495 Homeowners 33,016 36,808 Other 294 275 Total Reciprocal Exchanges $ 48,955 $ 50,578 Total Net Premium Written $ 1,164,664 $ 1,106,643 Three Months Ended March 31, Net Earned Premium 2019 2018 Property and Casualty Personal Auto $ 510,554 $ 454,216 Homeowners 84,058 82,195 RV/Packaged 50,305 45,689 Small Business Auto 67,633 58,562 Lender-placed Insurance 41,718 60,469 Other 2,651 4,476 Total Property and Casualty 756,919 705,607 Accident and Health Group 53,963 45,639 Individual 82,235 73,866 International 25,382 34,371 Total Accident and Health 161,580 153,876 NGHC Total $ 918,499 $ 859,483 Reciprocal Exchanges Personal Auto $ 15,861 $ 12,997 Homeowners 29,491 32,771 Other 306 287 Total Reciprocal Exchanges 45,658 46,055 Total Net Earned Premium $ 964,157 $ 905,538 Three Months Ended March 31, Fee Income 2019 2018 Property and Casualty Service and Fee Income $ 103,125 $ 94,489 Ceding Commission Income 48,409 32,700 Total Property and Casualty 151,534 127,189 Accident and Health Service and Fee Income Group 30,374 24,814 Individual 2,136 1,297 Third Party Fee 28,502 19,076 Total Service and Fee Income 61,012 45,187 Ceding Commission Income 2,591 258 Total Accident and Health 63,603 45,445 NGHC Total $ 215,137 $ 172,634 Reciprocal Exchanges Service and Fee Income $ 1,370 $ 2,446 Ceding Commission Income 18,534 11,510 Total Reciprocal Exchanges $ 19,904 $ 13,956 Total Fee Income $ 235,041 $ 186,590 |
Basis of Reporting Basis of Rep
Basis of Reporting Basis of Reporting (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Adoption of Leases Topic 842 | ||
Other liabilities | $ 392,160 | $ 240,404 |
Debt | Accounting Standards Update 2016-02 | ||
Adoption of Leases Topic 842 | ||
Other liabilities | $ 30,346 |
Recent Accounting Pronounceme_4
Recent Accounting Pronouncements - Leases (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 |
Adoption of Leases Topic 842 | ||
Lease, Right-of-Use Asset | $ 127,354 | |
Lease Liability | $ 133,475 | |
Accounting Standards Update 2016-02 | ||
Adoption of Leases Topic 842 | ||
Lease, Right-of-Use Asset | $ 85,000 | |
Lease Liability | $ 85,000 |
Investments - Available-for-Sal
Investments - Available-for-Sale Debt Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Schedule of Available-for-sale Securities | ||
Total | $ 3,612,002 | $ 3,614,609 |
Gross Unrealized Gains | ||
Total | 49,829 | 11,781 |
Total | (26,484) | (65,358) |
Fair Value | ||
Debt securities, available-for-sale | 3,635,347 | 3,561,032 |
Fair Value | 3,635,347 | 3,561,032 |
Other-than-temporary impairments recognized in AOCI | 0 | 0 |
Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Total | 299,242 | 302,970 |
Gross Unrealized Gains | ||
Total | 2,142 | 575 |
Total | (2,102) | (6,462) |
Fair Value | ||
Debt securities, available-for-sale | 299,282 | 297,083 |
Fair Value | 299,282 | 297,083 |
NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Total | 3,312,760 | 3,311,639 |
Gross Unrealized Gains | ||
Total | 47,687 | 11,206 |
Total | (24,382) | (58,896) |
Fair Value | ||
Fair Value | 3,336,065 | 3,263,949 |
U.S. Treasury | ||
Schedule of Available-for-sale Securities | ||
Debt Securities | 61,814 | 64,829 |
Gross Unrealized Gains | ||
Debt Securities | 1,348 | 1,026 |
Debt Securities | (179) | (262) |
Fair Value | ||
Debt securities, available-for-sale | 62,983 | 65,593 |
U.S. Treasury | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Total | 12,991 | 12,707 |
Fair Value | ||
Fair Value | 13,247 | 12,834 |
U.S. Treasury | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Total | 48,823 | 52,122 |
Fair Value | ||
Fair Value | 49,736 | 52,759 |
Federal agencies | ||
Schedule of Available-for-sale Securities | ||
Debt Securities | 25,611 | 37,842 |
Gross Unrealized Gains | ||
Debt Securities | 22 | 22 |
Debt Securities | (17) | (389) |
Fair Value | ||
Debt securities, available-for-sale | 25,616 | 37,475 |
States and political subdivision bonds | ||
Schedule of Available-for-sale Securities | ||
Debt Securities | 258,204 | 274,367 |
Gross Unrealized Gains | ||
Debt Securities | 3,222 | 1,369 |
Debt Securities | (523) | (3,539) |
Fair Value | ||
Debt securities, available-for-sale | 260,903 | 272,197 |
Foreign government | ||
Schedule of Available-for-sale Securities | ||
Debt Securities | 142,324 | 151,443 |
Gross Unrealized Gains | ||
Debt Securities | 2,894 | 993 |
Debt Securities | 0 | (70) |
Fair Value | ||
Debt securities, available-for-sale | 145,218 | 152,366 |
Corporate bonds | ||
Schedule of Available-for-sale Securities | ||
Debt Securities | 1,332,739 | 1,283,061 |
Gross Unrealized Gains | ||
Debt Securities | 23,098 | 3,094 |
Debt Securities | (6,287) | (25,450) |
Fair Value | ||
Debt securities, available-for-sale | 1,349,550 | 1,260,705 |
Residential mortgage-backed securities | ||
Schedule of Available-for-sale Securities | ||
Debt Securities | 937,003 | 944,365 |
Gross Unrealized Gains | ||
Debt Securities | 3,844 | 716 |
Debt Securities | (9,837) | (19,965) |
Fair Value | ||
Debt securities, available-for-sale | 931,010 | 925,116 |
Commercial mortgage-backed securities | ||
Schedule of Available-for-sale Securities | ||
Debt Securities | 547,557 | 548,192 |
Gross Unrealized Gains | ||
Debt Securities | 14,281 | 3,757 |
Debt Securities | (4,766) | (6,974) |
Fair Value | ||
Debt securities, available-for-sale | 557,072 | 544,975 |
Asset-backed securities | ||
Schedule of Available-for-sale Securities | ||
Debt Securities | 61,198 | 60,563 |
Gross Unrealized Gains | ||
Debt Securities | 941 | 705 |
Debt Securities | (53) | (121) |
Fair Value | ||
Debt securities, available-for-sale | 62,086 | 61,147 |
Structured securities | ||
Schedule of Available-for-sale Securities | ||
Debt Securities | 245,552 | 249,947 |
Gross Unrealized Gains | ||
Debt Securities | 179 | 99 |
Debt Securities | (4,822) | (8,588) |
Fair Value | ||
Debt securities, available-for-sale | $ 240,909 | $ 241,458 |
Investments - Available-for-S_2
Investments - Available-for-Sale Debt Securities by Contractual Maturity (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Amortized Cost | |
Due in one year or less | $ 30,531 |
Due after one year through five years | 960,828 |
Due after five years through ten years | 820,423 |
Due after ten years | 254,462 |
Mortgage-backed securities | 1,545,758 |
Debt Securities | 3,612,002 |
Fair Value | |
Due in one year or less | 30,438 |
Due after one year through five years | 967,905 |
Due after five years through ten years | 833,633 |
Due after ten years | 253,203 |
Mortgage-backed securities | 1,550,168 |
Debt Securities | 3,635,347 |
Reciprocal Exchanges | |
Amortized Cost | |
Due in one year or less | 300 |
Due after one year through five years | 157,364 |
Due after five years through ten years | 44,621 |
Due after ten years | 11,751 |
Mortgage-backed securities | 85,206 |
Debt Securities | 299,242 |
Fair Value | |
Due in one year or less | 300 |
Due after one year through five years | 156,838 |
Due after five years through ten years | 45,048 |
Due after ten years | 11,819 |
Mortgage-backed securities | 85,277 |
Debt Securities | 299,282 |
NGHC, excluding Reciprocal Exchanges | |
Amortized Cost | |
Due in one year or less | 30,231 |
Due after one year through five years | 803,464 |
Due after five years through ten years | 775,802 |
Due after ten years | 242,711 |
Mortgage-backed securities | 1,460,552 |
Debt Securities | 3,312,760 |
Fair Value | |
Due in one year or less | 30,138 |
Due after one year through five years | 811,067 |
Due after five years through ten years | 788,585 |
Due after ten years | 241,384 |
Mortgage-backed securities | 1,464,891 |
Debt Securities | $ 3,336,065 |
Investments - Gross Unrealized
Investments - Gross Unrealized Losses (Details) $ in Thousands | Mar. 31, 2019USD ($)security | Dec. 31, 2018USD ($)security |
Fair Value | ||
Less Than 12 Months | $ 340,256 | $ 1,209,157 |
12 Months or More | 1,121,182 | 1,171,891 |
Total | 1,461,438 | 2,381,048 |
Unrealized Losses | ||
Less Than 12 Months | (5,687) | (24,306) |
12 Months or More | (20,797) | (41,052) |
Total | $ (26,484) | $ (65,358) |
Number of securities with gross unrealized loss | security | 857 | 1,662 |
25% of amortized cost or cost | 25.00% | 25.00% |
Reciprocal Exchanges | ||
Fair Value | ||
Less Than 12 Months | $ 24,944 | $ 93,334 |
12 Months or More | 155,946 | 152,916 |
Total | 180,890 | 246,250 |
Unrealized Losses | ||
Less Than 12 Months | (235) | (1,638) |
12 Months or More | (1,867) | (4,824) |
Total | (2,102) | (6,462) |
NGHC, excluding Reciprocal Exchanges | ||
Fair Value | ||
Less Than 12 Months | 315,312 | 1,115,823 |
12 Months or More | 965,236 | 1,018,975 |
Total | 1,280,548 | 2,134,798 |
Unrealized Losses | ||
Less Than 12 Months | (5,452) | (22,668) |
12 Months or More | (18,930) | (36,228) |
Total | (24,382) | (58,896) |
U.S. Treasury | ||
Fair Value | ||
Less Than 12 Months | 17,811 | 474 |
12 Months or More | 19,397 | 21,540 |
Total | 37,208 | 22,014 |
Unrealized Losses | ||
Less Than 12 Months | (5) | (2) |
12 Months or More | (174) | (260) |
Total | (179) | (262) |
Federal agencies | ||
Fair Value | ||
Less Than 12 Months | 4,897 | 23,729 |
12 Months or More | 719 | 1,493 |
Total | 5,616 | 25,222 |
Unrealized Losses | ||
Less Than 12 Months | (3) | (351) |
12 Months or More | (14) | (38) |
Total | (17) | (389) |
States and political subdivision bonds | ||
Fair Value | ||
Less Than 12 Months | 9,247 | 57,090 |
12 Months or More | 73,312 | 119,759 |
Total | 82,559 | 176,849 |
Unrealized Losses | ||
Less Than 12 Months | (32) | (902) |
12 Months or More | (491) | (2,637) |
Total | (523) | (3,539) |
Foreign government | ||
Fair Value | ||
Less Than 12 Months | 500 | 45,748 |
12 Months or More | 0 | 0 |
Total | 500 | 45,748 |
Unrealized Losses | ||
Less Than 12 Months | 0 | (70) |
12 Months or More | 0 | 0 |
Total | 0 | (70) |
Corporate bonds | ||
Fair Value | ||
Less Than 12 Months | 50,725 | 586,359 |
12 Months or More | 368,397 | 321,115 |
Total | 419,122 | 907,474 |
Unrealized Losses | ||
Less Than 12 Months | (196) | (12,891) |
12 Months or More | (6,091) | (12,559) |
Total | (6,287) | (25,450) |
Residential mortgage-backed securities | ||
Fair Value | ||
Less Than 12 Months | 91,162 | 234,396 |
12 Months or More | 485,077 | 551,623 |
Total | 576,239 | 786,019 |
Unrealized Losses | ||
Less Than 12 Months | (1,655) | (1,637) |
12 Months or More | (8,182) | (18,328) |
Total | (9,837) | (19,965) |
Commercial mortgage-backed securities | ||
Fair Value | ||
Less Than 12 Months | 0 | 13,229 |
12 Months or More | 151,359 | 148,700 |
Total | 151,359 | 161,929 |
Unrealized Losses | ||
Less Than 12 Months | 0 | (239) |
12 Months or More | (4,766) | (6,735) |
Total | (4,766) | (6,974) |
Asset-backed securities | ||
Fair Value | ||
Less Than 12 Months | 340 | 25,978 |
12 Months or More | 1,752 | 1,494 |
Total | 2,092 | 27,472 |
Unrealized Losses | ||
Less Than 12 Months | 0 | (78) |
12 Months or More | (53) | (43) |
Total | (53) | (121) |
Structured securities | ||
Fair Value | ||
Less Than 12 Months | 165,574 | 222,154 |
12 Months or More | 21,169 | 6,167 |
Total | 186,743 | 228,321 |
Unrealized Losses | ||
Less Than 12 Months | (3,796) | (8,136) |
12 Months or More | (1,026) | (452) |
Total | $ (4,822) | $ (8,588) |
Investments - Equity Securities
Investments - Equity Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Schedule of Equity Securities | ||
Equity securities | $ 10,285 | $ 10,949 |
Reciprocal Exchanges | ||
Schedule of Equity Securities | ||
Equity securities | 0 | 0 |
NGHC, excluding Reciprocal Exchanges | ||
Schedule of Equity Securities | ||
Equity securities | 10,285 | 10,949 |
Common stock | ||
Schedule of Equity Securities | ||
Equity securities | $ 10,285 | $ 10,949 |
Investments - Investment Income
Investments - Investment Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net Investment Income | ||
Investment Income, Interest | $ 34,472 | $ 26,419 |
Investment expenses | (1,027) | (1,408) |
Net investment income | 33,445 | 25,011 |
Reciprocal Exchanges | ||
Net Investment Income | ||
Net investment income | 2,170 | 2,144 |
NGHC, excluding Reciprocal Exchanges | ||
Net Investment Income | ||
Net investment income | 31,275 | 22,867 |
Cash and short-term investments | ||
Net Investment Income | ||
Investment Income, Interest | 1,497 | 187 |
Debt securities | ||
Net Investment Income | ||
Investment Income, Interest | 29,467 | 24,256 |
Equity securities | ||
Net Investment Income | ||
Investment Income, Interest | 2 | 155 |
Other, net (related parties - $254 and $(295)) | ||
Net Investment Income | ||
Other, net (related parties - $254 and $(295)) | 3,506 | 1,821 |
Other, net (related parties - $254 and $(295)) | Related Parties | ||
Net Investment Income | ||
Other, net (related parties - $254 and $(295)) | $ 254 | $ (295) |
Investments - Net Realized Gain
Investments - Net Realized Gains (Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Gain (Loss) on Investments | ||
Foreign currency transactions | $ (893) | $ 1,172 |
Net realized gain (loss) on investments | 22 | 118 |
Reciprocal Exchanges | ||
Gain (Loss) on Investments | ||
Net realized gain (loss) on investments | (744) | (131) |
NGHC, excluding Reciprocal Exchanges | ||
Gain (Loss) on Investments | ||
Net realized gain (loss) on investments | 766 | 249 |
Debt securities | ||
Gain (Loss) on Investments | ||
Debt securities, available-for-sale, gross gains | 136 | 1,169 |
Debt securities, available-for-sale, gross losses | (256) | (1,171) |
Net realized gain (loss) on debt securities, available-for-sale | (120) | (2) |
Equity securities | ||
Gain (Loss) on Investments | ||
Equity securities | 1,036 | (1,048) |
Less: Net gains (losses) recognized during the period on securities sold during the period | 0 | 0 |
Net gains (losses) recognized during the reporting period on securities still held at the reporting date | 1,036 | (1,048) |
Short-term and other investments | ||
Gain (Loss) on Investments | ||
Short-term and other investments | $ (1) | $ (4) |
Investments - Credit Quality of
Investments - Credit Quality of Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 3,612,002 | $ 3,614,609 |
Fair Value | 3,635,347 | 3,561,032 |
NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 3,312,760 | 3,311,639 |
Fair Value | 3,336,065 | 3,263,949 |
Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 299,242 | 302,970 |
Fair Value | 299,282 | 297,083 |
Debt securities | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 3,312,760 | 3,311,639 |
Fair Value | $ 3,336,065 | $ 3,263,949 |
Percentage | 100.00% | 100.00% |
Debt securities | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 299,242 | $ 302,970 |
Fair Value | $ 299,282 | $ 297,083 |
Percentage | 100.00% | 100.00% |
U.S. Treasury | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 48,823 | $ 52,122 |
Fair Value | $ 49,736 | $ 52,759 |
Percentage | 1.50% | 1.60% |
U.S. Treasury | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 12,991 | $ 12,707 |
Fair Value | $ 13,247 | $ 12,834 |
Percentage | 4.40% | 4.30% |
Debt Securities, Excluding US Treasury Securities | Standard & Poor's, AAA Rating | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 574,775 | $ 586,639 |
Fair Value | $ 589,125 | $ 589,078 |
Percentage | 17.70% | 18.00% |
Debt Securities, Excluding US Treasury Securities | Standard & Poor's, AAA Rating | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 18,283 | $ 18,335 |
Fair Value | $ 18,408 | $ 18,109 |
Percentage | 6.20% | 6.10% |
Debt Securities, Excluding US Treasury Securities | Standard & Poor's, AA, AA Plus, and AA Minus Rating | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 1,368,935 | $ 1,385,709 |
Fair Value | $ 1,363,545 | $ 1,358,528 |
Percentage | 40.90% | 41.60% |
Debt Securities, Excluding US Treasury Securities | Standard & Poor's, AA, AA Plus, and AA Minus Rating | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 129,590 | $ 142,525 |
Fair Value | $ 129,337 | $ 140,114 |
Percentage | 43.20% | 47.20% |
Debt Securities, Excluding US Treasury Securities | Standard & Poor's, A, A Plus, and A Minus Rating | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 615,601 | $ 591,219 |
Fair Value | $ 621,717 | $ 581,106 |
Percentage | 18.60% | 17.80% |
Debt Securities, Excluding US Treasury Securities | Standard & Poor's, A, A Plus, and A Minus Rating | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 127,511 | $ 118,535 |
Fair Value | $ 127,668 | $ 115,618 |
Percentage | 42.70% | 38.90% |
Debt Securities, Excluding US Treasury Securities | Standard & Poor's, BBB, BBB Plus, and BBB Minus Rating | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 664,992 | $ 653,645 |
Fair Value | $ 673,198 | $ 641,554 |
Percentage | 20.20% | 19.70% |
Debt Securities, Excluding US Treasury Securities | Standard & Poor's, BBB, BBB Plus, and BBB Minus Rating | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 10,835 | $ 10,834 |
Fair Value | $ 10,590 | $ 10,374 |
Percentage | 3.50% | 3.50% |
Debt Securities, Excluding US Treasury Securities | Standard & Poor's, BB Plus and Lower Rating | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 39,634 | $ 42,305 |
Fair Value | $ 38,744 | $ 40,924 |
Percentage | 1.10% | 1.30% |
Debt Securities, Excluding US Treasury Securities | Standard & Poor's, BB Plus and Lower Rating | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 32 | $ 34 |
Fair Value | $ 32 | $ 34 |
Percentage | 0.00% | 0.00% |
Investments - Investment Qualit
Investments - Investment Quality of Corporate Bonds (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Schedule of Available-for-sale Securities | ||
Fair Value | $ 3,635,347 | $ 3,561,032 |
Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Fair Value | 299,282 | 297,083 |
NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Fair Value | 3,336,065 | 3,263,949 |
Corporate Debt Securities | ||
Schedule of Available-for-sale Securities | ||
Fair Value | $ 1,349,550 | $ 1,260,705 |
% of Corporate Bonds Portfolio | 100.00% | 100.00% |
Corporate Debt Securities | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Fair Value | $ 186,001 | $ 181,606 |
% of Corporate Bonds Portfolio | 13.80% | 14.40% |
Corporate Debt Securities | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Fair Value | $ 1,163,549 | $ 1,079,099 |
% of Corporate Bonds Portfolio | 86.20% | 85.60% |
Corporate Debt Securities | Standard & Poor's, AAA Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.40% | 0.40% |
Corporate Debt Securities | Standard & Poor's, AAA Rating | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.40% | 0.40% |
Corporate Debt Securities | Standard & Poor's, AAA Rating | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.00% | 0.00% |
Corporate Debt Securities | Standard & Poor's, AA, AA Plus, and AA Minus Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 9.90% | 10.40% |
Corporate Debt Securities | Standard & Poor's, AA, AA Plus, and AA Minus Rating | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 3.20% | 4.10% |
Corporate Debt Securities | Standard & Poor's, AA, AA Plus, and AA Minus Rating | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 6.70% | 6.30% |
Corporate Debt Securities | Standard & Poor's, A, A Plus, and A Minus Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 47.00% | 46.40% |
Corporate Debt Securities | Standard & Poor's, A, A Plus, and A Minus Rating | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 9.40% | 9.10% |
Corporate Debt Securities | Standard & Poor's, A, A Plus, and A Minus Rating | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 37.60% | 37.30% |
Corporate Debt Securities | Standard & Poor's, BBB, BBB Plus, and BBB Minus Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 41.40% | 41.30% |
Corporate Debt Securities | Standard & Poor's, BBB, BBB Plus, and BBB Minus Rating | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.80% | 0.70% |
Corporate Debt Securities | Standard & Poor's, BBB, BBB Plus, and BBB Minus Rating | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 40.60% | 40.60% |
Corporate Debt Securities | Standard & Poor's, BB Plus and Lower Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 1.30% | 1.50% |
Corporate Debt Securities | Standard & Poor's, BB Plus and Lower Rating | Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.00% | 0.10% |
Corporate Debt Securities | Standard & Poor's, BB Plus and Lower Rating | NGHC, excluding Reciprocal Exchanges | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 1.30% | 1.40% |
Corporate Debt Securities | Financial Institutions | ||
Schedule of Available-for-sale Securities | ||
Fair Value | $ 589,699 | $ 535,373 |
% of Corporate Bonds Portfolio | 43.70% | 42.50% |
Corporate Debt Securities | Financial Institutions | Standard & Poor's, AAA Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.00% | 0.00% |
Corporate Debt Securities | Financial Institutions | Standard & Poor's, AA, AA Plus, and AA Minus Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 4.40% | 4.30% |
Corporate Debt Securities | Financial Institutions | Standard & Poor's, A, A Plus, and A Minus Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 24.10% | 23.10% |
Corporate Debt Securities | Financial Institutions | Standard & Poor's, BBB, BBB Plus, and BBB Minus Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 14.50% | 14.20% |
Corporate Debt Securities | Financial Institutions | Standard & Poor's, BB Plus and Lower Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.70% | 0.90% |
Corporate Debt Securities | Industrials | ||
Schedule of Available-for-sale Securities | ||
Fair Value | $ 733,355 | $ 697,324 |
% of Corporate Bonds Portfolio | 54.30% | 55.30% |
Corporate Debt Securities | Industrials | Standard & Poor's, AAA Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.40% | 0.40% |
Corporate Debt Securities | Industrials | Standard & Poor's, AA, AA Plus, and AA Minus Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 5.50% | 6.10% |
Corporate Debt Securities | Industrials | Standard & Poor's, A, A Plus, and A Minus Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 21.30% | 21.50% |
Corporate Debt Securities | Industrials | Standard & Poor's, BBB, BBB Plus, and BBB Minus Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 26.50% | 26.70% |
Corporate Debt Securities | Industrials | Standard & Poor's, BB Plus and Lower Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.60% | 0.60% |
Corporate Debt Securities | Utilities And Other | ||
Schedule of Available-for-sale Securities | ||
Fair Value | $ 26,496 | $ 28,008 |
% of Corporate Bonds Portfolio | 2.00% | 2.20% |
Corporate Debt Securities | Utilities And Other | Standard & Poor's, AAA Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.00% | 0.00% |
Corporate Debt Securities | Utilities And Other | Standard & Poor's, AA, AA Plus, and AA Minus Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.00% | 0.00% |
Corporate Debt Securities | Utilities And Other | Standard & Poor's, A, A Plus, and A Minus Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 1.60% | 1.80% |
Corporate Debt Securities | Utilities And Other | Standard & Poor's, BBB, BBB Plus, and BBB Minus Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.40% | 0.40% |
Corporate Debt Securities | Utilities And Other | Standard & Poor's, BB Plus and Lower Rating | ||
Schedule of Available-for-sale Securities | ||
Investment quality - corporate bond holdings and industry concentrations | 0.00% | 0.00% |
Investments - Cash and Cash Equ
Investments - Cash and Cash Equivalents, Restricted Cash and Restricted Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Investments, Debt and Equity Securities [Abstract] | ||||
Cash and cash equivalents | $ 188,064 | $ 193,858 | ||
Restricted cash and cash equivalents | 32,208 | 39,725 | ||
Total cash, cash equivalents and restricted cash | 220,272 | 233,583 | $ 378,053 | $ 357,484 |
Securities on deposit with state regulatory authorities | 76,215 | 73,119 | ||
Restricted investments to trusts in certain reinsurance transactions | 66,894 | 70,470 | ||
Total restricted investments | $ 143,109 | $ 143,589 |
Investments - Short-term and Ot
Investments - Short-term and Other Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Investment | ||
Other investments | $ 305,971 | $ 306,276 |
Related Parties | ||
Investment | ||
Other investments | 233,555 | 233,723 |
Equity method investments (related parties - $105,097 and $106,031) | ||
Investment | ||
Other investments | 142,707 | 142,921 |
Equity method investments (related parties - $105,097 and $106,031) | Related Parties | ||
Investment | ||
Other investments | 105,097 | 106,031 |
Notes receivable (related parties - $128,458 and $127,692) | ||
Investment | ||
Other investments | 129,474 | 128,893 |
Notes receivable (related parties - $128,458 and $127,692) | Related Parties | ||
Investment | ||
Other investments | 128,458 | 127,692 |
Long-term Certificates of Deposit (CDs), at cost | ||
Investment | ||
Other investments | 20,151 | 20,252 |
Investments, at fair value | ||
Investment | ||
Other investments | 5,971 | 6,542 |
Investments, at cost or amortized cost | ||
Investment | ||
Other investments | $ 7,668 | $ 7,668 |
Investments - Related Parties -
Investments - Related Parties - LSC Entity (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2019USD ($)contract | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
LSC Entities | AmTrust Financial Services, Inc. | ||||
Schedule of Equity Method Investments | ||||
Ownership percentage | 50.00% | |||
LSC Entities | VIE, Not primary beneficiary | Related Parties | ||||
Schedule of Equity Method Investments | ||||
Ownership percentage | 50.00% | |||
Life Settlement Contracts, Investment Method, Number of Contracts | contract | 1 | |||
Equity investment in unconsolidated subsidiaries | $ 48,910 | $ 56,348 | $ 48,324 | $ 160,683 |
Distributions | 0 | (107,035) | ||
Contributions | 0 | 2,000 | ||
Equity in earnings (losses) | 586 | 700 | ||
Change in equity method investments | $ 586 | $ (104,335) | ||
LSC Entities investment in LP | ||||
Schedule of Equity Method Investments | ||||
Ownership percentage | 30.00% |
Investments - Related Parties_2
Investments - Related Parties - 800 Superior, LLC (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Related Parties | 800 Superior, LLC | |||
Schedule of Equity Method Investments | |||
Rent expense | $ 742 | $ 722 | |
800 Superior, LLC | AmTrust Financial Services, Inc. | |||
Schedule of Equity Method Investments | |||
Ownership percentage | 50.00% | ||
800 Superior, LLC | VIE, Not primary beneficiary | Related Parties | |||
Schedule of Equity Method Investments | |||
Ownership percentage | 50.00% | ||
Equity investment in unconsolidated subsidiaries | $ 510 | $ 816 | |
Equity in earnings (losses) | $ (306) | $ (1,070) |
Investments - Related Parties_3
Investments - Related Parties - East Ninth & Superior (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
East Ninth & Superior, LLC | AmTrust Financial Services, Inc. | |||
Schedule of Equity Method Investments | |||
Ownership percentage | 50.00% | ||
East Ninth & Superior, LLC | VIE, Not primary beneficiary | Related Parties | |||
Schedule of Equity Method Investments | |||
Ownership percentage | 50.00% | ||
Equity investment in unconsolidated subsidiaries | $ 4,322 | $ 4,309 | |
Equity in earnings (losses) | $ 13 | $ 16 | |
Eight Hundred Superior NMTC investment Fund II | AmTrust Financial Services, Inc. | |||
Schedule of Equity Method Investments | |||
Ownership percentage | 24.50% | ||
Eight Hundred Superior NMTC investment Fund II | Related Parties | |||
Schedule of Equity Method Investments | |||
Ownership percentage | 24.50% |
Investments - Related Parties_4
Investments - Related Parties - North Dearborn (Details) - North Dearborn Building Company, L.P. - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
AmTrust Financial Services, Inc. | |||
Schedule of Equity Method Investments | |||
Limited Partnership, Percentage Participation | 45.00% | ||
NA Advisors GP LLC | |||
Schedule of Equity Method Investments | |||
Limited Partnership, Percentage Participation | 10.00% | ||
Limited Partnership, Percentage of Profit Interest | 10.00% | ||
VIE, Not primary beneficiary | Related Parties | |||
Schedule of Equity Method Investments | |||
Ownership percentage | 45.00% | ||
Equity investment in unconsolidated subsidiaries | $ 6,186 | $ 6,214 | |
Equity in earnings (losses) | $ (28) | $ (9) |
Investments - Related Parties_5
Investments - Related Parties - 4455 LBJ Freeway, LLC (Details) - 4455 LBJ Freeway, LLC - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
AmTrust Financial Services, Inc. | |||
Schedule of Equity Method Investments | |||
Limited Partnership, Percentage Participation | 50.00% | ||
Related Parties | |||
Schedule of Equity Method Investments | |||
Equity investment in unconsolidated subsidiaries | $ 816 | $ 793 | |
Equity in earnings (losses) | 23 | $ 2 | |
Related Parties | 4455 LBJ Freeway, LLC | |||
Schedule of Equity Method Investments | |||
Rent expense | $ 555 | $ 574 | |
VIE, Not primary beneficiary | Related Parties | |||
Schedule of Equity Method Investments | |||
Ownership percentage | 50.00% |
Investments - Related Parties_6
Investments - Related Parties - Illinois Center Building, L.P. (Details) - Illinois Center Building, L.P. - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
ACP Re Group, Inc. | |||
Schedule of Equity Method Investments | |||
Limited Partnership, Percentage Participation | 37.50% | ||
ACP Re | |||
Schedule of Equity Method Investments | |||
Limited Partnership, Percentage Participation | 15.00% | ||
NA Advisors GP LLC | |||
Schedule of Equity Method Investments | |||
Limited Partnership, Percentage Participation | 10.00% | ||
Limited Partnership, Percentage of Profit Interest | 10.00% | ||
VIE, Not primary beneficiary | Related Parties | |||
Schedule of Equity Method Investments | |||
Ownership percentage | 37.50% | ||
Equity investment in unconsolidated subsidiaries | $ 44,353 | $ 45,575 | |
Equity in earnings (losses) | $ (1,222) | $ (1,109) |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Assets Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | $ 3,635,347 | $ 3,561,032 |
Equity securities, at fair value | 10,285 | 10,949 |
Short-term investments | 390,052 | 348,549 |
Other investments | 305,971 | 306,276 |
Reciprocal Exchanges | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 299,282 | 297,083 |
Equity securities, at fair value | 0 | 0 |
Short-term investments | 19,632 | 17,328 |
NGHC, excluding Reciprocal Exchanges | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Equity securities, at fair value | 10,285 | 10,949 |
Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 3,635,347 | 3,561,032 |
Equity securities, at fair value | 10,285 | 10,949 |
Total | 4,041,655 | 3,927,072 |
Recurring | Reciprocal Exchanges | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Total | 318,914 | 314,411 |
Recurring | NGHC, excluding Reciprocal Exchanges | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Total | 3,722,741 | 3,612,661 |
Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 88,599 | 103,068 |
Equity securities, at fair value | 9,068 | 9,898 |
Total | 487,719 | 461,515 |
Level 1 | Recurring | Reciprocal Exchanges | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Total | 32,879 | 32,013 |
Level 1 | Recurring | NGHC, excluding Reciprocal Exchanges | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Total | 454,840 | 429,502 |
Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 3,531,254 | 3,442,601 |
Equity securities, at fair value | 0 | 0 |
Total | 3,531,254 | 3,442,601 |
Level 2 | Recurring | Reciprocal Exchanges | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Total | 286,035 | 282,398 |
Level 2 | Recurring | NGHC, excluding Reciprocal Exchanges | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Total | 3,245,219 | 3,160,203 |
Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 15,494 | 15,363 |
Equity securities, at fair value | 1,217 | 1,051 |
Total | 22,682 | 22,956 |
Level 3 | Recurring | Reciprocal Exchanges | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Total | 0 | 0 |
Level 3 | Recurring | NGHC, excluding Reciprocal Exchanges | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Total | 22,682 | 22,956 |
U.S. Treasury | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 62,983 | 65,593 |
U.S. Treasury | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 62,983 | 65,593 |
U.S. Treasury | Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 62,983 | 65,593 |
U.S. Treasury | Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
U.S. Treasury | Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Federal agencies | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 25,616 | 37,475 |
Federal agencies | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 25,616 | 37,475 |
Federal agencies | Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 25,616 | 37,475 |
Federal agencies | Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Federal agencies | Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
States and political subdivision bonds | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 260,903 | 272,197 |
States and political subdivision bonds | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 260,903 | 272,197 |
States and political subdivision bonds | Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
States and political subdivision bonds | Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 257,243 | 268,601 |
States and political subdivision bonds | Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 3,660 | 3,596 |
Foreign government | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 145,218 | 152,366 |
Foreign government | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 145,218 | 152,366 |
Foreign government | Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Foreign government | Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 145,218 | 152,366 |
Foreign government | Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Corporate bonds | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 1,349,550 | 1,260,705 |
Corporate bonds | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 1,349,550 | 1,260,705 |
Corporate bonds | Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Corporate bonds | Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 1,337,716 | 1,248,938 |
Corporate bonds | Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 11,834 | 11,767 |
Residential mortgage-backed securities | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 931,010 | 925,116 |
Residential mortgage-backed securities | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 931,010 | 925,116 |
Residential mortgage-backed securities | Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Residential mortgage-backed securities | Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 931,010 | 925,116 |
Residential mortgage-backed securities | Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Commercial mortgage-backed securities | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 557,072 | 544,975 |
Commercial mortgage-backed securities | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 557,072 | 544,975 |
Commercial mortgage-backed securities | Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Commercial mortgage-backed securities | Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 557,072 | 544,975 |
Commercial mortgage-backed securities | Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Asset-backed securities | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 62,086 | 61,147 |
Asset-backed securities | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 62,086 | 61,147 |
Asset-backed securities | Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Asset-backed securities | Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 62,086 | 61,147 |
Asset-backed securities | Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Structured securities | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 240,909 | 241,458 |
Structured securities | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 240,909 | 241,458 |
Structured securities | Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Structured securities | Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 240,909 | 241,458 |
Structured securities | Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Debt securities, available-for-sale | 0 | 0 |
Common stock | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Equity securities, at fair value | 10,285 | 10,949 |
Common stock | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Equity securities, at fair value | 10,285 | 10,949 |
Common stock | Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Equity securities, at fair value | 9,068 | 9,898 |
Common stock | Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Equity securities, at fair value | 0 | 0 |
Common stock | Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Equity securities, at fair value | 1,217 | 1,051 |
Short-term investments | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Short-term investments | 390,052 | 348,549 |
Short-term investments | Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Short-term investments | 390,052 | 348,549 |
Short-term investments | Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Short-term investments | 0 | 0 |
Short-term investments | Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Short-term investments | 0 | 0 |
Other investments | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Other investments | 5,971 | 6,542 |
Other investments | Level 1 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Other investments | 0 | 0 |
Other investments | Level 2 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Other investments | 0 | 0 |
Other investments | Level 3 | Recurring | ||
Fair Value Assets Measured on Recurring and Nonrecurring Basis | ||
Other investments | $ 5,971 | $ 6,542 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Changes in Fair Value of Level 3 Financial Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Fair Value Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Balance as of | $ 22,956 | $ 44,730 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Total gains (losses) included in net income | (405) | (380) |
Total gains (losses) included in other comprehensive income | 131 | 14 |
Purchases | 0 | 0 |
Sales | 0 | (526) |
Balance as of | 22,682 | 43,838 |
Change in unrealized gains (losses) for the period included in net income for assets held at the end of the reporting period | (405) | (380) |
Change in unrealized gains (losses) for the period included in other comprehensive income for assets held at the end of the reporting period | 131 | |
States and political subdivision bonds | ||
Fair Value Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Balance as of | 3,596 | 4,081 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Total gains (losses) included in net income | 0 | 0 |
Total gains (losses) included in other comprehensive income | 64 | 46 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Balance as of | 3,660 | 4,127 |
Change in unrealized gains (losses) for the period included in net income for assets held at the end of the reporting period | 0 | 0 |
Change in unrealized gains (losses) for the period included in other comprehensive income for assets held at the end of the reporting period | 64 | |
Corporate bonds | ||
Fair Value Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Balance as of | 11,767 | 24,545 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Total gains (losses) included in net income | 0 | 0 |
Total gains (losses) included in other comprehensive income | 67 | (32) |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Balance as of | 11,834 | 24,513 |
Change in unrealized gains (losses) for the period included in net income for assets held at the end of the reporting period | 0 | 0 |
Change in unrealized gains (losses) for the period included in other comprehensive income for assets held at the end of the reporting period | 67 | |
Common Stock | ||
Fair Value Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Balance as of | 1,051 | 5,052 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Total gains (losses) included in net income | 166 | (1,186) |
Total gains (losses) included in other comprehensive income | 0 | 0 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Balance as of | 1,217 | 3,866 |
Change in unrealized gains (losses) for the period included in net income for assets held at the end of the reporting period | 166 | (1,186) |
Change in unrealized gains (losses) for the period included in other comprehensive income for assets held at the end of the reporting period | 0 | |
Preferred Stock | ||
Fair Value Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Balance as of | 270 | |
Transfers into Level 3 | 0 | |
Transfers out of Level 3 | 0 | |
Total gains (losses) included in net income | 12 | |
Total gains (losses) included in other comprehensive income | 0 | |
Purchases | 0 | |
Sales | 0 | |
Balance as of | 282 | |
Change in unrealized gains (losses) for the period included in net income for assets held at the end of the reporting period | 12 | |
Other investments | ||
Fair Value Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Balance as of | 6,542 | 10,782 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Total gains (losses) included in net income | (571) | 794 |
Total gains (losses) included in other comprehensive income | 0 | 0 |
Purchases | 0 | 0 |
Sales | 0 | (526) |
Balance as of | 5,971 | 11,050 |
Change in unrealized gains (losses) for the period included in net income for assets held at the end of the reporting period | (571) | $ 794 |
Change in unrealized gains (losses) for the period included in other comprehensive income for assets held at the end of the reporting period | $ 0 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt | $ 710,196 | $ 705,795 |
Senior Notes | 7.625% Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt | 96,863 | 96,842 |
Senior Notes | 7.625% Notes | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Fair value estimates of debt | 102,000 | 90,400 |
Senior Notes | 6.75% Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt | 346,600 | 346,439 |
Senior Notes | 6.75% Notes | Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Fair value estimates of debt | 357,879 | 353,756 |
Surplus Notes | Subordinated Debentures | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt | 72,168 | 72,168 |
Surplus Notes | Subordinated Debentures | Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Fair value estimates of debt | 72,114 | 72,109 |
Line of Credit | Credit Agreement | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt | 0 | 160,000 |
Line of Credit | Credit Agreement | Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Fair value estimates of debt | 0 | 163,222 |
Line of Credit | 2019 Credit Agreement | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt | 160,000 | 0 |
Line of Credit | 2019 Credit Agreement | Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Fair value estimates of debt | $ 168,964 | $ 0 |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Narrative (Details) | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value Disclosures [Abstract] | ||
Percentage of investments priced by service | 100.00% | 100.00% |
Deferred Acquisition Costs (Det
Deferred Acquisition Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Movement Analysis of Deferred Policy Acquisition Costs | ||
Beginning of the period | $ 251,408 | $ 216,389 |
Additions | 171,080 | 145,072 |
Amortization | (154,311) | (127,861) |
Change in DAC | 16,769 | 17,211 |
End of the period | 268,177 | 233,600 |
Reciprocal Exchanges | ||
Movement Analysis of Deferred Policy Acquisition Costs | ||
End of the period | 20,305 | 21,635 |
NGHC, excluding Reciprocal Exchanges | ||
Movement Analysis of Deferred Policy Acquisition Costs | ||
End of the period | 247,872 | 211,965 |
Property and Casualty | ||
Movement Analysis of Deferred Policy Acquisition Costs | ||
Beginning of the period | 226,188 | 198,283 |
Additions | 145,979 | 139,132 |
Amortization | (136,008) | (120,332) |
Change in DAC | 9,971 | 18,800 |
End of the period | 236,159 | 217,083 |
Property and Casualty | Reciprocal Exchanges | ||
Movement Analysis of Deferred Policy Acquisition Costs | ||
End of the period | 20,305 | 21,635 |
Property and Casualty | NGHC, excluding Reciprocal Exchanges | ||
Movement Analysis of Deferred Policy Acquisition Costs | ||
End of the period | 215,854 | 195,448 |
Accident and Health | ||
Movement Analysis of Deferred Policy Acquisition Costs | ||
Beginning of the period | 25,220 | 18,106 |
Additions | 25,101 | 5,940 |
Amortization | (18,303) | (7,529) |
Change in DAC | 6,798 | (1,589) |
End of the period | 32,018 | 16,517 |
Accident and Health | Reciprocal Exchanges | ||
Movement Analysis of Deferred Policy Acquisition Costs | ||
End of the period | 0 | 0 |
Accident and Health | NGHC, excluding Reciprocal Exchanges | ||
Movement Analysis of Deferred Policy Acquisition Costs | ||
End of the period | $ 32,018 | $ 16,517 |
Unpaid Losses and Loss Adjust_3
Unpaid Losses and Loss Adjustment Expense Reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Liability for Claims and Claims Adjustment Expense | ||
Unpaid losses and LAE, gross of related reinsurance recoverable at beginning of the period | $ 2,957,159 | $ 2,663,557 |
Less: Reinsurance recoverable at beginning of the period | (1,285,142) | (1,129,743) |
Net balance at beginning of the period | 1,672,017 | 1,533,814 |
Current year | 666,123 | 654,104 |
Prior year | (14,314) | (19,938) |
Total incurred | 651,809 | 634,166 |
Current year | (179,025) | (242,943) |
Prior year | (497,348) | (371,573) |
Total paid | (676,373) | (614,516) |
Effect of foreign exchange rates | 1,094 | (1,679) |
Net balance at end of the period | 1,648,547 | 1,551,785 |
Plus: Reinsurance recoverable at end of the period | (1,221,776) | (1,127,132) |
Gross balance at end of period | 2,870,323 | 2,678,917 |
NGHC, excluding Reciprocal Exchanges | ||
Liability for Claims and Claims Adjustment Expense | ||
Unpaid losses and LAE, gross of related reinsurance recoverable at beginning of the period | 2,778,689 | 2,520,204 |
Less: Reinsurance recoverable at beginning of the period | (1,207,163) | (1,077,335) |
Net balance at beginning of the period | 1,571,526 | 1,442,869 |
Current year | 626,150 | 608,187 |
Prior year | (16,366) | (18,552) |
Total incurred | 609,784 | 589,635 |
Current year | (164,076) | (223,257) |
Prior year | (475,870) | (354,118) |
Total paid | (639,946) | (577,375) |
Effect of foreign exchange rates | 1,094 | (1,679) |
Net balance at end of the period | 1,542,458 | 1,453,450 |
Plus: Reinsurance recoverable at end of the period | (1,131,843) | (1,066,671) |
Gross balance at end of period | 2,674,301 | 2,520,121 |
Reciprocal Exchanges | ||
Liability for Claims and Claims Adjustment Expense | ||
Unpaid losses and LAE, gross of related reinsurance recoverable at beginning of the period | 178,470 | |
Gross balance at end of period | 196,022 | |
Property and Casualty | ||
Liability for Claims and Claims Adjustment Expense | ||
Prior year | (3,462) | (16,555) |
Property and Casualty | NGHC, excluding Reciprocal Exchanges | ||
Liability for Claims and Claims Adjustment Expense | ||
Unpaid losses and LAE, gross of related reinsurance recoverable at beginning of the period | 2,507,409 | 2,270,551 |
Less: Reinsurance recoverable at beginning of the period | (1,182,588) | (1,067,495) |
Net balance at beginning of the period | 1,324,821 | 1,203,056 |
Current year | 530,549 | 513,526 |
Prior year | (5,514) | (15,169) |
Total incurred | 525,035 | 498,357 |
Current year | (130,395) | (202,967) |
Prior year | (422,560) | (306,126) |
Total paid | (552,955) | (509,093) |
Effect of foreign exchange rates | 0 | 0 |
Net balance at end of the period | 1,296,901 | 1,192,320 |
Plus: Reinsurance recoverable at end of the period | (1,103,114) | (1,058,106) |
Gross balance at end of period | 2,400,015 | 2,250,426 |
Property and Casualty | Reciprocal Exchanges | ||
Liability for Claims and Claims Adjustment Expense | ||
Unpaid losses and LAE, gross of related reinsurance recoverable at beginning of the period | 178,470 | 143,353 |
Less: Reinsurance recoverable at beginning of the period | (77,979) | (52,408) |
Net balance at beginning of the period | 100,491 | 90,945 |
Current year | 39,973 | 45,917 |
Prior year | 2,052 | (1,386) |
Total incurred | 42,025 | 44,531 |
Current year | (14,949) | (19,686) |
Prior year | (21,478) | (17,455) |
Total paid | (36,427) | (37,141) |
Effect of foreign exchange rates | 0 | 0 |
Net balance at end of the period | 106,089 | 98,335 |
Plus: Reinsurance recoverable at end of the period | (89,933) | (60,461) |
Gross balance at end of period | 196,022 | 158,796 |
Accident and Health | NGHC, excluding Reciprocal Exchanges | ||
Liability for Claims and Claims Adjustment Expense | ||
Unpaid losses and LAE, gross of related reinsurance recoverable at beginning of the period | 271,280 | 249,653 |
Less: Reinsurance recoverable at beginning of the period | (24,575) | (9,840) |
Net balance at beginning of the period | 246,705 | 239,813 |
Current year | 95,601 | 94,661 |
Prior year | (10,852) | (3,383) |
Total incurred | 84,749 | 91,278 |
Current year | (33,681) | (20,290) |
Prior year | (53,310) | (47,992) |
Total paid | (86,991) | (68,282) |
Effect of foreign exchange rates | 1,094 | (1,679) |
Net balance at end of the period | 245,557 | 261,130 |
Plus: Reinsurance recoverable at end of the period | (28,729) | (8,565) |
Gross balance at end of period | $ 274,286 | $ 269,695 |
Reinsurance - Effects of Reinsu
Reinsurance - Effects of Reinsurance (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Reinsurance Recoverables | |||
Reinsurance recoverable on paid losses | $ 267,789 | $ 326,596 | |
Reinsurance recoverable on unpaid losses | 1,221,776 | 1,285,142 | |
Reinsurance recoverable | 1,489,565 | 1,611,738 | |
Reinsurance Liabilities | |||
Unpaid Loss and LAE reserves, assumed | 76,123 | 84,469 | |
Unearned premiums, assumed | 20,604 | 21,015 | |
Prepaid reinsurance premiums | 637,024 | $ 665,674 | |
Premiums: | |||
Direct, Written | 1,489,188 | $ 1,413,877 | |
Assumed premiums written | 20,590 | 19,253 | |
Gross premium written | 1,509,778 | 1,433,130 | |
Ceded premiums | (345,114) | (326,487) | |
Net premium written | 1,164,664 | 1,106,643 | |
Direct, Earned | 1,315,705 | 1,191,327 | |
Assumed, Earned | 21,000 | 29,051 | |
Premiums Earned, Gross | 1,336,705 | 1,220,378 | |
Ceded, Earned | (372,548) | (314,840) | |
Net earned premium | 964,157 | 905,538 | |
Loss and LAE expense: | |||
Ceded Loss and LAE | 209,322 | 197,317 | |
Assumed Losses and LAE | $ 5,322 | $ (1,321) |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) - USD ($) $ in Thousands | May 01, 2019 | Jul. 01, 2018 | May 01, 2018 | Jul. 01, 2017 | Mar. 31, 2019 | Dec. 31, 2019 |
Personal Auto | ||||||
Reinsurance Retention Policy | ||||||
Reinsurance - Percentage of Business Ceded | 15.00% | 7.00% | ||||
Reinsurance percentage of ceding commission | 31.20% | |||||
Liability of the Reinsurer per Risk | $ 5,000 | |||||
Liability of the Reinsurer per Event | $ 70,000 | |||||
Homeowners | ||||||
Reinsurance Retention Policy | ||||||
Reinsurance - Percentage of Business Ceded | 42.00% | 29.60% | ||||
Reinsurance percentage of ceding commission | 38.00% | 42.50% | ||||
Liability of the Reinsurer per Risk | $ 5,000 | |||||
Liability of the Reinsurer per Event | $ 70,000 | |||||
Reinsurance - Percentage of Business Ceded, Additional | 12.40% | |||||
Property Catastrophe Program | ||||||
Reinsurance Retention Policy | ||||||
Amount of coverage in excess of retention | $ 575,000 | |||||
Retention amount | $ 70,000 | |||||
Casualty Program | ||||||
Reinsurance Retention Policy | ||||||
Amount of coverage in excess of retention | $ 35,000 | |||||
Retention amount | 5,000 | |||||
Minimum | Personal Auto | ||||||
Reinsurance Retention Policy | ||||||
Reinsurance percentage of ceding commission | 29.60% | |||||
Loss Ratio | 63.40% | |||||
Maximum | Personal Auto | ||||||
Reinsurance Retention Policy | ||||||
Reinsurance percentage of ceding commission | 32.80% | |||||
Loss Ratio | 66.60% | |||||
Reciprocal Exchanges | Property Catastrophe Program | ||||||
Reinsurance Retention Policy | ||||||
Amount of coverage in excess of retention | 475,000 | $ 375,000 | ||||
Retention amount | $ 20,000 | $ 20,000 | ||||
Subsequent Event | Property Catastrophe Program | ||||||
Reinsurance Retention Policy | ||||||
Amount of coverage in excess of retention | $ 650,000 | |||||
Subsequent Event | Minimum | Personal Auto | ||||||
Reinsurance Retention Policy | ||||||
Reinsurance percentage of ceding commission | 5.00% | |||||
Subsequent Event | Maximum | Personal Auto | ||||||
Reinsurance Retention Policy | ||||||
Reinsurance percentage of ceding commission | 30.00% | |||||
First Event | Subsequent Event | Property Catastrophe Program | ||||||
Reinsurance Retention Policy | ||||||
Retention amount | 70,000 | |||||
Second Event | Subsequent Event | Property Catastrophe Program | ||||||
Reinsurance Retention Policy | ||||||
Retention amount | $ 50,000 |
Debt - Debt Instruments (Detail
Debt - Debt Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Debt Instrument | |||
Notes Payable | $ 710,196 | $ 705,795 | |
Finance lease liabilities | 20,568 | 14,824 | |
Unamortized debt issuance costs and unamortized discount | $ (6,537) | (6,719) | |
Senior Notes | 6.75% Notes | |||
Debt Instrument | |||
Interest rate on debt | 6.75% | ||
Notes Payable | $ 350,000 | 350,000 | |
Senior Notes | 7.625% Notes | |||
Debt Instrument | |||
Interest rate on debt | 7.625% | ||
Notes Payable | $ 100,000 | 100,000 | |
Surplus Notes | Subordinated Debentures I | |||
Debt Instrument | |||
Basis Spread on Variable Rate | 3.40% | ||
Notes Payable | $ 41,238 | 41,238 | |
Surplus Notes | Subordinated Debentures I | LIBOR | |||
Debt Instrument | |||
LIBOR | LIBOR | ||
Surplus Notes | Subordinated Debentures II | |||
Debt Instrument | |||
Basis Spread on Variable Rate | 4.25% | ||
Notes Payable | $ 30,930 | 30,930 | |
Surplus Notes | Subordinated Debentures II | LIBOR | |||
Debt Instrument | |||
LIBOR | LIBOR | ||
Other | Other | |||
Debt Instrument | |||
Interest rate on debt | 3.50% | ||
Notes Payable | $ 13,997 | 15,522 | |
Credit Agreement | |||
Debt Instrument | |||
Notes Payable | 0 | 160,000 | |
2019 Credit Agreement | |||
Debt Instrument | |||
Notes Payable | $ 160,000 | $ 0 | |
JPMorgan Chase, N.A. | Credit Agreement | |||
Debt Instrument | |||
Basis Spread on Variable Rate | 2.00% | ||
Interest rate on Credit Agreement | 4.58% | ||
JPMorgan Chase, N.A. | Credit Agreement | LIBOR | |||
Debt Instrument | |||
LIBOR | LIBOR | ||
JPMorgan Chase, N.A. | 2019 Credit Agreement | |||
Debt Instrument | |||
Basis Spread on Variable Rate | 1.75% | ||
Interest rate on Credit Agreement | 4.27% | ||
JPMorgan Chase, N.A. | 2019 Credit Agreement | LIBOR | |||
Debt Instrument | |||
LIBOR | LIBO | ||
Basis Spread on Variable Rate | 1.00% |
Debt - Interest Expense (Detail
Debt - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Debt Instrument | ||
Interest Expense, Debt | $ 12,999 | $ 11,154 |
Finance lease liabilities | ||
Debt Instrument | ||
Interest Expense, Debt | 294 | 164 |
Other | ||
Debt Instrument | ||
Interest Expense, Debt | 1,990 | 508 |
Senior Notes | 6.75% Notes | ||
Debt Instrument | ||
Interest Expense, Debt | 5,906 | 5,906 |
Senior Notes | 7.625% Notes | ||
Debt Instrument | ||
Interest Expense, Debt | 1,906 | 1,906 |
Surplus Notes | Subordinated Debentures | ||
Debt Instrument | ||
Interest Expense, Debt | 1,163 | 986 |
Credit Agreement | JPMorgan Chase, N.A. | ||
Debt Instrument | ||
Interest Expense, Debt | 1,211 | 1,684 |
2019 Credit Agreement | JPMorgan Chase, N.A. | ||
Debt Instrument | ||
Interest Expense, Debt | $ 529 | $ 0 |
Debt - Senior Notes (Details)
Debt - Senior Notes (Details) - Senior Notes | Mar. 31, 2019 |
6.75% Notes | |
Debt Instrument | |
Interest rate on debt | 6.75% |
7.625% Notes | |
Debt Instrument | |
Interest rate on debt | 7.625% |
Debt - Subordinated Debentures
Debt - Subordinated Debentures (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Debt Instrument | ||
Notes Payable | $ 710,196 | $ 705,795 |
Surplus Notes | Subordinated Debentures I | ||
Debt Instrument | ||
Notes Payable | $ 41,238 | 41,238 |
Basis Spread on Variable Rate | 3.40% | |
Surplus Notes | Subordinated Debentures II | ||
Debt Instrument | ||
Notes Payable | $ 30,930 | $ 30,930 |
Basis Spread on Variable Rate | 4.25% | |
Surplus Notes | Subordinated Debentures | ||
Debt Instrument | ||
Debt Instrument, Redemption Price, Percentage | 100.00% |
Debt - Credit Agreement (Detail
Debt - Credit Agreement (Details) - 2019 Credit Agreement - JPMorgan Chase, N.A. $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Debt Instrument | |
Line of Credit Facility, Maximum Amount Outstanding During Period | $ 340,000 |
Basis Spread on Variable Rate | 1.75% |
Letter Of Credit Fronting Fee | 0.125% |
Line of Credit Facility, Leverage Ratio | 0.225% |
LIBOR | |
Debt Instrument | |
federal funds | LIBO |
Basis Spread on Variable Rate | 1.00% |
Federal Funds Purchased | |
Debt Instrument | |
federal funds | federal funds |
Alternate Base Rate Or LIBOR | |
Debt Instrument | |
Basis Spread on Variable Rate | 0.50% |
Minimum | |
Debt Instrument | |
Line of Credit Facility, Current Borrowing Capacity | $ 150,000 |
Line of Credit Facility, Commitment Fee Percentage | 0.175% |
Maximum | |
Debt Instrument | |
Line of Credit Facility, Current Borrowing Capacity | $ 50,000 |
Line of Credit Facility, Commitment Fee Percentage | 0.25% |
Debt - Debt Maturities (Details
Debt - Debt Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Instrument | ||
2019 (remaining nine months) | $ 9,521 | |
2020 | 11,984 | |
2021 | 6,313 | |
2022 | 1,756 | |
2023 | 161,192 | |
2024 | 351,242 | |
Thereafter | 174,725 | |
Total principal amount of debt | 716,733 | |
Unamortized debt issuance costs and unamortized discount | (6,537) | $ (6,719) |
Carrying amount of debt | 710,196 | 705,795 |
Senior Notes | 6.75% Notes | ||
Debt Instrument | ||
2019 (remaining nine months) | 0 | |
2020 | 0 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
2024 | 350,000 | |
Thereafter | 0 | |
Total principal amount of debt | 350,000 | |
Carrying amount of debt | 346,600 | 346,439 |
Senior Notes | 7.625% Notes | ||
Debt Instrument | ||
2019 (remaining nine months) | 0 | |
2020 | 0 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 100,000 | |
Total principal amount of debt | 100,000 | |
Carrying amount of debt | 96,863 | $ 96,842 |
Surplus Notes | Subordinated Debentures I | ||
Debt Instrument | ||
2019 (remaining nine months) | 0 | |
2020 | 0 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 41,238 | |
Total principal amount of debt | 41,238 | |
Surplus Notes | Subordinated Debentures II | ||
Debt Instrument | ||
2019 (remaining nine months) | 0 | |
2020 | 0 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 30,930 | |
Total principal amount of debt | 30,930 | |
Finance lease liabilities | Finance lease liabilities | ||
Debt Instrument | ||
2019 (remaining nine months) | 4,866 | |
2020 | 5,585 | |
2021 | 3,370 | |
2022 | 1,756 | |
2023 | 1,192 | |
2024 | 1,242 | |
Thereafter | 2,557 | |
Total principal amount of debt | 20,568 | |
Other | Other | ||
Debt Instrument | ||
2019 (remaining nine months) | 4,655 | |
2020 | 6,399 | |
2021 | 2,943 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 0 | |
Total principal amount of debt | 13,997 | |
JPMorgan Chase, N.A. | 2019 Credit Agreement | ||
Debt Instrument | ||
2019 (remaining nine months) | 0 | |
2020 | 0 | |
2021 | 0 | |
2022 | 0 | |
2023 | 160,000 | |
2024 | 0 | |
Thereafter | 0 | |
Total principal amount of debt | $ 160,000 |
Debt - Covenants and Compliance
Debt - Covenants and Compliance (Details) - Senior Notes | Mar. 31, 2019 |
Indenture Excess Leverage Ratio | Minimum | |
Debt Instrument | |
Ratio of Indebtedness to Net Capital | 0.35 |
Indenture Excess Leverage Ratio | Maximum | |
Debt Instrument | |
Ratio of Indebtedness to Net Capital | 1 |
6.75% Notes | |
Debt Instrument | |
Interest rate on debt | 6.75% |
7.625% Notes | |
Debt Instrument | |
Interest rate on debt | 7.625% |
Leases - Narrative (Details)
Leases - Narrative (Details) | Mar. 31, 2019 |
Minimum | |
Lessee, Lease, Description | |
Finance Lease, Renewal Term | 1 year |
Operating Lease, Renewal Term | 1 year |
Maximum | |
Lessee, Lease, Description | |
Finance Lease, Renewal Term | 5 years |
Operating Lease, Renewal Term | 5 years |
Leases - Lease Assets and Liabi
Leases - Lease Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Lessee, Lease, Description | ||
Finance lease asset | $ 23,265 | |
Operating | 104,089 | |
Total lease assets | 127,354 | |
Finance lease liabilities | 20,568 | $ 14,824 |
Operating | 112,907 | |
Total lease liabilities | 133,475 | |
Buildings and improvements | ||
Lessee, Lease, Description | ||
Finance lease asset | 11,296 | |
Accumulated amortization | 995 | |
Vehicle | ||
Lessee, Lease, Description | ||
Finance lease asset | 6,209 | |
Accumulated amortization | 4,709 | |
Hardware, software and other equipment | ||
Lessee, Lease, Description | ||
Finance lease asset | 5,760 | |
Accumulated amortization | 649 | |
Operating lease assets | ||
Lessee, Lease, Description | ||
Accumulated amortization | $ 6,254 |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Finance Lease Cost | |
Amortization of leased assets | $ 1,758 |
Interest on lease liabilities | 294 |
Finance lease cost | 2,052 |
Operating lease cost | $ 8,818 |
Leases - Maturity of Lease Liab
Leases - Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Operating Lease Liabilities, Payments Due | ||
2019 (remaining nine months) | $ 23,189 | |
2020 | 25,770 | |
2021 | 19,791 | |
2022 | 15,925 | |
2023 | 13,495 | |
2024 | 10,915 | |
Thereafter | 25,675 | |
Total lease payments | 134,760 | |
Less: Interest | (21,853) | |
Present value of lease liabilities | 112,907 | |
Finance Lease Liabilities, Payments Due | ||
2019 (remaining nine months) | 5,508 | |
2020 | 6,230 | |
2021 | 3,808 | |
2022 | 2,083 | |
2023 | 1,446 | |
2024 | 1,428 | |
Thereafter | 2,847 | |
Total lease payments | 23,350 | |
Less: Interest | (2,782) | |
Present value of lease liabilities | 20,568 | $ 14,824 |
Lease Liabilities, Payments Due | ||
2019 (remaining nine months) | 28,697 | |
2020 | 32,000 | |
2021 | 23,599 | |
2022 | 18,008 | |
2023 | 14,941 | |
2024 | 12,343 | |
Thereafter | 28,522 | |
Total lease payments | $ 158,110 |
Leases - Lease Term and Discoun
Leases - Lease Term and Discount Rate (Details) | Mar. 31, 2019 |
Lessee, Lease, Description | |
Operating Lease, Weighted Average Remaining Lease Term | 5 years 9 months 18 days |
Operating Lease, Weighted Average Discount Rate, Percent | 5.90% |
Buildings and improvements | |
Lessee, Lease, Description | |
Finance Lease, Weighted Average Remaining Lease Term | 7 years 8 months 12 days |
Finance Lease, Weighted Average Discount Rate, Percent | 5.80% |
Vehicle | |
Lessee, Lease, Description | |
Finance Lease, Weighted Average Remaining Lease Term | 2 years 2 months 12 days |
Finance Lease, Weighted Average Discount Rate, Percent | 4.20% |
Hardware, software and other equipment | |
Lessee, Lease, Description | |
Finance Lease, Weighted Average Remaining Lease Term | 1 year 6 months |
Finance Lease, Weighted Average Discount Rate, Percent | 4.20% |
Leases - Cash Flow Lease Inform
Leases - Cash Flow Lease Information (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating cash flows from finance leases | $ 294 |
Financing cash flows from finance leases | 1,509 |
Operating cash flows from operating leases | 6,020 |
Leased assets obtained in exchange for new finance lease liabilities | $ 7,253 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Estimated Litigation Liability | $ 10,000 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate, Percent | 20.90% | 22.40% |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 29, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures | |||
Share Price | $ 23.73 | ||
Employee stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding | |||
Outstanding at beginning of period | 3,184,352 | ||
Exercised | (25,216) | ||
Outstanding at end of period | 3,159,136 | ||
Exercisable at end of period | 3,159,136 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | |||
Outstanding at beginning of period | $ 9.53 | ||
Exercised | 3.67 | ||
Outstanding at end of period | 9.58 | ||
Exercisable at end of period | $ 9.58 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures | |||
Weighted average remaining contractual term for option awards outstanding | 3 years 9 months 18 days | ||
Intrinsic value of the underlying stock exceeds the exercise price of options outstanding | $ 44,718 | ||
Weighted average remaining contractual term for vested portions of options outstanding and currently exercisable | 3 years 9 months | ||
Intrinsic value of the underlying shares reserved for issuance and exercise price of vested portions of options outstanding and currently exercisable | $ 44,718 | ||
Granted in period | 0 | ||
Forfeitures in period | 0 | ||
Expirations in period | 0 | ||
Intrinsic value of stock options exercised | $ 526 | $ 1,502 | |
Fair value of stock options vested | $ 37 | $ 221 |
Share-Based Compensation - RSU
Share-Based Compensation - RSU Activity (Details) - RSUs - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
RSUs | ||
Non-vested at beginning of period | 938,795 | |
Granted | 497,741 | |
Vested | (267,060) | |
Forfeited | (5,881) | |
Non-vested at end of period | 1,163,595 | |
Weighted Average Grant Date Fair Value (in usd per share) | ||
Non-vested at beginning of period | $ 22.28 | |
Granted | 25.60 | $ 20.15 |
Vested | 21.70 | |
Forfeited | 24.44 | |
Non-vested at end of period | $ 23.82 | |
RSUs Additional Disclosures | ||
Fair value of RSU's vested | $ 5,796 | $ 3,882 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($)planshares | Mar. 31, 2018USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of equity incentive plans | plan | 2 | |
Stock-compensation expense | $ | $ 2,622 | $ 2,130 |
Unrecognized compensation cost | $ | $ 24,051 | |
Future period share-based compensation expense period of recognition (in years) | 1 year 8 months 12 days | |
Common stock | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of shares authorized | shares | 7,435,000 | |
Number of shares available | shares | 29,451 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share, Diluted | ||
Net income attributable to NGHC | $ 91,758 | $ 68,208 |
Dividends on preferred stock | (7,875) | (7,875) |
Numerator for basic EPS | 83,883 | 60,333 |
Preferred stock dividends - convertible | 0 | 0 |
Numerator for diluted EPS - after assumed conversions | $ 83,883 | $ 60,333 |
Denominator for basic EPS - weighted-average shares outstanding | 113,014,711 | 106,758,641 |
Convertible preferred stock | 789,473 | 0 |
Dilutive potential common shares | 3,060,515 | 2,192,343 |
Denominator for diluted EPS - weighted-average shares outstanding and assumed conversions | 116,075,226 | 108,950,984 |
Earnings Per Share, Basic | ||
Basic EPS | $ 0.74 | $ 0.57 |
Earnings Per Share, Diluted | ||
Diluted EPS | $ 0.72 | $ 0.55 |
Employee stock options | ||
Earnings Per Share, Diluted | ||
Effect of dilutive securities | 1,939,844 | 1,922,885 |
RSUs | ||
Earnings Per Share, Diluted | ||
Effect of dilutive securities | 331,198 | 269,458 |
Preferred stock dividends - nonconvertible | ||
Earnings Per Share, Diluted | ||
Dividends on preferred stock | $ (7,875) | $ (7,875) |
Preferred stock dividends - convertible | ||
Earnings Per Share, Diluted | ||
Dividends on preferred stock | $ 0 | $ 0 |
Related Party Transactions - As
Related Party Transactions - Asset Purchase and Master Services Agreements (Details) - Related Parties - USD ($) $ in Thousands | Sep. 13, 2017 | Mar. 31, 2019 | Mar. 31, 2018 |
Purchase Commitment | |||
Related Party Transaction | |||
Payments for Software | $ 200,000 | ||
Master Service Agreement | |||
Related Party Transaction | |||
Expenses from transactions with related party | $ 425 | $ 3,756 |
Related Party Transactions - NG
Related Party Transactions - NGHC Quota Share Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Related Party Transaction | |||
Restricted investments to trusts in certain reinsurance transactions | $ 66,894 | $ 70,470 | |
Related Parties | ACP Re | |||
Related Party Transaction | |||
Restricted investments to trusts in certain reinsurance transactions | 2,397 | 3,796 | |
Related Parties | Maiden | |||
Related Party Transaction | |||
Restricted investments to trusts in certain reinsurance transactions | $ 8,034 | 8,644 | |
Related Parties | Reinsurance | ACP Re, Maiden and AmTrust | |||
Related Party Transaction | |||
Percentage of business ceded | 50.00% | ||
Related Parties | Reinsurance Recoverable on Unpaid Losses | ACP Re, Maiden and AmTrust | |||
Related Party Transaction | |||
Due from (to) reinsurance treaties | $ 6,136 | $ 7,425 | |
Amounts of transaction | $ 456 | $ 97 |
Related Party Transactions - Cr
Related Party Transactions - Credit Agreement with ACP Re (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2014 | |
Related Party Transaction | ||||
Other investments | $ 305,971 | $ 306,276 | ||
ACP Re | ||||
Related Party Transaction | ||||
Notes Receivable, Related Parties | $ 125,000 | |||
Related Parties | ||||
Related Party Transaction | ||||
Other investments | 233,555 | 233,723 | ||
Related Parties | ACP Re | ||||
Related Party Transaction | ||||
Notes Receivable, Related Parties | $ 250,000 | |||
Maintenance Covenant, minimum collateral interest as percent of value of outstanding loan balance | 115.00% | |||
Minimum percent of change in control included as events of default | 50.00% | |||
Related Parties | Loans | ||||
Related Party Transaction | ||||
Notes Receivable, Related Parties | $ 125,000 | |||
Related Parties | Loans | ACP Re | ||||
Related Party Transaction | ||||
Interest rate on debt | 3.70% | |||
Maximum percent of interest that may be paid in kind | 1.20% | |||
Other investments | $ 128,458 | $ 127,692 | ||
Interest Income, Related Party | $ 1,188 | $ 1,174 |
Related Party Transactions - Ot
Related Party Transactions - Other Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Related Parties | Lease Agreement 59 Maiden Lane | ||
Related Party Transaction | ||
Expenses from transactions with related party | $ 207 | $ 207 |
Related Parties | Lease Agreement 30 North LaSalle | ||
Related Party Transaction | ||
Expenses from transactions with related party | 76 | 75 |
Chief Executive Officer | ||
Related Party Transaction | ||
Aircraft Rental and Landing Fees | $ 15 | $ 40 |
Segment Information - Results o
Segment Information - Results of Operations of the Business Segments (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($)segment | Mar. 31, 2018USD ($) | |
Segment Reporting [Abstract] | ||
Number of business segments | segment | 2 | |
Segment Reporting Information | ||
Gross premium written | $ 1,509,778 | $ 1,433,130 |
Ceded premiums | (345,114) | (326,487) |
Net premium written | 1,164,664 | 1,106,643 |
Change in unearned premium | (200,507) | (201,105) |
Net earned premium | 964,157 | 905,538 |
Ceding commission income | 69,534 | 44,468 |
Service and fee income | 165,507 | 142,122 |
Total underwriting revenues | 1,199,198 | 1,092,128 |
Loss and loss adjustment expense | 651,809 | 634,166 |
Acquisition costs and other underwriting expenses | 211,918 | 168,710 |
General and administrative expenses | 248,094 | 231,005 |
Total underwriting expenses | 1,111,821 | 1,033,881 |
Underwriting income | 87,377 | 58,247 |
Net investment income | 33,445 | 25,011 |
Net gain on investments | 22 | 118 |
Interest expense | (12,999) | (11,154) |
Provision for income taxes | (22,506) | (16,202) |
Net (income) loss attributable to non-controlling interest | 6,419 | 12,188 |
Net income attributable to NGHC | 91,758 | 68,208 |
Property and Casualty | ||
Segment Reporting Information | ||
Gross premium written | 1,251,234 | 1,199,354 |
Ceded premiums | (286,751) | (316,064) |
Net premium written | 964,483 | 883,290 |
Change in unearned premium | (161,906) | (131,628) |
Net earned premium | 802,577 | 751,662 |
Ceding commission income | 66,943 | 44,210 |
Service and fee income | 104,495 | 96,935 |
Total underwriting revenues | 974,015 | 892,807 |
Loss and loss adjustment expense | 567,060 | 542,888 |
Acquisition costs and other underwriting expenses | 154,070 | 125,102 |
General and administrative expenses | 189,456 | 180,397 |
Total underwriting expenses | 910,586 | 848,387 |
Underwriting income | 63,429 | 44,420 |
Net investment income | 0 | 0 |
Net gain on investments | 0 | 0 |
Interest expense | 0 | 0 |
Provision for income taxes | 0 | 0 |
Net (income) loss attributable to non-controlling interest | 0 | 0 |
Net income attributable to NGHC | 63,429 | 44,420 |
Accident and Health | ||
Segment Reporting Information | ||
Gross premium written | 258,544 | 233,776 |
Ceded premiums | (58,363) | (10,423) |
Net premium written | 200,181 | 223,353 |
Change in unearned premium | (38,601) | (69,477) |
Net earned premium | 161,580 | 153,876 |
Ceding commission income | 2,591 | 258 |
Service and fee income | 61,012 | 45,187 |
Total underwriting revenues | 225,183 | 199,321 |
Loss and loss adjustment expense | 84,749 | 91,278 |
Acquisition costs and other underwriting expenses | 57,848 | 43,608 |
General and administrative expenses | 58,638 | 50,608 |
Total underwriting expenses | 201,235 | 185,494 |
Underwriting income | 23,948 | 13,827 |
Net investment income | 0 | 0 |
Net gain on investments | 0 | 0 |
Interest expense | 0 | 0 |
Provision for income taxes | 0 | 0 |
Net (income) loss attributable to non-controlling interest | 0 | 0 |
Net income attributable to NGHC | 23,948 | 13,827 |
Corporate and Other | ||
Segment Reporting Information | ||
Gross premium written | 0 | 0 |
Ceded premiums | 0 | 0 |
Net premium written | 0 | 0 |
Change in unearned premium | 0 | 0 |
Net earned premium | 0 | 0 |
Ceding commission income | 0 | 0 |
Service and fee income | 0 | 0 |
Total underwriting revenues | 0 | 0 |
Loss and loss adjustment expense | 0 | 0 |
Acquisition costs and other underwriting expenses | 0 | 0 |
General and administrative expenses | 0 | 0 |
Total underwriting expenses | 0 | 0 |
Underwriting income | 0 | 0 |
Net investment income | 33,445 | 25,011 |
Net gain on investments | 22 | 118 |
Interest expense | (12,999) | (11,154) |
Provision for income taxes | (22,506) | (16,202) |
Net (income) loss attributable to non-controlling interest | 6,419 | 12,188 |
Net income attributable to NGHC | $ 4,381 | $ 9,961 |
Segment Information - Long Live
Segment Information - Long Lived Assets and Total Assets of Business Segments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Segment Reporting Information | ||
Premiums and other receivables, net | $ 1,608,251 | $ 1,399,812 |
Deferred acquisition costs | 268,177 | 251,408 |
Reinsurance recoverable | 1,489,565 | 1,611,738 |
Prepaid reinsurance premiums | 637,024 | 665,674 |
Intangible assets, net and Goodwill | 552,995 | 560,120 |
Prepaid and other assets | 73,997 | 154,958 |
Corporate and other assets | 5,001,558 | 4,795,570 |
Total assets | 9,631,567 | 9,439,280 |
Property and Casualty | ||
Segment Reporting Information | ||
Premiums and other receivables, net | 1,388,282 | 1,245,530 |
Deferred acquisition costs | 236,159 | 226,188 |
Reinsurance recoverable | 1,457,778 | 1,585,008 |
Prepaid reinsurance premiums | 602,498 | 665,660 |
Intangible assets, net and Goodwill | 438,009 | 443,163 |
Prepaid and other assets | 22,660 | 20,941 |
Corporate and other assets | 0 | 0 |
Total assets | 4,145,386 | 4,186,490 |
Accident and Health | ||
Segment Reporting Information | ||
Premiums and other receivables, net | 216,278 | 153,896 |
Deferred acquisition costs | 32,018 | 25,220 |
Reinsurance recoverable | 31,787 | 26,730 |
Prepaid reinsurance premiums | 34,526 | 14 |
Intangible assets, net and Goodwill | 114,986 | 116,957 |
Prepaid and other assets | 25,196 | 22,472 |
Corporate and other assets | 0 | 0 |
Total assets | 454,791 | 345,289 |
Corporate and Other | ||
Segment Reporting Information | ||
Premiums and other receivables, net | 3,691 | 386 |
Deferred acquisition costs | 0 | 0 |
Reinsurance recoverable | 0 | 0 |
Prepaid reinsurance premiums | 0 | 0 |
Intangible assets, net and Goodwill | 0 | 0 |
Prepaid and other assets | 26,141 | 111,545 |
Corporate and other assets | 5,001,558 | 4,795,570 |
Total assets | $ 5,031,390 | $ 4,907,501 |
Segment Information - Schedule
Segment Information - Schedule of Revenue by Geographical Location (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information | ||
Gross premium written | $ 1,509,778 | $ 1,433,130 |
Net premium written | 1,164,664 | 1,106,643 |
Net earned premium | 964,157 | 905,538 |
Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 105,569 | 97,689 |
Net premium written | 48,955 | 50,578 |
Net earned premium | 45,658 | 46,055 |
NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 1,404,209 | 1,335,441 |
Net premium written | 1,115,709 | 1,056,065 |
Net earned premium | 918,499 | 859,483 |
North America | ||
Segment Reporting Information | ||
Gross premium written | 1,400,363 | 1,330,461 |
Net premium written | 1,102,556 | 1,003,974 |
Net earned premium | 938,775 | 871,167 |
North America | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 105,569 | 97,689 |
Net premium written | 48,955 | 50,578 |
Net earned premium | 45,658 | 46,055 |
North America | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 1,294,794 | 1,232,772 |
Net premium written | 1,053,601 | 953,396 |
Net earned premium | 893,117 | 825,112 |
Europe | ||
Segment Reporting Information | ||
Gross premium written | 109,415 | 102,669 |
Net premium written | 62,108 | 102,669 |
Net earned premium | 25,382 | 34,371 |
Europe | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 0 | 0 |
Net premium written | 0 | 0 |
Net earned premium | 0 | 0 |
Europe | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 109,415 | 102,669 |
Net premium written | 62,108 | 102,669 |
Net earned premium | $ 25,382 | $ 34,371 |
Segment Information - Service a
Segment Information - Service and Fee Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue from External Customer | ||
Service and fee income | $ 165,507 | $ 142,122 |
Reciprocal Exchanges | ||
Revenue from External Customer | ||
Service and fee income | 1,370 | 2,446 |
NGHC, excluding Reciprocal Exchanges | ||
Revenue from External Customer | ||
Service and fee income | 164,137 | 139,676 |
Property and Casualty | ||
Revenue from External Customer | ||
Service and fee income | 104,495 | 96,935 |
Property and Casualty | Reciprocal Exchanges | ||
Revenue from External Customer | ||
Service and fee income | 1,370 | 2,446 |
Property and Casualty | NGHC, excluding Reciprocal Exchanges | ||
Revenue from External Customer | ||
Service and fee income | 103,125 | 94,489 |
Accident and Health | ||
Revenue from External Customer | ||
Service and fee income | 61,012 | 45,187 |
Accident and Health | Reciprocal Exchanges | ||
Revenue from External Customer | ||
Service and fee income | 0 | 0 |
Accident and Health | NGHC, excluding Reciprocal Exchanges | ||
Revenue from External Customer | ||
Service and fee income | 61,012 | 45,187 |
Commission revenue | ||
Revenue from External Customer | ||
Service and fee income | 51,981 | 39,233 |
Commission revenue | Property and Casualty | ||
Revenue from External Customer | ||
Service and fee income | 27,210 | 21,709 |
Commission revenue | Accident and Health | ||
Revenue from External Customer | ||
Service and fee income | 24,771 | 17,524 |
Finance and processing fees | ||
Revenue from External Customer | ||
Service and fee income | 34,460 | 33,315 |
Finance and processing fees | Property and Casualty | ||
Revenue from External Customer | ||
Service and fee income | 32,436 | 32,060 |
Finance and processing fees | Accident and Health | ||
Revenue from External Customer | ||
Service and fee income | 2,024 | 1,255 |
Installment fees | ||
Revenue from External Customer | ||
Service and fee income | 24,170 | 21,302 |
Installment fees | Property and Casualty | ||
Revenue from External Customer | ||
Service and fee income | 24,170 | 21,302 |
Installment fees | Accident and Health | ||
Revenue from External Customer | ||
Service and fee income | 0 | 0 |
Group health administrative fees | ||
Revenue from External Customer | ||
Service and fee income | 23,505 | 19,291 |
Group health administrative fees | Property and Casualty | ||
Revenue from External Customer | ||
Service and fee income | 0 | 0 |
Group health administrative fees | Accident and Health | ||
Revenue from External Customer | ||
Service and fee income | 23,505 | 19,291 |
Late payment fees | ||
Revenue from External Customer | ||
Service and fee income | 8,380 | 7,583 |
Late payment fees | Property and Casualty | ||
Revenue from External Customer | ||
Service and fee income | 8,293 | 7,558 |
Late payment fees | Accident and Health | ||
Revenue from External Customer | ||
Service and fee income | 87 | 25 |
Other service and fee income | ||
Revenue from External Customer | ||
Service and fee income | 23,011 | 21,398 |
Other service and fee income | Property and Casualty | ||
Revenue from External Customer | ||
Service and fee income | 12,386 | 14,306 |
Other service and fee income | Accident and Health | ||
Revenue from External Customer | ||
Service and fee income | $ 10,625 | $ 7,092 |
Segment Information - Gross Pre
Segment Information - Gross Premium Written (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information | ||
Gross premium written | $ 1,509,778 | $ 1,433,130 |
Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 105,569 | 97,689 |
NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 1,404,209 | 1,335,441 |
Property and Casualty | ||
Segment Reporting Information | ||
Gross premium written | 1,251,234 | 1,199,354 |
Property and Casualty | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 105,569 | 97,689 |
Property and Casualty | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 1,145,665 | 1,101,665 |
Property and Casualty | Personal Auto | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 36,862 | 34,297 |
Property and Casualty | Personal Auto | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 766,681 | 724,645 |
Property and Casualty | Homeowners | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 67,800 | 62,521 |
Property and Casualty | Homeowners | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 152,042 | 140,253 |
Property and Casualty | RV/Packaged | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 51,851 | 49,464 |
Property and Casualty | Small Business Auto | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 85,878 | 86,244 |
Property and Casualty | Lender-placed insurance | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 75,938 | 84,934 |
Property and Casualty | Other | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 907 | 871 |
Property and Casualty | Other | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 13,275 | 16,125 |
Accident and Health | ||
Segment Reporting Information | ||
Gross premium written | 258,544 | 233,776 |
Accident and Health | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 258,544 | 233,776 |
Accident and Health | Group | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 64,938 | 56,060 |
Accident and Health | Individual | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | 84,192 | 75,048 |
Accident and Health | International | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Gross premium written | $ 109,414 | $ 102,668 |
Segment Information - Net Premi
Segment Information - Net Premium Written (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information | ||
Net premium written | $ 1,164,664 | $ 1,106,643 |
Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 48,955 | 50,578 |
NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 1,115,709 | 1,056,065 |
Property and Casualty | ||
Segment Reporting Information | ||
Net premium written | 964,483 | 883,290 |
Property and Casualty | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 48,955 | 50,578 |
Property and Casualty | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 915,528 | 832,712 |
Property and Casualty | Personal Auto | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 15,645 | 13,495 |
Property and Casualty | Personal Auto | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 658,920 | 553,997 |
Property and Casualty | Homeowners | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 33,016 | 36,808 |
Property and Casualty | Homeowners | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 85,245 | 92,596 |
Property and Casualty | RV/Packaged | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 51,597 | 49,189 |
Property and Casualty | Small Business Auto | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 74,186 | 64,727 |
Property and Casualty | Lender-placed insurance | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 42,070 | 63,214 |
Property and Casualty | Other | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 294 | 275 |
Property and Casualty | Other | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 3,510 | 8,989 |
Accident and Health | ||
Segment Reporting Information | ||
Net premium written | 200,181 | 223,353 |
Accident and Health | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 200,181 | 223,353 |
Accident and Health | Group | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 53,950 | 45,637 |
Accident and Health | Individual | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | 84,123 | 75,048 |
Accident and Health | International | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net premium written | $ 62,108 | $ 102,668 |
Segment Information - Net Earne
Segment Information - Net Earned Premium (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information | ||
Net earned premium | $ 964,157 | $ 905,538 |
Service and fee income | 165,507 | 142,122 |
Ceding commission income | 69,534 | 44,468 |
Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 45,658 | 46,055 |
NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 918,499 | 859,483 |
Property and Casualty | ||
Segment Reporting Information | ||
Net earned premium | 802,577 | 751,662 |
Service and fee income | 104,495 | 96,935 |
Ceding commission income | 66,943 | 44,210 |
Property and Casualty | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 45,658 | 46,055 |
Service and fee income | 1,370 | 2,446 |
Ceding commission income | 18,534 | 11,510 |
Property and Casualty | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 756,919 | 705,607 |
Service and fee income | 103,125 | 94,489 |
Ceding commission income | 48,409 | 32,700 |
Property and Casualty | Personal Auto | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 15,861 | 12,997 |
Property and Casualty | Personal Auto | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 510,554 | 454,216 |
Property and Casualty | Homeowners | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 29,491 | 32,771 |
Property and Casualty | Homeowners | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 84,058 | 82,195 |
Property and Casualty | RV/Packaged | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 50,305 | 45,689 |
Property and Casualty | Small Business Auto | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 67,633 | 58,562 |
Property and Casualty | Lender-placed insurance | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 41,718 | 60,469 |
Property and Casualty | Other | Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 306 | 287 |
Property and Casualty | Other | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 2,651 | 4,476 |
Accident and Health | ||
Segment Reporting Information | ||
Net earned premium | 161,580 | 153,876 |
Service and fee income | 61,012 | 45,187 |
Ceding commission income | 2,591 | 258 |
Accident and Health | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 161,580 | 153,876 |
Service and fee income | 61,012 | 45,187 |
Ceding commission income | 2,591 | 258 |
Accident and Health | Group | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 53,963 | 45,639 |
Service and fee income | 30,374 | 24,814 |
Accident and Health | Individual | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | 82,235 | 73,866 |
Service and fee income | 2,136 | 1,297 |
Accident and Health | International | NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Net earned premium | $ 25,382 | $ 34,371 |
Segment Information - Fee Incom
Segment Information - Fee Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information | ||
Service and fee income | $ 165,507 | $ 142,122 |
Ceding commission income | 69,534 | 44,468 |
Fee Income | 235,041 | 186,590 |
Property and Casualty | ||
Segment Reporting Information | ||
Service and fee income | 104,495 | 96,935 |
Ceding commission income | 66,943 | 44,210 |
Accident and Health | ||
Segment Reporting Information | ||
Service and fee income | 61,012 | 45,187 |
Ceding commission income | 2,591 | 258 |
Reciprocal Exchanges | Property and Casualty | ||
Segment Reporting Information | ||
Service and fee income | 1,370 | 2,446 |
Ceding commission income | 18,534 | 11,510 |
Fee Income | 19,904 | 13,956 |
NGHC, excluding Reciprocal Exchanges | ||
Segment Reporting Information | ||
Fee Income | 215,137 | 172,634 |
NGHC, excluding Reciprocal Exchanges | Property and Casualty | ||
Segment Reporting Information | ||
Service and fee income | 103,125 | 94,489 |
Ceding commission income | 48,409 | 32,700 |
Fee Income | 151,534 | 127,189 |
NGHC, excluding Reciprocal Exchanges | Accident and Health | ||
Segment Reporting Information | ||
Service and fee income | 61,012 | 45,187 |
Ceding commission income | 2,591 | 258 |
Fee Income | 63,603 | 45,445 |
Group | NGHC, excluding Reciprocal Exchanges | Accident and Health | ||
Segment Reporting Information | ||
Service and fee income | 30,374 | 24,814 |
Individual | NGHC, excluding Reciprocal Exchanges | Accident and Health | ||
Segment Reporting Information | ||
Service and fee income | 2,136 | 1,297 |
Third Party Fee | NGHC, excluding Reciprocal Exchanges | Accident and Health | ||
Segment Reporting Information | ||
Service and fee income | $ 28,502 | $ 19,076 |