Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 27, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-36777 | |
Entity Registrant Name | JAMES RIVER GROUP HOLDINGS, LTD. | |
Entity Incorporation, State or Country Code | D0 | |
Entity Tax Identification Number | 98-0585280 | |
Entity Address, Address Line Three | Wellesley House | |
Entity Address, Address Line Two | 2nd Floor | |
Entity Address, Address Line One | 90 Pitts Bay Road | |
Entity Address, City or Town | Pembroke | |
Entity Address, Postal Zip Code | HM08 | |
Entity Address, Country | BM | |
City Area Code | 441 | |
Local Phone Number | 278-4580 | |
Title of 12(b) Security | Common Shares, par value $0.0002 per share | |
Trading Symbol | JRVR | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Central Index Key | 0001620459 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 30,610,153 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Invested assets: | ||
Fixed maturity securities, available-for-sale, at fair value (amortized cost: 2020 – $1,724,561; 2019 – $1,398,533) | $ 1,813,471 | $ 1,433,626 |
Equity securities, at fair value (cost: 2020 – $79,300; 2019 – $73,244) | 79,896 | 80,735 |
Bank loan participations (2020: at fair value; 2019: held-for-investment, at amortized cost, net of allowance) | 131,198 | |
Bank loan participations (2020: at fair value; 2019: held-for-investment, at amortized cost, net of allowance) | 260,864 | |
Short-term investments | 71,986 | 156,925 |
Other invested assets | 45,621 | 61,210 |
Total invested assets | 2,142,172 | 1,993,360 |
Cash and cash equivalents | 139,969 | 206,912 |
Restricted cash equivalents | 940,221 | 1,199,164 |
Accrued investment income | 11,730 | 13,597 |
Premiums receivable and agents’ balances, net | 331,008 | 369,462 |
Reinsurance recoverable on unpaid losses, net | 769,815 | 668,045 |
Reinsurance recoverable on paid losses | 36,591 | 33,221 |
Prepaid reinsurance premiums | 237,544 | 178,976 |
Deferred policy acquisition costs | 53,967 | 62,006 |
Intangible assets, net | 36,493 | 36,940 |
Goodwill | 181,831 | 181,831 |
Other assets | 103,012 | 80,891 |
Total assets | 4,984,353 | 5,024,405 |
Liabilities: | ||
Reserve for losses and loss adjustment expenses | 2,106,749 | 2,045,506 |
Unearned premiums | 581,098 | 524,377 |
Payables to reinsurers | 109,727 | 108,059 |
Funds held | 940,221 | 1,199,164 |
Senior debt | 217,300 | 158,300 |
Junior subordinated debt | 104,055 | 104,055 |
Accrued expenses | 54,907 | 58,416 |
Other liabilities | 48,890 | 47,947 |
Total liabilities | 4,162,947 | 4,245,824 |
Commitments and contingent liabilities | 0 | 0 |
Shareholders’ equity: | ||
Common Shares – 2020 and 2019: $0.0002 par value; 200,000,000 shares authorized; 30,610,153 and 30,424,391 shares issued and outstanding, respectively | 6 | 6 |
Preferred Shares – 2020 and 2019: $0.00125 par value; 20,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Additional paid-in capital | 664,092 | 657,875 |
Retained earnings | 78,761 | 89,586 |
Accumulated other comprehensive income | 78,547 | 31,114 |
Total shareholders’ equity | 821,406 | 778,581 |
Total liabilities and shareholders’ equity | $ 4,984,353 | $ 5,024,405 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Fixed maturity securities, available-for-sale, at amortized cost | $ 1,724,561 | $ 1,398,533 |
Equity securities, at cost | $ 79,300 | $ 73,244 |
Common stock, par value (in dollars per share) | $ 0.0002 | $ 0.0002 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 30,610,153 | 30,424,391 |
Common stock, shares outstanding (in shares) | 30,610,153 | 30,424,391 |
Preferred stock, par value (in dollars per share) | $ 0.00125 | $ 0.00125 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues | ||||
Gross written premiums | $ 311,852 | $ 388,228 | $ 897,332 | $ 1,095,565 |
Ceded written premiums | (166,693) | (164,359) | (451,762) | (424,045) |
Net written premiums | 145,159 | 223,869 | 445,570 | 671,520 |
Change in net unearned premiums | 7,803 | (10,495) | 2,125 | (68,880) |
Net earned premiums | 152,962 | 213,374 | 447,695 | 602,640 |
Net investment income | 14,959 | 17,878 | 51,145 | 54,844 |
Net realized and unrealized gains (losses) on investments | 8,929 | (2,357) | (27,885) | 331 |
Other income | 615 | 2,579 | 3,543 | 8,160 |
Total revenues | 177,465 | 231,474 | 474,498 | 665,975 |
Expenses | ||||
Losses and loss adjustment expenses | 106,155 | 214,084 | 301,757 | 501,064 |
Other operating expenses | 38,224 | 41,692 | 133,242 | 132,287 |
Other expenses | 60 | 372 | 1,792 | 1,055 |
Interest expense | 2,129 | 2,594 | 7,970 | 8,086 |
Amortization of intangible assets | 149 | 149 | 447 | 447 |
Total expenses | 146,717 | 258,891 | 445,208 | 642,939 |
Income (loss) before taxes | 30,748 | (27,417) | 29,290 | 23,036 |
Income tax expense (benefit) | 4,465 | (2,250) | 4,208 | 5,168 |
Net income (loss) | 26,283 | (25,167) | 25,082 | 17,868 |
Other comprehensive income: | ||||
Net unrealized gains, net of taxes of $849 and $6,384 in 2020 and $638 and $3,949 in 2019 | 5,039 | 9,457 | 47,433 | 50,449 |
Total comprehensive income (loss) | $ 31,322 | $ (15,710) | $ 72,515 | $ 68,317 |
Per share data: | ||||
Basic earnings per share (in dollars per share) | $ 0.86 | $ (0.83) | $ 0.82 | $ 0.59 |
Diluted earnings per share (in dollars per share) | 0.85 | (0.83) | 0.81 | 0.58 |
Dividend declared per share (in dollars per share) | $ 0.30 | $ 0.30 | $ 0.90 | $ 0.90 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 30,582,540 | 30,382,105 | 30,529,557 | 30,230,490 |
Diluted (in shares) | 30,946,843 | 30,382,105 | 30,838,595 | 30,659,389 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Unaudited) (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Tax on net unrealized gains (losses) | $ 849 | $ 638 | $ 6,384 | $ 3,949 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Shares | Preferred Shares | Additional Paid-in Capital | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Income |
Balance (in shares) at Dec. 31, 2018 | 29,988,460 | |||||||
Balance at Dec. 31, 2018 | $ 709,241 | $ 8,280 | $ 6 | $ 0 | $ 645,310 | $ 79,753 | $ 8,280 | $ (15,828) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | 17,868 | 17,868 | ||||||
Other comprehensive income (loss) | 50,449 | 50,449 | ||||||
Dividends | (27,557) | (27,557) | ||||||
Exercise of stock options (in shares) | 336,533 | |||||||
Exercise of stock options | 6,799 | 6,799 | ||||||
Vesting of RSUs (in shares) | 76,277 | |||||||
Vesting of RSUs | (1,374) | (1,374) | ||||||
Compensation expense under share incentive plans | 5,263 | 5,263 | ||||||
Balance (in shares) at Sep. 30, 2019 | 30,401,270 | |||||||
Balance at Sep. 30, 2019 | $ 768,969 | $ 6 | 0 | 655,998 | 78,344 | 34,621 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | |||||||
Balance (in shares) at Jun. 30, 2019 | 30,330,675 | |||||||
Balance at Jun. 30, 2019 | $ 791,050 | $ 6 | 0 | 653,151 | 112,729 | 25,164 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | (25,167) | (25,167) | ||||||
Other comprehensive income (loss) | 9,457 | 9,457 | ||||||
Dividends | (9,218) | (9,218) | ||||||
Exercise of stock options (in shares) | 70,595 | |||||||
Exercise of stock options | 1,068 | 1,068 | ||||||
Compensation expense under share incentive plans | 1,779 | 1,779 | ||||||
Balance (in shares) at Sep. 30, 2019 | 30,401,270 | |||||||
Balance at Sep. 30, 2019 | $ 768,969 | $ 6 | 0 | 655,998 | 78,344 | 34,621 | ||
Balance (in shares) at Dec. 31, 2019 | 30,424,391 | 30,424,391 | ||||||
Balance at Dec. 31, 2019 | $ 778,581 | $ 6 | 0 | 657,875 | 89,586 | 31,114 | ||
Balance (ASU 2019-05) at Dec. 31, 2019 | (7,827) | (7,827) | ||||||
Balance (ASU 2016-13) at Dec. 31, 2019 | (265) | (265) | ||||||
Balance (ASU 2019-05) at Jan. 01, 2020 | (7,800) | |||||||
Balance (ASU 2016-13) at Jan. 01, 2020 | (265) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Accounting Standards Update [Extensible List] | ASU 2019-05 | us-gaap:AccountingStandardsUpdate201905Member | |||||||
Accounting Standards Update [Extensible List] | ASU 2016-13 | us-gaap:AccountingStandardsUpdate201613Member | |||||||
Balance (in shares) at Dec. 31, 2019 | 30,424,391 | 30,424,391 | ||||||
Balance at Dec. 31, 2019 | $ 778,581 | $ 6 | 0 | 657,875 | 89,586 | 31,114 | ||
Balance (ASU 2019-05) at Dec. 31, 2019 | (7,827) | (7,827) | ||||||
Balance (ASU 2016-13) at Dec. 31, 2019 | $ (265) | $ (265) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | 25,082 | 25,082 | ||||||
Other comprehensive income (loss) | 47,433 | 47,433 | ||||||
Dividends | $ (27,815) | (27,815) | ||||||
Exercise of stock options (in shares) | 79,615 | 79,615 | ||||||
Exercise of stock options | $ 2,529 | 2,529 | ||||||
Vesting of RSUs (in shares) | 106,147 | |||||||
Vesting of RSUs | (2,186) | (2,186) | ||||||
Compensation expense under share incentive plans | $ 5,874 | 5,874 | ||||||
Balance (in shares) at Sep. 30, 2020 | 30,610,153 | 30,610,153 | ||||||
Balance at Sep. 30, 2020 | $ 821,406 | $ 6 | 0 | 664,092 | 78,761 | 78,547 | ||
Balance (in shares) at Jun. 30, 2020 | 30,553,178 | |||||||
Balance at Jun. 30, 2020 | 795,711 | $ 6 | 0 | 660,427 | 61,770 | 73,508 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | 26,283 | 26,283 | ||||||
Other comprehensive income (loss) | 5,039 | 5,039 | ||||||
Dividends | (9,292) | (9,292) | ||||||
Exercise of stock options (in shares) | 50,474 | |||||||
Exercise of stock options | 1,691 | 1,691 | ||||||
Vesting of RSUs (in shares) | 6,501 | |||||||
Vesting of RSUs | (123) | (123) | ||||||
Compensation expense under share incentive plans | $ 2,097 | 2,097 | ||||||
Balance (in shares) at Sep. 30, 2020 | 30,610,153 | 30,610,153 | ||||||
Balance at Sep. 30, 2020 | $ 821,406 | $ 6 | $ 0 | $ 664,092 | $ 78,761 | $ 78,547 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | ||
Operating activities | |||
Net cash (used in) provided by operating activities | [1] | $ (222,060) | $ 213,787 |
Securities available-for-sale: | |||
Purchases – fixed maturity securities | (509,764) | (327,725) | |
Sales – fixed maturity securities | 17,465 | 102,030 | |
Maturities and calls – fixed maturity securities | 163,974 | 85,921 | |
Purchases – equity securities | (10,057) | (4,975) | |
Sales – equity securities | 3,945 | 3,131 | |
Bank loan participations: | |||
Purchases | (36,168) | (73,102) | |
Sales | 113,432 | 41,707 | |
Maturities | 22,786 | 34,303 | |
Other invested assets: | |||
Purchases | (1,687) | 0 | |
Return of capital | 314 | 1,477 | |
Redemptions | 16,292 | 7,016 | |
Short-term investments, net | 84,939 | 32,082 | |
Securities receivable or payable, net | (487) | 10,673 | |
Purchases of property and equipment | (315) | (442) | |
Net cash used in investing activities | (135,331) | (87,904) | |
Financing activities | |||
Senior debt issuances | 119,000 | 0 | |
Senior debt repayments | (60,000) | (20,000) | |
Dividends paid | (27,838) | (27,463) | |
Issuance of common shares under equity incentive plans | 2,529 | 7,961 | |
Common share repurchases | (2,186) | (2,536) | |
Net cash provided by (used in) financing activities | 31,505 | (42,038) | |
Change in cash, cash equivalents, and restricted cash equivalents | (325,886) | 83,845 | |
Cash, cash equivalents, and restricted cash equivalents at beginning of period | 1,406,076 | 172,457 | |
Cash, cash equivalents, and restricted cash equivalents at end of period | 1,080,190 | 256,302 | |
Supplemental information | |||
Interest paid | 9,023 | $ 9,510 | |
Restricted cash returned to a former insured | 258,900 | ||
Cash provided by operating activities excluding reduction in collateral funds | $ 36,900 | ||
[1] | Cash used in operating activities for the nine months ended September 30, 2020 primarily reflects $258.9 million of restricted cash equivalents returned to a former insured, per the terms of a collateral trust (see Amounts Recoverable from an Indemnifying Party in Liquidity and Capital Resources ). Excluding the reduction in the collateral funds, cash provided by operating activities was $36.9 million for the nine months ended September 30, 2020. |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Accounting Policies | Accounting Policies Organization James River Group Holdings, Ltd. (referred to as “JRG Holdings” or, with its subsidiaries, the “Company”) is an exempted holding company registered in Bermuda, organized for the purpose of acquiring and managing insurance and reinsurance entities. The Company owns five insurance companies based in the United States (“U.S.”) focused on specialty insurance niches and two Bermuda-based reinsurance companies as described below: • James River Group Holdings UK Limited (“James River UK”) is an insurance holding company formed in 2015 in the United Kingdom (“U.K.”). JRG Holdings contributed James River Group, Inc. (“James River Group”), a U.S. insurance holding company, to James River UK in 2015. ▪ James River Group is a Delaware domiciled insurance holding company formed in 2002 which owns all of the Company’s U.S.-based subsidiaries, either directly or indirectly through one of its wholly-owned U.S. subsidiaries. James River Group oversees the Company’s U.S. insurance operations and maintains all of the outstanding debt in the U.S. ◦ James River Insurance Company is an Ohio domiciled excess and surplus lines insurance company that, with its wholly-owned insurance subsidiary, James River Casualty Company, a Virginia domiciled company, is authorized to write business in every state and the District of Columbia. ◦ Falls Lake National Insurance Company (“Falls Lake National”) is an Ohio domiciled insurance company which wholly owns Stonewood Insurance Company (“Stonewood Insurance”), a North Carolina domiciled company, and Falls Lake Fire and Casualty Company, a California domiciled company. Falls Lake National and its subsidiaries primarily write specialty admitted fronting and program business and individual risk workers' compensation insurance. ◦ JRG Reinsurance Company Ltd. (“JRG Re”) was formed in 2007 and commenced operations in 2008. JRG Re, a Bermuda domiciled reinsurer, primarily provides non-catastrophe casualty reinsurance to U.S. third parties and, through December 31, 2017, to the Company’s U.S.-based insurance subsidiaries. ◦ Carolina Re Ltd (“Carolina Re”) was formed in 2018 and as of January 1, 2018 provides reinsurance to the Company’s U.S.-based insurance subsidiaries. Carolina Re is also the cedent on a stop loss reinsurance treaty with JRG Re. Basis of Presentation The accompanying condensed consolidated financial statements and notes have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and do not contain all of the information and footnotes required by U.S. GAAP for complete financial statements. The condensed consolidated financial statements include the results of the Company and its subsidiaries from their respective dates of inception or acquisition, as applicable. Readers are urged to review the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for a more complete description of the Company’s business and accounting policies. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results of operations for the full year. The consolidated balance sheet as of December 31, 2019 was derived from the Company’s audited annual consolidated financial statements. Intercompany transactions and balances have been eliminated. Estimates and Assumptions Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying disclosures. Those estimates are inherently subject to change, and actual results may ultimately differ from those estimates. Variable Interest Entities Entities that do not have sufficient equity at risk to allow the entity to finance its activities without additional financial support or in which the equity investors, as a group, do not have the characteristic of a controlling financial interest are referred to as variable interest entities (“VIE”). A VIE is consolidated by the variable interest holder that is determined to have the controlling financial interest (primary beneficiary) as a result of having both the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE’s capital structure, contractual terms, nature of the VIE’s operations and purpose, and the Company’s relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis. The Company holds interests in VIEs through certain equity method investments included in “other invested assets” in the accompanying condensed consolidated balance sheets. The Company has determined that it should not consolidate any of the VIEs as it is not the primary beneficiary in any of the relationships. Although the investments resulted in the Company holding variable interests in the entities, they did not empower the Company to direct the activities that most significantly impact the economic performance of the entities. The Company’s investments related to these VIEs totaled $30.5 million and $31.2 million at September 30, 2020 and December 31, 2019, respectively, representing the Company’s maximum exposure to loss. Income Tax Expense Our effective tax rate fluctuates from period to period based on the relative mix of income reported by country and the respective tax rates imposed by each tax jurisdiction. For U.S.-sourced income, the Company’s U.S. federal income tax expense differs from the amounts computed by applying the federal statutory income tax rate to income before taxes due primarily to interest income on tax-advantaged state and municipal securities, dividends received income, and excess tax benefits on share based compensation. For the nine months ended September 30, 2020, our U.S. federal income tax expense was 14.4% of income before taxes. For the nine months ended September 30, 2019, our U.S. federal income tax expense was 22.4% of income before taxes. The effective tax rate for the nine months ended September 30, 2019 was elevated due to changes in reserve estimates between accident years in the commercial auto business, and the related impact on the mix of income reported by country. Adopted Accounting Standards On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , using the modified retrospective approach, by which a cumulative-effect adjustment was made to retained earnings as of the date of adoption. This update requires financial assets measured at amortized cost, such as bank loan participations held for investment, to be presented at the net amount expected to be collected by means of an allowance for credit losses that is reflected in net income. Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which fair value is below amortized cost. In connection with the adoption of this ASU, the Company elected the fair value option in accounting for bank loan participations effective January 1, 2020. The targeted transition relief offered by ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief was applied to elect the fair value option to account for bank loan participations already held at the January 1, 2020 date of adoption. Under the fair value option, bank loan participations are measured at fair value, and changes in unrealized gains and losses in bank loan participations are reported in our income statement as net realized and unrealized gains (losses) on investments. At adoption on January 1, 2020, the Company reduced the carrying value of its bank loan portfolio to fair value through an $8.4 million adjustment with a $7.8 million (net of tax) cumulative effect adjustment to reduce retained earnings. Upon adoption of this ASU, the Company established an allowance for uncollectible reinsurance balances through a $265,000 (net of tax) cumulative effect adjustment to retained earnings. Because we purchase reinsurance from financially strong reinsurers or we have collateral securing the recoverables, the effect of adoption was not material to our financial position. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2020 | |
Investments [Abstract] | |
Investments | Investments The Company’s available-for-sale fixed maturity securities are summarized as follows: Cost or Gross Gross Fair (in thousands) September 30, 2020 Fixed maturity securities: State and municipal $ 271,218 $ 17,484 $ (106) $ 288,596 Residential mortgage-backed 297,932 8,591 (54) 306,469 Corporate 727,678 50,067 (790) 776,955 Commercial mortgage and asset-backed 324,966 12,535 (1,667) 335,834 U.S. Treasury securities and obligations guaranteed by the U.S. government 100,742 2,852 — 103,594 Redeemable preferred stock 2,025 — (2) 2,023 Total fixed maturity securities, available-for-sale $ 1,724,561 $ 91,529 $ (2,619) $ 1,813,471 December 31, 2019 Fixed maturity securities: State and municipal $ 159,894 $ 7,949 $ (742) $ 167,101 Residential mortgage-backed 261,524 3,244 (622) 264,146 Corporate 611,304 21,306 (389) 632,221 Commercial mortgage and asset-backed 249,309 3,954 (806) 252,457 U.S. Treasury securities and obligations guaranteed by the U.S. government 114,477 1,229 (39) 115,667 Redeemable preferred stock 2,025 9 — 2,034 Total fixed maturity securities, available-for-sale $ 1,398,533 $ 37,691 $ (2,598) $ 1,433,626 The amortized cost and fair value of available-for-sale investments in fixed maturity securities at September 30, 2020 are summarized, by contractual maturity, as follows: Cost or Fair (in thousands) One year or less $ 104,099 $ 105,328 After one year through five years 456,660 483,155 After five years through ten years 306,679 330,510 After ten years 232,200 250,152 Residential mortgage-backed 297,932 306,469 Commercial mortgage and asset-backed 324,966 335,834 Redeemable preferred stock 2,025 2,023 Total $ 1,724,561 $ 1,813,471 Actual maturities may differ for some securities because borrowers have the right to call or prepay obligations with or without penalties. The following table shows the Company’s gross unrealized losses and fair value for available-for-sale securities aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position: Less Than 12 Months 12 Months or More Total Fair Gross Fair Gross Fair Gross (in thousands) September 30, 2020 Fixed maturity securities: State and municipal $ 17,967 $ (106) $ — $ — $ 17,967 $ (106) Residential mortgage-backed 14,601 (54) — — 14,601 (54) Corporate 41,182 (790) — — 41,182 (790) Commercial mortgage and asset-backed 23,964 (1,118) 38,344 (549) 62,308 (1,667) Redeemable preferred stock 2,023 (2) — — 2,023 (2) Total fixed maturity securities, available-for-sale $ 99,737 $ (2,070) $ 38,344 $ (549) $ 138,081 $ (2,619) December 31, 2019 Fixed maturity securities: State and municipal $ 30,028 $ (741) $ 667 $ (1) $ 30,695 $ (742) Residential mortgage-backed 23,632 (78) 37,363 (544) 60,995 (622) Corporate 45,550 (365) 9,933 (24) 55,483 (389) Commercial mortgage and asset-backed 46,434 (406) 56,720 (400) 103,154 (806) U.S. Treasury securities and obligations guaranteed by the U.S. government 8,474 (22) 7,168 (17) 15,642 (39) Total fixed maturity securities, available-for-sale $ 154,118 $ (1,612) $ 111,851 $ (986) $ 265,969 $ (2,598) At September 30, 2020, the Company held fixed maturity securities of 27 issuers that were in an unrealized loss position with a total fair value of $138.1 million and gross unrealized losses of $2.6 million. None of the fixed maturity securities with unrealized losses has ever missed, or been delinquent on, a scheduled principal or interest payment. At September 30, 2020, 99.5% of the Company’s fixed maturity security portfolio was rated “BBB-” or better (“investment grade”) by Standard & Poor’s or received an equivalent rating from another nationally recognized rating agency. Fixed maturity securities with ratings below investment grade by Standard & Poor’s or another nationally recognized rating agency at September 30, 2020 had an aggregate fair value of $8.8 million and an aggregate net unrealized gain of $56,000. The Company adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2020. This update changed the impairment model for available-for-sale fixed maturities and requires the Company to determine whether unrealized losses on available-for-sale fixed maturities are due to credit-related factors. An allowance for credit losses is established for any credit-related impairments, limited to the amount by which fair value is below amortized cost. Changes in the allowance for credit losses are recognized in earnings and included in n et realized and unrealized gains (losses) on investments . Unrealized losses that are not credit-related will continue to be recognized in other comprehensive income. The Company considers the extent to which fair value is below amortized cost in determining whether a credit-related loss exists. The Company also considers the credit quality rating of the security, with a special emphasis on securities downgraded below investment grade. A comparison is made between the present value of expected future cash flows for a security and its amortized cost. If the present value of future expected cash flows is less than amortized cost, a credit loss is presumed to exist and an allowance for credit losses is established. Management may conclude that a qualitative analysis is sufficient to support its conclusion that the present value of the expected cash flows equals or exceeds a security’s amortized cost. As a result of this review, management concluded that there were no credit-related impairments of fixed maturity securities at September 30, 2020. Management does not intend to sell the securities in an unrealized loss position, and it is not “more likely than not” that the Company will be required to sell these securities before a recovery in their value to their amortized cost basis occurs. Management concluded that none of the fixed maturity securities with an unrealized loss at December 31, 2019 had experienced an other-than-temporary impairment. At March 31, 2019, management concluded that three fixed maturity securities from one issuer that we intended to sell at a loss in the second quarter were impaired. The Company recorded impairment losses on these securities of $271,000 in the three months ended March 31, 2019. Management concluded that none of the fixed maturity securities with an unrealized loss at September 30, 2019 had experienced an other-than-temporary impairment. In connection with the adoption of ASU 2016-13, the Company elected the fair value option in accounting for bank loan participations effective January 1, 2020. The targeted transition relief offered by ASU 2019-05 Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief was applied to elect the fair value option to account for bank loan participations already held at the January 1, 2020 date of adoption. Under the fair value option, bank loan participations are measured at fair value, and changes in unrealized gains and losses in bank loan participations are reported in our income statement as net realized and unrealized gains (losses) on investments. At adoption on January 1, 2020, the Company applied the amendments on a modified retrospective basis, reducing the carrying value of its bank loan portfolio to fair value through an $8.4 million adjustment with a $7.8 million (net of tax) cumulative effect adjustment to reduce retained earnings. Applying the fair value option to the bank loan portfolio increases volatility in the Company's financial statements, but management believes it is less subjective and less burdensome to implement and maintain than ASU 2016-13, which would have otherwise been required. At September 30, 2020, the Company's bank loan portfolio had an aggregate fair value of $131.2 million and unpaid principal of $151.8 million. Investment income on bank loan participations included in net investment income was $2.4 million and $9.7 million for the three and nine months ended September 30, 2020, respectively. Net realized and unrealized gains (losses) on investments includes gains of $9.7 million and losses of $7.6 million related to changes in unrealized gains and losses on bank loan participations in the three and nine months ended September 30, 2020, respectively, and management concluded that $437,000 and $8.2 million of unrealized losses were due to credit-related impairments for the three and nine months ended September 30, 2020, respectively. Losses due to credit-related impairments were determined based upon consultations and advice from the Company's specialized investment manager and consideration of any adverse situations that could affect the borrower's ability to repay, the estimated value of underlying collateral, and other relevant factors. Prior to the election of the fair value option on January 1, 2020, bank loan participations were classified as held-for-investment and carried at amortized cost net of any allowance for credit losses. Under the prior accounting method, management concluded that seven loans from six issuers in the Company's bank loan portfolio were impaired at December 31, 2019. At December 31, 2019, the impaired loans had a carrying value of $6.9 million, unpaid principal of $14.3 million, and an allowance for credit losses of $7.2 million, $5.1 million of which related to two loans from one issuer that was experiencing liquidity concerns resulting from revenue declines and poor growth prospects in its most profitable segment. Management concluded that five of the loans in the Company’s loan portfolio were impaired at September 30, 2019. At September 30, 2019, the impaired loans had a carrying value of $6.4 million, unpaid principal of $12.3 million, and an allowance for credit losses of $5.9 million, $4.2 million of which related to two loans from one issuer that was experiencing liquidity concerns resulting from revenue declines and poor growth prospects in its most profitable segment. Bank loan participations generally provide a higher yield than our portfolio of fixed maturities and have a credit rating that is below investment grade (i.e. below “BBB-” for Standard & Poor’s) at the date of purchase. These bank loans are primarily senior, secured floating-rate debt rated “BB”, “B”, or “CCC” by Standard & Poor’s or an equivalent rating from another nationally recognized rating agency. These bank loans include assignments of, and participations in, performing and non-performing senior corporate debt generally acquired through primary bank syndications and in secondary markets. Bank loans consist of, but are not limited to, term loans, the funded and unfunded portions of revolving credit loans, and other similar loans and investments. Management believed that it was probable at the time that these loans were acquired that the Company would be able to collect all contractually required payments receivable. Interest income on bank loan participations is accrued on the unpaid principal balance, and discounts and premiums on bank loan participations are amortized to income using the interest method. Generally, the accrual of interest on a bank loan participation is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest. A bank loan participation may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. Generally, bank loan participations are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. Interest received on nonaccrual loans generally is reported as investment income. There were no bank loans on nonaccrual status at September 30, 2020 or December 31, 2019. The average recorded investment in impaired bank loans was $3.2 million during the nine months ended September 30, 2019. Investment income of $23,000 was recognized during the time within that period that the loans were impaired. The Company recorded net realized investment losses of $5.9 million and $7.7 million in the three and nine months ended September 30, 2019, respectively, for changes in the fair value of impaired bank loans. The Company’s net realized and unrealized gains and losses on investments are summarized as follows: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Fixed maturity securities: Gross realized gains $ 386 $ 445 $ 906 $ 1,033 Gross realized losses — (9) (1) (494) 386 436 905 539 Bank loan participations: Gross realized gains 24 79 357 229 Gross realized losses (3,506) (6,056) (14,484) (9,056) Changes in fair values of bank loan participations 9,741 — (7,636) — 6,259 (5,977) (21,763) (8,827) Equity securities: Gross realized gains 13 11 13 11 Gross realized losses — (78) (170) (96) Changes in fair values of equity securities 2,374 3,251 (6,895) 8,700 2,387 3,184 (7,052) 8,615 Short-term investments and other: Gross realized gains 27 1 76 5 Gross realized losses — (1) (1) (1) Changes in fair values of short-term investments and other (130) — (50) — (103) — 25 4 Total $ 8,929 $ (2,357) $ (27,885) $ 331 Realized investment gains or losses are determined on a specific identification basis. The Company invests selectively in private debt and equity opportunities. These investments, which together comprise the Company’s other invested assets, are primarily focused in renewable energy, limited partnerships, and bank holding companies. Carrying Value Investment Income September 30, December 31, Three Months Ended Nine Months Ended 2020 2019 2020 2019 2020 2019 (in thousands) Renewable energy LLCs (a) $ 30,520 $ 31,219 $ (526) $ 1,602 $ 320 $ 2,510 Renewable energy notes receivable ( b) — 8,750 547 328 814 984 Limited partnerships (c) 10,601 16,741 426 (631) 102 2,166 Bank holding companies (d) 4,500 4,500 86 85 258 257 Total other invested assets $ 45,621 $ 61,210 $ 533 $ 1,384 $ 1,494 $ 5,917 (a) The Company’s Corporate and Other segment owns equity interests ranging from 2.6% to 32.6% in various LLCs whose principal objective is capital appreciation and income generation from owning and operating renewable energy production facilities (wind and solar). The LLCs are managed by an entity for which two former directors served as officers, and the Company’s Chairman and Chief Executive Officer ("CEO") has invested in certain of these LLCs. The equity method is used to account for the Company’s LLC investments. Income for the LLCs primarily reflects adjustments to the carrying values of investments in renewable energy projects to their determined fair values. The fair value adjustments are included in revenues for the LLCs. Expenses for the LLCs are not significant and are comprised of administrative and interest expenses. The Company received cash distributions from these investments totaling $1.0 million and $687,000 in the nine months ended September 30, 2020 and 2019, respectively. (b) The Company's Corporate and Other segment has invested in notes receivable for renewable energy projects. At December 31, 2019, the Company held an $8.8 million note issued by an entity for which two of our former directors serve as officers . During the nine months ended September 30, 2020, the Company received the total principal balance of $8.8 million for the note issued. Interest on the note was fixed at 15.0%. Interest income on the note was $547,000 and $814,000 for the three and nine months ended September 30, 2020, respectively ($328,000 and $984,000 for the three and nine months ended September 30, 2019, respectively). (c) The Company owns investments in limited partnerships that invest in concentrated portfolios including publicly-traded small cap equities, loans of middle market private equity sponsored companies, and tranches of distressed home loans. Income f rom the partnerships is recognized under the equity method of accounting. The Company’s Corporate and Other segment held an investment in a limited partnership with a carrying value of $3.5 million at September 30, 2020. The Company recognized investment income of $100,000 and $182,000 on the investment for the nine months ended September 30, 2020 and 2019, respectively. The Company’s Excess and Surplus Lines segment holds investments in limited partnerships of $7.1 million at September 30, 2020. Investment income of $2,000 and $2.0 million was recognized on the investments for the nine months ended September 30, 2020 and 2019 , respectively. At September 30, 2020, the Company’s Excess and Surplus Lines segment has outstanding commitments to invest another $3.9 million in these limited partnerships. (d) The Company's Corporate and Other segment holds $4.5 million of subordinated notes issued by a bank holding company for which the Company’s Chairman and CEO was previously the Lead Independent Director and an investor and for which one of the Company’s directors was an investor and is currently a holder of the subordinated notes (the "Bank Holding Company"). Interest on the notes, which mature on August 12, 2023, is fixed at 7.6% per annum. Interest income on the notes was $257,000 for both nine month periods ended September 30, 2020 and 2019, respectively. At September 30, 2020 and December 31, 2019, the Company held an investment in a CLO where one of the underlying loans was issued by the Bank Holding Company. The investment, with a carrying value of $677,000 at September 30, 2020, is classified as an available-for-sale fixed maturity. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets On December 11, 2007, the Company completed an acquisition of James River Group by acquiring 100% of the outstanding shares of James River Group common stock, referred to herein as the “Merger”. The transaction was accounted for under the purchase method of accounting, and goodwill and intangible assets were recognized by the Company as a result of the transaction. Goodwill resulting from the Merger was $181.8 million at September 30, 2020 and December 31, 2019. The gross carrying amounts and accumulated amortization for each major specifically identifiable intangible asset class were as follows: September 30, 2020 December 31, 2019 Life Gross Accumulated Gross Accumulated ($ in thousands) Intangible Assets Trademarks Indefinite $ 22,200 $ — $ 22,200 $ — Insurance licenses and authorities Indefinite 8,964 — 8,964 — Identifiable intangibles not subject to amortization 31,164 — 31,164 — Broker relationships 24.6 11,611 6,282 11,611 5,835 Identifiable intangible assets subject to amortization 11,611 6,282 11,611 5,835 $ 42,775 $ 6,282 $ 42,775 $ 5,835 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following represents a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations contained in the condensed consolidated financial statements: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands, except share and per share amounts) Net income (loss) to shareholders $ 26,283 $ (25,167) $ 25,082 $ 17,868 Weighted average common shares outstanding: Basic 30,582,540 30,382,105 30,529,557 30,230,490 Common share equivalents 364,303 — 309,038 428,899 Diluted 30,946,843 30,382,105 30,838,595 30,659,389 Earnings (loss) per share: Basic $ 0.86 $ (0.83) $ 0.82 $ 0.59 Common share equivalents (0.01) — (0.01) (0.01) Diluted $ 0.85 $ (0.83) $ 0.81 $ 0.58 For the three and nine months ended September 30, 2020, all common share equivalents are dilutive. For the three months ended September 30, 2019, common share equivalents of 431,137 were excluded from the calculation of diluted earnings per share as a net loss for the three months ended September 30, 2019 made the effects of all common share equivalents anti-dilutive. For the nine months ended September 30, 2019, all common share equivalents were dilutive. |
Reserve for Losses and Loss Adj
Reserve for Losses and Loss Adjustment Expenses | 9 Months Ended |
Sep. 30, 2020 | |
Liability for Claims and Claims Adjustment Expense [Abstract] | |
Reserve for Losses and Loss Adjustment Expenses | Reserve for Losses and Loss Adjustment Expenses The following table provides a reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses, net of reinsurance, to the gross amounts reported in the condensed consolidated balance sheets. Reinsurance recoverables on unpaid losses and loss adjustment expenses are presented gross of a $335,000 allowance for uncollectible reinsurance balances at June 30, 2020 and September 30, 2020. Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period $ 1,339,534 $ 1,237,930 $ 1,377,461 $ 1,194,088 Add: Incurred losses and loss adjustment expenses net of reinsurance: Current year 101,921 157,113 295,523 440,810 Prior years 4,234 56,971 6,234 60,254 Total incurred losses and loss and adjustment expenses 106,155 214,084 301,757 501,064 Deduct: Loss and loss adjustment expense payments net of reinsurance: Current year 6,950 21,021 13,558 46,275 Prior years 102,140 104,513 329,061 322,397 Total loss and loss adjustment expense payments 109,090 125,534 342,619 368,672 Reserve for losses and loss adjustment expenses net of reinsurance recoverables at end of period 1,336,599 1,326,480 1,336,599 1,326,480 Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period 770,150 614,827 770,150 614,827 Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period $ 2,106,749 $ 1,941,307 $ 2,106,749 $ 1,941,307 The Company experienced $4.2 million of net adverse reserve development in the three months ended September 30, 2020 on the reserve for losses and loss adjustment expenses held at December 31, 2019. This reserve development included $27,000 of net adverse development in the Excess and Surplus Lines segment, $2.0 million of net favorable development in the Specialty Admitted Insurance segment due to favorable development in the workers' compensation business for prior accident years, and $6.2 million of net adverse development in the Casualty Reinsurance segment due to higher than expected levels of reported losses in the quarter. The Company experienced $57.0 million of net adverse reserve development in the three months ended September 30, 2019 on the reserve for losses and loss adjustment expenses held at December 31, 2018. This reserve development included $50.0 million of net adverse development in the Excess and Surplus Lines segment primarily related to the 2016 and 2017 accident years for the commercial auto business. The Specialty Admitted Insurance segment experienced $1.0 million of net favorable development due to favorable development in the workers' compensation business for prior accident years. The Company also experienced $7.9 million of net adverse development in the Casualty Reinsurance segment due to higher than expected levels of reported losses in the quarter. The Company experienced $6.2 million of net adverse reserve development in the nine months ended September 30, 2020 on the reserve for losses and loss adjustment expenses held at December 31, 2019. This reserve development included $2.8 million of net favorable development in the Excess and Surplus Lines segment, $4.0 million of net favorable development in the Specialty Admitted Insurance segment due to favorable development in the workers' compensation business for prior accident years, and $13.1 million of net adverse development in the Casualty Reinsurance segment due to higher than expected levels of reported losses in the nine months ended September 30, 2020. The Company experienced $60.3 million of net adverse reserve development in the nine months ended September 30, 2019 on the reserve for losses and loss adjustment expenses held at December 31, 2018. This reserve development included $51.2 million of net adverse development in the Excess and Surplus Lines segment primarily related to the 2016 and 2017 accident years for the commercial auto business. The Specialty Admitted Insurance segment experienced $4.3 million of net favorable |
Other Comprehensive Income
Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2020 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Other Comprehensive Income | Other Comprehensive Income The following table summarizes the components of other comprehensive income: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Unrealized gains arising during the period, before U.S. income taxes $ 6,274 $ 10,531 $ 54,722 $ 54,937 U.S. income taxes (881) (690) (6,441) (4,045) Unrealized gains arising during the period, net of U.S. income taxes 5,393 9,841 48,281 50,892 Less reclassification adjustment: Net realized investment gains 386 436 905 539 U.S. income taxes (32) (52) (57) (96) Reclassification adjustment for investment gains realized in net income 354 384 848 443 Other comprehensive income $ 5,039 $ 9,457 $ 47,433 $ 50,449 In addition to the $386,000 and $905,000 of net realized investment gains on available-for-sale fixed maturities for the three and nine months ended September 30, 2020, respectively ($436,000 and $539,000 of net realized investment gains for the three and nine months ended September 30, 2019 , respectively), the Company also recognized $6.3 million of net realized and unrealized investment gains and $21.8 million of net realized and unrealized investment losses in the respective periods on its investments in bank loan participations ($6.0 million and $8.8 million of net realized investment losses in the prior year respective periods) and $2.4 million of net realized and unrealized gains and $7.1 million of net realized and unrealized losses in the respective periods on its investments in equity securities ($3.2 million and $8.6 million of net realized and unrealized gains in the prior year respective periods). |
Contingent Liabilities
Contingent Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingent Liabilities | Contingent Liabilities The Company is a party to various lawsuits arising in the ordinary course of its operations. The Company believes that the ultimate resolution of these matters will not materially impact its financial position, cash flows, or results of operations. In response to the outbreak of the coronavirus pandemic in the first quarter of 2020, many state and local governments in the United States and around the world have instituted emergency restrictions that have substantially limited the operation of non-essential businesses and the activities of individuals. Many states have extended the expiration date of restrictions and some states that eased restrictions subsequently re-imposed them as the spread of COVID-19 worsened. These restrictions could result in significant adverse effects on our policyholders and many different types of small and mid-sized businesses within the Company’s client base, particularly those in the retail, hospitality and food and beverage industries, among many others. The ultimate effect and severity of COVID-19 on the economy is not known nor is the ultimate length of the restrictions and any accompanying effects caused by it. Moreover, the Federal Reserve has taken action to lower the Federal Funds rate and the U.S. equity markets have experienced substantial volatility in reaction to COVID-19 since February 2020, both of which have, along with other factors, placed pressure on net investment income and resulted in material realized and unrealized losses in our investment portfolio in the first quarter of 2020. Investment markets recovered substantially in the second and third quarters, leading to unrealized gains in our investment portfolio for those quarters. The effect of COVID-19 and related events could have a negative effect on the Company, including as a result of quarantines, market volatility, market downturns, actions of lawmakers and regulators, changes in consumer behavior, business closures, deterioration in the credit quality of policyholders or the inability of policyholders to pay their premium and deductible obligations to the Company, and deterioration in the credit quality of reinsurers or insurance entities with which we have a fronting arrangement or the inability of insurers or the insurance entities for which we are fronting to pay their obligations to the Company. At the federal and state level, there have been proposals by lawmakers to retroactively amend business interruption insurance policies to cover claims related to COVID-19 when such insurance policies otherwise would exclude such risks. In addition, a number of states have instituted, and other states are considering instituting, changes designed to effectively expand workers’ compensation coverage by creating presumptions of compensability of claims for certain types of workers. The Company has received both business interruption and workers’ compensation claims related to COVID-19 and we expect that we will continue to receive claims related to COVID-19. If the efforts of lawmakers to effectively expand coverage under business interruption, workers’ compensation or other policies on a retroactive basis are successful and enforceable, the Company may be forced to pay claims under policies for which it received inadequate premiums to cover such risks, and therefore the Company’s reserves may be inadequate to pay such claims. At the state level, insurance departments throughout the country have issued bulletins and regulations urging or requiring insurers to extend grace periods for the payment of policy premiums and to refrain from canceling or non-renewing policies for the non-payment of policy premiums for policyholders adversely affected by COVID-19. While many of these requirements and recommendations have expired or are scheduled to expire in the near future, insurance departments could reinstate or extend them as conditions deteriorate and/or the negative impact of the pandemic on policyholders persists. It is uncertain what impact these government mandates may have on our ability to recover unpaid premiums on the affected policies or what our obligations may be for the payment of claims made under policies for which we have not received premium payments. Further, demand for the insurance policies that the Company offers is highly dependent upon the business environment in the markets in which the Company operates. Given the ongoing and dynamic nature of the circumstances, it is not possible to predict the ultimate impact of the coronavirus outbreak, but it could have a material adverse impact on the business prospects, financial condition or results of operations of the Company. JRG Re has entered into three letter of credit facilities with banks as security to third-party reinsureds on reinsurance assumed by JRG Re. JRG Re has established custodial accounts to secure these letters of credit. Under a $75.0 million facility, $12.2 million of letters of credit were issued through September 30, 2020 which were secured by deposits of $25.2 million. Under a $102.5 million facility, $76.0 million of letters of credit were issued through September 30, 2020 which were secured by deposits of $96.7 million. Under a $100.0 million facility, $17.5 million of letters of credit were issued through September 30, 2020 which were secured by deposits of $28.3 million. JRG Re has also established trust accounts to secure its obligations to selected reinsureds. The total amount deposited in the trust accounts for the benefit of third-party reinsureds was $302.1 million at September 30, 2020. The Company previously issued a set of insurance contracts to Rasier LLC and its affiliates (collectively, “Rasier”) under which the Company pays losses and loss adjustment expenses on the contracts. The Company has indemnity agreements with Rasier (non-insurance entities) and is contractually entitled to receive reimbursement for a significant portion of the losses and loss adjustment expenses paid on behalf of Rasier and other expenses incurred by the Company. Rasier is required to collateralize all amounts currently due to the Company and to provide additional collateral sufficient to cover the amounts that may be recoverable under the indemnity agreements, including, among other things, case loss and loss adjustment expense reserves, IBNR loss and loss adjustment expense reserves, extra contractual obligations and excess of policy limits liabilities. The collateral is provided through a collateral trust arrangement established in favor of the Company by a captive insurance company affiliate of Rasier. As permitted under our indemnification agreements with Rasier and the associated trust agreement, we have withdrawn the collateral posted to the trust account. At September 30, 2020, the Company held collateral funds of $940.2 million. The funds withdrawn from the trust account, currently invested in short term securities and included in restricted cash equivalents on the Company's consolidated balance sheet, will be used to reimburse the Company for the losses and loss adjustment expenses paid on behalf of Rasier and other related expenses incurred by the Company to the extent not paid as required under the indemnity agreements. The Company has ongoing exposure to estimated losses and expenses on these contracts growing at a faster pace than growth in our collateral balances. In addition, we have credit exposure if our estimates of future losses and loss adjustment expenses and other amounts recoverable, which are the basis for establishing collateral balances, are lower than actual amounts paid or payable. The amount of our credit exposure in any of these instances could be material. To mitigate these risks, we closely and frequently monitor our exposure compared to our collateral held, and we request additional collateral when our analysis indicates that we have uncollateralized exposure. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company has four reportable segments: the Excess and Surplus Lines segment, the Specialty Admitted Insurance segment, the Casualty Reinsurance segment, and the Corporate and Other segment. Segment profit (loss) is measured by underwriting profit (loss), which is generally defined as net earned premiums less loss and loss adjustment expenses and other operating expenses of the operating segments. Included in “other income” on the condensed consolidated statements of income (loss) and comprehensive income (loss) is gross fee income of $363,000 and $2.7 million for the three and nine months ended September 30, 2020, respectively, ($2.3 million and $7.3 million the three and nine months ended September 30, 2019 , respectively) that is included in underwriting profit for the respective three and nine month periods. Segment results are reported prior to the effects of intercompany reinsurance agreements among the Company’s insurance subsidiaries. The following table summarizes the Company’s segment results: Excess and Specialty Casualty Corporate Total (in thousands) Three Months Ended September 30, 2020 Gross written premiums $ 179,458 $ 112,589 $ 19,805 $ — $ 311,852 Net earned premiums 104,933 14,985 33,044 — 152,962 Underwriting profit (loss) of insurance segments 15,581 1,859 (689) — 16,751 Net investment income 3,751 807 10,033 368 14,959 Interest expense — — — 2,129 2,129 Segment revenues 112,800 16,843 47,385 437 177,465 Segment goodwill 181,831 — — — 181,831 Segment assets 2,243,065 877,619 1,806,341 57,328 4,984,353 Three Months Ended September 30, 2019 Gross written premiums $ 241,045 $ 100,459 $ 46,724 $ — $ 388,228 Net earned premiums 164,759 14,242 34,373 — 213,374 Underwriting (loss) profit of insurance segments (29,351) 837 (4,288) — (32,802) Net investment income 3,467 976 11,717 1,718 17,878 Interest expense — — — 2,594 2,594 Segment revenues 170,734 16,493 42,403 1,844 231,474 Segment goodwill 181,831 — — — 181,831 Segment assets 1,186,094 773,677 1,631,569 69,576 3,660,916 Nine Months Ended September 30, 2020 Gross written premiums $ 502,649 $ 303,831 $ 90,852 $ — $ 897,332 Net earned premiums 305,521 42,660 99,514 — 447,695 Underwriting profit (loss) of insurance segments 39,788 2,301 (3,119) — 38,970 Net investment income 15,028 2,547 32,171 1,399 51,145 Interest expense — — — 7,970 7,970 Segment revenues 309,972 45,386 117,459 1,681 474,498 Segment goodwill 181,831 — — — 181,831 Segment assets 2,243,065 877,619 1,806,341 57,328 4,984,353 Nine Months Ended September 30, 2019 Gross written premiums $ 687,871 $ 292,884 $ 114,810 $ — $ 1,095,565 Net earned premiums 457,352 39,688 105,600 — 602,640 Underwriting (loss) profit of insurance segments (439) 3,758 (4,061) — (742) Net investment income 13,240 2,791 34,875 3,938 54,844 Interest expense — — — 8,086 8,086 Segment revenues 481,745 45,169 134,731 4,330 665,975 Segment goodwill 181,831 — — — 181,831 Segment assets 1,186,094 773,677 1,631,569 69,576 3,660,916 The following table reconciles the underwriting profit (loss) of the operating segments by individual segment to consolidated income before taxes: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Underwriting profit (loss) of the insurance segments: Excess and Surplus Lines $ 15,581 $ (29,351) $ 39,788 $ (439) Specialty Admitted Insurance 1,859 837 2,301 3,758 Casualty Reinsurance (689) (4,288) (3,119) (4,061) Total underwriting profit (loss) of insurance segments 16,751 (32,802) 38,970 (742) Other operating expenses of the Corporate and Other segment (7,805) (7,302) (23,556) (22,641) Underwriting profit (loss) 8,946 (40,104) 15,414 (23,383) Net investment income 14,959 17,878 51,145 54,844 Net realized and unrealized gains (losses) on investments 8,929 (2,357) (27,885) 331 Amortization of intangible assets (149) (149) (447) (447) Other income and expenses 192 (91) (967) (223) Interest expense (2,129) (2,594) (7,970) (8,086) Income (loss) before taxes $ 30,748 $ (27,417) $ 29,290 $ 23,036 |
Other Operating Expenses and Ot
Other Operating Expenses and Other Expenses | 9 Months Ended |
Sep. 30, 2020 | |
Other Operating Expenses and Other Expenses [Abstract] | |
Other Operating Expenses and Other Expenses | Other Operating Expenses and Other Expenses Other operating expenses consist of the following: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Amortization of policy acquisition costs $ 16,660 $ 21,258 $ 62,406 $ 63,029 Other underwriting expenses of the operating segments 13,759 13,132 47,280 46,617 Other operating expenses of the Corporate and Other segment 7,805 7,302 23,556 22,641 Total $ 38,224 $ 41,692 $ 133,242 $ 132,287 Other expenses of $60,000 and $1.8 million for the three and nine months ended September 30, 2020 ($372,000 and $1.1 million for the three and nine months ended September 30, 2019 ) , primarily consist of employee severance costs. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Three levels of inputs are used to measure fair value of financial instruments: (1) Level 1: quoted price (unadjusted) in active markets for identical assets, (2) Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument, and (3) Level 3: inputs to the valuation methodology are unobservable for the asset or liability. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. To measure fair value, the Company obtains quoted market prices for its investment securities from its outside investment managers, who utilize independent pricing services. If a quoted market price is not available, the Company uses prices of similar securities. Values for U.S. Treasury and publicly-traded equity securities are generally based on Level 1 inputs which use the market approach valuation technique. The values for all other fixed maturity securities (including state and municipal securities and obligations of U.S. government corporations and agencies) and bank loan participations generally incorporate significant Level 2 inputs, and in some cases, Level 3 inputs, using the market approach and income approach valuation techniques. There have been no changes in the Company’s use of valuation techniques since December 31, 2018. The Company reviews fair value prices provided by its outside investment managers for reasonableness by comparing the fair values provided by the managers to those provided by its investment custodian or other alternative sources. The Company also reviews and monitors changes in unrealized gains and losses. The Company has not historically adjusted security prices. The Company obtains an understanding of the methods, models and inputs used by the investment managers and independent pricing services, and controls are in place to validate that prices provided represent fair values. The Company’s control process includes, but is not limited to, initial and ongoing evaluation of the methodologies used, a review of specific securities and an assessment for proper classification within the fair value hierarchy, and obtaining and reviewing internal control reports for our investment managers that obtain fair values from independent pricing services. Assets measured at fair value on a recurring basis as of September 30, 2020 are summarized below: Fair Value Measurements Using Quoted Prices Significant Significant Total (in thousands) Fixed maturity securities, available-for-sale: State and municipal $ — $ 288,596 $ — $ 288,596 Residential mortgage-backed — 306,469 — 306,469 Corporate — 776,955 — 776,955 Commercial mortgage and asset-backed — 335,834 — 335,834 U.S. Treasury securities and obligations guaranteed by the U.S. government 103,130 464 — 103,594 Redeemable preferred stock — 2,023 — 2,023 Total fixed maturity securities, available-for-sale $ 103,130 $ 1,710,341 $ — $ 1,813,471 Equity securities: Preferred stock — 65,576 — 65,576 Common stock 9,305 5,015 — 14,320 Total equity securities $ 9,305 $ 70,591 $ — $ 79,896 Bank loan participations $ — $ 130,890 $ 308 $ 131,198 Short-term investments $ — $ 71,986 $ — $ 71,986 Assets measured at fair value on a recurring basis as of December 31, 2019 are summarized below: Fair Value Measurements Using Quoted Prices Significant Significant Total (in thousands) Fixed maturity securities, available-for-sale: State and municipal $ — $ 167,101 $ — $ 167,101 Residential mortgage-backed — 264,146 — 264,146 Corporate — 632,221 — 632,221 Commercial mortgage and asset-backed — 252,457 — 252,457 U.S. Treasury securities and obligations guaranteed by the U.S. government 115,173 494 — 115,667 Redeemable preferred stock — 2,034 — 2,034 Total fixed maturity securities, available-for-sale $ 115,173 $ 1,318,453 $ — $ 1,433,626 Equity securities: Preferred stock — 62,747 — 62,747 Common stock 14,669 3,276 43 17,988 Total equity securities $ 14,669 $ 66,023 $ 43 $ 80,735 Short-term investments $ — $ 156,925 $ — $ 156,925 A reconciliation of the beginning and ending balances of available-for-sale fixed maturity securities, equity securities, and bank loan participations measured at fair value on a recurring basis (as a result of the fair value option effective January 1, 2020) using significant unobservable inputs (Level 3) is shown below: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) (in thousands) Beginning balance $ 312 $ 3,099 $ 43 $ 4,442 Transfers out of Level 3 (8) (3,010) (729) (7,238) Transfers in to Level 3 — — 358 3,010 Purchases — — 703 — Sales — — — — Maturities, calls and paydowns — — (17) — Amortization of discount — — 3 — Total gains or losses (realized/unrealized): — Included in earnings 4 (45) (53) (170) Included in other comprehensive income — — — — Ending balance $ 308 $ 44 $ 308 $ 44 The Company held one available-for-sale fixed maturity security at December 31, 2018 for which the fair value was determined using significant unobservable inputs (Level 3). A market approach using prices in trades of comparable securities was utilized to determine a fair value of $4.2 million for the security at December 31, 2018. The Company was able to obtain a quoted price from a pricing vendor for the available-for-sale fixed maturity security at March 31, 2019 and it was transferred to Level 2. At June 30, 2019, the Company held two equity securities for which the fair value was determined using significant unobservable inputs (Level 3). In the three months ended June 30, 2019, one equity security was transferred from Level 1 to Level 3 as the security was no longer actively traded. In the three months ended September 30, 2019, one equity security was transferred from Level 3 to Level 2 as the Company was able to obtain a quoted price from a pricing vendor for the equity security at September 30, 2019. At September 30, 2019, the Company held one equity security for which the fair value was determined using significant unobservable inputs (Level 3) A market approach using prices in trades of comparable securities was utilized to determine a fair value for the equity securities of $44,000 at September 30, 2019. At September 30, 2020, the Company held one bank loan participation and one equity security for which the fair value was determined using significant unobservable inputs (Level 3). The Company was able to obtain a quoted price from a pricing vendor for two bank loan participations at June 30, 2020 and transferred them to Level 2. During the three months ended September 30, 2020, the Company was able to obtain a quoted price from a pricing vendor for one equity security and transferred it to Level 2. At December 31, 2019, the Company held one equity security for which the fair value was determined using significant unobservable inputs (Level 3). A market approach using prices in trades of comparable securities was utilized to determine a fair value for the securities of $308,000 at September 30, 2020 and $43,000 at December 31, 2019. Transfers out of Level 3 occur when the Company is able to obtain reliable prices from pricing vendors for securities for which the Company was previously unable to obtain reliable prices. Transfers in to Level 3 occur when the Company is unable to obtain reliable prices for securities from pricing vendors and instead must use broker price quotes to value the securities. There were no transfers between Level 1 and Level 2 during the three months or nine months ended September 30, 2020 or 2019. The Company recognizes transfers between levels at the beginning of the reporting period. In connection with the adoption of ASU 2016-13, the Company elected the fair value option in accounting for bank loan participations effective January 1, 2020. Prior to the election, bank loan participations were classified as held-for-investment and carried at amortized cost net of any allowance for credit losses. Prior to January 1, 2020, t he Company measured certain bank loan participations at fair value on a non-recurring basis as part of the Company’s impairment evaluation when loans were determined by management to be impaired. Bank loan participations held-for-investment that were determined to be impaired were written down to their fair value a t December 31, 2019 as shown below: Fair Value Measurements Using Quoted Prices Significant Significant Total (in thousands) December 31, 2019 Bank loan participations held-for-investment $ — $ — $ 6,949 $ 6,949 In the determination of the fair value for bank loan participations, the Company’s investment manager endeavors to obtain data from multiple external pricing sources. External pricing sources may include brokers, dealers and price data vendors that provide a composite price based on prices from multiple dealers. Such external pricing sources typically provide valuations for normal institutional size trading units of such securities using methods based on market transactions for comparable securities, and various relationships between securities, as generally recognized by institutional dealers. For investments in which the investment manager determines that only one external pricing source is appropriate or if only one external price is available, the relevant investment is generally recorded at fair value based on such price. Investments for which external sources are not available or are determined by the investment manager not to be representative of fair value are recorded at fair value as determined by the Company, with input from its investment managers and valuation specialists as considered necessary. In determining the fair value of such investments, the Company considers one or more of the following factors: type of security held, convertibility or exchangeability of the security, redeemability of the security (including the timing of redemptions), application of industry accepted valuation models, recent trading activity, liquidity, estimates of liquidation value, purchase cost, and prices received for securities with similar terms of the same issuer or similar issuers. At September 30, 2020 and December 31, 2019, there were no investments for which external sources were unavailable to determine fair value. The carrying values and fair values of financial instruments are summarized below: September 30, 2020 December 31, 2019 Carrying Fair Value Carrying Fair Value (in thousands) Assets Fixed maturity securities, available-for-sale $ 1,813,471 $ 1,813,471 $ 1,433,626 $ 1,433,626 Equity securities 79,896 79,896 80,735 80,735 Bank loan participations 131,198 131,198 260,864 252,423 Cash and cash equivalents 139,969 139,969 206,912 206,912 Restricted cash equivalents 940,221 940,221 1,199,164 1,199,164 Short-term investments 71,986 71,986 156,925 156,925 Other invested assets – notes receivable 4,500 5,275 13,250 18,756 Liabilities Senior debt 217,300 204,601 158,300 158,043 Junior subordinated debt 104,055 106,203 104,055 122,193 The fair values of fixed maturity securities, equity securities, and bank loan participations have been determined by independent pricing services using quoted market prices for securities traded in the public market or prices using bid or closing prices for securities not traded in the public marketplace. The fair values of cash and cash equivalents and short-term investments approximate their carrying values due to their short-term maturity. The fair values of other invested assets-notes receivable, senior debt, and junior subordinated debt at September 30, 2020 and December 31, 2019 were determined by calculating the present value of expected future cash flows under the terms of the note agreements or debt agreements, as applicable, discounted at an estimated market rate of interest at September 30, 2020 and December 31, 2019, respectively. The fair values of senior debt and junior subordinated debt at September 30, 2020 and December 31, 2019 were determined using inputs to the valuation methodology that are unobservable (Level 3). |
Senior Debt
Senior Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Senior Debt | Senior Debt In the three months ended March 31, 2020, the Company drew $60.0 million on the $212.5 million unsecured revolving facility in its $315.0 million senior revolving credit facility (as amended or amended and restated, the "2013 Facility”). The borrowing was a precautionary measure to increase the Company's cash position and preserve financial flexibility in light of uncertainty in the global markets resulting from the coronavirus (COVID-19) outbreak. The Company repaid $30.0 million in the three months ended June 30, 2020. At September 30, 2020, the Company had a drawn balance of $163.3 million outstanding on the unsecured revolver. The 2013 Facility contains certain financial and other covenants (including minimum net worth, maximum ratio of total adjusted debt outstanding to total capitalization, and financial strength ratings) with which the Company was in compliance at September 30, 2020. Also in the three months ended March 31, 2020, the Company drew $59.0 million of unsecured capacity on a credit agreement (the "2017 Facility") that provides the Company with a revolving line of credit of up to $100.0 million, which may be used for loans and letters of credit made or issued, at the borrowers' option, on a secured or unsecured basis. The borrowing was a precautionary measure to increase the Company's cash position and preserve financial flexibility in light of uncertainty in the global markets resulting from the coronavirus (COVID-19) outbreak. The Company repaid $30.0 million in the three months ended June 30, 2020. At September 30, 2020, unsecured loans of $39.0 million and secured letters of credit totaling $17.5 million were outstanding under the facility. The 2017 Facility contains certain financial and other covenants which the Company was in compliance with at September 30, 2020. |
Capital Stock and Equity Awards
Capital Stock and Equity Awards | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Capital Stock and Equity Awards | Capital Stock and Equity AwardsThe Company issued 185,762 common shares in the nine months ended September 30, 2020. 79,615 of the new shares were related stock option exercises and 106,147 were related vesting of restricted share units (“RSUs”). The total common shares outstanding increased from 30,424,391 at December 31, 2019 to 30,610,153 at September 30, 2020. The Company declared the following dividends during the first nine months of 2020 and 2019: Date of Declaration Dividend per Common Share Payable to Shareholders of Record on Payment Date Total Amount (thousands) 2020 February 19, 2020 $ 0.30 March 16, 2020 March 31, 2020 $ 9,269 April 28, 2020 $ 0.30 June 15, 2020 June 30, 2020 $ 9,271 July 28, 2020 $ 0.30 September 14, 2020 September 30, 2020 $ 9,292 $ 0.90 $ 27,832 2019 February 20, 2019 $ 0.30 March 11, 2019 March 29, 2019 $ 9,146 April 30, 2019 $ 0.30 June 10, 2019 June 28, 2019 $ 9,205 July 30, 2019 $ 0.30 September 16, 2019 September 30, 2019 $ 9,231 $ 0.90 $ 27,582 Included in the total dividends for the nine months ended September 30, 2020 and 2019 are $329,000 and $327,000, respectively, of dividend equivalents on unvested RSUs. The balance of dividends payable on unvested RSUs was $600,000 at September 30, 2020 and $623,000 at December 31, 2019. Equity Incentive Plans The Company’s shareholders have approved various equity incentive plans, including the Amended and Restated 2009 Equity Incentive Plan (the “Legacy Plan”), the 2014 Long Term Incentive Plan (“2014 LTIP”), and the 2014 Non-Employee Director Incentive Plan (“2014 Director Plan”) (collectively, the “Plans”). All awards issued under the Plans are issued at the discretion of the Board of Directors. Under the Legacy Plan, employees received non-qualified stock options. Options are outstanding under the Legacy Plan; however, no additional awards may be granted. Employees are eligible to receive non-qualified stock options, incentive stock options, share appreciation rights, performance shares, restricted shares, RSUs, and other awards under the 2014 LTIP. The maximum number of shares available for issuance under the 2014 LTIP is 4,171,150, and at September 30, 2020, 1,401,535 shares are available for grant. Non-employee directors of the Company are eligible to receive non-qualified stock options, share appreciation rights, performance shares, restricted shares, RSUs, and other awards under the 2014 Director Plan. At the 2019 Annual General Meeting of Shareholders of the Company held on April 30, 2019, the Company's shareholders approved an amendment to the 2014 Director Plan. The Board of Directors of the Company had previously approved the amendment. The amendment increased the number of the Company's common shares authorized for issuance under the 2014 Director Plan by 100,000 shares. The maximum number of shares available for issuance under the 2014 Director Plan is 150,000, and at September 30, 2020, 101,746 shares are available for grant. Generally, awards issued under the 2014 LTIP and 2014 Director Plan vest immediately in the event that an award recipient is terminated without Cause (as defined in the applicable plans), and in the case of the 2014 LTIP for Good Reason (as defined in the applicable plans), at any time following a Change in Control (as defined in the applicable plans). Options The following table summarizes option activity: Nine Months Ended September 30, 2020 2019 Shares Weighted- Shares Weighted- Outstanding: Beginning of period 643,851 $ 30.41 1,115,324 $ 29.02 Granted — $ — — $ — Exercised (79,615) $ 31.77 (450,514) $ 26.68 Forfeited — $ — (12,058) $ 36.84 End of period 564,236 $ 30.22 652,752 $ 30.50 Exercisable, end of period 564,236 $ 30.22 599,241 $ 29.44 All of the outstanding options vest over three RSUs The following table summarizes RSU activity: Nine Months Ended September 30, 2020 2019 Shares Weighted- Shares Weighted- Unvested, beginning of period 340,368 $ 41.50 300,142 $ 39.22 Granted 197,518 $ 43.77 197,078 $ 42.56 Vested (156,434) $ 41.50 (111,212) $ 39.90 Forfeited (16,846) $ 42.17 (22,445) $ 41.32 Unvested, end of period 364,606 $ 42.70 363,563 $ 40.69 The vesting period of RSUs granted to employees range from one Compensation Expense Share based compensation expense is recognized on a straight line basis over the vesting period. The amount of expense and related tax benefit is summarized below: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Share based compensation expense $ 2,097 $ 1,779 $ 5,874 $ 5,263 U.S. tax benefit on share based compensation expense 287 211 786 631 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 28, 2020, the Board of Directors declared a cash dividend of $0.30 per common share. The dividend is payable on December 31, 2020 to shareholders of record on December 14, 2020. On October 28, 2020, the Company announced the retirement of its Chief Executive Officer, J. Adam Abram, and the appointment of Frank D’Orazio as Chief Executive Officer, effective as of November 2, 2020. Mr. Abram’s retirement will be effective November 1, 2020, but he will continue to serve on the Company’s Board of Directors as non-executive chairman. On October 28, 2020, the Board of Directors granted awards under the 2014 LTIP to the Company’s employees. RSUs for 12,421 shares were awarded with a fair value on the date of grant of $52.33 per share. The RSUs vest over three years. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements and notes have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and do not contain all of the information and footnotes required by U.S. GAAP for complete financial statements. The condensed consolidated financial statements include the results of the Company and its subsidiaries from their respective dates of inception or acquisition, as applicable. Readers are urged to review the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for a more complete description of the Company’s business and accounting policies. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results of operations for the full year. The consolidated balance sheet as of December 31, 2019 was derived from the Company’s audited annual consolidated financial statements. Intercompany transactions and balances have been eliminated. |
Estimates and Assumptions | Estimates and Assumptions Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying disclosures. Those estimates are inherently subject to change, and actual results may ultimately differ from those estimates. |
Variable Interest Entities | Variable Interest Entities Entities that do not have sufficient equity at risk to allow the entity to finance its activities without additional financial support or in which the equity investors, as a group, do not have the characteristic of a controlling financial interest are referred to as variable interest entities (“VIE”). A VIE is consolidated by the variable interest holder that is determined to have the controlling financial interest (primary beneficiary) as a result of having both the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE’s capital structure, contractual terms, nature of the VIE’s operations and purpose, and the Company’s relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis. |
Income Tax Expense | Income Tax ExpenseOur effective tax rate fluctuates from period to period based on the relative mix of income reported by country and the respective tax rates imposed by each tax jurisdiction. For U.S.-sourced income, the Company’s U.S. federal income tax expense differs from the amounts computed by applying the federal statutory income tax rate to income before taxes due primarily to interest income on tax-advantaged state and municipal securities, dividends received income, and excess tax benefits on share based compensation. |
Adopted Accounting Standards | Adopted Accounting Standards On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , using the modified retrospective approach, by which a cumulative-effect adjustment was made to retained earnings as of the date of adoption. This update requires financial assets measured at amortized cost, such as bank loan participations held for investment, to be presented at the net amount expected to be collected by means of an allowance for credit losses that is reflected in net income. Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which fair value is below amortized cost. In connection with the adoption of this ASU, the Company elected the fair value option in accounting for bank loan participations effective January 1, 2020. The targeted transition relief offered by ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief was applied to elect the fair value option to account for bank loan participations already held at the January 1, 2020 date of adoption. Under the fair value option, bank loan participations are measured at fair value, and changes in unrealized gains and losses in bank loan participations are reported in our income statement as net realized and unrealized gains (losses) on investments. At adoption on January 1, 2020, the Company reduced the carrying value of its bank loan portfolio to fair value through an $8.4 million adjustment with a $7.8 million (net of tax) cumulative effect adjustment to reduce retained earnings. Upon adoption of this ASU, the Company established an allowance for uncollectible reinsurance balances through a $265,000 (net of tax) cumulative effect adjustment to retained earnings. Because we purchase reinsurance from financially strong reinsurers or we have collateral securing the recoverables, the effect of adoption was not material to our financial position. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investments [Abstract] | |
Schedule of summary of available-for-sale investments | The Company’s available-for-sale fixed maturity securities are summarized as follows: Cost or Gross Gross Fair (in thousands) September 30, 2020 Fixed maturity securities: State and municipal $ 271,218 $ 17,484 $ (106) $ 288,596 Residential mortgage-backed 297,932 8,591 (54) 306,469 Corporate 727,678 50,067 (790) 776,955 Commercial mortgage and asset-backed 324,966 12,535 (1,667) 335,834 U.S. Treasury securities and obligations guaranteed by the U.S. government 100,742 2,852 — 103,594 Redeemable preferred stock 2,025 — (2) 2,023 Total fixed maturity securities, available-for-sale $ 1,724,561 $ 91,529 $ (2,619) $ 1,813,471 December 31, 2019 Fixed maturity securities: State and municipal $ 159,894 $ 7,949 $ (742) $ 167,101 Residential mortgage-backed 261,524 3,244 (622) 264,146 Corporate 611,304 21,306 (389) 632,221 Commercial mortgage and asset-backed 249,309 3,954 (806) 252,457 U.S. Treasury securities and obligations guaranteed by the U.S. government 114,477 1,229 (39) 115,667 Redeemable preferred stock 2,025 9 — 2,034 Total fixed maturity securities, available-for-sale $ 1,398,533 $ 37,691 $ (2,598) $ 1,433,626 |
Schedule of summary of available-for-sale investments by contractual maturity | The amortized cost and fair value of available-for-sale investments in fixed maturity securities at September 30, 2020 are summarized, by contractual maturity, as follows: Cost or Fair (in thousands) One year or less $ 104,099 $ 105,328 After one year through five years 456,660 483,155 After five years through ten years 306,679 330,510 After ten years 232,200 250,152 Residential mortgage-backed 297,932 306,469 Commercial mortgage and asset-backed 324,966 335,834 Redeemable preferred stock 2,025 2,023 Total $ 1,724,561 $ 1,813,471 |
Schedule of gross unrealized losses and fair value for available-for-sale securities | The following table shows the Company’s gross unrealized losses and fair value for available-for-sale securities aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position: Less Than 12 Months 12 Months or More Total Fair Gross Fair Gross Fair Gross (in thousands) September 30, 2020 Fixed maturity securities: State and municipal $ 17,967 $ (106) $ — $ — $ 17,967 $ (106) Residential mortgage-backed 14,601 (54) — — 14,601 (54) Corporate 41,182 (790) — — 41,182 (790) Commercial mortgage and asset-backed 23,964 (1,118) 38,344 (549) 62,308 (1,667) Redeemable preferred stock 2,023 (2) — — 2,023 (2) Total fixed maturity securities, available-for-sale $ 99,737 $ (2,070) $ 38,344 $ (549) $ 138,081 $ (2,619) December 31, 2019 Fixed maturity securities: State and municipal $ 30,028 $ (741) $ 667 $ (1) $ 30,695 $ (742) Residential mortgage-backed 23,632 (78) 37,363 (544) 60,995 (622) Corporate 45,550 (365) 9,933 (24) 55,483 (389) Commercial mortgage and asset-backed 46,434 (406) 56,720 (400) 103,154 (806) U.S. Treasury securities and obligations guaranteed by the U.S. government 8,474 (22) 7,168 (17) 15,642 (39) Total fixed maturity securities, available-for-sale $ 154,118 $ (1,612) $ 111,851 $ (986) $ 265,969 $ (2,598) |
Summary of net realized gains and losses on investments | The Company’s net realized and unrealized gains and losses on investments are summarized as follows: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Fixed maturity securities: Gross realized gains $ 386 $ 445 $ 906 $ 1,033 Gross realized losses — (9) (1) (494) 386 436 905 539 Bank loan participations: Gross realized gains 24 79 357 229 Gross realized losses (3,506) (6,056) (14,484) (9,056) Changes in fair values of bank loan participations 9,741 — (7,636) — 6,259 (5,977) (21,763) (8,827) Equity securities: Gross realized gains 13 11 13 11 Gross realized losses — (78) (170) (96) Changes in fair values of equity securities 2,374 3,251 (6,895) 8,700 2,387 3,184 (7,052) 8,615 Short-term investments and other: Gross realized gains 27 1 76 5 Gross realized losses — (1) (1) (1) Changes in fair values of short-term investments and other (130) — (50) — (103) — 25 4 Total $ 8,929 $ (2,357) $ (27,885) $ 331 |
Summary of net unrealized gains and losses on investments | The Company’s net realized and unrealized gains and losses on investments are summarized as follows: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Fixed maturity securities: Gross realized gains $ 386 $ 445 $ 906 $ 1,033 Gross realized losses — (9) (1) (494) 386 436 905 539 Bank loan participations: Gross realized gains 24 79 357 229 Gross realized losses (3,506) (6,056) (14,484) (9,056) Changes in fair values of bank loan participations 9,741 — (7,636) — 6,259 (5,977) (21,763) (8,827) Equity securities: Gross realized gains 13 11 13 11 Gross realized losses — (78) (170) (96) Changes in fair values of equity securities 2,374 3,251 (6,895) 8,700 2,387 3,184 (7,052) 8,615 Short-term investments and other: Gross realized gains 27 1 76 5 Gross realized losses — (1) (1) (1) Changes in fair values of short-term investments and other (130) — (50) — (103) — 25 4 Total $ 8,929 $ (2,357) $ (27,885) $ 331 |
Schedule of other invested assets | The Company invests selectively in private debt and equity opportunities. These investments, which together comprise the Company’s other invested assets, are primarily focused in renewable energy, limited partnerships, and bank holding companies. Carrying Value Investment Income September 30, December 31, Three Months Ended Nine Months Ended 2020 2019 2020 2019 2020 2019 (in thousands) Renewable energy LLCs (a) $ 30,520 $ 31,219 $ (526) $ 1,602 $ 320 $ 2,510 Renewable energy notes receivable ( b) — 8,750 547 328 814 984 Limited partnerships (c) 10,601 16,741 426 (631) 102 2,166 Bank holding companies (d) 4,500 4,500 86 85 258 257 Total other invested assets $ 45,621 $ 61,210 $ 533 $ 1,384 $ 1,494 $ 5,917 (a) The Company’s Corporate and Other segment owns equity interests ranging from 2.6% to 32.6% in various LLCs whose principal objective is capital appreciation and income generation from owning and operating renewable energy production facilities (wind and solar). The LLCs are managed by an entity for which two former directors served as officers, and the Company’s Chairman and Chief Executive Officer ("CEO") has invested in certain of these LLCs. The equity method is used to account for the Company’s LLC investments. Income for the LLCs primarily reflects adjustments to the carrying values of investments in renewable energy projects to their determined fair values. The fair value adjustments are included in revenues for the LLCs. Expenses for the LLCs are not significant and are comprised of administrative and interest expenses. The Company received cash distributions from these investments totaling $1.0 million and $687,000 in the nine months ended September 30, 2020 and 2019, respectively. (b) The Company's Corporate and Other segment has invested in notes receivable for renewable energy projects. At December 31, 2019, the Company held an $8.8 million note issued by an entity for which two of our former directors serve as officers . During the nine months ended September 30, 2020, the Company received the total principal balance of $8.8 million for the note issued. Interest on the note was fixed at 15.0%. Interest income on the note was $547,000 and $814,000 for the three and nine months ended September 30, 2020, respectively ($328,000 and $984,000 for the three and nine months ended September 30, 2019, respectively). (c) The Company owns investments in limited partnerships that invest in concentrated portfolios including publicly-traded small cap equities, loans of middle market private equity sponsored companies, and tranches of distressed home loans. Income f rom the partnerships is recognized under the equity method of accounting. The Company’s Corporate and Other segment held an investment in a limited partnership with a carrying value of $3.5 million at September 30, 2020. The Company recognized investment income of $100,000 and $182,000 on the investment for the nine months ended September 30, 2020 and 2019, respectively. The Company’s Excess and Surplus Lines segment holds investments in limited partnerships of $7.1 million at September 30, 2020. Investment income of $2,000 and $2.0 million was recognized on the investments for the nine months ended September 30, 2020 and 2019 , respectively. At September 30, 2020, the Company’s Excess and Surplus Lines segment has outstanding commitments to invest another $3.9 million in these limited partnerships. (d) The Company's Corporate and Other segment holds $4.5 million of subordinated notes issued by a bank holding company for which the Company’s Chairman and CEO was previously the Lead Independent Director and an investor and for which one of the Company’s directors was an investor and is currently a holder of the subordinated notes (the "Bank Holding Company"). Interest on the notes, which mature on August 12, 2023, is fixed at 7.6% per annum. Interest income on the notes was $257,000 for both nine month periods ended September 30, 2020 and 2019, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of gross carrying amounts and accumulated amortization | The gross carrying amounts and accumulated amortization for each major specifically identifiable intangible asset class were as follows: September 30, 2020 December 31, 2019 Life Gross Accumulated Gross Accumulated ($ in thousands) Intangible Assets Trademarks Indefinite $ 22,200 $ — $ 22,200 $ — Insurance licenses and authorities Indefinite 8,964 — 8,964 — Identifiable intangibles not subject to amortization 31,164 — 31,164 — Broker relationships 24.6 11,611 6,282 11,611 5,835 Identifiable intangible assets subject to amortization 11,611 6,282 11,611 5,835 $ 42,775 $ 6,282 $ 42,775 $ 5,835 |
Schedule of gross carrying amounts and accumulated amortization | The gross carrying amounts and accumulated amortization for each major specifically identifiable intangible asset class were as follows: September 30, 2020 December 31, 2019 Life Gross Accumulated Gross Accumulated ($ in thousands) Intangible Assets Trademarks Indefinite $ 22,200 $ — $ 22,200 $ — Insurance licenses and authorities Indefinite 8,964 — 8,964 — Identifiable intangibles not subject to amortization 31,164 — 31,164 — Broker relationships 24.6 11,611 6,282 11,611 5,835 Identifiable intangible assets subject to amortization 11,611 6,282 11,611 5,835 $ 42,775 $ 6,282 $ 42,775 $ 5,835 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of numerator and denominator of basic and diluted earnings per share | The following represents a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations contained in the condensed consolidated financial statements: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands, except share and per share amounts) Net income (loss) to shareholders $ 26,283 $ (25,167) $ 25,082 $ 17,868 Weighted average common shares outstanding: Basic 30,582,540 30,382,105 30,529,557 30,230,490 Common share equivalents 364,303 — 309,038 428,899 Diluted 30,946,843 30,382,105 30,838,595 30,659,389 Earnings (loss) per share: Basic $ 0.86 $ (0.83) $ 0.82 $ 0.59 Common share equivalents (0.01) — (0.01) (0.01) Diluted $ 0.85 $ (0.83) $ 0.81 $ 0.58 |
Reserve for Losses and Loss A_2
Reserve for Losses and Loss Adjustment Expenses (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Liability for Claims and Claims Adjustment Expense [Abstract] | |
Schedule of reconciliation of beginning and ending reserve balances for losses and loss adjustment expenses | The following table provides a reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses, net of reinsurance, to the gross amounts reported in the condensed consolidated balance sheets. Reinsurance recoverables on unpaid losses and loss adjustment expenses are presented gross of a $335,000 allowance for uncollectible reinsurance balances at June 30, 2020 and September 30, 2020. Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period $ 1,339,534 $ 1,237,930 $ 1,377,461 $ 1,194,088 Add: Incurred losses and loss adjustment expenses net of reinsurance: Current year 101,921 157,113 295,523 440,810 Prior years 4,234 56,971 6,234 60,254 Total incurred losses and loss and adjustment expenses 106,155 214,084 301,757 501,064 Deduct: Loss and loss adjustment expense payments net of reinsurance: Current year 6,950 21,021 13,558 46,275 Prior years 102,140 104,513 329,061 322,397 Total loss and loss adjustment expense payments 109,090 125,534 342,619 368,672 Reserve for losses and loss adjustment expenses net of reinsurance recoverables at end of period 1,336,599 1,326,480 1,336,599 1,326,480 Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period 770,150 614,827 770,150 614,827 Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period $ 2,106,749 $ 1,941,307 $ 2,106,749 $ 1,941,307 |
Other Comprehensive Income (Tab
Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of components of comprehensive income (loss) | The following table summarizes the components of other comprehensive income: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Unrealized gains arising during the period, before U.S. income taxes $ 6,274 $ 10,531 $ 54,722 $ 54,937 U.S. income taxes (881) (690) (6,441) (4,045) Unrealized gains arising during the period, net of U.S. income taxes 5,393 9,841 48,281 50,892 Less reclassification adjustment: Net realized investment gains 386 436 905 539 U.S. income taxes (32) (52) (57) (96) Reclassification adjustment for investment gains realized in net income 354 384 848 443 Other comprehensive income $ 5,039 $ 9,457 $ 47,433 $ 50,449 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of summary of company's segment results | The following table summarizes the Company’s segment results: Excess and Specialty Casualty Corporate Total (in thousands) Three Months Ended September 30, 2020 Gross written premiums $ 179,458 $ 112,589 $ 19,805 $ — $ 311,852 Net earned premiums 104,933 14,985 33,044 — 152,962 Underwriting profit (loss) of insurance segments 15,581 1,859 (689) — 16,751 Net investment income 3,751 807 10,033 368 14,959 Interest expense — — — 2,129 2,129 Segment revenues 112,800 16,843 47,385 437 177,465 Segment goodwill 181,831 — — — 181,831 Segment assets 2,243,065 877,619 1,806,341 57,328 4,984,353 Three Months Ended September 30, 2019 Gross written premiums $ 241,045 $ 100,459 $ 46,724 $ — $ 388,228 Net earned premiums 164,759 14,242 34,373 — 213,374 Underwriting (loss) profit of insurance segments (29,351) 837 (4,288) — (32,802) Net investment income 3,467 976 11,717 1,718 17,878 Interest expense — — — 2,594 2,594 Segment revenues 170,734 16,493 42,403 1,844 231,474 Segment goodwill 181,831 — — — 181,831 Segment assets 1,186,094 773,677 1,631,569 69,576 3,660,916 Nine Months Ended September 30, 2020 Gross written premiums $ 502,649 $ 303,831 $ 90,852 $ — $ 897,332 Net earned premiums 305,521 42,660 99,514 — 447,695 Underwriting profit (loss) of insurance segments 39,788 2,301 (3,119) — 38,970 Net investment income 15,028 2,547 32,171 1,399 51,145 Interest expense — — — 7,970 7,970 Segment revenues 309,972 45,386 117,459 1,681 474,498 Segment goodwill 181,831 — — — 181,831 Segment assets 2,243,065 877,619 1,806,341 57,328 4,984,353 Nine Months Ended September 30, 2019 Gross written premiums $ 687,871 $ 292,884 $ 114,810 $ — $ 1,095,565 Net earned premiums 457,352 39,688 105,600 — 602,640 Underwriting (loss) profit of insurance segments (439) 3,758 (4,061) — (742) Net investment income 13,240 2,791 34,875 3,938 54,844 Interest expense — — — 8,086 8,086 Segment revenues 481,745 45,169 134,731 4,330 665,975 Segment goodwill 181,831 — — — 181,831 Segment assets 1,186,094 773,677 1,631,569 69,576 3,660,916 |
Schedule of underwriting profit of operating segments by individual segment and reconciliation to consolidated income before taxes | The following table reconciles the underwriting profit (loss) of the operating segments by individual segment to consolidated income before taxes: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Underwriting profit (loss) of the insurance segments: Excess and Surplus Lines $ 15,581 $ (29,351) $ 39,788 $ (439) Specialty Admitted Insurance 1,859 837 2,301 3,758 Casualty Reinsurance (689) (4,288) (3,119) (4,061) Total underwriting profit (loss) of insurance segments 16,751 (32,802) 38,970 (742) Other operating expenses of the Corporate and Other segment (7,805) (7,302) (23,556) (22,641) Underwriting profit (loss) 8,946 (40,104) 15,414 (23,383) Net investment income 14,959 17,878 51,145 54,844 Net realized and unrealized gains (losses) on investments 8,929 (2,357) (27,885) 331 Amortization of intangible assets (149) (149) (447) (447) Other income and expenses 192 (91) (967) (223) Interest expense (2,129) (2,594) (7,970) (8,086) Income (loss) before taxes $ 30,748 $ (27,417) $ 29,290 $ 23,036 |
Other Operating Expenses and _2
Other Operating Expenses and Other Expenses (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Operating Expenses and Other Expenses [Abstract] | |
Schedule of other operating expenses | Other operating expenses consist of the following: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Amortization of policy acquisition costs $ 16,660 $ 21,258 $ 62,406 $ 63,029 Other underwriting expenses of the operating segments 13,759 13,132 47,280 46,617 Other operating expenses of the Corporate and Other segment 7,805 7,302 23,556 22,641 Total $ 38,224 $ 41,692 $ 133,242 $ 132,287 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets measured at fair value on a recurring basis | Assets measured at fair value on a recurring basis as of September 30, 2020 are summarized below: Fair Value Measurements Using Quoted Prices Significant Significant Total (in thousands) Fixed maturity securities, available-for-sale: State and municipal $ — $ 288,596 $ — $ 288,596 Residential mortgage-backed — 306,469 — 306,469 Corporate — 776,955 — 776,955 Commercial mortgage and asset-backed — 335,834 — 335,834 U.S. Treasury securities and obligations guaranteed by the U.S. government 103,130 464 — 103,594 Redeemable preferred stock — 2,023 — 2,023 Total fixed maturity securities, available-for-sale $ 103,130 $ 1,710,341 $ — $ 1,813,471 Equity securities: Preferred stock — 65,576 — 65,576 Common stock 9,305 5,015 — 14,320 Total equity securities $ 9,305 $ 70,591 $ — $ 79,896 Bank loan participations $ — $ 130,890 $ 308 $ 131,198 Short-term investments $ — $ 71,986 $ — $ 71,986 Assets measured at fair value on a recurring basis as of December 31, 2019 are summarized below: Fair Value Measurements Using Quoted Prices Significant Significant Total (in thousands) Fixed maturity securities, available-for-sale: State and municipal $ — $ 167,101 $ — $ 167,101 Residential mortgage-backed — 264,146 — 264,146 Corporate — 632,221 — 632,221 Commercial mortgage and asset-backed — 252,457 — 252,457 U.S. Treasury securities and obligations guaranteed by the U.S. government 115,173 494 — 115,667 Redeemable preferred stock — 2,034 — 2,034 Total fixed maturity securities, available-for-sale $ 115,173 $ 1,318,453 $ — $ 1,433,626 Equity securities: Preferred stock — 62,747 — 62,747 Common stock 14,669 3,276 43 17,988 Total equity securities $ 14,669 $ 66,023 $ 43 $ 80,735 Short-term investments $ — $ 156,925 $ — $ 156,925 |
Reconciliation of securities measured at fair value on a recurring basis using significant unobservable inputs | A reconciliation of the beginning and ending balances of available-for-sale fixed maturity securities, equity securities, and bank loan participations measured at fair value on a recurring basis (as a result of the fair value option effective January 1, 2020) using significant unobservable inputs (Level 3) is shown below: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) (in thousands) Beginning balance $ 312 $ 3,099 $ 43 $ 4,442 Transfers out of Level 3 (8) (3,010) (729) (7,238) Transfers in to Level 3 — — 358 3,010 Purchases — — 703 — Sales — — — — Maturities, calls and paydowns — — (17) — Amortization of discount — — 3 — Total gains or losses (realized/unrealized): — Included in earnings 4 (45) (53) (170) Included in other comprehensive income — — — — Ending balance $ 308 $ 44 $ 308 $ 44 |
Schedule of assets measured at fair value on a nonrecurring basis that were determined to be impaired | Bank loan participations held-for-investment that were determined to be impaired were written down to their fair value a t December 31, 2019 as shown below: Fair Value Measurements Using Quoted Prices Significant Significant Total (in thousands) December 31, 2019 Bank loan participations held-for-investment $ — $ — $ 6,949 $ 6,949 |
Schedule of carrying value and fair value | The carrying values and fair values of financial instruments are summarized below: September 30, 2020 December 31, 2019 Carrying Fair Value Carrying Fair Value (in thousands) Assets Fixed maturity securities, available-for-sale $ 1,813,471 $ 1,813,471 $ 1,433,626 $ 1,433,626 Equity securities 79,896 79,896 80,735 80,735 Bank loan participations 131,198 131,198 260,864 252,423 Cash and cash equivalents 139,969 139,969 206,912 206,912 Restricted cash equivalents 940,221 940,221 1,199,164 1,199,164 Short-term investments 71,986 71,986 156,925 156,925 Other invested assets – notes receivable 4,500 5,275 13,250 18,756 Liabilities Senior debt 217,300 204,601 158,300 158,043 Junior subordinated debt 104,055 106,203 104,055 122,193 |
Capital Stock and Equity Awar_2
Capital Stock and Equity Awards (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of dividends | The Company declared the following dividends during the first nine months of 2020 and 2019: Date of Declaration Dividend per Common Share Payable to Shareholders of Record on Payment Date Total Amount (thousands) 2020 February 19, 2020 $ 0.30 March 16, 2020 March 31, 2020 $ 9,269 April 28, 2020 $ 0.30 June 15, 2020 June 30, 2020 $ 9,271 July 28, 2020 $ 0.30 September 14, 2020 September 30, 2020 $ 9,292 $ 0.90 $ 27,832 2019 February 20, 2019 $ 0.30 March 11, 2019 March 29, 2019 $ 9,146 April 30, 2019 $ 0.30 June 10, 2019 June 28, 2019 $ 9,205 July 30, 2019 $ 0.30 September 16, 2019 September 30, 2019 $ 9,231 $ 0.90 $ 27,582 |
Schedule of summary of option activity | The following table summarizes option activity: Nine Months Ended September 30, 2020 2019 Shares Weighted- Shares Weighted- Outstanding: Beginning of period 643,851 $ 30.41 1,115,324 $ 29.02 Granted — $ — — $ — Exercised (79,615) $ 31.77 (450,514) $ 26.68 Forfeited — $ — (12,058) $ 36.84 End of period 564,236 $ 30.22 652,752 $ 30.50 Exercisable, end of period 564,236 $ 30.22 599,241 $ 29.44 |
Schedule of summary of RSU activity | The following table summarizes RSU activity: Nine Months Ended September 30, 2020 2019 Shares Weighted- Shares Weighted- Unvested, beginning of period 340,368 $ 41.50 300,142 $ 39.22 Granted 197,518 $ 43.77 197,078 $ 42.56 Vested (156,434) $ 41.50 (111,212) $ 39.90 Forfeited (16,846) $ 42.17 (22,445) $ 41.32 Unvested, end of period 364,606 $ 42.70 363,563 $ 40.69 |
Schedule of summary of share based compensation expense and related tax benefit | Share based compensation expense is recognized on a straight line basis over the vesting period. The amount of expense and related tax benefit is summarized below: Three Months Ended Nine Months Ended 2020 2019 2020 2019 (in thousands) Share based compensation expense $ 2,097 $ 1,779 $ 5,874 $ 5,263 U.S. tax benefit on share based compensation expense 287 211 786 631 |
Accounting Policies - Narrative
Accounting Policies - Narrative (Details) $ in Thousands | 9 Months Ended | ||||||
Sep. 30, 2020USD ($)company | Sep. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Effective U.S. federal income tax expense rate | 14.40% | 22.40% | |||||
Shareholders' equity | $ 821,406 | $ 768,969 | $ 795,711 | $ 778,581 | $ 791,050 | $ 709,241 | |
Cumulative Effect, Period of Adoption, Adjustment | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Shareholders' equity | 8,280 | ||||||
VIE, not primary beneficiary | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Investment in variable interest entities | $ 30,500 | 31,200 | |||||
UNITED STATES | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Number of insurance companies | company | 5 | ||||||
BERMUDA | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Number of insurance companies | company | 2 | ||||||
ASU 2019-05 | Cumulative Effect, Period of Adoption, Adjustment | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Bank loan participations | $ (8,400) | (8,400) | |||||
Shareholders' equity | (7,827) | ||||||
ASU 2016-13 | Cumulative Effect, Period of Adoption, Adjustment | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Shareholders' equity | (265) | ||||||
Retained Earnings | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Shareholders' equity | $ 78,761 | $ 78,344 | $ 61,770 | 89,586 | $ 112,729 | 79,753 | |
Retained Earnings | Cumulative Effect, Period of Adoption, Adjustment | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Shareholders' equity | $ 8,280 | ||||||
Retained Earnings | ASU 2019-05 | Cumulative Effect, Period of Adoption, Adjustment | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Shareholders' equity | (7,800) | (7,827) | |||||
Retained Earnings | ASU 2016-13 | Cumulative Effect, Period of Adoption, Adjustment | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Shareholders' equity | $ (265) | $ (265) |
Investments - Schedule of Avail
Investments - Schedule of Available-for-Sale Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Total fixed maturity securities, Cost or Amortized Cost | $ 1,724,561 | $ 1,398,533 |
Fixed maturity securities, available-for-sale | 1,813,471 | 1,433,626 |
Fixed maturity securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total fixed maturity securities, Cost or Amortized Cost | 1,398,533 | |
Total investments available-for-sale, Gross Unrealized Gains | 91,529 | 37,691 |
Total investments available-for-sale, Gross Unrealized Losses | (2,619) | (2,598) |
Fixed maturity securities, available-for-sale | 1,813,471 | 1,433,626 |
State and municipal | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total fixed maturity securities, Cost or Amortized Cost | 271,218 | 159,894 |
Total investments available-for-sale, Gross Unrealized Gains | 17,484 | 7,949 |
Total investments available-for-sale, Gross Unrealized Losses | (106) | (742) |
Fixed maturity securities, available-for-sale | 288,596 | 167,101 |
Residential mortgage-backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total fixed maturity securities, Cost or Amortized Cost | 297,932 | 261,524 |
Total investments available-for-sale, Gross Unrealized Gains | 8,591 | 3,244 |
Total investments available-for-sale, Gross Unrealized Losses | (54) | (622) |
Fixed maturity securities, available-for-sale | 306,469 | 264,146 |
Corporate | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total fixed maturity securities, Cost or Amortized Cost | 727,678 | 611,304 |
Total investments available-for-sale, Gross Unrealized Gains | 50,067 | 21,306 |
Total investments available-for-sale, Gross Unrealized Losses | (790) | (389) |
Fixed maturity securities, available-for-sale | 776,955 | 632,221 |
Commercial mortgage and asset-backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total fixed maturity securities, Cost or Amortized Cost | 324,966 | 249,309 |
Total investments available-for-sale, Gross Unrealized Gains | 12,535 | 3,954 |
Total investments available-for-sale, Gross Unrealized Losses | (1,667) | (806) |
Fixed maturity securities, available-for-sale | 335,834 | 252,457 |
U.S. Treasury securities and obligations guaranteed by the U.S. government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total fixed maturity securities, Cost or Amortized Cost | 100,742 | 114,477 |
Total investments available-for-sale, Gross Unrealized Gains | 2,852 | 1,229 |
Total investments available-for-sale, Gross Unrealized Losses | 0 | (39) |
Fixed maturity securities, available-for-sale | 103,594 | 115,667 |
Redeemable preferred stock | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total fixed maturity securities, Cost or Amortized Cost | 2,025 | 2,025 |
Total investments available-for-sale, Gross Unrealized Gains | 0 | 9 |
Total investments available-for-sale, Gross Unrealized Losses | (2) | 0 |
Fixed maturity securities, available-for-sale | $ 2,023 | $ 2,034 |
Investments - Schedule of Contr
Investments - Schedule of Contract Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Cost or Amortized Cost | ||
One year or less | $ 104,099 | |
After one year through five years | 456,660 | |
After five years through ten years | 306,679 | |
After ten years | 232,200 | |
Residential mortgage-backed | 297,932 | |
Commercial mortgage and asset-backed | 324,966 | |
Redeemable preferred stock | 2,025 | |
Total fixed maturity securities, Cost or Amortized Cost | 1,724,561 | $ 1,398,533 |
Fair Value | ||
One year or less | 105,328 | |
After one year through five years | 483,155 | |
After five years through ten years | 330,510 | |
After ten years | 250,152 | |
Residential mortgage-backed | 306,469 | |
Commercial mortgage and asset-backed | 335,834 | |
Redeemable preferred stock | 2,023 | |
Total investments available-for-sale, Fair Value | $ 1,813,471 | $ 1,433,626 |
Investments - Schedule of Gross
Investments - Schedule of Gross Unrealized Losses and Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturity securities, fair value | $ 138,100 | |
Fixed maturity securities, gross unrealized losses | (2,600) | |
Fixed maturity securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturity securities, less than 12 months, fair value | 99,737 | $ 154,118 |
Fixed maturity securities, less than 12 months, gross unrealized losses | (2,070) | (1,612) |
Fixed maturity securities, 12 months or more, fair value | 38,344 | 111,851 |
Fixed maturity securities, 12 months or more, gross unrealized losses | (549) | (986) |
Fixed maturity securities, fair value | 138,081 | 265,969 |
Fixed maturity securities, gross unrealized losses | (2,619) | (2,598) |
State and municipal | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturity securities, less than 12 months, fair value | 17,967 | 30,028 |
Fixed maturity securities, less than 12 months, gross unrealized losses | (106) | (741) |
Fixed maturity securities, 12 months or more, fair value | 0 | 667 |
Fixed maturity securities, 12 months or more, gross unrealized losses | 0 | (1) |
Fixed maturity securities, fair value | 17,967 | 30,695 |
Fixed maturity securities, gross unrealized losses | (106) | (742) |
Residential mortgage-backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturity securities, less than 12 months, fair value | 14,601 | 23,632 |
Fixed maturity securities, less than 12 months, gross unrealized losses | (54) | (78) |
Fixed maturity securities, 12 months or more, fair value | 0 | 37,363 |
Fixed maturity securities, 12 months or more, gross unrealized losses | 0 | (544) |
Fixed maturity securities, fair value | 14,601 | 60,995 |
Fixed maturity securities, gross unrealized losses | (54) | (622) |
Corporate | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturity securities, less than 12 months, fair value | 41,182 | 45,550 |
Fixed maturity securities, less than 12 months, gross unrealized losses | (790) | (365) |
Fixed maturity securities, 12 months or more, fair value | 0 | 9,933 |
Fixed maturity securities, 12 months or more, gross unrealized losses | 0 | (24) |
Fixed maturity securities, fair value | 41,182 | 55,483 |
Fixed maturity securities, gross unrealized losses | (790) | (389) |
Commercial mortgage and asset-backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturity securities, less than 12 months, fair value | 23,964 | 46,434 |
Fixed maturity securities, less than 12 months, gross unrealized losses | (1,118) | (406) |
Fixed maturity securities, 12 months or more, fair value | 38,344 | 56,720 |
Fixed maturity securities, 12 months or more, gross unrealized losses | (549) | (400) |
Fixed maturity securities, fair value | 62,308 | 103,154 |
Fixed maturity securities, gross unrealized losses | (1,667) | (806) |
U.S. Treasury securities and obligations guaranteed by the U.S. government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturity securities, less than 12 months, fair value | 8,474 | |
Fixed maturity securities, less than 12 months, gross unrealized losses | (22) | |
Fixed maturity securities, 12 months or more, fair value | 7,168 | |
Fixed maturity securities, 12 months or more, gross unrealized losses | (17) | |
Fixed maturity securities, fair value | 15,642 | |
Fixed maturity securities, gross unrealized losses | $ (39) | |
Redeemable preferred stock | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturity securities, less than 12 months, fair value | 2,023 | |
Fixed maturity securities, less than 12 months, gross unrealized losses | (2) | |
Fixed maturity securities, 12 months or more, fair value | 0 | |
Fixed maturity securities, 12 months or more, gross unrealized losses | 0 | |
Fixed maturity securities, fair value | 2,023 | |
Fixed maturity securities, gross unrealized losses | $ (2) |
Investments - Narrative (Detail
Investments - Narrative (Details) $ in Thousands | Jan. 01, 2020USD ($) | Sep. 30, 2020USD ($)issuer | Sep. 30, 2019USD ($)issuerloan | Mar. 31, 2019USD ($)security | Sep. 30, 2020USD ($)issuer | Sep. 30, 2019USD ($)issuerloan | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($)issuerloan | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Gain (Loss) on Securities [Line Items] | ||||||||||
Number of issuers | issuer | 27 | 27 | ||||||||
Total fair value | $ 138,100 | $ 138,100 | ||||||||
Gross unrealized losses | 2,600 | 2,600 | ||||||||
Fixed maturity securities, available-for-sale | 1,813,471 | 1,813,471 | $ 1,433,626 | |||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | |||||||||
Shareholders' equity | 821,406 | $ 768,969 | 821,406 | $ 768,969 | $ 795,711 | $ 778,581 | $ 791,050 | $ 709,241 | ||
Bank loan participations | 131,198 | 131,198 | ||||||||
Unpaid principal balance | 151,800 | 151,800 | ||||||||
Net investment income | 14,959 | 17,878 | 51,145 | 54,844 | ||||||
Changes in fair values of bank loan participations | 9,741 | $ 0 | (7,636) | $ 0 | ||||||
Losses due to credit-related impairments | 437 | 8,200 | ||||||||
Number of impaired loans | loan | 5 | 5 | 7 | |||||||
Carrying value of impaired loans | $ 6,400 | $ 6,400 | $ 6,900 | |||||||
Unpaid principal on impaired loans | 12,300 | 12,300 | 14,300 | |||||||
Allowance for credit losses on impaired loans | 5,900 | 5,900 | 7,200 | |||||||
Average recorded investment in impaired bank loans | 3,200 | |||||||||
Investment income during period loans were impaired | (23) | |||||||||
Net realized gain (loss) on changes in fair value of impaired bank loans | (5,900) | (7,700) | ||||||||
Bank Loan Participations | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Net investment income | 2,400 | 9,700 | ||||||||
Retained Earnings | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Shareholders' equity | 78,761 | $ 78,344 | 78,761 | $ 78,344 | $ 61,770 | 89,586 | $ 112,729 | 79,753 | ||
Cumulative Effect, Period of Adoption, Adjustment | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Shareholders' equity | 8,280 | |||||||||
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Shareholders' equity | $ 8,280 | |||||||||
Fixed maturity securities | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Total fair value | 138,081 | 138,081 | 265,969 | |||||||
Gross unrealized losses | 2,619 | 2,619 | 2,598 | |||||||
Fixed maturity securities, available-for-sale | 1,813,471 | 1,813,471 | 1,433,626 | |||||||
Aggregate net unrealized gain | $ 91,529 | $ 91,529 | $ 37,691 | |||||||
Number of impaired fixed maturities | security | 3 | |||||||||
Impairment losses | $ 271 | |||||||||
Bank Loan Portfolio | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Number of issuers with impaired loans | issuer | 6 | |||||||||
Loans from Issuer Experiencing Liquidity Concerns | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Number of impaired loans | loan | 2 | 2 | 2 | |||||||
Number of issuers with impaired loans | issuer | 1 | 1 | 1 | |||||||
Allowance for credit losses on impaired loans | $ 4,200 | $ 4,200 | $ 5,100 | |||||||
BBB- or better | Fixed maturity securities | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Percentage of available for sale securities | 99.50% | 99.50% | ||||||||
Below BBB- | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Fixed maturity securities, available-for-sale | $ 8,800 | $ 8,800 | ||||||||
Aggregate net unrealized gain | 56 | 56 | ||||||||
ASU 2019-05 | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201905Member | |||||||||
ASU 2019-05 | Cumulative Effect, Period of Adoption, Adjustment | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Bank loan participations | $ (8,400) | (8,400) | ||||||||
Shareholders' equity | (7,827) | |||||||||
ASU 2019-05 | Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Shareholders' equity | $ (7,800) | (7,827) | ||||||||
ASU 2016-13 | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | |||||||||
ASU 2016-13 | Cumulative Effect, Period of Adoption, Adjustment | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Shareholders' equity | (265) | |||||||||
ASU 2016-13 | Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Shareholders' equity | $ (265) | $ (265) | ||||||||
Bank Holding Company | ||||||||||
Gain (Loss) on Securities [Line Items] | ||||||||||
Carrying value of collateralized loan obligation held | $ 677 | $ 677 |
Investments - Summary of Realiz
Investments - Summary of Realized Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Investments [Abstract] | ||||
Fixed maturity securities, gross realized gains | $ 386 | $ 445 | $ 906 | $ 1,033 |
Fixed maturity securities, gross realized losses | 0 | (9) | (1) | (494) |
Fixed maturity securities | 386 | 436 | 905 | 539 |
Bank loan participations, gross realized gains | 24 | 79 | 357 | 229 |
Bank loan participations, gross realized losses | (3,506) | (6,056) | (14,484) | (9,056) |
Changes in fair values of bank loan participations | 9,741 | 0 | (7,636) | 0 |
Bank loan participations | 6,259 | (5,977) | (21,763) | (8,827) |
Equity securities, gross realized gain | 13 | 11 | 13 | 11 |
Equity securities, gross realized losses | 0 | (78) | (170) | (96) |
Changes in fair values of equity securities | 2,374 | 3,251 | (6,895) | 8,700 |
Equity securities | 2,387 | 3,184 | (7,052) | 8,615 |
Short-term investments and other, gross realized gains | 27 | 1 | 76 | 5 |
Short-term investments and other, gross realized losses | 0 | (1) | (1) | (1) |
Changes in fair values of short-term investments and other | (130) | 0 | (50) | 0 |
Short-term investments and other | (103) | 0 | 25 | 4 |
Total | $ 8,929 | $ (2,357) | $ (27,885) | $ 331 |
Investments - Summary of Privat
Investments - Summary of Private Debt and Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Net Investment Income [Line Items] | |||||
Total other invested assets | $ 45,621 | $ 45,621 | $ 61,210 | ||
Investment income | 533 | $ 1,384 | 1,494 | $ 5,917 | |
Renewable energy LLCs | |||||
Net Investment Income [Line Items] | |||||
Total other invested assets | 30,520 | 30,520 | 31,219 | ||
Investment income | (526) | 1,602 | 320 | 2,510 | |
Renewable energy notes receivable | |||||
Net Investment Income [Line Items] | |||||
Total other invested assets | 0 | 0 | 8,750 | ||
Investment income | $ 547 | 328 | 814 | 984 | |
Repayment received | $ 8,800 | ||||
Rate of interest | 15.00% | 15.00% | |||
Limited partnerships | |||||
Net Investment Income [Line Items] | |||||
Total other invested assets | $ 10,601 | $ 10,601 | 16,741 | ||
Investment income | 426 | (631) | 102 | 2,166 | |
Bank holding companies | |||||
Net Investment Income [Line Items] | |||||
Total other invested assets | 4,500 | 4,500 | $ 4,500 | ||
Investment income | $ 86 | $ 85 | 258 | 257 | |
Interest income | $ 257 | 257 | |||
Bank Holding Company | |||||
Net Investment Income [Line Items] | |||||
Rate of interest | 7.60% | 7.60% | |||
Corporate and Other | Limited partnerships | |||||
Net Investment Income [Line Items] | |||||
Carrying values of limited partnerships held | $ 3,500 | $ 3,500 | |||
Investment income (loss) | (100) | 182 | |||
Corporate and Other | Investment in LLC | |||||
Net Investment Income [Line Items] | |||||
Cash distributions from LLCs | 1,000 | 687 | |||
Corporate and Other | Bank Holding Company | |||||
Net Investment Income [Line Items] | |||||
Investment in private subordinated notes | 4,500 | 4,500 | |||
Excess and Surplus Lines | Limited partnerships | |||||
Net Investment Income [Line Items] | |||||
Carrying values of limited partnerships held | 7,100 | 7,100 | |||
Investment income (loss) | 2 | $ 2,000 | |||
Outstanding commitments to invest | $ 3,900 | $ 3,900 | |||
Minimum | Corporate and Other | Investment in LLC | |||||
Net Investment Income [Line Items] | |||||
Ownership percentage | 2.60% | 2.60% | |||
Maximum | Corporate and Other | Investment in LLC | |||||
Net Investment Income [Line Items] | |||||
Ownership percentage | 32.60% | 32.60% |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 11, 2007 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 181,831 | $ 181,831 | $ 181,831 | |
James River Group, Inc. | ||||
Business Acquisition [Line Items] | ||||
Percentage of outstanding shares | 100.00% |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Acquired Intangible Assets [Line Items] | ||
Identifiable intangibles not subject to amortization | $ 31,164 | $ 31,164 |
Identifiable intangible assets subject to amortization | ||
Gross Carrying Amount | 11,611 | 11,611 |
Accumulated Amortization | 6,282 | 5,835 |
Total Intangible Assets, Gross | 42,775 | 42,775 |
Broker relationships | ||
Identifiable intangible assets subject to amortization | ||
Gross Carrying Amount | 11,611 | 11,611 |
Accumulated Amortization | $ 6,282 | 5,835 |
Life | 24 years 7 months 6 days | |
Trademarks | ||
Acquired Intangible Assets [Line Items] | ||
Identifiable intangibles not subject to amortization | $ 22,200 | 22,200 |
Insurance licenses and authorities | ||
Acquired Intangible Assets [Line Items] | ||
Identifiable intangibles not subject to amortization | $ 8,964 | $ 8,964 |
Earnings Per Share - Basic and
Earnings Per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) to shareholders | $ 26,283 | $ (25,167) | $ 25,082 | $ 17,868 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 30,582,540 | 30,382,105 | 30,529,557 | 30,230,490 |
Common share equivalents (in shares) | 364,303 | 0 | 309,038 | 428,899 |
Diluted (in shares) | 30,946,843 | 30,382,105 | 30,838,595 | 30,659,389 |
Earnings (loss) per share: | ||||
Basic (in dollars per share) | $ 0.86 | $ (0.83) | $ 0.82 | $ 0.59 |
Common share equivalents (in dollars per share) | (0.01) | 0 | (0.01) | (0.01) |
Diluted (in dollars per share) | $ 0.85 | $ (0.83) | $ 0.81 | $ 0.58 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) | 3 Months Ended |
Sep. 30, 2019shares | |
Stock options and restricted share units ("RSU's") | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Number of securities excluded from the calculations of diluted earnings per share | 431,137 |
Reserve for Losses and Loss A_3
Reserve for Losses and Loss Adjustment Expenses - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | |
Liability for Claims and Claims Adjustment Expense [Abstract] | |||||
Allowance for uncollectible reinsurance balances | $ 335 | $ 335 | $ 335 | ||
Favorable development on prior year loss reserves | |||||
Reserve for losses and loss adjustment expenses | (4,234) | $ (56,971) | (6,234) | $ (60,254) | |
Excess and Surplus Lines | |||||
Favorable development on prior year loss reserves | |||||
Reserve for losses and loss adjustment expenses | 27 | (50,000) | 2,800 | (51,200) | |
Specialty Admitted Insurance | |||||
Favorable development on prior year loss reserves | |||||
Reserve for losses and loss adjustment expenses | 2,000 | 1,000 | 4,000 | 4,300 | |
Casualty Reinsurance | |||||
Favorable development on prior year loss reserves | |||||
Reserve for losses and loss adjustment expenses | $ (6,200) | $ (7,900) | $ (13,100) | $ (13,300) |
Reserve for Losses and Loss A_4
Reserve for Losses and Loss Adjustment Expenses - Reconciliation of Losses and Loss Adjustment Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | |
Liability for Unpaid Claims and Claims Adjustment Expense, Period Increase (Decrease) [Abstract] | |||||||
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period | $ 1,339,534 | $ 1,237,930 | $ 1,377,461 | $ 1,194,088 | |||
Add: Incurred losses and loss adjustment expenses net of reinsurance: | |||||||
Current year | 101,921 | 157,113 | 295,523 | 440,810 | |||
Prior years | 4,234 | 56,971 | 6,234 | 60,254 | |||
Total incurred losses and loss and adjustment expenses | 106,155 | 214,084 | 301,757 | 501,064 | |||
Deduct: Loss and loss adjustment expense payments net of reinsurance: | |||||||
Current year | 6,950 | 21,021 | 13,558 | 46,275 | |||
Prior years | 102,140 | 104,513 | 329,061 | 322,397 | |||
Total loss and loss adjustment expense payments | 109,090 | 125,534 | 342,619 | 368,672 | |||
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at end of period | $ 1,339,534 | $ 1,237,930 | $ 1,377,461 | $ 1,194,088 | $ 1,336,599 | $ 1,377,461 | $ 1,326,480 |
Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period | 770,150 | 614,827 | |||||
Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period | $ 2,106,749 | $ 2,045,506 | $ 1,941,307 |
Other Comprehensive Income - Su
Other Comprehensive Income - Summary of Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Unrealized gains arising during the period, before U.S. income taxes | $ 6,274 | $ 10,531 | $ 54,722 | $ 54,937 |
U.S. income taxes | (881) | (690) | (6,441) | (4,045) |
Unrealized gains arising during the period, net of U.S. income taxes | 5,393 | 9,841 | 48,281 | 50,892 |
Less reclassification adjustment: | ||||
Net realized investment gains | 386 | 436 | 905 | 539 |
U.S. income taxes | (32) | (52) | (57) | (96) |
Reclassification adjustment for investment gains realized in net income | 354 | 384 | 848 | 443 |
Other comprehensive income | $ 5,039 | $ 9,457 | $ 47,433 | $ 50,449 |
Other Comprehensive Income - Na
Other Comprehensive Income - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Fixed maturity securities | $ 386 | $ 436 | $ 905 | $ 539 |
Bank loan participations | 6,259 | (5,977) | (21,763) | (8,827) |
Net realized and unrealized gains (losses) on investments in equity securities | $ 2,400 | $ 3,200 | $ (7,100) | $ 8,600 |
Contingent Liabilities - Narrat
Contingent Liabilities - Narrative (Details) | Sep. 30, 2020USD ($)credit_facility | Dec. 31, 2019USD ($) |
Contingent Liabilities [Line Items] | ||
Amount of collateral held | $ 940,221,000 | $ 1,199,164,000 |
JRG Reinsurance Company, Ltd. | ||
Contingent Liabilities [Line Items] | ||
Number of credit facilities | credit_facility | 3 | |
JRG Reinsurance Company, Ltd. | Letter of credit 75 Million | ||
Contingent Liabilities [Line Items] | ||
Letters of credit facility, amount | $ 75,000,000 | |
Amount of letters of credit issued | 12,200,000 | |
Assets deposited for securing letters of credit | 25,200,000 | |
JRG Reinsurance Company, Ltd. | Letter of credit 102.5 Million | ||
Contingent Liabilities [Line Items] | ||
Letters of credit facility, amount | 102,500,000 | |
Amount of letters of credit issued | 76,000,000 | |
Assets deposited for securing letters of credit | 96,700,000 | |
JRG Reinsurance Company, Ltd. | Letter of credit 100 Million | ||
Contingent Liabilities [Line Items] | ||
Amount of letters of credit issued | 17,500,000 | |
Assets deposited for securing letters of credit | 28,300,000 | |
Line of credit (up to) | 100,000,000 | |
Third-party Reinsureds | JRG Reinsurance Company, Ltd. | ||
Contingent Liabilities [Line Items] | ||
Collateral trust arrangement amount | 302,100,000 | |
Raiser | ||
Contingent Liabilities [Line Items] | ||
Amount of collateral held | $ 940,200,000 |
Segment Information - Narrative
Segment Information - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reportable segments | segment | 4 | |||
Gross fee income | $ | $ 363 | $ 2,300 | $ 2,700 | $ 7,300 |
Segment Information - Summary o
Segment Information - Summary of Segment Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||||
Gross written premiums | $ 311,852 | $ 388,228 | $ 897,332 | $ 1,095,565 | |
Net earned premiums | 152,962 | 213,374 | 447,695 | 602,640 | |
Underwriting profit of insurance segments | 16,751 | (32,802) | 38,970 | (742) | |
Net investment income | 14,959 | 17,878 | 51,145 | 54,844 | |
Interest expense | 2,129 | 2,594 | 7,970 | 8,086 | |
Total revenues | 177,465 | 231,474 | 474,498 | 665,975 | |
Segment goodwill | 181,831 | 181,831 | 181,831 | 181,831 | $ 181,831 |
Segment assets | 4,984,353 | 3,660,916 | 4,984,353 | 3,660,916 | $ 5,024,405 |
Excess and Surplus Lines | |||||
Segment Reporting Information [Line Items] | |||||
Gross written premiums | 179,458 | 241,045 | 502,649 | 687,871 | |
Net earned premiums | 104,933 | 164,759 | 305,521 | 457,352 | |
Underwriting profit of insurance segments | 15,581 | (29,351) | 39,788 | (439) | |
Net investment income | 3,751 | 3,467 | 15,028 | 13,240 | |
Interest expense | 0 | 0 | 0 | 0 | |
Total revenues | 112,800 | 170,734 | 309,972 | 481,745 | |
Segment goodwill | 181,831 | 181,831 | 181,831 | 181,831 | |
Segment assets | 2,243,065 | 1,186,094 | 2,243,065 | 1,186,094 | |
Specialty Admitted Insurance | |||||
Segment Reporting Information [Line Items] | |||||
Gross written premiums | 112,589 | 100,459 | 303,831 | 292,884 | |
Net earned premiums | 14,985 | 14,242 | 42,660 | 39,688 | |
Underwriting profit of insurance segments | 1,859 | 837 | 2,301 | 3,758 | |
Net investment income | 807 | 976 | 2,547 | 2,791 | |
Interest expense | 0 | 0 | 0 | 0 | |
Total revenues | 16,843 | 16,493 | 45,386 | 45,169 | |
Segment goodwill | 0 | 0 | 0 | 0 | |
Segment assets | 877,619 | 773,677 | 877,619 | 773,677 | |
Casualty Reinsurance | |||||
Segment Reporting Information [Line Items] | |||||
Gross written premiums | 19,805 | 46,724 | 90,852 | 114,810 | |
Net earned premiums | 33,044 | 34,373 | 99,514 | 105,600 | |
Underwriting profit of insurance segments | (689) | (4,288) | (3,119) | (4,061) | |
Net investment income | 10,033 | 11,717 | 32,171 | 34,875 | |
Interest expense | 0 | 0 | 0 | 0 | |
Total revenues | 47,385 | 42,403 | 117,459 | 134,731 | |
Segment goodwill | 0 | 0 | 0 | 0 | |
Segment assets | 1,806,341 | 1,631,569 | 1,806,341 | 1,631,569 | |
Corporate and Other | |||||
Segment Reporting Information [Line Items] | |||||
Gross written premiums | 0 | 0 | 0 | 0 | |
Net earned premiums | 0 | 0 | 0 | 0 | |
Underwriting profit of insurance segments | 0 | 0 | 0 | 0 | |
Net investment income | 368 | 1,718 | 1,399 | 3,938 | |
Interest expense | 2,129 | 2,594 | 7,970 | 8,086 | |
Total revenues | 437 | 1,844 | 1,681 | 4,330 | |
Segment goodwill | 0 | 0 | 0 | 0 | |
Segment assets | $ 57,328 | $ 69,576 | $ 57,328 | $ 69,576 |
Segment Information - Reconcili
Segment Information - Reconciliation of Operating Segments by Individual Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Total underwriting profit (loss) of insurance segments | $ 16,751 | $ (32,802) | $ 38,970 | $ (742) |
Other operating expenses of the Corporate and Other segment | (7,805) | (7,302) | (23,556) | (22,641) |
Underwriting profit (loss) | 8,946 | (40,104) | 15,414 | (23,383) |
Net investment income | 14,959 | 17,878 | 51,145 | 54,844 |
Net realized and unrealized gains (losses) on investments | 8,929 | (2,357) | (27,885) | 331 |
Amortization of intangible assets | (149) | (149) | (447) | (447) |
Other income and expenses | 192 | (91) | (967) | (223) |
Interest expense | (2,129) | (2,594) | (7,970) | (8,086) |
Income (loss) before taxes | 30,748 | (27,417) | 29,290 | 23,036 |
Excess and Surplus Lines | ||||
Segment Reporting Information [Line Items] | ||||
Total underwriting profit (loss) of insurance segments | 15,581 | (29,351) | 39,788 | (439) |
Net investment income | 3,751 | 3,467 | 15,028 | 13,240 |
Interest expense | 0 | 0 | 0 | 0 |
Specialty Admitted Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Total underwriting profit (loss) of insurance segments | 1,859 | 837 | 2,301 | 3,758 |
Net investment income | 807 | 976 | 2,547 | 2,791 |
Interest expense | 0 | 0 | 0 | 0 |
Casualty Reinsurance | ||||
Segment Reporting Information [Line Items] | ||||
Total underwriting profit (loss) of insurance segments | (689) | (4,288) | (3,119) | (4,061) |
Net investment income | 10,033 | 11,717 | 32,171 | 34,875 |
Interest expense | $ 0 | $ 0 | $ 0 | $ 0 |
Other Operating Expenses and _3
Other Operating Expenses and Other Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Other Operating Expenses and Other Expenses [Abstract] | ||||
Amortization of policy acquisition costs | $ 16,660 | $ 21,258 | $ 62,406 | $ 63,029 |
Other underwriting expenses of the operating segments | 13,759 | 13,132 | 47,280 | 46,617 |
Other operating expenses of the Corporate and Other segment | 7,805 | 7,302 | 23,556 | 22,641 |
Total | 38,224 | 41,692 | 133,242 | 132,287 |
Other expenses | $ 60 | $ 372 | $ 1,792 | $ 1,055 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Assets Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 |
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | $ 1,813,471 | $ 1,433,626 | |
Equity securities: | |||
Total equity securities | 79,896 | 80,735 | |
Bank loan participations | 131,198 | ||
Fixed maturity securities | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 1,813,471 | 1,433,626 | |
State and municipal | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 288,596 | 167,101 | |
Residential mortgage-backed | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 306,469 | 264,146 | |
Corporate | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 776,955 | 632,221 | |
Commercial mortgage and asset-backed | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 335,834 | 252,457 | |
U.S. Treasury securities and obligations guaranteed by the U.S. government | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 103,594 | 115,667 | |
Redeemable preferred stock | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 2,023 | 2,034 | |
Recurring basis | |||
Equity securities: | |||
Bank loan participations | 131,198 | ||
Short-term investments | 71,986 | 156,925 | |
Recurring basis | Fixed maturity securities | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 1,813,471 | 1,433,626 | |
Recurring basis | State and municipal | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 288,596 | 167,101 | |
Recurring basis | Residential mortgage-backed | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 306,469 | 264,146 | |
Recurring basis | Corporate | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 776,955 | 632,221 | |
Recurring basis | Commercial mortgage and asset-backed | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 335,834 | 252,457 | |
Recurring basis | U.S. Treasury securities and obligations guaranteed by the U.S. government | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 103,594 | 115,667 | |
Recurring basis | Redeemable preferred stock | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 2,023 | 2,034 | |
Recurring basis | Equity securities | |||
Equity securities: | |||
Total equity securities | 79,896 | 80,735 | |
Recurring basis | Preferred stock | |||
Equity securities: | |||
Total equity securities | 65,576 | 62,747 | |
Recurring basis | Common stock | |||
Equity securities: | |||
Total equity securities | 14,320 | 17,988 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | |||
Equity securities: | |||
Bank loan participations | 0 | ||
Short-term investments | 0 | 0 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Fixed maturity securities | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 103,130 | 115,173 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | State and municipal | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 0 | 0 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Residential mortgage-backed | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 0 | 0 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Corporate | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 0 | 0 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Commercial mortgage and asset-backed | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 0 | 0 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | U.S. Treasury securities and obligations guaranteed by the U.S. government | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 103,130 | 115,173 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Redeemable preferred stock | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 0 | 0 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Equity securities | |||
Equity securities: | |||
Total equity securities | 9,305 | 14,669 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Preferred stock | |||
Equity securities: | |||
Total equity securities | 0 | 0 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Common stock | |||
Equity securities: | |||
Total equity securities | 9,305 | 14,669 | |
Recurring basis | Significant Other Observable Inputs Level 2 | |||
Equity securities: | |||
Bank loan participations | 130,890 | ||
Short-term investments | 71,986 | 156,925 | |
Recurring basis | Significant Other Observable Inputs Level 2 | Fixed maturity securities | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 1,710,341 | 1,318,453 | |
Recurring basis | Significant Other Observable Inputs Level 2 | State and municipal | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 288,596 | 167,101 | |
Recurring basis | Significant Other Observable Inputs Level 2 | Residential mortgage-backed | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 306,469 | 264,146 | |
Recurring basis | Significant Other Observable Inputs Level 2 | Corporate | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 776,955 | 632,221 | |
Recurring basis | Significant Other Observable Inputs Level 2 | Commercial mortgage and asset-backed | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 335,834 | 252,457 | |
Recurring basis | Significant Other Observable Inputs Level 2 | U.S. Treasury securities and obligations guaranteed by the U.S. government | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 464 | 494 | |
Recurring basis | Significant Other Observable Inputs Level 2 | Redeemable preferred stock | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 2,023 | 2,034 | |
Recurring basis | Significant Other Observable Inputs Level 2 | Equity securities | |||
Equity securities: | |||
Total equity securities | 70,591 | 66,023 | |
Recurring basis | Significant Other Observable Inputs Level 2 | Preferred stock | |||
Equity securities: | |||
Total equity securities | 65,576 | 62,747 | |
Recurring basis | Significant Other Observable Inputs Level 2 | Common stock | |||
Equity securities: | |||
Total equity securities | 5,015 | 3,276 | |
Recurring basis | Significant Unobservable Inputs Level 3 | |||
Equity securities: | |||
Total equity securities | 308 | ||
Bank loan participations | 308 | ||
Short-term investments | 0 | 0 | |
Recurring basis | Significant Unobservable Inputs Level 3 | Fixed maturity securities | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 0 | 0 | |
Recurring basis | Significant Unobservable Inputs Level 3 | State and municipal | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 0 | 0 | |
Recurring basis | Significant Unobservable Inputs Level 3 | Residential mortgage-backed | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 0 | 0 | |
Recurring basis | Significant Unobservable Inputs Level 3 | Corporate | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 0 | 0 | |
Recurring basis | Significant Unobservable Inputs Level 3 | Commercial mortgage and asset-backed | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 0 | 0 | |
Recurring basis | Significant Unobservable Inputs Level 3 | U.S. Treasury securities and obligations guaranteed by the U.S. government | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 0 | 0 | |
Recurring basis | Significant Unobservable Inputs Level 3 | Redeemable preferred stock | |||
Fixed maturity securities, available-for-sale: | |||
Total fixed maturity securities, available-for-sale | 0 | 0 | |
Recurring basis | Significant Unobservable Inputs Level 3 | Equity securities | |||
Equity securities: | |||
Total equity securities | 0 | 43 | |
Recurring basis | Significant Unobservable Inputs Level 3 | Preferred stock | |||
Equity securities: | |||
Total equity securities | 0 | 0 | |
Recurring basis | Significant Unobservable Inputs Level 3 | Common stock | |||
Equity securities: | |||
Total equity securities | $ 0 | $ 43 | $ 44 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Securities Measured at Fair Value (Details) - Fair Value, Recurring - Available-for-sale fixed maturity securities and equity securities - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | $ 312 | $ 3,099 | $ 43 | $ 4,442 |
Transfers out of Level 3 | (8) | (3,010) | (729) | (7,238) |
Transfers in to Level 3 | 0 | 0 | 358 | 3,010 |
Purchases | 0 | 0 | 703 | 0 |
Sales | 0 | 0 | 0 | 0 |
Maturities, calls and paydowns | 0 | 0 | (17) | 0 |
Amortization of discount | 0 | 0 | 3 | 0 |
Total gains or losses (realized/unrealized)-Included in earnings | 4 | (45) | (53) | (170) |
Total gains or losses (realized/unrealized)-Included in other comprehensive income | 0 | 0 | 0 | 0 |
Ending balance | $ 308 | $ 44 | $ 308 | $ 44 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Total fixed maturity securities, available-for-sale | $ 1,813,471 | $ 1,433,626 | ||
Equity securities | 79,896 | 80,735 | ||
Recurring basis | Level 3 | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Equity securities | 308 | |||
Common stock | Recurring basis | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Equity securities | 14,320 | 17,988 | ||
Common stock | Recurring basis | Level 3 | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Equity securities | $ 0 | $ 43 | $ 44 | |
Market approach | Level 3 | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Total fixed maturity securities, available-for-sale | $ 4,200 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Assets Fair Value on a Nonrecurring Basis (Details) - Nonrecurring basis $ in Thousands | Dec. 31, 2019USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Bank loan participations held-for-investment | $ 6,949 |
Quoted Prices in Active Markets for Identical Assets Level 1 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Bank loan participations held-for-investment | 0 |
Significant Other Observable Inputs Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Bank loan participations held-for-investment | 0 |
Significant Unobservable Inputs Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Bank loan participations held-for-investment | $ 6,949 |
Fair Value Measurements - Sum_3
Fair Value Measurements - Summary of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Fixed maturity securities, available-for-sale | $ 1,813,471 | $ 1,433,626 |
Equity securities | 79,896 | 80,735 |
Bank loan participations | 131,198 | |
Bank loan participations | 260,864 | |
Cash and cash equivalents | 139,969 | 206,912 |
Restricted cash equivalents | 940,221 | 1,199,164 |
Liabilities | ||
Senior debt | 217,300 | 158,300 |
Junior subordinated debt | 104,055 | 104,055 |
Carrying Value | ||
Assets | ||
Fixed maturity securities, available-for-sale | 1,813,471 | 1,433,626 |
Equity securities | 79,896 | 80,735 |
Bank loan participations | 131,198 | |
Bank loan participations | 260,864 | |
Cash and cash equivalents | 139,969 | 206,912 |
Restricted cash equivalents | 940,221 | 1,199,164 |
Short-term investments | 71,986 | 156,925 |
Other invested assets – notes receivable | 4,500 | 13,250 |
Liabilities | ||
Senior debt | 217,300 | 158,300 |
Junior subordinated debt | 104,055 | 104,055 |
Fair Value | ||
Assets | ||
Fixed maturity securities, available-for-sale | 1,813,471 | 1,433,626 |
Equity securities | 79,896 | 80,735 |
Bank loan participations | 131,198 | |
Bank loan participations | 252,423 | |
Cash and cash equivalents | 139,969 | 206,912 |
Restricted cash equivalents | 940,221 | 1,199,164 |
Short-term investments | 71,986 | 156,925 |
Other invested assets – notes receivable | 5,275 | 18,756 |
Liabilities | ||
Senior debt | 204,601 | 158,043 |
Junior subordinated debt | $ 106,203 | $ 122,193 |
Senior Debt (Details)
Senior Debt (Details) - USD ($) | 3 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||||
Drawn balance outstanding | $ 217,300,000 | $ 158,300,000 | ||
2013 Facility | ||||
Debt Instrument [Line Items] | ||||
Amount drawn | $ 60,000,000 | |||
Unsecured Debt | 2013 Facility | ||||
Debt Instrument [Line Items] | ||||
Line of credit (up to) | 212,500,000 | |||
Drawn balance outstanding | 163,300,000 | |||
Line of Credit | 2013 Facility | ||||
Debt Instrument [Line Items] | ||||
Line of credit (up to) | 315,000,000 | |||
Repaid amount | $ 30,000,000 | |||
JRG Reinsurance Company, Ltd. | 2013 Facility | ||||
Debt Instrument [Line Items] | ||||
Amount of letters of credit issued | 76,000,000 | |||
JRG Reinsurance Company, Ltd. | 2017 Facility | ||||
Debt Instrument [Line Items] | ||||
Amount drawn | $ 59,000,000 | |||
Line of credit (up to) | 100,000,000 | |||
Repaid amount | $ 30,000,000 | |||
Amount of letters of credit issued | 17,500,000 | |||
JRG Reinsurance Company, Ltd. | Unsecured Debt | 2017 Facility | ||||
Debt Instrument [Line Items] | ||||
Drawn balance outstanding | $ 39,000,000 |
Capital Stock and Equity Awar_3
Capital Stock and Equity Awards - Common Shares (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Exercise of stock options (in shares) | 79,615 | |||||||
Common stock, shares outstanding (in shares) | 30,610,153 | 30,610,153 | 30,424,391 | |||||
RSUs | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting of restricted share units (in shares) | 106,147 | |||||||
Restricted stock unit dividend equivalents | $ 329 | $ 327 | ||||||
Dividends payable | $ 600 | $ 600 | $ 623 | |||||
Common stock | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of common shares issued during period (in shares) | 185,762 | |||||||
Exercise of stock options (in shares) | 50,474 | 70,595 | 79,615 | 336,533 | ||||
Common stock, shares outstanding (in shares) | 30,610,153 | 30,401,270 | 30,610,153 | 30,401,270 | 30,553,178 | 30,424,391 | 30,330,675 | 29,988,460 |
Capital Stock and Equity Awar_4
Capital Stock and Equity Awards - Schedule of Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 30, 2020 | Jul. 28, 2020 | Jun. 30, 2020 | Apr. 28, 2020 | Mar. 31, 2020 | Feb. 19, 2020 | Sep. 30, 2019 | Jul. 30, 2019 | Jun. 28, 2019 | Apr. 30, 2019 | Mar. 29, 2019 | Feb. 20, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Stockholders' Equity Note [Abstract] | ||||||||||||||||
Dividend declared per share (in dollars per share) | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.90 | $ 0.90 | ||||||
Total Amount (thousands) | $ 9,292 | $ 9,271 | $ 9,269 | $ 9,231 | $ 9,205 | $ 9,146 | $ 27,832 | $ 27,582 |
Capital Stock and Equity Awar_5
Capital Stock and Equity Awards - Equity Incentive Plans (Details) - Non-qualified stock options - shares | Apr. 30, 2019 | Sep. 30, 2020 |
2014 LTIP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Maximum number of shares available for issuance | 4,171,150 | |
Number of shares available for grant | 1,401,535 | |
2014 Director Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Maximum number of shares available for issuance | 150,000 | |
Number of shares available for grant | 101,746 | |
Increase in number of shares authorized for issuance (in shares) | 100,000 |
Capital Stock and Equity Awar_6
Capital Stock and Equity Awards - Summary of Option Activity (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Shares | ||
Exercised (in shares) | (79,615) | |
Weighted- Average Exercise Price | ||
Weighted-average remaining contractual life of options outstanding | 2 years 2 months 12 days | |
Weighted-average remaining contractual life of options exercisable | 2 years 2 months 12 days | |
Options | ||
Shares | ||
Beginning of period (in shares) | 643,851 | 1,115,324 |
Granted (in shares) | 0 | 0 |
Exercised (in shares) | (79,615) | (450,514) |
Forfeited (in shares) | 0 | (12,058) |
End of period (in shares) | 564,236 | 652,752 |
Exercisable, end of period (in shares) | 564,236 | 599,241 |
Weighted- Average Exercise Price | ||
Beginning of period (in dollars per share) | $ 30.41 | $ 29.02 |
Granted (in dollars per share) | 0 | 0 |
Exercised (in dollars per share) | 31.77 | 26.68 |
Forfeited (in dollars per share) | 0 | 36.84 |
End of period (in dollars per share) | 30.22 | 30.50 |
Exercisable, end of period (in dollars per share) | $ 30.22 | $ 29.44 |
Contractual life (in years) | 7 years | |
Minimum | Options | ||
Weighted- Average Exercise Price | ||
Vesting period (in years) | 3 years | |
Maximum | Options | ||
Weighted- Average Exercise Price | ||
Vesting period (in years) | 4 years |
Capital Stock and Equity Awar_7
Capital Stock and Equity Awards - Summary of RSU Activity (Details) - RSUs - $ / shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Shares | ||
Unvested, beginning of period (in shares) | 340,368 | 300,142 |
Granted (in shares) | 197,518 | 197,078 |
Vested (in shares) | (156,434) | (111,212) |
Forfeited (in shares) | (16,846) | (22,445) |
Unvested, end of period (in shares) | 364,606 | 363,563 |
Weighted- Average Grant Date Fair Value | ||
Unvested, beginning of period (in dollars per share) | $ 41.50 | $ 39.22 |
Granted (in dollars per share) | 43.77 | 42.56 |
Vested (in dollars per share) | 41.50 | 39.90 |
Forfeited (in dollars per share) | 42.17 | 41.32 |
Unvested, end of period (in dollars per share) | $ 42.70 | $ 40.69 |
Vesting period (in years) | 3 years | |
Non-employee directors | ||
Weighted- Average Grant Date Fair Value | ||
Vesting period (in years) | 1 year | |
Minimum | ||
Weighted- Average Grant Date Fair Value | ||
Vesting period (in years) | 1 year | |
Maximum | ||
Weighted- Average Grant Date Fair Value | ||
Vesting period (in years) | 3 years |
Capital Stock and Equity Awar_8
Capital Stock and Equity Awards - Summary of Share Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stockholders' Equity Note [Abstract] | ||||
Share based compensation expense | $ 2,097 | $ 1,779 | $ 5,874 | $ 5,263 |
U.S. tax benefit on share based compensation expense | $ 287 | $ 211 | $ 786 | $ 631 |
Capital Stock and Equity Awar_9
Capital Stock and Equity Awards - Compensation Expense (Details) - RSUs $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized share based compensation expense | $ 10.7 |
Weighted-average period of unrecognized share based compensation expense | 1 year 9 months 18 days |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Dec. 31, 2020 | Dec. 14, 2020 | Oct. 28, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Oct. 27, 2020 |
RSUs | ||||||
Subsequent Event [Line Items] | ||||||
Granted (in shares) | 197,518 | 197,078 | ||||
Fair value on date of grant (in dollars per share) | $ 43.77 | $ 42.56 | ||||
Vesting period (in years) | 3 years | |||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Cash dividend declared (in dollars per share) | $ 0.30 | |||||
Dividends payable, date to be paid | Dec. 31, 2020 | |||||
Dividend payable, record date | Dec. 14, 2020 | |||||
Subsequent Event | RSUs | 2014 LTIP | ||||||
Subsequent Event [Line Items] | ||||||
Granted (in shares) | 12,421 | |||||
Fair value on date of grant (in dollars per share) | $ 52.33 | |||||
Vesting period (in years) | 3 years |