Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 09, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | KINGSTONE COMPANIES, INC. | |
Entity Central Index Key | 0000033992 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Sep. 30, 2020 | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 | |
Entity Common Stock Shares Outstanding | 10,675,198 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Entity File Number | 0-1665 | |
Entity Incorporation State Country Code | DE | |
Entity Tax Identification Number | 36-2476480 | |
Entity Address Address Line 1 | 15 Joys Lane | |
Entity Address City Or Town | Kingston | |
Entity Address State Or Province | NY | |
Entity Address Postal Zip Code | 12401 | |
City Area Code | 845 | |
Local Phone Number | 802-7900 | |
Security 12b Title | 0.01 | |
Trading Symbol | KINS | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $7,899,304 at September 30, 2020 and $4,124,767 at December 31, 2019) | $ 7,369,608 | $ 3,825,952 |
Fixed-maturity securities, available-for-sale, at fair value (amortized cost of $145,126,859 at September 30, 2020 and $162,202,355 at December 31, 2019) | 156,538,589 | 168,236,181 |
Equity securities, at fair value (cost of $30,300,839 at September 30, 2020 and $22,624,668 at December 31, 2019) | 29,623,267 | 24,661,382 |
Other investments | 2,829,078 | 2,584,913 |
Total investments | 196,360,542 | 199,308,428 |
Cash and cash equivalents | 24,388,103 | 32,391,485 |
Premiums receivable, net | 13,883,708 | 12,706,411 |
Reinsurance receivables, net | 55,529,408 | 40,750,538 |
Deferred policy acquisition costs | 19,916,325 | 20,634,378 |
Intangible assets | 500,000 | 500,000 |
Property and equipment, net | 7,788,633 | 7,620,636 |
Deferred income taxes, net | 0 | 311,052 |
Other assets | 8,992,936 | 6,979,884 |
Total assets | 327,359,655 | 321,202,812 |
Liabilities | ||
Loss and loss adjustment expense reserves | 84,979,024 | 80,498,611 |
Unearned premiums | 88,167,636 | 90,383,238 |
Advance premiums | 4,919,256 | 3,191,512 |
Reinsurance balances payable | 10,062,649 | 11,714,724 |
Deferred ceding commission revenue | 7,207,142 | 7,735,398 |
Accounts payable, accrued expenses and other liabilities | 11,134,175 | 9,986,317 |
Deferred income taxes, net | 1,972,782 | |
Long-term debt, net | 29,603,566 | 29,471,431 |
Total liabilities | 238,046,230 | 232,981,231 |
Stockholders' Equity | ||
Preferred stock, $.01 par value; authorized 2,500,000 shares | 0 | 0 |
Common stock, $.01 par value; authorized 20,000,000 shares; issued 11,871,307 shares at September 30, 2020 and 11,824,889 at December 31, 2019; outstanding 10,675,198 shares at September 30, 2020 and 10,797,450 shares at December 31, 2019 | 118,713 | 118,248 |
Capital in excess of par | 70,372,799 | 69,133,918 |
Accumulated other comprehensive income | 9,017,415 | 4,768,870 |
Retained earnings | 13,318,838 | 16,913,097 |
Stockholders' Equity before Treasury Stock | 92,827,765 | 90,934,133 |
Treasury stock, at cost, 1,196,109 shares at September 30, 2020 and 1,027,439 shares at December 31, 2019 | (3,514,340) | (2,712,552) |
Total stockholders' equity | 89,313,425 | 88,221,581 |
Total liabilities and stockholders' equity | $ 327,359,655 | $ 321,202,812 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Condensed Consolidated Balance Sheets | ||
Fixed-maturity securities, held-to-maturity, fair value | $ 7,899,304 | $ 4,124,767 |
Fixed-maturity securities, available-for-sale, amortized cost | 145,126,859 | 162,202,355 |
Equity securities, available-for-sale, cost | $ 30,300,839 | $ 22,624,668 |
Stockholders' Equity | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares | 2,500,000 | 2,500,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 20,000,000 | 20,000,000 |
Common stock, issued shares | 11,871,307 | 11,824,889 |
Common stock, outstanding shares | 10,675,198 | 10,797,450 |
Treasury stock, shares | 1,196,109 | 1,027,439 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues | ||||
Net premiums earned | $ 27,521,081 | $ 34,220,010 | $ 81,099,387 | $ 95,017,178 |
Ceding commission revenue | 3,448,774 | 1,029,582 | 10,760,087 | 2,982,960 |
Net investment income | 1,494,086 | 1,856,553 | 4,771,936 | 5,200,034 |
Net gains (losses) on investments | 2,107,876 | 998,162 | (1,638,674) | 3,712,180 |
Other income | 250,654 | 343,391 | 772,672 | 998,927 |
Total revenues | 34,822,471 | 38,447,698 | 95,765,408 | 107,911,279 |
Expenses | ||||
Loss and loss adjustment expenses | 20,117,975 | 24,781,318 | 49,317,427 | 71,587,850 |
Commission expense | 8,036,298 | 7,722,825 | 23,652,765 | 21,866,420 |
Other underwriting expenses | 6,346,846 | 6,430,734 | 19,434,110 | 17,983,174 |
Other operating expenses | 1,038,453 | 609,924 | 3,364,483 | 2,647,221 |
Depreciation and amortization | 710,181 | 646,201 | 2,070,435 | 1,876,202 |
Interest expense | 456,545 | 456,545 | 1,369,635 | 1,369,635 |
Total expenses | 36,706,298 | 40,647,547 | 99,208,855 | 117,330,502 |
Income (loss) from operations before income taxes | (1,883,827) | (2,199,849) | (3,443,447) | (9,419,223) |
Income tax expense (benefit) | (655,971) | (474,687) | (1,379,578) | (1,998,251) |
Net income (loss) | (1,227,856) | (1,725,162) | (2,063,869) | (7,420,972) |
Other comprehensive income, net of tax | ||||
Gross change in unrealized gains on available-for-sale-securities | 1,778,478 | 1,323,626 | 5,938,600 | 9,191,817 |
Reclassification adjustment for gains included in net income (loss) | (606,969) | 46,841 | (560,696) | 81,636 |
Net change in unrealized gains | 1,171,509 | 1,370,467 | 5,377,904 | 9,273,453 |
Income tax expense related to items of other comprehensive income | (246,017) | (287,798) | (1,129,359) | (1,947,424) |
Other comprehensive income, net of tax | 925,492 | 1,082,669 | 4,248,545 | 7,326,029 |
Comprehensive income | $ (302,364) | $ (642,493) | $ 2,184,676 | $ (94,943) |
Earnings (loss) per share : | ||||
Basic | $ (0.12) | $ (0.16) | $ (0.19) | $ (0.69) |
Diluted | $ (0.12) | $ (0.16) | $ (0.19) | $ 0.69 |
Weighted average common shares outstanding | ||||
Basic | 10,673,077 | 10,779,641 | 10,737,853 | 10,769,817 |
Diluted | 10,673,077 | 10,779,641 | 10,737,853 | 10,769,817 |
Dividends declared and paid per common share | $ 0.0400 | $ 0.0625 | $ 0.1425 | $ 0.2625 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Total | Common Stock | Treasury Stock | Preferred Stock | Capital in Excess of Par | Accumulated other comprehensive Income | Retained Earnings |
Balance, shares at Dec. 31, 2018 | 11,775,148 | 1,027,439 | |||||
Balance, amount at Dec. 31, 2018 | $ 88,665,642 | $ 117,751 | $ (2,712,552) | $ 0 | $ 67,763,940 | $ (2,884,313) | $ 26,380,816 |
Stock-based compensation | 1,116,921 | $ 0 | 0 | 0 | 1,116,921 | 0 | 0 |
Vesting of restricted stock awards, shares | 43,596 | ||||||
Vesting of restricted stock awards, amount | 0 | $ 434 | 0 | 0 | (434) | 0 | 0 |
Shares deducted from restricted stock awards for payment of withholding taxes, shares | (10,733) | ||||||
Shares deducted from restricted stock awards for payment of withholding taxes, amount | (148,278) | $ (105) | 0 | 0 | (148,173) | 0 | 0 |
Exercise of stock options, shares | 3,000 | ||||||
Exercise of stock options, amount | 23,552 | $ 30 | 0 | 0 | 23,522 | 0 | 0 |
Dividends | (2,827,276) | 0 | 0 | 0 | 0 | 0 | (2,827,276) |
Net loss | (7,420,972) | 0 | 0 | 0 | 0 | 0 | (7,420,972) |
Change in unrealized gains on available- for-sale securities, net of tax | 7,326,029 | $ 0 | $ 0 | 0 | 0 | 7,326,029 | 0 |
Balance, shares at Sep. 30, 2019 | 11,811,011 | 1,027,439 | |||||
Balance, amount at Sep. 30, 2019 | 86,735,618 | $ 118,110 | $ (2,712,552) | 0 | 68,755,776 | 4,441,716 | 16,132,568 |
Balance, shares at Jun. 30, 2019 | 11,802,087 | 1,027,439 | |||||
Balance, amount at Jun. 30, 2019 | 87,669,762 | $ 118,020 | $ (2,712,552) | 0 | 68,373,590 | 3,359,047 | 18,531,657 |
Stock-based compensation | 407,714 | $ 0 | 0 | 0 | 407,714 | 0 | 0 |
Vesting of restricted stock awards, shares | 12,050 | ||||||
Vesting of restricted stock awards, amount | 0 | $ 120 | 0 | 0 | (120) | 0 | 0 |
Shares deducted from restricted stock awards for payment of withholding taxes, shares | (3,126) | ||||||
Shares deducted from restricted stock awards for payment of withholding taxes, amount | (25,438) | $ (30) | 0 | 0 | (25,408) | 0 | 0 |
Dividends | (637,927) | 0 | 0 | 0 | 0 | 0 | (637,927) |
Net loss | (1,725,162) | 0 | 0 | 0 | 0 | 0 | (1,725,162) |
Change in unrealized gains on available- for-sale securities, net of tax | 1,082,669 | $ 0 | $ 0 | 0 | 0 | 1,082,669 | 0 |
Balance, shares at Sep. 30, 2019 | 11,811,011 | 1,027,439 | |||||
Balance, amount at Sep. 30, 2019 | 86,735,618 | $ 118,110 | $ (2,712,552) | 0 | 68,755,776 | 4,441,716 | 16,132,568 |
Balance, shares at Dec. 31, 2019 | 11,824,889 | 1,027,439 | |||||
Balance, amount at Dec. 31, 2019 | 88,221,581 | $ 118,248 | $ (2,712,552) | 0 | 69,133,918 | 4,768,870 | 16,913,097 |
Stock-based compensation | $ 1,373,283 | $ 0 | 0 | 0 | 1,373,283 | 0 | 0 |
Vesting of restricted stock awards, shares | (91,863) | 67,686 | |||||
Vesting of restricted stock awards, amount | $ 0 | $ 676 | 0 | 0 | (676) | 0 | 0 |
Shares deducted from restricted stock awards for payment of withholding taxes, shares | (21,268) | ||||||
Shares deducted from restricted stock awards for payment of withholding taxes, amount | (133,937) | $ (211) | 0 | 0 | (133,726) | 0 | 0 |
Dividends | (1,530,390) | 0 | 0 | 0 | 0 | 0 | (1,530,390) |
Net loss | (2,063,869) | 0 | 0 | 0 | 0 | 0 | (2,063,869) |
Change in unrealized gains on available- for-sale securities, net of tax | 4,248,545 | 0 | $ 0 | 0 | 0 | 4,248,545 | 0 |
Acquisition of treasury stock, shares | 168,670 | ||||||
Acquisition of treasury stock, amount | (801,788) | $ 0 | $ (801,788) | 0 | 0 | 0 | 0 |
Balance, shares at Sep. 30, 2020 | 11,871,307 | 1,196,109 | |||||
Balance, amount at Sep. 30, 2020 | 89,313,425 | $ 118,713 | $ (3,514,340) | 0 | 70,372,799 | 9,017,415 | 13,318,838 |
Balance, shares at Jun. 30, 2020 | 11,866,254 | 1,196,109 | |||||
Balance, amount at Jun. 30, 2020 | 89,621,478 | $ 118,662 | $ (3,514,340) | 0 | 69,951,549 | 8,091,923 | 14,973,684 |
Stock-based compensation | 430,896 | $ 0 | 0 | 0 | 430,896 | 0 | 0 |
Vesting of restricted stock awards, shares | 6,790 | ||||||
Vesting of restricted stock awards, amount | 0 | $ 69 | 0 | 0 | (69) | 0 | 0 |
Shares deducted from restricted stock awards for payment of withholding taxes, shares | (1,737) | ||||||
Shares deducted from restricted stock awards for payment of withholding taxes, amount | (9,595) | $ (18) | 0 | 0 | (9,577) | 0 | 0 |
Dividends | (426,990) | 0 | 0 | 0 | 0 | 0 | (426,990) |
Net loss | (1,227,856) | 0 | 0 | 0 | 0 | 0 | (1,227,856) |
Change in unrealized gains on available- for-sale securities, net of tax | 925,492 | $ 0 | $ 0 | 0 | 0 | 925,492 | 0 |
Balance, shares at Sep. 30, 2020 | 11,871,307 | 1,196,109 | |||||
Balance, amount at Sep. 30, 2020 | $ 89,313,425 | $ 118,713 | $ (3,514,340) | $ 0 | $ 70,372,799 | $ 9,017,415 | $ 13,318,838 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (2,063,869) | $ (7,420,972) |
Adjustments to reconcile net loss to net cash flows (used in) provided by operating activities: | ||
Net (gains) losses on sale of investments | (857,650) | 54,759 |
Net unrealized losses (gains) of equity investments | 2,740,489 | (3,196,260) |
Net unrealized gains on other investments | (244,165) | (570,679) |
Depreciation and amortization | 2,070,435 | 1,876,202 |
Bad debts | 70,666 | 0 |
Amortization of bond premium, net | 518,146 | 283,620 |
Amortization of discount and issuance costs on long-term debt | 132,135 | 132,135 |
Stock-based compensation | 1,373,283 | 1,116,921 |
Deferred income tax expense (benefit) | 1,154,475 | (2,133,486) |
(Increase) decrease in operating assets: | ||
Premiums receivable, net | (1,247,963) | (390,922) |
Reinsurance receivables, net | (14,778,870) | (213,334) |
Deferred policy acquisition costs | 718,053 | (2,583,831) |
Other assets | (2,010,253) | (882,320) |
Increase (decrease) in operating liabilities: | ||
Loss and loss adjustment expense reserves | 4,480,413 | 21,212,317 |
Unearned premiums | (2,215,602) | 11,036,552 |
Advance premiums | 1,727,744 | 1,629,862 |
Reinsurance balances payable | (1,652,075) | (1,123,540) |
Deferred ceding commission revenue | (528,256) | (857,805) |
Accounts payable, accrued expenses and other liabilities | 1,147,858 | 1,568,746 |
Net cash flows (used in) provided by operating activities | (9,465,006) | 19,537,965 |
Cash flows from investing activities: | ||
Purchase - fixed-maturity securities held-to-maturity | (4,041,750) | 0 |
Purchase - fixed-maturity securities available-for-sale | (12,447,259) | (15,373,113) |
Purchase - equity securities | (15,614,675) | (6,657,676) |
Sale and redemption - fixed-maturity securities held-to-maturity | 500,000 | 400,000 |
Sale or maturity - fixed-maturity securities available-for-sale | 29,666,158 | 9,835,464 |
Sale - equity securities | 8,103,697 | 2,941,492 |
Acquisition of property and equipment | (2,238,432) | (3,231,483) |
Net cash flows provided by (used in) investing activities | 3,927,739 | (12,085,316) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 0 | 23,552 |
Withholding taxes paid on vested retricted stock awards | (133,937) | (148,278) |
Purchase of treasury stock | (801,788) | 0 |
Dividends paid | (1,530,390) | (2,827,276) |
Net cash flows used in financing activities | (2,466,115) | (2,952,002) |
(Decrease) increase in cash and cash equivalents | (8,003,382) | 4,500,647 |
Cash and cash equivalents, beginning of period | 32,391,485 | 21,138,403 |
Cash and cash equivalents, end of period | 24,388,103 | 25,639,050 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 0 | 388,000 |
Cash paid for interest | $ 825,000 | $ 825,000 |
Nature of Business and Basis of
Nature of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Nature of Business and Basis of Presentation | |
1. Nature of Business and Basis of Presentation | Note 1 - Nature of Business and Basis of Presentation Kingstone Companies, Inc. (referred to herein as “Kingstone” or the “Company”), through its wholly owned subsidiary, Kingstone Insurance Company (“KICO”), underwrites property and casualty insurance exclusively through retail and wholesale agents and brokers. KICO is a licensed insurance company in the States of New York, New Jersey, Rhode Island, Massachusetts, Pennsylvania, Connecticut, Maine and New Hampshire. KICO is currently offering its property and casualty insurance products in New York, New Jersey, Rhode Island, Massachusetts, and Connecticut. Although New Jersey, Rhode Island, Massachusetts and Connecticut continue to be growing markets for the Company, 80.6% and 79.9% of KICO’s direct written premiums for the three months and nine months ended September 30, 2020, respectively, came from the New York policies. Kingstone, through its wholly owned subsidiary, Cosi Agency, Inc. (“Cosi”), a multi-state licensed general agency, accesses alternate forms of distribution outside of the independent agent and broker network, through which KICO currently distributes its various products. Kingstone (through Cosi) now has the opportunity to partner with name-brand carriers and access nationwide insurance agencies. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The principles for condensed interim financial information do not require the inclusion of all the information and footnotes required by GAAP for complete financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 31, 2019 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2020. The accompanying condensed consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with standards of the Public Company Accounting Oversight Board (United States) but, in the opinion of management, such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position and results of operations. The results of operations for the nine months ended September 30, 2020 may not be indicative of the results that may be expected for the year ending December 31, 2020. |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies | |
2. Accounting Policies | Note 2 – Accounting Policies Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and assumptions, which include the reserves for losses and loss adjustment expenses, and are subject to estimation errors due to the inherent uncertainty in projecting ultimate claim amounts that will be reported and settled over a period of many years. In addition, estimates and assumptions associated with receivables under reinsurance contracts related to contingent ceding commission revenue require judgments by management. On an ongoing basis, management reevaluates its assumptions and the methods for calculating these estimates. Actual results may differ significantly from the estimates and assumptions used in preparing the consolidated financial statements. Principles of Consolidation The accompanying condensed consolidated financial statements consist of Kingstone and its following wholly owned subsidiaries: (1) KICO and its wholly owned subsidiaries, CMIC Properties, Inc. (“Properties”) and 15 Joys Lane, LLC (“15 Joys Lane”), which together own the land and building from which KICO operates, and (2) Cosi. All significant intercompany account balances and transactions have been eliminated in consolidation. Accounting Changes The Company has determined that it was not subject to any new accounting pronouncements that became effective during the nine months ended September 30, 2020. Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The revised accounting guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses of available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective for the Company on January 1, 2023. The Company is currently evaluating the effect the updated guidance will have on its condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes (“ASU 2019-12”). Among other items, the amendments in ASU 2019-12 simplify the accounting treatment of tax law changes and year-to-date losses in interim periods. An entity generally recognizes the effects of a change in tax law in the period of enactment; however, there is an exception for tax laws with delayed effective dates. Under current guidance, an entity may not adjust its annual effective tax rate for a tax law change until the period in which the law is effective. This exception was removed under ASU 2019-12, thereby providing that all effects of a tax law change are recognized in the period of enactment, including adjustment of the estimated annual effective tax rate. Regarding year-to-date losses in interim periods, an entity is required to estimate its annual effective tax rate for the full fiscal year at the end of each interim period and use that rate to calculate its income taxes on a year-to-date basis. However, current guidance provides an exception that when a loss in an interim period exceeds the anticipated loss for the year, the income tax benefit is limited to the amount that would be recognized if the year-to-date loss were the anticipated loss for the full year. ASU 2019-12 removes this exception and provides that, in this situation, an entity would compute its income tax benefit at each interim period based on its estimated annual effective tax rate. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its financial condition and results of operations. The Company has determined that all other recently issued accounting pronouncements will not have a material impact on its consolidated financial position, results of operations and cash flows, or do not apply to its operations. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2020 | |
Investments | |
3. Investments | Note 3 - Investments Fixed-Maturity Securities The amortized cost, estimated fair value, and unrealized gains and losses on investments in fixed-maturity securities classified as available-for-sale as of September 30, 2020 and December 31, 2019 are summarized as follows: September 30, 2020 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Category Cost Gains Months Months Value Gains Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 3,026,477 $ 42,853 $ - $ - $ 3,069,330 $ 42,853 Political subdivisions of States, Territories and Possessions 5,593,778 322,297 - - 5,916,075 322,297 Corporate and other bonds Industrial and miscellaneous 112,504,206 10,698,206 (1,654 ) - 123,200,758 10,696,552 Residential mortgage and other asset backed securities (1) 24,002,398 535,772 (38,491 ) (147,253 ) 24,352,426 350,028 Total $ 145,126,859 $ 11,599,128 $ (40,145 ) $ (147,253 ) $ 156,538,589 $ 11,411,730 (1) KICO has placed certain residential mortgage backed securities as eligible collateral in a designated custodian account related to its membership in the Federal Home Loan Bank of New York (“FHLBNY”) (see Note 7). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of September 30, 2020, the estimated fair value of the eligible investments was approximately $6,685,000. KICO will retain all rights regarding all securities if pledged as collateral. As of September 30, 2020, there was no outstanding balance on the FHLBNY credit line. December 31, 2019 Net Cost or Gross Gross Unrealized Losses Estimated Unrealized Amortized Unrealized Less than 12 More than 12 Fair Gains Category Cost Gains Months Months Value Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 7,037,856 $ 23,244 $ - $ - $ 7,061,100 $ 23,244 Political subdivisions of States, Territories and Possessions 9,151,293 181,835 (11,316 ) - 9,321,812 170,519 Corporate and other bonds Industrial and miscellaneous 119,874,573 5,777,624 (16,685 ) (13,473 ) 125,622,039 5,747,466 Residential mortgage and other asset backed securities (1) 26,138,633 437,841 (68,793 ) (276,451 ) 26,231,230 92,597 Total $ 162,202,355 $ 6,420,544 $ (96,794 ) $ (289,924 ) $ 168,236,181 $ 6,033,826 (1) KICO has placed certain residential mortgage backed securities as eligible collateral in a designated custodian account related to its membership in the FHLBNY (see Note 7). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of December 31, 2019, the estimated fair value of the eligible investments was approximately $7,284,000. KICO will retain all rights regarding all securities if pledged as collateral. As of December 31, 2019, there was no outstanding balance on the FHLBNY credit line. A summary of the amortized cost and estimated fair value of the Company’s investments in available-for-sale fixed-maturity securities by contractual maturity as of September 30, 2020 and December 31, 2019 is shown below: The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties. Equity Securities The cost and estimated fair value of, and gross unrealized gains and losses on, investments in equity securities as of September 30, 2020 and December 31, 2019 are as follows: September 30, 2020 Gross Gross Unrealized Unrealized Estimated Category Cost Gains Losses Fair Value Equity Securities: Preferred stocks $ 14,260,019 $ 325,070 $ (339,125 ) $ 14,245,964 Common stocks, mutual funds, and exchange traded funds 16,040,820 777,813 (1,441,330 ) 15,377,303 Total $ 30,300,839 $ 1,102,883 $ (1,780,455 ) $ 29,623,267 December 31, 2019 Gross Gross Unrealized Unrealized Estimated Category Cost Gains Losses Fair Value Equity Securities: Preferred stocks $ 8,374,424 $ 339,257 $ (11,794 ) $ 8,701,887 Common stocks, mutual funds, and exchange traded funds 14,250,244 1,982,878 (273,627 ) 15,959,495 Total $ 22,624,668 $ 2,322,135 $ (285,421 ) $ 24,661,382 Other Investments The cost and estimated fair value of, and gross unrealized gains on, the Company’s other investments as of September 30, 2020 and December 31, 2019 are as follows: September 30, 2020 December 31, 2019 Gross Gross Unrealized Estimated Unrealized Estimated Category Cost Gains Fair Value Cost Gains Fair Value Other Investments: Hedge fund $ 1,999,381 $ 829,697 $ 2,829,078 $ 1,999,381 $ 585,532 $ 2,584,913 Total $ 1,999,381 $ 829,697 $ 2,829,078 $ 1,999,381 $ 585,532 $ 2,584,913 Held-to-Maturity Securities The cost or amortized cost and estimated fair value of, and unrealized gross gains and losses on, investments in held-to-maturity fixed-maturity securities as of September 30, 2020 and December 31, 2019 are summarized as follows: September 30, 2020 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Category Cost Gains Months Months Value Gains Held-to-Maturity Securities: U.S. Treasury securities $ 729,583 $ 162,442 $ - $ - $ 892,025 $ 162,442 Political subdivisions of States, Territories and Possessions 998,480 56,700 - - 1,055,180 56,700 Corporate and other bonds Industrial and miscellaneous 5,641,545 334,412 (23,858 ) - 5,952,099 310,554 Total $ 7,369,608 $ 553,554 $ (23,858 ) $ - $ 7,899,304 $ 529,696 December 31, 2019 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Category Cost Gains Months Months Value Gains Held-to-Maturity Securities: U.S. Treasury securities $ 729,550 $ 151,002 $ - $ - $ 880,552 $ 151,002 Political subdivisions of States, Territories and Possessions 998,619 51,021 - - 1,049,640 51,021 Corporate and other bonds Industrial and miscellaneous 2,097,783 97,627 (835 ) - 2,194,575 96,792 Total $ 3,825,952 $ 299,650 $ (835 ) $ - $ 4,124,767 $ 298,815 Held-to-maturity U.S. Treasury securities are held in trust pursuant to various states’ minimum funds requirements. A summary of the amortized cost and estimated fair value of the Company’s investments in held-to-maturity securities by contractual maturity as of September 30, 2020 and December 31, 2019 is shown below: September 30, 2020 December 31, 2019 Amortized Estimated Amortized Estimated Remaining Time to Maturity Cost Fair Value Cost Fair Value Less than one year $ - $ - $ 500,000 $ 499,165 One to five years 2,597,739 2,793,089 2,099,268 2,215,640 Five to ten years 1,499,837 1,710,586 620,134 655,923 More than 10 years 3,272,032 3,395,629 606,550 754,039 Total $ 7,369,608 $ 7,899,304 $ 3,825,952 $ 4,124,767 The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties. Investment Income Major categories of the Company’s net investment income are summarized as follows: Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Income: Fixed-maturity securities $ 1,264,633 $ 1,499,135 $ 4,106,404 $ 4,500,346 Equity securities 290,834 253,594 787,702 666,247 Cash and cash equivalents 1,834 75,253 89,993 288,334 Total 1,557,301 1,827,982 4,984,099 5,454,927 Expenses: Investment expenses 63,215 (28,571 ) 212,163 254,893 Net investment income $ 1,494,086 $ 1,856,553 $ 4,771,936 $ 5,200,034 Proceeds from the sale and redemption of fixed-maturity securities held-to-maturity were $500,000and $400,000 for the nine months ended September 30, 2020 and 2019, respectively. Proceeds from the sale or maturity of fixed-maturity securities available-for-sale were $29,666,158 and $9,835,464 for the nine months ended September 30, 2020 and 2019, respectively. Proceeds from the sale of equity securities were $8,103,697 and $2,941,492 for the nine months ended September 30, 2020 and 2019, respectively. The Company’s net gains (losses) on investments are summarized as follows: Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Realized Gains (Losses) - Fixed-maturity securities: Gross realized gains $ 714,162 $ 10 $ 967,573 $ 10,954 Gross realized losses (107,193 ) (46,851 ) (304,118 ) (92,591 ) 606,969 (46,841 ) 560,696 (81,637 ) Equity securities: Gross realized gains 199,439 38,477 644,111 83,737 Gross realized losses (209,069 ) - (449,916 ) (56,859 ) (9,630 ) 38,477 194,195 26,878 Net realized (losses) gains 597,339 (8,364 ) 857,650 (54,759 ) Unrealized Gains (Losses) Equity securities: Gross gains 1,223,779 916,496 - 3,196,260 Gross losses - - (2,740,489 ) - 1,223,779 916,496 (2,740,489 ) 3,196,260 Other investments: Gross gains 286,758 90,030 244,165 570,679 Gross losses - - - - 286,758 90,030 244,165 570,679 Net unrealized gains (losses) 1,510,537 1,006,526 (2,496,324 ) 3,766,939 Net gains (losses) on investments $ 2,107,876 $ 998,162 $ (1,638,674 ) $ 3,712,180 Impairment Review Impairment of investment securities results in a charge to operations when a market decline below cost is deemed to be other-than-temporary. The Company regularly reviews its fixed-maturity securities to evaluate the necessity of recording impairment losses for other-than-temporary declines in the estimated fair value of investments. In evaluating potential impairment, GAAP specifies (i) if the Company does not have the intent to sell a debt security prior to recovery and (ii) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered other-than-temporarily impaired unless there is a credit loss. When the Company does not intend to sell the security and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an other-than-temporary impairment (“OTTI”) of a debt security in earnings and the remaining portion in comprehensive income. The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security as projected based on cash flow projections. For held-to-maturity debt securities, the amount of OTTI recorded in comprehensive loss for the noncredit portion of a previous OTTI is amortized prospectively over the remaining life of the security on the basis of timing of future estimated cash flows of the security. OTTI losses are recorded in the condensed consolidated statements of operations and comprehensive income (loss) as net realized losses on investments and result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process and different judgments and assumptions could affect the timing of loss realization. At September 30, 2020 and December 31, 2019, there were 19 and 39 fixed-maturity securities, respectively, that accounted for the gross unrealized loss. The Company determined that none of the unrealized losses were deemed to be OTTI for its portfolio of investments for the nine months ended September 30, 2020 and 2019. Significant factors influencing the Company’s determination that unrealized losses were temporary included the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and management’s intent and ability to retain the investment for a period of time sufficient to allow for an anticipated recovery of estimated fair value to the Company’s cost basis. The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at September 30, 2020 as follows: September 30, 2020 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ - $ - - $ - $ - - $ - $ - Political subdivisions of States, Territories and Possessions - - - - - - - - Corporate and other bonds industrial and miscellaneous 522,450 (1,654 ) 1 - - - 522,450 (1,654 ) Residential mortgage and other asset backed securities 4,003,377 (38,491 ) 6 5,020,026 (147,253 ) 12 9,023,403 (185,744 ) Total fixed-maturity securities $ 4,525,827 $ (40,145 ) 7 $ 5,020,026 $ (147,253 ) 12 $ 9,545,853 $ (187,398 ) The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at December 31, 2019 as follows: December 31, 2019 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ - $ - - $ - $ - - $ - $ - Political subdivisions of States, Territories and Possessions 3,067,428 (11,316 ) 3 - - - 3,067,428 (11,316 ) Corporate and other bonds industrial and miscellaneous 3,730,478 (16,685 ) 7 1,300,915 (13,473 ) 3 5,031,393 (30,158 ) Residential mortgage and other asset backed securities 5,862,636 (68,793 ) 5 13,534,768 (276,451 ) 21 19,397,404 (345,244 ) Total fixed-maturity securities $ 12,660,542 $ (96,794 ) 15 $ 14,835,683 $ (289,924 ) 24 $ 27,496,225 $ (386,718 ) |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Measurements | |
4. Fair Value Measurements | Note 4 - Fair Value Measurements The following table presents information about the Company’s investments that are measured at fair value on a recurring basis at September 30, 2020 and December 31, 2019 indicating the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: September 30, 2020 Level 1 Level 2 Level 3 Total Fixed-maturity securities available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 3,069,330 $ - $ - $ 3,069,330 Political subdivisions of States, Territories and Possessions - 5,916,075 - 5,916,075 Corporate and other bonds industrial and miscellaneous 121,119,461 2,081,297 - 123,200,758 Residential mortgage backed securities - 24,352,426 - 24,352,426 Total fixed maturities 124,188,791 32,349,798 - 156,538,589 Equity securities 29,623,267 - - 29,623,267 Total investments $ 153,812,058 $ 32,349,798 $ - $ 186,161,856 December 31, 2019 Level 1 Level 2 Level 3 Total Fixed-maturity securities available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 7,061,100 $ - $ - $ 7,061,100 Political subdivisions of States, Territories and Possessions - 9,321,812 - 9,321,812 Corporate and other bonds industrial and miscellaneous 123,010,772 2,611,267 - 125,622,039 Residential mortgage backed securities - 26,231,230 - 26,231,230 Total fixed maturities 130,071,872 38,164,309 - 168,236,181 Equity securities 24,661,382 - - 24,661,382 Total investments $ 154,733,254 $ 38,164,309 $ - $ 192,897,563 The following table sets forth the Company’s investment in a hedge fund measured at Net Asset Value (“NAV”) per share as of September 30, 2020 and December 31, 2019. The Company measures this investment at fair value on a recurring basis. Fair value using NAV per share is as follows as of the dates indicated: Category September 30, 2020 December 31, 2019 Other Investments: Hedge fund $ 2,829,078 $ 2,584,913 Total $ 2,829,078 $ 2,584,913 The investment is generally redeemable with at least 45 days prior written notice. The hedge fund investment is accounted for as a limited partnership by the Company. Income is earned based upon the Company’s allocated share of the partnership’s changes in unrealized gains and losses to its partners. Such amounts have been recorded in the condensed consolidated statements of operations and comprehensive income (loss) within net gains (losses) on investments. The estimated fair value and the level of the fair value hierarchy of the Company’s long-term debt as of September 30, 2020 and December 31, 2019 not measured at fair value is as follows: September 30, 2020 Level 1 Level 2 Level 3 Total Long-term debt Senior Notes due 2022 $ - $ 27,279,652 $ - $ 27,279,652 December 31, 2019 Level 1 Level 2 Level 3 Total Long-term debt Senior Notes due 2022 $ - $ 27,313,994 $ - $ 27,313,994 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments and Real Estate | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value of Financial Instruments and Real Estate | |
5. Fair Value of Financial Instruments and Real Estate | Note 5 - Fair Value of Financial Instruments and Real Estate The estimated fair values of the Company’s financial instruments and real estate as of September 30, 2020 and December 31, 2019 are as follows: September 30, 2020 December 31, 2019 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value Fixed-maturity securities-held-to maturity $ 7,369,608 $ 7,899,304 $ 3,825,952 $ 4,124,767 Cash and cash equivalents $ 24,388,103 $ 24,388,103 $ 32,391,485 $ 32,391,485 Premiums receivable, net $ 13,883,708 $ 13,883,708 $ 12,706,411 $ 12,706,411 Reinsurance receivables, net $ 55,529,408 $ 55,529,408 $ 40,750,538 $ 40,750,538 Real estate, net of accumulated depreciation $ 2,238,435 $ 2,705,000 $ 2,292,743 $ 2,705,000 Reinsurance balances payable $ 10,062,649 $ 10,062,649 $ 11,714,724 $ 11,714,724 |
Property and Casualty Insurance
Property and Casualty Insurance Activity | 9 Months Ended |
Sep. 30, 2020 | |
Property and Casualty Insurance Activity | |
6. Property and Casualty Insurance Activity | Note 6 – Property and Casualty Insurance Activity Premiums Earned Premiums written, ceded and earned are as follows: Direct Assumed Ceded Net Nine months ended September 30, 2020 Premiums written $ 125,089,571 $ - $ (43,813,468 ) $ 81,276,103 Change in unearned premiums 2,215,602 - (2,392,318 ) (176,716 ) Premiums earned $ 127,305,173 $ - $ (46,205,786 ) $ 81,099,387 Nine months ended September 30, 2019 Premiums written $ 128,333,117 $ 938 $ (20,914,074 ) $ 107,419,981 Change in unearned premiums (11,035,993 ) (559 ) (1,366,251 ) (12,402,803 ) Premiums earned $ 117,297,124 $ 379 $ (22,280,325 ) $ 95,017,178 Three months ended September 30, 2020 Premiums written $ 45,742,165 $ - $ (15,747,215 ) $ 29,994,950 Change in unearned premiums (3,161,356 ) - 687,487 (2,473,869 ) Premiums earned $ 42,580,809 $ - $ (15,059,728 ) $ 27,521,081 Three months ended September 30, 2019 Premiums written $ 46,023,290 $ 861 $ (5,586,278 ) $ 40,437,873 Change in unearned premiums (4,579,777 ) (761 ) (1,637,325 ) (6,217,863 ) Premiums earned $ 41,443,513 $ 100 $ (7,223,603 ) $ 34,220,010 Premium receipts in advance of the policy effective date are recorded as advance premiums. The balance of advance premiums as of September 30, 2020 and December 31, 2019 was $4,919,256and $3,191,512, respectively. Loss and Loss Adjustment Expense Reserves The following table provides a reconciliation of the beginning and ending balances for unpaid losses and loss adjustment expense (“LAE”) reserves: Nine months ended September, 30 2020 2019 Balance at beginning of period $ 80,498,611 $ 56,197,106 Less reinsurance recoverables (15,728,224 ) (15,671,247 ) Net balance, beginning of period 64,770,387 40,525,859 Incurred related to: Current year 49,597,154 60,401,821 Prior years (279,727 ) 11,186,029 Total incurred 49,317,427 71,587,850 Paid related to: Current year 29,845,049 31,515,656 Prior years 24,068,492 18,600,946 Total paid 53,913,541 50,116,602 Net balance at end of period 60,174,273 61,997,107 Add reinsurance recoverables 24,804,751 15,412,316 Balance at end of period $ 84,979,024 $ 77,409,423 Incurred losses and LAE are net of reinsurance recoveries under reinsurance contracts of $23,826,986and $8,849,440for the nine months ended September 30, 2020 and 2019, respectively. Prior year incurred loss and LAE development is based upon estimates by line of business and accident year. Prior year loss and LAE development incurred during the nine months ended September 30, 2020 and 2019 was $279,727favorable and $11,186,029unfavorable, respectively. During the nine months ended September 30, 2019, the Company increased case reserves for certain older open liability claims, which primarily affected the ultimate loss projections for commercial lines business. This was in response to management’s detailed review of open liability claims that resulted in new assessments of carried case and incurred but not reported (“IBNR”) reserve levels, giving consideration to both Company and industry trends. Loss and LAE reserves The reserving process for loss and LAE reserves provides for the Company’s best estimate at a particular point in time of the ultimate unpaid cost of all losses and LAE incurred, including settlement and administration of losses, and is based on facts and circumstances then known including losses that have occurred but that have not yet been reported. The process relies on standard actuarial reserving methodologies, judgments relative to estimates of ultimate claim severity and frequency, the length of time before losses will develop to their ultimate level (‘tail’ factors), and the likelihood of changes in the law or other external factors that are beyond the Company’s control. Several actuarial reserving methodologies are used to estimate required loss reserves. The process produces carried reserves set by management based upon the actuaries’ best estimate and is the cumulative combination of the best estimates made by line of business, accident year, and loss and LAE. The amount of loss and LAE reserves for individual reported claims (the “case reserve”) is determined by the claims department and changes over time as new information is gathered. Such information is critical to the review of appropriate IBNR reserves and includes a review of coverage applicability, comparative liability on the part of the insured, injury severity, property damage, replacement cost estimates, and any other information considered pertinent to estimating the exposure presented by the claim. The amounts of loss and LAE reserves for unreported claims and development on known claims (IBNR reserves) are determined using historical information aggregated by line of insurance as adjusted to current conditions. Since this process produces loss reserves set by management based upon the actuaries’ best estimate, there is no explicit or implicit provision for uncertainty in the carried loss reserves. Due to the inherent uncertainty associated with the reserving process, the ultimate liability may differ, perhaps substantially, from the original estimate. Such estimates are regularly reviewed and updated and any resulting adjustments are included in the current period’s results. Reserves are closely monitored and are recomputed periodically using the most recent information on reported claims and a variety of statistical techniques. On at least a quarterly basis, the Company reviews by line of business existing reserves, new claims, changes to existing case reserves, and paid losses with respect to the current and prior periods. Several methods are used, varying by line of business and accident year, in order to select the estimated period-end loss reserves. These methods include the following: Paid Loss Development Incurred Loss Development Paid Bornhuetter-Ferguson (“BF”) Incurred Bornhuetter-Ferguson (“BF”) Incremental Claim-Based Methods Frequency / Severity Based Methods Management’s best estimate of required reserves is generally based on an average of the methods above, with appropriate weighting of methods based on the line of business and accident year being projected. In some cases, additional methods or historical data from industry sources are employed to supplement the projections derived from the methods listed above. Three key assumptions that materially affect the estimate of loss reserves are the loss ratio estimate for the current accident year used in the BF methods, the loss development factor selections used in the loss development methods, and the loss severity assumptions used in the frequency / severity method described above. The loss ratio estimates used in the BF methods are selected after reviewing historical accident year loss ratios adjusted for rate changes, trend, and mix of business. The severity assumptions used in the frequency / severity method are determined by reviewing historical average claim severity for older more mature accident periods, trended forward to less mature accident periods. The Company is not aware of any claim trends that have emerged or that would cause future adverse development that have not already been contemplated in setting current carried reserves levels. In New York State, lawsuits for negligence are subject to certain limitations and must be commenced within three years from the date of the accident or are otherwise barred. Accordingly, the Company’s exposure to unreported claims (“pure” IBNR) for accident dates of September 30, 2017 and prior is limited, although there remains the possibility of adverse development on reported claims (“case development” IBNR). In certain rare circumstances states have retroactively revised a statute of limitations. The Company is not aware of any such effort that would have a material impact on the Company’s results. The following is information about incurred and paid claims development as of September 30, 2020, net of reinsurance, as well as the cumulative reported claims by accident year and total IBNR reserves as of September 30, 2020 included in the net incurred loss and allocated expense amounts. The historical information regarding incurred and paid claims development for the years ended December 31, 2011 to December 31, 2019 is presented as supplementary unaudited information. All Lines of Business (in thousands, except reported claims data) Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance As of September 30, 2020 For the Years Ended December 31, Cumulative Accident Nine months ended September 30, Number of Reported Claims by Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 IBNR Year (Unaudited 2011 - 2019) (Unaudited) 2011 $ 7,603 $ 7,678 $ 8,618 $ 9,440 $ 9,198 $ 9,066 $ 9,144 $ 9,171 $ 9,127 $ 9,128 $ - 1,914 2012 9,539 9,344 10,278 10,382 10,582 10,790 10,791 11,015 10,891 19 4,704 (1) 2013 10,728 9,745 9,424 9,621 10,061 10,089 10,607 10,456 33 1,561 2014 14,193 14,260 14,218 14,564 15,023 16,381 16,425 253 2,137 2015 22,340 21,994 22,148 22,491 23,386 22,974 108 2,555 2016 26,062 24,941 24,789 27,887 27,862 507 2,878 2017 31,605 32,169 35,304 36,131 383 3,389 2018 54,455 56,351 58,233 1,986 4,204 2019 75,092 72,772 10,765 4,423 2020 47,313 8,823 4,499 Total $ 312,185 (1) Reported claims for accident year 2012 includes 3,406 claims from Superstorm Sandy. All Lines of Business (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident For the Years Ended December 31, Nine months ended September 30, Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (Unaudited 2011 - 2019) (Unaudited) 2011 $ 3,740 $ 5,117 $ 6,228 $ 7,170 $ 8,139 $ 8,540 $ 8,702 $ 8,727 $ 8,789 $ 8,994 2012 3,950 5,770 7,127 8,196 9,187 10,236 10,323 10,428 10,448 2013 3,405 5,303 6,633 7,591 8,407 9,056 9,717 10,009 2014 5,710 9,429 10,738 11,770 13,819 14,901 15,428 2015 12,295 16,181 18,266 19,984 21,067 22,088 2016 15,364 19,001 21,106 23,974 25,125 2017 16,704 24,820 28,693 30,821 2018 32,383 44,516 49,247 2019 40,933 53,910 2020 28,688 Total $ 254,757 Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented $ 57,428 All outstanding liabilities before 2011, net of reinsurance 98 Liabilities for loss and allocated loss adjustment expenses, net of reinsurance $ 57,526 Reported claim counts are measured on an occurrence or per event basis. A single claim occurrence could result in more than one loss type or claimant; however, the Company counts claims at the occurrence level as a single claim regardless of the number of claimants or claim features involved. The reconciliation of the net incurred and paid loss development tables to the loss and LAE reserves in the consolidated balance sheet is as follows: As of (in thousands) September 30, 2020 Liabilities for loss and loss adjustment expenses, net of reinsurance $ 57,626 Total reinsurance recoverable on unpaid losses 24,805 Unallocated loss adjustment expenses 2,648 Total gross liability for loss and LAE reserves $ 85,079 Reinsurance Through June 30, 2019, the Company’s quota share reinsurance treaties were on a July 1 through June 30 fiscal year basis. Effective December 15, 2019, the Company entered into a quota share reinsurance treaty for its personal lines business, which primarily consists of homeowners’ policies, covering the period from December 15, 2019 through December 31, 2020 (“2019/2020 Treaty”). The Company’s quota share reinsurance treaties in effect during the nine months ended September 30, 2019 for its personal lines business were covered through June 30, 2019 under a treaty covering a two-year period from July 1, 2017 through June 30, 2019 (“2017/2019 Treaty”). The treaty in effect during the nine months ended September 30, 2019 was covered through June 30, 2019 under the July 1, 2018 through June 30, 2019 treaty year (“2018/2019 Treaty Year”). Effective July 1, 2019, the 2017/2019 Treaty and the commercial umbrella treaty expired on a run-off basis; these treaties were not renewed. The Company entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2020. Material terms for reinsurance treaties in effect for the treaty years shown below are as follows: Treaty Year Line of Business December 15, 2019 to December 31, 2020 July 1, 2019 to December 14, 2019 July 1, 2018 to June 30, 2019 Personal Lines: Homeowners, dwelling fire and and canine legal liability Quota share treaty: Percent ceded 25 % None 10 % Treaty Year Line of Business January 1, 2021 to June 30, 2021 July 1, 2020 to December 31, 2020 December 15, 2019 to June 30, 2020 July 1, 2019 to December 14, 2019 July 1, 2018 to June 30, 2019 Personal Lines: Homeowners, dwelling fire and and canine legal liability Quota share treaty: Risk retained on intial $1,000,000 of losses NA (7) $ 750,000 $ 750,000 $ 1,000,000 $ 900,000 Losses per occurrence subject to quota share reinsurance coverage NA (7) $ 1,000,000 $ 1,000,000 None $ 1,000,000 Expiration date December 31, 2020 December 31, 2020 June 30, 2019 Excess of loss coverage and facultative facility coverage (1) $ 8,000,000 $ 8,000,000 $ 9,000,000 $ 9,000,000 $ 9,000,000 in excess of in excess of in excess of in excess of in excess of $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 Total reinsurance coverage per occurrence (7) $ 8,000,000 $ 8,250,000 $ 9,250,000 $ 9,000,000 $ 9,100,000 Losses per occurrence subject to reinsurance coverage $ 8,000,000 $ 9,000,000 $ 10,000,000 $ 10,000,000 $ 10,000,000 Expiration date (7) June 30, 2021 June 30, 2021 June 30, 2020 June 30, 2020 June 30, 2019 Catastrophe Reinsurance: Initial loss subject to personal lines quota share treaty NA (7) $ 7,500,000 $ 7,500,000 None $ 5,000,000 Risk retained per catastrophe occurrence (2) (7) $ 10,000,000 $ 8,125,000 $ 5,625,000 $ 7,500,000 $ 4,500,000 Catastrophe loss coverage in excess of quota share coverage (3) (7) $ 475,000,000 $ 475,000,000 $ 602,500,000 $ 602,500,000 $ 445,000,000 Reinstatement premium protection (4) (5) (6) Yes Yes Yes Yes Yes (1) For personal lines, includes the addition of an automatic facultative facility allowing KICO to obtain homeowners single risk coverage up to $10,000,000 in total insured value, which covers direct losses from $3,500,000 to $10,000,000. (2) Plus losses in excess of catastrophe coverage. Effective July 1, 2020, no reinsurance coverage for the $2,500,000 gap between quota share limit of $7,500,000 and first $10,000,000 layer of catastrophe coverage (see note (7) below). (3) Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts. Duration of 168 consecutive hours for a catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone. (4) Effective July 1, 2018, reinstatement premium protection for $210,000,000 of catastrophe coverage in excess of $5,000,000. (5) Effective July 1, 2019, reinstatement premium protection for $292,500,000 of catastrophe coverage in excess of $7,500,000. (6) Effective July 1, 2020, reinstatement premium protection for $70,000,000 of catastrophe coverage in excess of $10,000,000. (7) Quota share expires December 31, 2020; reinsurance coverage from January 1, 2021 through June 30, 2021 is only for excess of loss and catastrophe reinsurance. Treaty Year July 1, 2020 July 1, 2019 July 1, 2018 to to to Line of Business June 30, 2021 June 30, 2020 June 30, 2019 Personal Lines: Personal Umbrella Quota share treaty: Percent ceded - first $1,000,000 of coverage 90 % 90 % 90 % Percent ceded - excess of $1,000,000 of coverage 95 % 100 % 100 % Risk retained $ 300,000 $ 100,000 $ 100,000 Total reinsurance coverage per occurrence $ 4,700,000 $ 4,900,000 $ 4,900,000 Losses per occurrence subject to quota share reinsurance coverage $ 5,000,000 $ 5,000,000 $ 5,000,000 Expiration date June 30, 2021 June 30, 2020 June 30, 2019 Commercial Lines: General liability commercial policies Quota share treaty None None None Risk retained $ 750,000 $ 750,000 $ 750,000 Excess of loss coverage above risk retained $ 3,750,000 $ 3,750,000 $ 3,750,000 in excess of in excess of in excess of $ 750,000 $ 750,000 $ 750,000 Total reinsurance coverage per occurrence $ 3,750,000 $ 3,750,000 $ 3,750,000 Losses per occurrence subject to reinsurance coverage $ 4,500,000 $ 4,500,000 $ 4,500,000 Commercial Umbrella Quota share treaty: None None Percent ceded - first $1,000,000 of coverage 90 % Percent ceded - excess of $1,000,000 of coverage 100 % Risk retained $ 100,000 Total reinsurance coverage per occurrence $ 4,900,000 Losses per occurrence subject to quota share reinsurance coverage $ 5,000,000 Expiration date June 30, 2019 The Company’s reinsurance program has been structured to enable the Company to grow its premium volume while maintaining regulatory capital and other financial ratios generally within or below the expected ranges used for regulatory oversight purposes. The reinsurance program also provides income as a result of ceding commissions earned pursuant to the quota share reinsurance contracts. The Company’s participation in reinsurance arrangements does not relieve the Company of its obligations to policyholders. Ceding Commission Revenue The Company earns ceding commission revenue under its quota share reinsurance agreements based on: (i) a fixed provisional commission rate at which provisional ceding commissions are earned, and (ii) a sliding scale of commission rates and ultimate treaty year loss ratios on the policies reinsured under each of these agreements based upon which contingent ceding commissions are earned. The sliding scale includes minimum and maximum commission rates in relation to specified ultimate loss ratios. The commission rate and contingent ceding commissions earned increases when the estimated ultimate loss ratio decreases and, conversely, the commission rate and contingent ceding commissions earned decreases when the estimated ultimate loss ratio increases. The Company’s estimated ultimate treaty year loss ratios (the “Loss Ratio(s)”) for treaties in effect during the three months and nine months ended September 30, 2020 are attributable to contracts under the 2019/2020 Treaty. The Loss Ratios for treaties in effect for the nine months ended September 30, 2019 are attributable to contracts under the 2017/2019 Treaty for the 2018/2019 Treaty Year, which expired on June 30, 2019 and was not renewed. There was no current quota share treaty in effect during the three months ended September 30, 2019, and therefore no current contingent commission adjustment was recorded for the three months ended September 30, 2019. Under the 2019/2020 Treaty and the 2017/2019 Treaty for the 2018/2019 Treaty Year, the Company received an upfront fixed provisional ceding commission rate that is not subject to a sliding scale contingent adjustment. In addition to the treaties that were in effect during the nine months ended September 30, 2020 and 2019, and three months ended September 30, 2019, the Loss Ratios from prior years’ treaties are subject to change as incurred losses from those periods increase or decrease, resulting in an increase or decrease in the commission rate and contingent ceding commissions earned. Ceding commission revenue consists of the following: Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Provisional ceding commissions earned $ 3,460,768 $ 1,320,069 $ 10,621,804 $ 4,001,294 Contingent ceding commissions earned (11,994 ) (290,487 ) 138,283 (1,018,334 ) $ 3,448,774 $ 1,029,582 $ 10,760,087 $ 2,982,960 Provisional ceding commissions are settled monthly. Balances due from reinsurers for contingent ceding commissions on quota share treaties are settled annually based on the Loss Ratio of each treaty year that ends on June 30. As discussed above, the Loss Ratios from prior years’ treaties are subject to change as incurred losses from those periods develop, resulting in an increase or decrease in the commission rate and contingent ceding commissions earned. As of September 30, 2020 and December 31, 2019, net contingent ceding commissions payable to reinsurers under all treaties was approximately $2,864,000and $2,886,000, respectively, which is recorded in reinsurance balances payable on the accompanying condensed consolidated balance sheets. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt | |
7. Debt | Note 7 – Debt Federal Home Loan Bank In July 2017, KICO became a member of, and invested in, the Federal Home Loan Bank of New York (“FHLBNY”). The aggregate fair value of the investment in dividend bearing common stock was $11,200and $15,180as of September 30, 2020 and December 31, 2019, respectively. FHLBNY members have access to a variety of flexible, low cost funding through FHLBNY’s credit products, enabling members to customize advances, which are to be fully collateralized. Eligible collateral to pledge to FHLBNY includes residential and commercial mortgage backed securities, along with U.S. Treasury and agency securities. See Note 3 – Investments for eligible collateral held in a designated custodian account available for future advances. Advances are limited to 5% of KICO’s net admitted assets as of the previous quarter and are due and payable within ninety days of borrowing. The maximum allowable advance as of September 30, 2020 was approximately $11,732,000. Advances are limited to 85% of the amount of available collateral, which was approximately $5,683,000 as of September 30, 2020. There were no borrowings under this facility during the nine months ended September 30, 2020 and 2019. Long-term Debt On December 19, 2017, the Company issued $30 million of its5.50% Senior Unsecured Notes dueDecember 30, 2022 (the “Notes”) in an underwritten public offering. Interest is payable semi-annually in arrears on June 30 and December 30 of each year, which began on June 30, 2018 at the rate of 5.50% per annum. The net proceeds of the issuance were $29,121,630, net of discount of $163,200and transaction costs of $715,170, for an effective yield of 5.67% per annum. The balance of long-term debt as of September 30, 2020 and December 31, 2019 is as follows: September 30, December 31, 2020 2019 5.50% Senior Unsecured Notes $ 30,000,000 $ 30,000,000 Discount (73,023 ) (97,325 ) Issuance costs (323,411 ) (431,244 ) Long-term debt, net $ 29,603,566 $ 29,471,431 The Notes are unsecured obligations of the Company and are not the obligations of or guaranteed by any of the Company’s subsidiaries. The Notes rank senior in right of payment to any of the Company’s existing and future indebtedness that is by its terms expressly subordinated or junior in right of payment to the Notes. The Notes rank equally in right of payment to all of the Company’s existing and future senior indebtedness, but will be effectively subordinated to any secured indebtedness to the extent of the value of the collateral securing such secured indebtedness. In addition, the Notes will be structurally subordinated to the indebtedness and other obligations of the Company’s subsidiaries. The Company may redeem the Notes, at any time in whole or from time to time in part, at the redemption price equal to the greater of: (i) 100% of the principal amount of the Notes to be redeemed; and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed that would be due if the Notes matured on the applicable redemption date (exclusive of interest accrued to the applicable redemption date) discounted to the redemption date on a semi-annual basis at the Treasury Rate, plus 50 basis points. The Company has used an aggregate $28,256,335of the net proceeds from the offering to contribute capital to KICO in order to support additional growth. The remainder of the net proceeds is being used for general corporate purposes. A registration statement relating to the debt issued in the offering was filed with the SEC, which became effective on November 28, 2017. |
Stockholders Equity
Stockholders Equity | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders Equity | |
8. Stockholders' Equity | Note 8 – Stockholders’ Equity Dividends Declared and Paid Dividends declared and paid on Common Stock were $1,530,390 and $2,827,276for the nine months ended September 30, 2020 and 2019, respectively. The Company’s Board of Directors approved a quarterly dividend on November 4, 2020 of $.04per share payable in cash on December 15, 2020 to stockholders of record as of November 30, 2020 (see Note 13 - Subsequent Events). Stock Options Effective August 12, 2014, the Company adopted the 2014 Equity Participation Plan (the “2014 Plan”) pursuant to which a maximum of 700,000shares of Common Stock of the Company were initially authorized to be issued pursuant to the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and stock bonuses. Incentive stock options granted under the 2014 Plan expire no later than ten years from the date of grant (except no later than five years for a grant to a 10% stockholder). Non-statutory stock options granted under the 2014 Plan expire no later than ten years from the date of grant. The Board of Directors or the Compensation Committee determines the vesting provisions for stock awards granted under the 2014 Plan, subject to the provisions of the 2014 Plan. On August 5, 2020, the Company’s stockholders approved amendments to the 2014 Plan, including an increase in the maximum shares of Common Stock of the Company that are authorized to be used pursuant to the 2014 Plan to1,400,000. The results of operations for the three months ended September 30, 2020 and 2019 include stock-based compensation expense for stock options totaling approximately $14,000and $20,000, respectively. The results of operations for the nine months ended September 30, 2020 and 2019 include stock-based compensation expense for stock options totaling approximately $52,000and $21,000, respectively. Stock-based compensation expense related to stock options is net of estimated forfeitures of approximately 16% for the three months and nine months ended September 30, 2020. Stock-based compensation expense related to stock options is net of estimated forfeitures of approximately 17% for the three months and nine months ended September 30, 2019. Such amounts have been included in the consolidated statements of operations and comprehensive income (loss) within other operating expenses. The weighted average estimated fair value of stock options granted during the nine months ended September 30, 2020 and 2019 was $2.40per share and $1.91per share, respectively. The fair value of stock options at the grant date was estimated using the Black-Scholes option-pricing model. The following weighted average assumptions were used for grants during the following periods: Nine months ended September 30, 2020 2019 Dividend Yield 3.14 % 2.87 % Volatility 37.69 % 36.11 % Risk-Free Interest Rate 1.40 % 1.61 % Expected Life 2.75 years 3.25 years A summary of stock option activity under the Company’s 2014 Plan for the nine months ended September 30, 2020 is as follows: Stock Options Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 1, 2020 82,000 $ 8.61 3.38 $ - Granted 74,523 $ 7.96 4.34 $ - Exercised - $ - - $ - Forfeited (36,557 ) $ 8.43 - $ - Outstanding at September 30, 2020 119,966 $ 8.26 3.80 $ - Vested and Exercisable at September 30, 2020 50,000 $ 8.45 1.34 $ - Restricted Stock Awards A summary of the restricted Common Stock activity under the Company’s 2014 Plan for the nine months ended September 30, 2020 is as follows: Restricted Stock Awards Shares Weighted Average Grant Date Fair Value per Share Aggregate Fair Value Balance at January 1, 2020 213,929 $ 16.51 $ 3,554,174 Granted 209,518 $ 7.93 $ 1,661,504 Vested (91,863 ) $ 14.49 $ (1,331,254 ) Forfeited (19,266 ) $ 15.18 $ (292,455 ) Balance at September 30, 2020 312,318 $ 10.45 $ 3,591,969 Fair value was calculated using the closing price of the Company’s Common Stock on the grant date. For the three months ended September 30, 2020 and 2019, stock-based compensation for these grants was approximately $416,000and $388,000, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). For the nine months ended September 30, 2020 and 2019, stock-based compensation for these grants was approximately $1,321,000and $1,096,000, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). These amounts reflect the Company’s accounting expense and do not correspond to the actual value that will be recognized by the directors, executives and employees. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Taxes | |
9. Income Taxes | Note 9 – Income Taxes The Company files a consolidated U.S. federal income tax return that includes all wholly owned subsidiaries. State tax returns are filed on a consolidated or separate return basis depending on applicable laws. The Company records adjustments related to prior years’ taxes during the period when they are identified, generally when the tax returns are filed. The effect of these adjustments on the current and prior periods (during which the differences originated) is evaluated based upon quantitative and qualitative factors and are considered in relation to the consolidated financial statements taken as a whole for the respective periods. Deferred tax assets and liabilities are determined using the enacted tax rates applicable to the period the temporary differences are expected to be recovered. Accordingly, the current period income tax provision can be affected by the enactment of new tax rates. The net deferred income taxes on the balance sheets reflect temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and income tax purposes, tax effected at various rates depending on whether the temporary differences are subject to federal taxes, state taxes, or both. Significant components of the Company’s deferred tax assets and liabilities are as follows: September 30, December 31, 2020 2019 Deferred tax asset: Net operating loss carryovers (1) $ 55,845 $ 1,586,247 Claims reserve discount 779,554 839,959 Unearned premium 3,185,331 3,105,344 Deferred ceding commission revenue 1,513,500 1,624,434 Other 491,402 462,019 Total deferred tax assets 6,025,632 7,618,003 Deferred tax liability: Investment in KICO (2) 759,543 759,543 Deferred acquisition costs 4,182,428 4,333,219 Intangible asset 105,000 105,000 Depreciation and amortization 369,570 312,298 Net unrealized gains of securities - available-for-sale 2,581,873 1,796,891 Total deferred tax liabilities 7,998,414 7,306,951 Net deferred income tax (liability) asset $ (1,972,782 ) $ 311,052 (1) The deferred tax assets from net operating loss carryovers (“NOL”) are as follows: (A) On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law, allowing for a five year carryback of 2019 NOL’s. The Company will elect on its 2019 federal income tax return to carry back the 2019 NOL to tax years 2014 and 2015. The corporate tax rate in 2014 and 2015 was 34%, compared to the corporate tax rate of 21% in 2019. (B) Kingstone generates operating losses for state purposes and has prior year NOLs available. The state NOL as of September 30, 2020 and December 31, 2019 was approximately $28,690,000and $24,901,000, respectively. KICO, the Company’s insurance underwriting subsidiary, is not subject to state income taxes. KICO’s state tax obligations are paid through a gross premiums tax, which is included in the consolidated statements of operations and comprehensive income (loss) within other underwriting expenses. Kingstone has recorded a valuation allowance due to the uncertainty of generating enough state taxable income to utilize 100% of the available state NOLs over their remaining lives, which expire between 2027 and 2040. (2) Deferred tax liability – Investment in KICO On July 1, 2009, the Company completed the acquisition of 100% of the issued and outstanding common stock of KICO (formerly known as Commercial Mutual Insurance Company (“CMIC”)) pursuant to the conversion of CMIC from an advance premium cooperative to a stock property and casualty insurance company. Pursuant to the plan of conversion, the Company acquired a 100% equity interest in KICO, in consideration for the exchange of $3,750,000principal amount of surplus notes of CMIC. In addition, the Company forgave all accrued and unpaid interest on the surplus notes as of the date of conversion. As of the date of acquisition, unpaid accrued interest on the surplus notes along with the accretion of the discount on the original purchase of the surplus notes totaled $2,921,319(together “Untaxed Interest”). As of the date of acquisition, the deferred tax liability on the Untaxed Interest was $1,169,000. A temporary difference with an indefinite life exists when the parent has a lower carrying value of its subsidiary for income tax purposes. The deferred tax liability was reduced to $759,543upon the reduction of federal income tax rates as of December 31, 2017. The Company is required to maintain its deferred tax liability of $759,543related to this temporary difference until the stock of KICO is sold, or the assets of KICO are sold or KICO and the parent are merged. In assessing the valuation of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. No valuation allowance against deferred tax assets has been established, except for NOL limitations, as the Company believes it is more likely than not the deferred tax assets will be realized based on the historical taxable income of KICO, or by offset to deferred tax liabilities. The Company had no material unrecognized tax benefit and no adjustments to liabilities or operations were required. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the nine months ended September 30, 2020 and 2019. If any had been recognized these would have been reported in income tax expense. Generally, taxing authorities may examine the Company’s tax returns for the three years from the date of filing. The Company’s tax returns for the years ended December 31, 2016 through December 31, 2019 remain subject to examination. The Company’s federal income tax return for the year ended December 31, 2016 has been examined by the Internal Revenue Service and was accepted as filed. |
Earnings(Loss) Per Common Share
Earnings(Loss) Per Common Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings (loss) per share : | |
10. Earnings/(Loss) Per Common Share | Note 10 –Earnings/(Loss) Per Common Share Basic net earnings/(loss) per common share is computed by dividing income/(loss) available to common shareholders by the weighted-average number of shares of Common Stock outstanding. Diluted earnings/(loss) per common share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options as well as non-vested restricted stock awards. The computation of diluted earnings/(loss) per common share excludes those options with an exercise price in excess of the average market price of the Company’s Common Stock during the periods presented. The computation of diluted earnings/(loss) per common share excludes outstanding options in periods where the exercise of such options would be anti-dilutive. For the nine months ended September 30, 2020, no options were included in the computation of diluted earnings (loss) per common share as they would have been anti-dilutive for the relevant periods and, as a result, the weighted average number of shares of Common Stock used in the calculation of diluted earnings per common share has not been adjusted for the effect of such options. The reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted earnings (loss) per common share follows: Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Weighted average number of shares outstanding 10,673,077 10,779,641 10,737,853 10,769,817 Effect of dilutive securities, common share equivalents: Stock options - - - - Restricted stock awards - - - - Weighted average number of shares outstanding, used for computing diluted earnings per share 10,673,077 10,779,641 10,737,853 10,769,817 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
11. Commitments and Contingencies | Note 11 - Commitments and Contingencies Litigation From time to time, the Company is involved in various legal proceedings in the ordinary course of business. For example, to the extent a claim is asserted by a third party in a lawsuit against one of the Company’s insureds covered by a particular policy, the Company may have a duty to defend the insured party against the claim. These claims may relate to bodily injury, property damage or other compensable injuries as set forth in the policy. Such proceedings are considered in estimating the liability for loss and LAE expenses. On June 12, 2019, Phillip Woolgar filed a suit naming the Company and certain present or former officers and directors as defendants in a putative class action captioned Woolgar v. Kingstone Companies et al. Office Lease The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. The Company is a party to a non-cancellable operating lease, dated March 27, 2015, for its office facility for KICO located in Valley Stream, New York expiring March 31, 2024. On July 8, 2019, the Company entered into a lease agreement for an additional office facility for Cosi located in Valley Stream, New York under a non-cancelable operating lease. The lease has a term of seven years and two months expiring December 31, 2026. In addition to the base rental costs, occupancy lease agreements generally provide for rent escalations resulting from increased assessments from real estate taxes and other charges. Additional information regarding the Company’s office operating leases is as follows: Three months ended Nine months ended Lease cost September 30, 2020 September 30, 2020 Operating leases $ 61,297 $ 183,891 Short-term leases - - Total lease cost (1) $ 61,297 $ 183,891 Other information on operating leases Cash payments included in the measurement of lease liability reported in operating cash flows $ 62,782 $ 147,018 Discount rate 5.50 % 5.50 % Remaining lease term in years 5 years 5 years (1) Included in the condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses for KICO and within other operating expenses for Cosi. The following table presents the contractual maturities of the Company’s lease liabilities as of September 30, 2020: Rent expense for the three months ended September 30, 2020 and 2019 amounted to $61,297and $41,342, respectively. Rent expense for the nine months ended September 30, 2020 and 2019 totaled $183,891and $124,026, respectively. Rent expense is included in the accompanying condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses. Employment Agreements Barry Goldstein, President, Chief Executive Officer and Executive Chairman of the Board On October 14, 2019, the Company and Barry B. Goldstein, the Company’s President, Chief Executive Officer and Executive Chairman of the Board, entered into a Second Amended and Restated Employment Agreement (the “Amended Employment Agreement”). The Amended Employment Agreement is effective as of January 1, 2020 and expires on December 31, 2022. The Amended Employment Agreement extends the expiration date of the employment agreement in effect for Mr. Goldstein from December 31, 2021 to December 31, 2022. Pursuant to the Amended Employment Agreement, Mr. Goldstein is entitled to receive an annual base salary of $500,000and an annual bonus equal to 6% of the Company’s consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 2.5 times his base salary. In addition, pursuant to the Amended Employment Agreement, Mr. Goldstein is entitled to receive a long-term compensation (“LTC”) award of between $945,000 and $2,835,000 based on a specified minimum increase in the Company’s adjusted book value per share (as defined in the Amended Employment Agreement) as of December 31, 2022 as compared to December 31, 2019 (with the maximum LTC payment being due if the average per annum increase is at least 14%). Further, pursuant to the Amended Employment Agreement, in the event that Mr. Goldstein’s employment is terminated by the Company without cause or he resigns for good reason (each as defined in the Amended Employment Agreement), Mr. Goldstein would be entitled to receive his base salary, the 6% bonus and the LTC payment for the remainder of the term. In addition, in the event of Mr. Goldstein’s death, his estate would be entitled to receive his base salary, accrued bonus and accrued LTC payment through the date of death. Further, in the event that Mr. Goldstein’s employment is terminated by the Company without cause or he resigns for good reason, or, in the event of the termination of Mr. Goldstein’s employment due to disability or death, Mr. Goldstein’s granted but unvested restricted stock awards will vest. Mr. Goldstein would be entitled, under certain circumstances, to a payment equal to 3.82 times his then annual salary, the target LTC payment of $1,890,000 and his accrued 6% bonus in the event of the termination of his employment within eighteen months following a change of control of the Company. Pursuant to the Amended Employment Agreement, in January 2020, Mr. Goldstein received a grant of 157,431shares of restricted stock, under the terms of the Company’s 2014 Plan determined by dividing $1,250,000by the fair market value of the Company’s Common Stock on the date of grant. This 2020 grant will become vested with respect to one-third of the award on each of the first and second anniversaries of the grant date and on December 31, 2022 based on the continued provision of services through the applicable vesting date. Also pursuant to the Amended Employment Agreement, Mr. Goldstein will be entitled to receive a grant, under the terms of the 2014 Plan, during January 2021, of a number of shares of restricted stock determined by dividing $1,500,000by the fair market value of the Company’s Common Stock on the date of grant. The January 2021 grant will become vested with respect to one-half of the award on each of the first anniversary of the grant date and on December 31, 2022 based on the continued provision of services through the applicable vesting date. Further, pursuant to the Amended Employment Agreement, Mr. Goldstein is entitled to receive a grant, under the terms of the 2014 Plan, during each of 2020, 2021 and 2022, of a number of shares of restricted stock determined by dividing $136,500by the fair market value of the Company’s Common Stock on the date of grant. In January 2020, Mr. Goldstein was granted 17,191shares of restricted stock pursuant to this provision. This grant will become vested with respect to one-third of the award on each of the first and second anniversaries of the grant date and on December 31, 2022 based on the continued provision of services through the applicable vesting date. The 2021 grant will become vested with respect to one-half of the award on each of the first anniversary of the grant date and on December 31, 2022 based on the continued provision of services through the applicable vesting date. The 2022 grant will become vested on December 31, 2022 based on the continued provision of services through such date. Dale A. Thatcher Effective July 19, 2019 (the “Separation Date”), Dale A. Thatcher retired and resigned his positions as Chief Executive Officer and President of the Company and KICO. At such time, he also resigned his positions on the Board of Directors of each of the Company and KICO. Effective upon Mr. Thatcher’s separation from employment, the Board appointed Barry B. Goldstein, former Chief Executive Officer and Executive Chairman of the Board of Directors, to the position of Chief Executive Officer and President of each of the Company and KICO. Mr. Goldstein previously served as Chief Executive Officer and President of the Company from March 2001 through December 31, 2018, and as Chief Executive Officer and President of KICO from January 2012 through December 31, 2018. In connection with his separation from employment, each of the Company and KICO entered into an Agreement and General Release (the “Separation Agreement”) with Mr. Thatcher. Pursuant to the Separation Agreement, the Company and KICO shall collectively provide the following payments and benefits to Mr. Thatcher in full satisfaction of all payments and benefits and other amounts due to him under the terms of the existing employment agreements upon his separation from employment: (i) $381,111 (representing the amount of base salary he would have received had he remained employed through March 31, 2020), (ii) $5,000 in full satisfaction for any bonus payments payable under the existing employment agreements, (iii) continuing group health coverage commencing on the Separation Date and ending on March 31, 2020, and (iv) continued vesting of all stock awards previously granted to Mr. Thatcher in his capacity as an executive officer but which were unvested as of the Separation Date (Mr. Thatcher shall not be entitled to any further grants of stock awards after the Separation Date). In addition, the Company and KICO agreed to provide Mr. Thatcher with a severance payment of $20,000in consideration for a release. Pursuant to the Separation Agreement, Mr. Thatcher agreed that, for a period of three years following the Separation Date, he shall not accept any operating executive role with another property and casualty insurance company. Meryl Golden, Chief Operating Officer On September 16, 2019, the Company and Meryl Golden entered into an employment agreement (the “Golden Employment Agreement”) pursuant to which Ms. Golden serves as the Company’s Chief Operating Officer. Ms. Golden also serves as KICO’s Chief Operating Officer. The Golden Employment Agreement became effective as of September 25, 2019 and expires on December 31, 2021. Pursuant to the Golden Employment Agreement, Ms. Golden is entitled to receive an annual salary of $500,000and was granted a five year option for the purchase of 50,000shares of the Company’s Common Stock pursuant to the 2014 Plan. The options granted will vest in three equal installments, with the first installment vesting on the grant date, and the remaining installments vesting on the first and second anniversaries following the grant date, subject to the terms of the stock option agreement between the Company and Ms. Golden. COVID-19 The outbreak of the coronavirus, also known as “COVID-19”, has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures have had and will continue to have a material adverse impact on global economic conditions as well as on the Company’s business activities. The extent to which COVID-19 may impact the Company’s business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. These events are highly uncertain and, as such, the Company cannot determine their financial impact at this time. No adjustments have been made to the amounts reported in these condensed consolidated financial statements as a result of this matter. |
Deferred Compensation Plan
Deferred Compensation Plan | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Compensation Plan | |
12. Deferred Compensation Plan | Note 12 – Deferred Compensation Plan On June 18, 2018, the Company adopted the Kingstone Companies, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan is offered to a select group (“Participants”), consisting of management and highly compensated employees as a method of recognizing and retaining such Participants. The Deferred Compensation Plan provides for eligible Participants to elect to defer up to 75% of their base compensation and up to 100% of bonuses and other compensation and to have such deferred amounts deemed to be invested in specified investment options. In addition to the Participant deferrals, the Company may choose to make matching contributions to some or all of the Participants in the Deferred Compensation Plan to the extent the Participant did not receive the maximum matching or non-elective contributions permissible under the Company’s 401(k) Plan due to limitations under the Internal Revenue Code or the 401(k) Plan. Participants may elect to receive payment of their account balances in a single cash payment or in annual installments for a period of up to ten years. The deferred compensation liability as of September 30, 2020 and December 31, 2019 amounted to $629,593and $599,274, respectively, and is recorded in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets. The Company did not make any voluntary contributions for the nine months ended September 30, 2020 and 2019. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events | |
13. Subsequent Events | Note 13 – Subsequent Events The Company has evaluated events that occurred subsequent to September 30, 2020 through the date these condensed consolidated financial statements were issued for matters that required disclosure or adjustment in these condensed consolidated financial statements. Dividends Declared On November 4, 2020, the Company’s Board of Directors approved a quarterly dividend of $0.04 per share payable in cash on December 15, 2020 to stockholders of record as of the close of business on November 30, 2020 (see Note 8 – Stockholders’ Equity). |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies | |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and assumptions, which include the reserves for losses and loss adjustment expenses, and are subject to estimation errors due to the inherent uncertainty in projecting ultimate claim amounts that will be reported and settled over a period of many years. In addition, estimates and assumptions associated with receivables under reinsurance contracts related to contingent ceding commission revenue require judgments by management. On an ongoing basis, management reevaluates its assumptions and the methods for calculating these estimates. Actual results may differ significantly from the estimates and assumptions used in preparing the consolidated financial statements. |
Principles of Consolidation | The accompanying condensed consolidated financial statements consist of Kingstone and its following wholly owned subsidiaries: (1) KICO and its wholly owned subsidiaries, CMIC Properties, Inc. (“Properties”) and 15 Joys Lane, LLC (“15 Joys Lane”), which together own the land and building from which KICO operates, and (2) Cosi. All significant intercompany account balances and transactions have been eliminated in consolidation. |
Accounting Changes | The Company has determined that it was not subject to any new accounting pronouncements that became effective during the nine months ended September 30, 2020. |
Accounting Pronouncements | In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The revised accounting guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses of available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective for the Company on January 1, 2023. The Company is currently evaluating the effect the updated guidance will have on its condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes (“ASU 2019-12”). Among other items, the amendments in ASU 2019-12 simplify the accounting treatment of tax law changes and year-to-date losses in interim periods. An entity generally recognizes the effects of a change in tax law in the period of enactment; however, there is an exception for tax laws with delayed effective dates. Under current guidance, an entity may not adjust its annual effective tax rate for a tax law change until the period in which the law is effective. This exception was removed under ASU 2019-12, thereby providing that all effects of a tax law change are recognized in the period of enactment, including adjustment of the estimated annual effective tax rate. Regarding year-to-date losses in interim periods, an entity is required to estimate its annual effective tax rate for the full fiscal year at the end of each interim period and use that rate to calculate its income taxes on a year-to-date basis. However, current guidance provides an exception that when a loss in an interim period exceeds the anticipated loss for the year, the income tax benefit is limited to the amount that would be recognized if the year-to-date loss were the anticipated loss for the full year. ASU 2019-12 removes this exception and provides that, in this situation, an entity would compute its income tax benefit at each interim period based on its estimated annual effective tax rate. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its financial condition and results of operations. The Company has determined that all other recently issued accounting pronouncements will not have a material impact on its consolidated financial position, results of operations and cash flows, or do not apply to its operations. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investments | |
Schedule of available for sale securities | September 30, 2020 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Category Cost Gains Months Months Value Gains Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 3,026,477 $ 42,853 $ - $ - $ 3,069,330 $ 42,853 Political subdivisions of States, Territories and Possessions 5,593,778 322,297 - - 5,916,075 322,297 Corporate and other bonds Industrial and miscellaneous 112,504,206 10,698,206 (1,654 ) - 123,200,758 10,696,552 Residential mortgage and other asset backed securities (1) 24,002,398 535,772 (38,491 ) (147,253 ) 24,352,426 350,028 Total $ 145,126,859 $ 11,599,128 $ (40,145 ) $ (147,253 ) $ 156,538,589 $ 11,411,730 (1) KICO has placed certain residential mortgage backed securities as eligible collateral in a designated custodian account related to its membership in the Federal Home Loan Bank of New York (“FHLBNY”) (see Note 7). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of September 30, 2020, the estimated fair value of the eligible investments was approximately $6,685,000. KICO will retain all rights regarding all securities if pledged as collateral. As of September 30, 2020, there was no outstanding balance on the FHLBNY credit line. December 31, 2019 Net Cost or Gross Gross Unrealized Losses Estimated Unrealized Amortized Unrealized Less than 12 More than 12 Fair Gains Category Cost Gains Months Months Value Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 7,037,856 $ 23,244 $ - $ - $ 7,061,100 $ 23,244 Political subdivisions of States, Territories and Possessions 9,151,293 181,835 (11,316 ) - 9,321,812 170,519 Corporate and other bonds Industrial and miscellaneous 119,874,573 5,777,624 (16,685 ) (13,473 ) 125,622,039 5,747,466 Residential mortgage and other asset backed securities (1) 26,138,633 437,841 (68,793 ) (276,451 ) 26,231,230 92,597 Total $ 162,202,355 $ 6,420,544 $ (96,794 ) $ (289,924 ) $ 168,236,181 $ 6,033,826 (1) KICO has placed certain residential mortgage backed securities as eligible collateral in a designated custodian account related to its membership in the FHLBNY (see Note 7). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of December 31, 2019, the estimated fair value of the eligible investments was approximately $7,284,000. KICO will retain all rights regarding all securities if pledged as collateral. As of December 31, 2019, there was no outstanding balance on the FHLBNY credit line. |
Schedule of available for sale securities by contractual maturity | September 30, 2020 December 31, 2019 Amortized Estimated Amortized Estimated Remaining Time to Maturity Cost Fair Value Cost Fair Value Less than one year $ 8,879,582 $ 8,986,248 $ 11,986,401 $ 12,025,804 One to five years 46,530,097 49,878,416 49,715,422 51,000,025 Five to ten years 57,021,277 64,194,995 69,850,104 74,410,275 More than 10 years 8,693,505 9,126,504 4,511,795 4,568,847 Residential mortgage and other asset backed securities 24,002,398 24,352,426 26,138,633 26,231,230 Total $ 145,126,859 $ 156,538,589 $ 162,202,355 $ 168,236,181 |
Schedule of equity securities | September 30, 2020 Gross Gross Unrealized Unrealized Estimated Category Cost Gains Losses Fair Value Equity Securities: Preferred stocks $ 14,260,019 $ 325,070 $ (339,125 ) $ 14,245,964 Common stocks, mutual funds, and exchange traded funds 16,040,820 777,813 (1,441,330 ) 15,377,303 Total $ 30,300,839 $ 1,102,883 $ (1,780,455 ) $ 29,623,267 December 31, 2019 Gross Gross Unrealized Unrealized Estimated Category Cost Gains Losses Fair Value Equity Securities: Preferred stocks $ 8,374,424 $ 339,257 $ (11,794 ) $ 8,701,887 Common stocks, mutual funds, and exchange traded funds 14,250,244 1,982,878 (273,627 ) 15,959,495 Total $ 22,624,668 $ 2,322,135 $ (285,421 ) $ 24,661,382 |
Schedule of other investments | September 30, 2020 December 31, 2019 Gross Gross Unrealized Estimated Unrealized Estimated Category Cost Gains Fair Value Cost Gains Fair Value Other Investments: Hedge fund $ 1,999,381 $ 829,697 $ 2,829,078 $ 1,999,381 $ 585,532 $ 2,584,913 Total $ 1,999,381 $ 829,697 $ 2,829,078 $ 1,999,381 $ 585,532 $ 2,584,913 |
Schedule of held to maturity securities | September 30, 2020 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Category Cost Gains Months Months Value Gains Held-to-Maturity Securities: U.S. Treasury securities $ 729,583 $ 162,442 $ - $ - $ 892,025 $ 162,442 Political subdivisions of States, Territories and Possessions 998,480 56,700 - - 1,055,180 56,700 Corporate and other bonds Industrial and miscellaneous 5,641,545 334,412 (23,858 ) - 5,952,099 310,554 Total $ 7,369,608 $ 553,554 $ (23,858 ) $ - $ 7,899,304 $ 529,696 December 31, 2019 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Category Cost Gains Months Months Value Gains Held-to-Maturity Securities: U.S. Treasury securities $ 729,550 $ 151,002 $ - $ - $ 880,552 $ 151,002 Political subdivisions of States, Territories and Possessions 998,619 51,021 - - 1,049,640 51,021 Corporate and other bonds Industrial and miscellaneous 2,097,783 97,627 (835 ) - 2,194,575 96,792 Total $ 3,825,952 $ 299,650 $ (835 ) $ - $ 4,124,767 $ 298,815 |
Schedule of held to maturity securities by contractual maturity | September 30, 2020 December 31, 2019 Amortized Estimated Amortized Estimated Remaining Time to Maturity Cost Fair Value Cost Fair Value Less than one year $ - $ - $ 500,000 $ 499,165 One to five years 2,597,739 2,793,089 2,099,268 2,215,640 Five to ten years 1,499,837 1,710,586 620,134 655,923 More than 10 years 3,272,032 3,395,629 606,550 754,039 Total $ 7,369,608 $ 7,899,304 $ 3,825,952 $ 4,124,767 |
Schedule of investment income | Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Income: Fixed-maturity securities $ 1,264,633 $ 1,499,135 $ 4,106,404 $ 4,500,346 Equity securities 290,834 253,594 787,702 666,247 Cash and cash equivalents 1,834 75,253 89,993 288,334 Total 1,557,301 1,827,982 4,984,099 5,454,927 Expenses: Investment expenses 63,215 (28,571 ) 212,163 254,893 Net investment income $ 1,494,086 $ 1,856,553 $ 4,771,936 $ 5,200,034 |
Schedule of securities with realized gains and losses on investments | Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Realized Gains (Losses) - Fixed-maturity securities: Gross realized gains $ 714,162 $ 10 $ 967,573 $ 10,954 Gross realized losses (107,193 ) (46,851 ) (304,118 ) (92,591 ) 606,969 (46,841 ) 560,696 (81,637 ) Equity securities: Gross realized gains 199,439 38,477 644,111 83,737 Gross realized losses (209,069 ) - (449,916 ) (56,859 ) (9,630 ) 38,477 194,195 26,878 Net realized (losses) gains 597,339 (8,364 ) 857,650 (54,759 ) Unrealized Gains (Losses) Equity securities: Gross gains 1,223,779 916,496 - 3,196,260 Gross losses - - (2,740,489 ) - 1,223,779 916,496 (2,740,489 ) 3,196,260 Other investments: Gross gains 286,758 90,030 244,165 570,679 Gross losses - - - - 286,758 90,030 244,165 570,679 Net unrealized gains (losses) 1,510,537 1,006,526 (2,496,324 ) 3,766,939 Net gains (losses) on investments $ 2,107,876 $ 998,162 $ (1,638,674 ) $ 3,712,180 |
Schedule of securities with unrealized losses | September 30, 2020 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ - $ - - $ - $ - - $ - $ - Political subdivisions of States, Territories and Possessions - - - - - - - - Corporate and other bonds industrial and miscellaneous 522,450 (1,654 ) 1 - - - 522,450 (1,654 ) Residential mortgage and other asset backed securities 4,003,377 (38,491 ) 6 5,020,026 (147,253 ) 12 9,023,403 (185,744 ) Total fixed-maturity securities $ 4,525,827 $ (40,145 ) 7 $ 5,020,026 $ (147,253 ) 12 $ 9,545,853 $ (187,398 ) December 31, 2019 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ - $ - - $ - $ - - $ - $ - Political subdivisions of States, Territories and Possessions 3,067,428 (11,316 ) 3 - - - 3,067,428 (11,316 ) Corporate and other bonds industrial and miscellaneous 3,730,478 (16,685 ) 7 1,300,915 (13,473 ) 3 5,031,393 (30,158 ) Residential mortgage and other asset backed securities 5,862,636 (68,793 ) 5 13,534,768 (276,451 ) 21 19,397,404 (345,244 ) Total fixed-maturity securities $ 12,660,542 $ (96,794 ) 15 $ 14,835,683 $ (289,924 ) 24 $ 27,496,225 $ (386,718 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Measurements | |
Schedule of fair value measurements | September 30, 2020 Level 1 Level 2 Level 3 Total Fixed-maturity securities available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 3,069,330 $ - $ - $ 3,069,330 Political subdivisions of States, Territories and Possessions - 5,916,075 - 5,916,075 Corporate and other bonds industrial and miscellaneous 121,119,461 2,081,297 - 123,200,758 Residential mortgage backed securities - 24,352,426 - 24,352,426 Total fixed maturities 124,188,791 32,349,798 - 156,538,589 Equity securities 29,623,267 - - 29,623,267 Total investments $ 153,812,058 $ 32,349,798 $ - $ 186,161,856 December 31, 2019 Level 1 Level 2 Level 3 Total Fixed-maturity securities available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 7,061,100 $ - $ - $ 7,061,100 Political subdivisions of States, Territories and Possessions - 9,321,812 - 9,321,812 Corporate and other bonds industrial and miscellaneous 123,010,772 2,611,267 - 125,622,039 Residential mortgage backed securities - 26,231,230 - 26,231,230 Total fixed maturities 130,071,872 38,164,309 - 168,236,181 Equity securities 24,661,382 - - 24,661,382 Total investments $ 154,733,254 $ 38,164,309 $ - $ 192,897,563 |
Schedule of hedge fund investments | Category September 30, 2020 December 31, 2019 Other Investments: Hedge fund $ 2,829,078 $ 2,584,913 Total $ 2,829,078 $ 2,584,913 |
Schedule of Fair value hierarchy of long-term debt | September 30, 2020 Level 1 Level 2 Level 3 Total Long-term debt Senior Notes due 2022 $ - $ 27,279,652 $ - $ 27,279,652 December 31, 2019 Level 1 Level 2 Level 3 Total Long-term debt Senior Notes due 2022 $ - $ 27,313,994 $ - $ 27,313,994 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments and Real Estate (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Measurements | |
Schedule of fair value of financial instruments | September 30, 2020 December 31, 2019 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value Fixed-maturity securities-held-to maturity $ 7,369,608 $ 7,899,304 $ 3,825,952 $ 4,124,767 Cash and cash equivalents $ 24,388,103 $ 24,388,103 $ 32,391,485 $ 32,391,485 Premiums receivable, net $ 13,883,708 $ 13,883,708 $ 12,706,411 $ 12,706,411 Reinsurance receivables, net $ 55,529,408 $ 55,529,408 $ 40,750,538 $ 40,750,538 Real estate, net of accumulated depreciation $ 2,238,435 $ 2,705,000 $ 2,292,743 $ 2,705,000 Reinsurance balances payable $ 10,062,649 $ 10,062,649 $ 11,714,724 $ 11,714,724 |
Property and Casualty Insuran_2
Property and Casualty Insurance Activity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property and Casualty Insurance Activity | |
Schedule of earned premiums | Direct Assumed Ceded Net Nine months ended September 30, 2020 Premiums written $ 125,089,571 $ - $ (43,813,468 ) $ 81,276,103 Change in unearned premiums 2,215,602 - (2,392,318 ) (176,716 ) Premiums earned $ 127,305,173 $ - $ (46,205,786 ) $ 81,099,387 Nine months ended September 30, 2019 Premiums written $ 128,333,117 $ 938 $ (20,914,074 ) $ 107,419,981 Change in unearned premiums (11,035,993 ) (559 ) (1,366,251 ) (12,402,803 ) Premiums earned $ 117,297,124 $ 379 $ (22,280,325 ) $ 95,017,178 Three months ended September 30, 2020 Premiums written $ 45,742,165 $ - $ (15,747,215 ) $ 29,994,950 Change in unearned premiums (3,161,356 ) - 687,487 (2,473,869 ) Premiums earned $ 42,580,809 $ - $ (15,059,728 ) $ 27,521,081 Three months ended September 30, 2019 Premiums written $ 46,023,290 $ 861 $ (5,586,278 ) $ 40,437,873 Change in unearned premiums (4,579,777 ) (761 ) (1,637,325 ) (6,217,863 ) Premiums earned $ 41,443,513 $ 100 $ (7,223,603 ) $ 34,220,010 |
Schedule of loss and loss adjustment expenses | Nine months ended September, 30 2020 2019 Balance at beginning of period $ 80,498,611 $ 56,197,106 Less reinsurance recoverables (15,728,224 ) (15,671,247 ) Net balance, beginning of period 64,770,387 40,525,859 Incurred related to: Current year 49,597,154 60,401,821 Prior years (279,727 ) 11,186,029 Total incurred 49,317,427 71,587,850 Paid related to: Current year 29,845,049 31,515,656 Prior years 24,068,492 18,600,946 Total paid 53,913,541 50,116,602 Net balance at end of period 60,174,273 61,997,107 Add reinsurance recoverables 24,804,751 15,412,316 Balance at end of period $ 84,979,024 $ 77,409,423 |
Schedule of allocated claim adjustment expenses | Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance As of September 30, 2020 For the Years Ended December 31, Cumulative Accident Nine months ended September 30, Number of Reported Claims by Accident Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 IBNR Year (Unaudited 2011 - 2019) (Unaudited) 2011 $ 7,603 $ 7,678 $ 8,618 $ 9,440 $ 9,198 $ 9,066 $ 9,144 $ 9,171 $ 9,127 $ 9,128 $ - 1,914 2012 9,539 9,344 10,278 10,382 10,582 10,790 10,791 11,015 10,891 19 4,704 (1) 2013 10,728 9,745 9,424 9,621 10,061 10,089 10,607 10,456 33 1,561 2014 14,193 14,260 14,218 14,564 15,023 16,381 16,425 253 2,137 2015 22,340 21,994 22,148 22,491 23,386 22,974 108 2,555 2016 26,062 24,941 24,789 27,887 27,862 507 2,878 2017 31,605 32,169 35,304 36,131 383 3,389 2018 54,455 56,351 58,233 1,986 4,204 2019 75,092 72,772 10,765 4,423 2020 47,313 8,823 4,499 Total $ 312,185 Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance Accident For the Years Ended December 31, Nine months ended September 30, Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (Unaudited 2011 - 2019) (Unaudited) 2011 $ 3,740 $ 5,117 $ 6,228 $ 7,170 $ 8,139 $ 8,540 $ 8,702 $ 8,727 $ 8,789 $ 8,994 2012 3,950 5,770 7,127 8,196 9,187 10,236 10,323 10,428 10,448 2013 3,405 5,303 6,633 7,591 8,407 9,056 9,717 10,009 2014 5,710 9,429 10,738 11,770 13,819 14,901 15,428 2015 12,295 16,181 18,266 19,984 21,067 22,088 2016 15,364 19,001 21,106 23,974 25,125 2017 16,704 24,820 28,693 30,821 2018 32,383 44,516 49,247 2019 40,933 53,910 2020 28,688 Total $ 254,757 Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented $ 57,428 All outstanding liabilities before 2011, net of reinsurance 98 Liabilities for loss and allocated loss adjustment expenses, net of reinsurance $ 57,526 |
Schedule of reconciliation of the net incurred and paid claims | As of (in thousands) September 30, 2020 Liabilities for loss and loss adjustment expenses, net of reinsurance $ 57,626 Total reinsurance recoverable on unpaid losses 24,805 Unallocated loss adjustment expenses 2,648 Total gross liability for loss and LAE reserves $ 85,079 |
Schedule of line of business | Treaty Year Line of Business December 15, 2019 to December 31, 2020 July 1, 2019 to December 14, 2019 July 1, 2018 to June 30, 2019 Personal Lines: Homeowners, dwelling fire and and canine legal liability Quota share treaty: Percent ceded 25 % None 10 % Treaty Year Line of Business January 1, 2021 to June 30, 2021 July 1, 2020 to December 31, 2020 December 15, 2019 to June 30, 2020 July 1, 2019 to December 14, 2019 July 1, 2018 to June 30, 2019 Personal Lines: Homeowners, dwelling fire and and canine legal liability Quota share treaty: Risk retained on intial $1,000,000 of losses NA (7) $ 750,000 $ 750,000 $ 1,000,000 $ 900,000 Losses per occurrence subject to quota share reinsurance coverage NA (7) $ 1,000,000 $ 1,000,000 None $ 1,000,000 Expiration date December 31, 2020 December 31, 2020 June 30, 2019 Excess of loss coverage and facultative facility coverage (1) $ 8,000,000 $ 8,000,000 $ 9,000,000 $ 9,000,000 $ 9,000,000 in excess of in excess of in excess of in excess of in excess of $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 Total reinsurance coverage per occurrence (7) $ 8,000,000 $ 8,250,000 $ 9,250,000 $ 9,000,000 $ 9,100,000 Losses per occurrence subject to reinsurance coverage $ 8,000,000 $ 9,000,000 $ 10,000,000 $ 10,000,000 $ 10,000,000 Expiration date (7) June 30, 2021 June 30, 2021 June 30, 2020 June 30, 2020 June 30, 2019 Catastrophe Reinsurance: Initial loss subject to personal lines quota share treaty NA (7) $ 7,500,000 $ 7,500,000 None $ 5,000,000 Risk retained per catastrophe occurrence (2) (7) $ 10,000,000 $ 8,125,000 $ 5,625,000 $ 7,500,000 $ 4,500,000 Catastrophe loss coverage in excess of quota share coverage (3) (7) $ 475,000,000 $ 475,000,000 $ 602,500,000 $ 602,500,000 $ 445,000,000 Reinstatement premium protection (4) (5) (6) Yes Yes Yes Yes Yes Treaty Year July 1, 2020 July 1, 2019 July 1, 2018 to to to Line of Business June 30, 2021 June 30, 2020 June 30, 2019 Personal Lines: Personal Umbrella Quota share treaty: Percent ceded - first $1,000,000 of coverage 90 % 90 % 90 % Percent ceded - excess of $1,000,000 of coverage 95 % 100 % 100 % Risk retained $ 300,000 $ 100,000 $ 100,000 Total reinsurance coverage per occurrence $ 4,700,000 $ 4,900,000 $ 4,900,000 Losses per occurrence subject to quota share reinsurance coverage $ 5,000,000 $ 5,000,000 $ 5,000,000 Expiration date June 30, 2021 June 30, 2020 June 30, 2019 Commercial Lines: General liability commercial policies Quota share treaty None None None Risk retained $ 750,000 $ 750,000 $ 750,000 Excess of loss coverage above risk retained $ 3,750,000 $ 3,750,000 $ 3,750,000 in excess of in excess of in excess of $ 750,000 $ 750,000 $ 750,000 Total reinsurance coverage per occurrence $ 3,750,000 $ 3,750,000 $ 3,750,000 Losses per occurrence subject to reinsurance coverage $ 4,500,000 $ 4,500,000 $ 4,500,000 Commercial Umbrella Quota share treaty: None None Percent ceded - first $1,000,000 of coverage 90 % Percent ceded - excess of $1,000,000 of coverage 100 % Risk retained $ 100,000 Total reinsurance coverage per occurrence $ 4,900,000 Losses per occurrence subject to quota share reinsurance coverage $ 5,000,000 Expiration date June 30, 2019 |
Schedule of ceding commission revenue | Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Provisional ceding commissions earned $ 3,460,768 $ 1,320,069 $ 10,621,804 $ 4,001,294 Contingent ceding commissions earned (11,994 ) (290,487 ) 138,283 (1,018,334 ) $ 3,448,774 $ 1,029,582 $ 10,760,087 $ 2,982,960 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt | |
Schedule of debt | September 30, December 31, 2020 2019 5.50% Senior Unsecured Notes $ 30,000,000 $ 30,000,000 Discount (73,023 ) (97,325 ) Issuance costs (323,411 ) (431,244 ) Long-term debt, net $ 29,603,566 $ 29,471,431 |
Stockholders Equity (Tables)
Stockholders Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders Equity | |
Schedule of weighted average assumptions | Nine months ended September 30, 2020 2019 Dividend Yield 3.14 % 2.87 % Volatility 37.69 % 36.11 % Risk-Free Interest Rate 1.40 % 1.61 % Expected Life 2.75 years 3.25 years |
Schedule of stock options activity | Stock Options Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 1, 2020 82,000 $ 8.61 3.38 $ - Granted 74,523 $ 7.96 4.34 $ - Exercised - $ - - $ - Forfeited (36,557 ) $ 8.43 - $ - Outstanding at September 30, 2020 119,966 $ 8.26 3.80 $ - Vested and Exercisable at September 30, 2020 50,000 $ 8.45 1.34 $ - |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Income Taxes | |
Schedule of deferrred tax assets and liabilities | September 30, December 31, 2020 2019 Deferred tax asset: Net operating loss carryovers (1) $ 55,845 $ 1,586,247 Claims reserve discount 779,554 839,959 Unearned premium 3,185,331 3,105,344 Deferred ceding commission revenue 1,513,500 1,624,434 Other 491,402 462,019 Total deferred tax assets 6,025,632 7,618,003 Deferred tax liability: Investment in KICO (2) 759,543 759,543 Deferred acquisition costs 4,182,428 4,333,219 Intangible asset 105,000 105,000 Depreciation and amortization 369,570 312,298 Net unrealized gains of securities - available-for-sale 2,581,873 1,796,891 Total deferred tax liabilities 7,998,414 7,306,951 Net deferred income tax (liability) asset $ (1,972,782 ) $ 311,052 |
Schedule of losses subject to annual limitation | September 30, December 31, Type of NOL 2020 2019 Expiration Federal only, current year $ - $ 1,517,866 (A) State only (B) 1,864,863 1,616,568 December 31, 2040 Valuation allowance (1,809,018 ) (1,548,187 ) State only, net of valuation allowance 55,845 68,381 Total deferred tax asset from net operating loss carryovers $ 55,845 $ 1,586,247 |
Earnings(Loss) Per Common Sha_2
Earnings(Loss) Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings (loss) per share : | |
Schedule of net earnings/(loss) per common share | Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Weighted average number of shares outstanding 10,673,077 10,779,641 10,737,853 10,769,817 Effect of dilutive securities, common share equivalents: Stock options - - - - Restricted stock awards - - - - Weighted average number of shares outstanding, used for computing diluted earnings per share 10,673,077 10,779,641 10,737,853 10,769,817 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Schedule of lease cost | Three months ended Nine months ended Lease cost September 30, 2020 September 30, 2020 Operating leases $ 61,297 $ 183,891 Short-term leases - - Total lease cost (1) $ 61,297 $ 183,891 Other information on operating leases Cash payments included in the measurement of lease liability reported in operating cash flows $ 62,782 $ 147,018 Discount rate 5.50 % 5.50 % Remaining lease term in years 5 years 5 years |
Schedule of lease liability maturities | For the Year Ending December 31, Total Remainder of 2020 $ 64,281 2021 264,571 2022 273,831 2023 283,415 2024 140,739 Thereafter 192,916 Total undiscounted lease payments 1,219,753 Less: present value adjustment 188,522 Operating lease liability $ 1,031,231 |
Nature of Business and Basis _2
Nature of Business and Basis of Presentation (Details Narrative) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Nature of Business and Basis of Presentation | ||
Direct written premiums, percentage | 806.00% | 799.00% |
Investments (Details)
Investments (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
U.S. Treasury Securities and Obligations of U.S. Government [Member] | ||
Cost or amortized cost | $ 3,026,477 | $ 7,037,856 |
Gross unrealized gains | 42,853 | 23,244 |
Gross unrealized losses - less than 12 months | 0 | 0 |
Gross unrealized loss - more than 12 months | 0 | 0 |
Estimated fair value | 3,069,330 | 7,061,100 |
Net unrealized gains/(losses) | 42,853 | 23,244 |
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member] | ||
Cost or amortized cost | 5,593,778 | 9,151,293 |
Gross unrealized gains | 322,297 | 181,835 |
Gross unrealized losses - less than 12 months | 0 | 11,316 |
Gross unrealized loss - more than 12 months | 0 | 0 |
Estimated fair value | 5,916,075 | 9,321,812 |
Net unrealized gains/(losses) | 322,297 | 170,519 |
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member] | ||
Cost or amortized cost | 112,504,206 | 119,874,573 |
Gross unrealized gains | 10,698,206 | 5,777,624 |
Gross unrealized losses - less than 12 months | 1,654 | 16,685 |
Gross unrealized loss - more than 12 months | 0 | 13,473 |
Estimated fair value | 123,200,758 | 125,622,039 |
Net unrealized gains/(losses) | 10,696,552 | 5,747,466 |
Fixed Maturity Securities Residential Mortgage and other asset backed securities [Member] | ||
Cost or amortized cost | 24,002,398 | 26,138,633 |
Gross unrealized gains | 535,772 | 437,841 |
Gross unrealized losses - less than 12 months | 38,491 | 68,793 |
Gross unrealized loss - more than 12 months | 147,253 | 276,451 |
Estimated fair value | 24,352,426 | 26,231,230 |
Net unrealized gains/(losses) | 350,028 | 92,597 |
Fixed Maturity Securities Total Fixed Maturity Securities [Member] | ||
Cost or amortized cost | 145,126,859 | 162,202,355 |
Gross unrealized gains | 11,599,128 | 6,420,544 |
Gross unrealized losses - less than 12 months | 40,145 | 96,794 |
Gross unrealized loss - more than 12 months | 147,253 | 289,924 |
Estimated fair value | 156,538,589 | 168,236,181 |
Net unrealized gains/(losses) | $ 11,411,730 | $ 6,033,826 |
Investments (Details 1)
Investments (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Amortized cost | $ 145,126,859 | $ 162,202,355 |
Estimated fair value | 156,538,589 | 168,236,181 |
More Than 10 Years [Member] | ||
Amortized cost | 8,693,505 | 4,511,795 |
Estimated fair value | 9,126,504 | 4,568,847 |
Residential mortgage-backed securities [Member] | ||
Amortized cost | 24,002,398 | 26,138,633 |
Estimated fair value | 24,352,426 | 26,231,230 |
Less Than One Year [Member] | ||
Amortized cost | 8,879,582 | 11,986,401 |
Estimated fair value | 8,986,248 | 12,025,804 |
One To Five Years [Member] | ||
Amortized cost | 46,530,097 | 49,715,422 |
Estimated fair value | 49,878,416 | 51,000,025 |
Five To Ten Years [Member] | ||
Amortized cost | 57,021,277 | 69,850,104 |
Estimated fair value | $ 64,194,995 | $ 74,410,275 |
Investments (Details 2)
Investments (Details 2) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Estimated fair value | $ 2,829,078 | $ 2,584,913 |
Preferred Stock [Member] | ||
Cost | 14,260,019 | 8,374,424 |
Unrealised gains | 325,070 | 339,257 |
Unrealised losses | (339,125) | (11,794) |
Estimated fair value | 14,245,964 | 8,701,887 |
Common stock, mutual fund and exchange traded funds [Member] | ||
Cost | 16,040,820 | 14,250,244 |
Unrealised gains | 777,813 | 1,982,878 |
Unrealised losses | (1,441,330) | (273,627) |
Estimated fair value | 15,377,303 | 15,959,495 |
Hedge Fund [Member] | ||
Cost | 1,999,381 | 1,999,381 |
Unrealised gains | 829,697 | 585,532 |
Estimated fair value | 2,829,078 | 2,584,913 |
Other Investments [Member] | ||
Cost | 1,999,381 | 1,999,381 |
Unrealised gains | 829,697 | 585,532 |
Estimated fair value | 2,829,078 | 2,584,913 |
Equity Securities [Member] | ||
Cost | 30,300,839 | 22,624,668 |
Unrealised gains | 1,102,883 | 2,322,135 |
Unrealised losses | 1,780,455 | 285,421 |
Estimated fair value | $ 29,623,267 | $ 24,661,382 |
Investments (Details 3)
Investments (Details 3) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Cost or amortized cost | $ 7,369,608 | $ 3,825,952 |
Gross unrealized gains | 553,554 | 299,650 |
Gross unrealized losses - less than 12 months | (23,858) | (835) |
Gross unrealized loss - more than 12 months | 0 | 0 |
Estimated fair value | 7,899,304 | 4,124,767 |
Net unrealized gains | 529,696 | 298,815 |
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member] | ||
Cost or amortized cost | 998,480 | 998,619 |
Gross unrealized gains | 56,700 | 51,021 |
Gross unrealized losses - less than 12 months | 0 | 0 |
Gross unrealized loss - more than 12 months | 0 | 0 |
Estimated fair value | 1,055,180 | 1,049,640 |
Net unrealized gains | 56,700 | 51,021 |
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member] | ||
Cost or amortized cost | 5,641,545 | 2,097,783 |
Gross unrealized gains | 334,412 | 97,627 |
Gross unrealized losses - less than 12 months | 23,858 | 835 |
Gross unrealized loss - more than 12 months | 0 | 0 |
Estimated fair value | 5,952,099 | 2,194,575 |
Net unrealized gains | 310,554 | 96,792 |
Held-to-Maturity Securities US Treasury Securities [Member] | ||
Cost or amortized cost | 729,583 | 729,550 |
Gross unrealized gains | 162,442 | 151,002 |
Gross unrealized losses - less than 12 months | 0 | 0 |
Gross unrealized loss - more than 12 months | 0 | 0 |
Estimated fair value | 892,025 | 880,552 |
Net unrealized gains | $ 162,442 | $ 151,002 |
Investments (Details 4)
Investments (Details 4) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Amortized cost | $ 7,369,608 | $ 3,825,952 |
Estimated fair value | 7,899,304 | 4,124,767 |
More Than 10 Years [Member] | ||
Amortized cost | 3,272,032 | 606,550 |
Estimated fair value | 3,395,629 | 754,039 |
Less Than One Year [Member] | ||
Amortized cost | 500,000 | |
Estimated fair value | 0 | 499,165 |
One To Five Years [Member] | ||
Amortized cost | 2,597,739 | 2,099,268 |
Estimated fair value | 2,793,089 | 2,215,640 |
Five To Ten Years [Member] | ||
Amortized cost | 1,499,837 | 620,134 |
Estimated fair value | $ 1,710,586 | $ 655,923 |
Investments (Details 5)
Investments (Details 5) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income: | ||||
Fixed-maturity securities | $ 1,264,633 | $ 1,499,135 | $ 4,106,404 | $ 4,500,346 |
Equity securities | 290,834 | 253,594 | 787,702 | 666,247 |
Cash and cash equivalents | 1,834 | 75,253 | 89,993 | 288,334 |
Total | 1,557,301 | 1,827,982 | 4,984,099 | 5,454,927 |
Expenses: | ||||
Investment expenses | 63,215 | 28,571 | 212,163 | 254,893 |
Net investment income | $ 1,494,086 | $ 1,856,553 | $ 4,771,936 | $ 5,200,034 |
Investments (Details 6)
Investments (Details 6) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Fixed-maturity securities: | ||||
Gross realized gains | $ 714,162 | $ 10 | $ 967,573 | $ 10,954 |
Gross realized losses | (107,193) | (46,851) | (304,118) | (92,591) |
Total fixed-maturity securities | 606,969 | (46,841) | 560,696 | (81,637) |
Equity securities: | ||||
Gross realized gains | 199,439 | 38,477 | 644,111 | 83,737 |
Gross realized losses | (209,069) | 0 | (449,916) | (56,859) |
Total equity securities | 9,630 | 38,477 | 194,195 | 26,878 |
Net realized gains (losses) | 597,339 | (8,364) | 857,650 | (54,759) |
Equity securities | ||||
Gross gains | 1,223,779 | 916,496 | 0 | 3,196,260 |
Gross losses | 0 | 0 | (2,740,489) | 0 |
Total equity securities | 1,223,779 | 916,496 | (2,740,489) | 3,196,260 |
Other investments: | ||||
Gross gains | 286,758 | 90,030 | 244,165 | 570,679 |
Gross losses | 0 | 0 | 0 | 0 |
Total other investments | 286,758 | 90,030 | 244,165 | 570,679 |
Net unrealized gains (losses) | 1,510,537 | 1,006,526 | (2,496,324) | 3,766,939 |
Net gains (losses) on investments | $ 2,107,876 | $ 998,162 | $ (1,638,674) | $ 3,712,180 |
Investments (Details 7)
Investments (Details 7) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
U.S. Treasury Securities and Obligations of U.S. Government [Member] | ||
Estimated fair value - less than 12 months | $ 0 | $ 0 |
Unrealized losses - less than 12 months | 0 | 0 |
Number of positions held - less than 12 months | 0 | 0 |
Estimated fair value - 12 months or more | 0 | 0 |
Unrealized losses - 12 months or more | 0 | 0 |
Number of positions held - 12 months or more | 0 | 0 |
Estimated fair value - total | 0 | 0 |
Unrealized losses - total | 0 | 0 |
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member] | ||
Estimated fair value - less than 12 months | 0 | 3,067,428 |
Unrealized losses - less than 12 months | 0 | (11,316) |
Number of positions held - less than 12 months | 0 | 3 |
Estimated fair value - 12 months or more | 0 | 0 |
Unrealized losses - 12 months or more | 0 | 0 |
Number of positions held - 12 months or more | 0 | 0 |
Estimated fair value - total | 0 | 3,067,428 |
Unrealized losses - total | 0 | (11,316) |
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member] | ||
Estimated fair value - less than 12 months | 522,450 | 3,730,478 |
Unrealized losses - less than 12 months | (1,654) | (16,685) |
Number of positions held - less than 12 months | 1 | 7 |
Estimated fair value - 12 months or more | 0 | 1,300,915 |
Unrealized losses - 12 months or more | 0 | (13,473) |
Number of positions held - 12 months or more | 0 | 3 |
Estimated fair value - total | 522,450 | 5,031,393 |
Unrealized losses - total | (1,654) | (30,158) |
Fixed Maturity Securities Residential Mortgage and other asset backed securities [Member] | ||
Estimated fair value - less than 12 months | 4,003,377 | 5,862,636 |
Unrealized losses - less than 12 months | (38,491) | (68,793) |
Number of positions held - less than 12 months | 6 | 5 |
Estimated fair value - 12 months or more | 5,020,026 | 13,534,768 |
Unrealized losses - 12 months or more | (147,253) | (276,451) |
Number of positions held - 12 months or more | 12 | 21 |
Estimated fair value - total | 9,023,403 | 19,397,404 |
Unrealized losses - total | (185,744) | (345,244) |
Fixed Maturity Securities Total Fixed Maturity Securities [Member] | ||
Estimated fair value - less than 12 months | 4,525,827 | 12,660,542 |
Unrealized losses - less than 12 months | (40,145) | (96,794) |
Number of positions held - less than 12 months | 7 | 15 |
Estimated fair value - 12 months or more | 5,020,026 | 14,835,683 |
Unrealized losses - 12 months or more | (147,253) | (289,924) |
Number of positions held - 12 months or more | 12 | 24 |
Estimated fair value - total | 9,545,853 | 27,496,225 |
Unrealized losses - total | $ (187,398) | $ (386,718) |
Investments (Details Narrative)
Investments (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Investments | ||
Proceeds from the sale and redemption of fixed-maturity securities held-to-maturity | $ 500,000 | $ 400,000 |
Proceeds from the sale or maturity of fixed-maturity securities available-for-sale | 29,666,158 | 9,835,464 |
Proceeds from the sale of equity securities | $ 8,103,697 | $ 2,941,492 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Political subdivisions of states, territories and possessions | $ 5,916,075 | $ 9,321,812 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 3,069,330 | 7,061,100 |
Corporate and other bonds industrial and miscellaneous | 123,200,758 | 125,622,039 |
Residential mortgage and other asset backed securities | 24,352,426 | 26,231,230 |
Total fixed maturities | 156,538,589 | 168,236,181 |
Equity securities | 29,623,267 | 24,661,382 |
Total investments | 186,161,856 | 192,897,563 |
Level 1 [Member] | ||
Political subdivisions of states, territories and possessions | 0 | 0 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 3,069,330 | 7,061,100 |
Corporate and other bonds industrial and miscellaneous | 121,119,461 | 123,010,772 |
Residential mortgage and other asset backed securities | 0 | 0 |
Total fixed maturities | 124,188,791 | 130,071,872 |
Equity securities | 29,623,267 | 24,661,382 |
Total investments | 153,812,058 | 154,733,254 |
Level 2 [Member] | ||
Political subdivisions of states, territories and possessions | 5,916,075 | 9,321,812 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Corporate and other bonds industrial and miscellaneous | 2,081,297 | 2,611,267 |
Residential mortgage and other asset backed securities | 24,352,426 | 26,231,230 |
Total fixed maturities | 32,349,798 | 38,164,309 |
Equity securities | 0 | 0 |
Total investments | 32,349,798 | 38,164,309 |
Level 3 [Member] | ||
Political subdivisions of states, territories and possessions | 0 | 0 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Corporate and other bonds industrial and miscellaneous | 0 | 0 |
Residential mortgage and other asset backed securities | 0 | 0 |
Total fixed maturities | 0 | 0 |
Equity securities | 0 | 0 |
Total investments | $ 0 | $ 0 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Hedge fund investments | $ 2,829,078 | $ 2,584,913 |
Hedge Fund [Member] | ||
Hedge fund investments | $ 2,829,078 | $ 2,584,913 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details 2) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Senior Notes due 2022 | $ 27,279,652 | $ 27,313,994 |
Level 1 [Member] | ||
Senior Notes due 2022 | 0 | 0 |
Level 2 [Member] | ||
Senior Notes due 2022 | 27,279,652 | 27,313,994 |
Level 3 [Member] | ||
Senior Notes due 2022 | $ 0 | $ 0 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments and Real Estate (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Reinsurance balances payable | $ 10,062,649 | $ 11,714,724 |
Carrying Value [Member] | ||
Reinsurance balances payable | 10,062,649 | 11,714,724 |
Fixed-maturity securities held-to-maturity | 7,369,608 | 3,825,952 |
Cash and cash equivalents | 24,388,103 | 32,391,485 |
Premiums receivable, net | 13,883,708 | 12,706,411 |
Reinsurance receivables, net | 55,529,408 | 40,750,538 |
Real estate, net of accumulated depreciation | 2,238,435 | 2,292,743 |
Fair Value [Member] | ||
Reinsurance balances payable | 10,062,649 | 11,714,724 |
Fixed-maturity securities held-to-maturity | 7,899,304 | 4,124,767 |
Cash and cash equivalents | 24,388,103 | 32,391,485 |
Premiums receivable, net | 13,883,708 | 12,706,411 |
Reinsurance receivables, net | 55,529,408 | 40,750,538 |
Real estate, net of accumulated depreciation | $ 2,705,000 | $ 2,705,000 |
Property and Casualty Insuran_3
Property and Casualty Insurance Activity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Premiums Written [Member] | ||||
Direct | $ 45,742,165 | $ 46,023,290 | $ 125,089,571 | $ 128,333,117 |
Assumed | 0 | 861 | 0 | 938 |
Ceded | (15,747,215) | (5,586,278) | (43,813,468) | (20,914,074) |
Net | 29,994,950 | 40,437,873 | 81,276,103 | 107,419,981 |
Changes In Unearned Premiums [Member] | ||||
Direct | (3,161,356) | (4,579,777) | 2,215,602 | (11,035,993) |
Assumed | 0 | (761) | 0 | (559) |
Ceded | 687,487 | (1,637,325) | (2,392,318) | (1,366,251) |
Net | (2,473,869) | (6,217,863) | (176,716) | (12,402,803) |
Premiums Earned [Member] | ||||
Direct | 42,580,809 | 41,443,513 | 127,305,173 | 117,297,124 |
Assumed | 0 | 100 | 0 | 379 |
Ceded | (15,059,728) | (7,223,603) | (46,205,786) | (22,280,325) |
Net | $ 27,521,081 | $ 34,220,010 | $ 81,099,387 | $ 95,017,178 |
Property and Casualty Insuran_4
Property and Casualty Insurance Activity (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Fair Value of Financial Instruments and Real Estate | ||
Balance at beginning of period | $ 80,498,611 | $ 56,197,106 |
Less reinsurance recoverables | (15,728,224) | (15,671,247) |
Net balance, beginning of period | 64,770,387 | 40,525,859 |
Incurred related to: | ||
Current year | 49,597,154 | 60,401,821 |
Prior years | (279,727) | 11,186,029 |
Total incurred | 49,317,427 | 71,587,850 |
Paid related to: | ||
Current year | 29,845,049 | 31,515,656 |
Prior years | 24,068,492 | 18,600,946 |
Net balance at end of period | 60,174,273 | 61,997,107 |
Total paid | 53,913,541 | 50,116,602 |
Add reinsurance recoverables | 24,804,751 | 15,412,316 |
Balance at end of period | $ 84,979,024 | $ 77,409,423 |
Property and Casualty Insuran_5
Property and Casualty Insurance Activity (Details 2) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
2011 [Member] | |
2011 | $ 7,603,000 |
IBNR | $ 0 |
Cumulative number of reported claims | 1,914 |
2012 [Member] | |
2011 | $ 7,678,000 |
IBNR | $ 19 |
Cumulative number of reported claims | 4,704 |
2012 | $ 9,539,000 |
2013 [Member] | |
2011 | 8,618,000 |
IBNR | $ 33 |
Cumulative number of reported claims | 1,561 |
2012 | $ 9,344,000 |
2013 | 10,728,000 |
2014 [Member] | |
2011 | 9,440,000 |
IBNR | $ 253 |
Cumulative number of reported claims | 2,137 |
2012 | $ 10,278,000 |
2013 | 9,745,000 |
2014 | 14,193,000 |
2015 [Member] | |
2011 | 9,198,000 |
IBNR | $ 108 |
Cumulative number of reported claims | 2,555 |
2012 | $ 10,382,000 |
2013 | 9,424,000 |
2014 | 14,260,000 |
2015 | 22,340,000 |
2016 [Member] | |
2011 | 9,066,000 |
IBNR | $ 507 |
Cumulative number of reported claims | 2,878 |
2012 | $ 10,582,000 |
2013 | 9,621,000 |
2014 | 14,218,000 |
2015 | 21,994,000 |
2016 | 26,062,000 |
2017 [Member] | |
2011 | 9,144,000 |
IBNR | $ 383 |
Cumulative number of reported claims | 3,389 |
2012 | $ 10,790,000 |
2013 | 10,061,000 |
2014 | 14,564,000 |
2015 | 22,148,000 |
2016 | 24,941,000 |
2017 | 31,605,000 |
2018 [Member] | |
2011 | 9,171,000 |
IBNR | $ 1,986 |
Cumulative number of reported claims | 4,204 |
2012 | $ 10,791,000 |
2013 | 10,089,000 |
2014 | 15,023,000 |
2015 | 22,491,000 |
2016 | 24,789 |
2017 | 32,169,000 |
2018 | 54,455,000 |
2019 [Member] | |
2011 | 9,127,000 |
IBNR | $ 10,765 |
Cumulative number of reported claims | 4,423 |
2012 | $ 11,015,000 |
2013 | 10,607,000 |
2014 | 16,381,000 |
2015 | 23,386,000 |
2016 | 27,887,000 |
2017 | 35,304,000 |
2018 | 56,351,000 |
2019 | 75,092,000 |
2020 [Member] | |
2011 | 9,128,000 |
IBNR | $ 8,823 |
Cumulative number of reported claims | 4,499 |
2012 | $ 10,891,000 |
2013 | 10,456,000 |
2014 | 16,425,000 |
2015 | 22,974,000 |
2016 | 27,862,000 |
2017 | 36,131,000 |
2018 | 58,233,000 |
2019 | 72,772 |
2020 | 47,313,000 |
Total | $ 312,185,000 |
Property and Casualty Insuran_6
Property and Casualty Insurance Activity (Details 3) | Sep. 30, 2020USD ($) |
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented | $ 57,428,000 |
All outstanding liabilities before 2011, net of reinsurance | 98,000 |
Liabilities for claims and claim adjustment expenses, net of reinsurance | 57,526 |
2011 [Member] | |
2011 | 3,740,000 |
2012 [Member] | |
2011 | 5,117,000 |
2012 | 3,950,000 |
2013 [Member] | |
2011 | 6,228,000 |
2012 | 5,770,000 |
2013 | 3,405,000 |
2014 [Member] | |
2011 | 7,170,000 |
2012 | 7,127,000 |
2013 | 5,303,000 |
2014 | 5,710,000 |
2015 [Member] | |
2011 | 8,139,000 |
2012 | 8,196,000 |
2013 | 6,633,000 |
2014 | 9,429,000 |
2015 | 12,295,000 |
2016 [Member] | |
2011 | 8,540,000 |
2012 | 9,187,000 |
2013 | 7,591,000 |
2014 | 10,738,000 |
2015 | 16,181,000 |
2016 | 15,364,000 |
2017 [Member] | |
2011 | 8,702,000 |
2012 | 10,236,000 |
2013 | 8,407,000 |
2014 | 11,770,000 |
2015 | 18,266,000 |
2016 | 19,001,000 |
2017 | 16,704,000 |
2018 [Member] | |
2011 | 8,727,000 |
2012 | 10,323,000 |
2013 | 9,056,000 |
2014 | 13,819,000 |
2015 | 19,984,000 |
2016 | 21,106,000 |
2017 | 24,820,000 |
2018 | 32,383,000 |
2019 [Member] | |
2011 | 8,789,000 |
2012 | 10,428,000 |
2013 | 9,717,000 |
2014 | 14,901,000 |
2015 | 21,067,000 |
2016 | 23,974,000 |
2017 | 28,693,000 |
2018 | 44,516,000 |
2019 | 40,933,000 |
2020 [Member] | |
2011 | 8,994,000 |
2012 | 10,448,000 |
2013 | 10,009,000 |
2014 | 15,428,000 |
2015 | 22,088,000 |
2016 | 25,125,000 |
2017 | 30,821,000 |
2018 | 49,247,000 |
2019 | 53,910,000 |
2020 | 28,688,000 |
Total | $ 254,757,000 |
Property and Casualty Insuran_7
Property and Casualty Insurance Activity (Details 4) $ in Thousands | Sep. 30, 2020USD ($) |
Fair Value of Financial Instruments and Real Estate | |
Liabilities for allocated loss and loss adjustment expenses, net of reinsurance | $ 57,626 |
Total reinsurance recoverable on unpaid losses | 24,805 |
Unallocated loss adjustment expenses | 2,648 |
Total gross liability for loss and LAE reserves | $ 85,079 |
Property and Casualty Insuran_8
Property and Casualty Insurance Activity (Details 5) - USD ($) | 5 Months Ended | 6 Months Ended | 7 Months Ended | 12 Months Ended | 13 Months Ended | |
Dec. 14, 2019 | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2020 | |
Personal Lines [Member] | ||||||
Percent ceded | 0.00% | 1000.00% | 2500.00% | |||
Risk retained on initial $1,000,000 of losses | $ 1,000,000 | $ 750,000 | $ 750,000 | $ 900,000 | ||
Losses per occurrence subject to quota share reinsurance coverage | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | |||
Expiration date | Dec. 31, 2020 | Dec. 31, 2020 | Jun. 30, 2019 | |||
Losses per occurrence subject to reinsurance coverage | 10,000,000 | $ 8,000,000 | $ 9,000,000 | $ 10,000,000 | $ 10,000,000 | |
Excess of loss coverage and facultative facility coverage | 9,000,000 | 8,000,000 | 8,000,000 | 9,000,000 | 9,000,000 | |
In excess of | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 | |
Total reinsurance coverage per occurrence | $ 9,000,000 | $ 8,000,000 | $ 8,250,000 | $ 9,250,000 | $ 9,100,000 | |
Expiration date | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Catastrophe [Member] | ||||||
Initial loss subject to personal lines quota share treaty | $ 7,500,000 | $ 7,500,000 | $ 7,500,000 | $ 5,000,000 | ||
Risk retained per catastrophe occurrence | $ 7,500,000 | 10,000,000 | 8,125,000 | 5,625,000 | 4,500,000 | |
Catastrophe loss coverage in excess of quota share coverage | $ 602,500,000 | $ 475,000,000 | $ 475,000,000 | $ 602,500,000 | $ 445,000,000 | |
Reinstatement premium protection | Yes | Yes | Yes | Yes | Yes |
Property and Casualty Insuran_9
Property and Casualty Insurance Activity (Details 6) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Personal Umbrella [Member] | |||
Risk retained on initial $1,000,000 of losses | $ 300,000 | $ 100,000 | $ 100,000 |
Losses per occurrence subject to quota share reinsurance coverage | 5,000,000 | 5,000,000 | 5,000,000 |
Total reinsurance coverage per occurrence | $ 4,700,000 | $ 4,900,000 | $ 4,900,000 |
Expiration date | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 |
Percent ceded - first $1000000 of coverage | 9000.00% | 9000.00% | 9000.00% |
Percent ceded - excess of $1000000 of coverage | 9500.00% | 10000.00% | 10000.00% |
Commercial Lines [Member] | |||
Risk retained on initial $1,000,000 of losses | $ 750,000 | $ 750,000 | $ 750,000 |
Losses per occurrence subject to quota share reinsurance coverage | 4,500,000 | 4,500,000 | 4,500,000 |
Total reinsurance coverage per occurrence | 3,750,000 | 3,750,000 | 3,750,000 |
Excess of loss coverage and facultative facility coverage | 3,750,000 | 3,750,000 | 3,750,000 |
In excess of | $ 750,000 | $ 750,000 | 750,000 |
Commercial Umbrella [Member] | |||
Risk retained on initial $1,000,000 of losses | 100,000 | ||
Losses per occurrence subject to quota share reinsurance coverage | 5,000,000 | ||
Total reinsurance coverage per occurrence | $ 4,900,000 | ||
Expiration date | Jun. 30, 2019 | ||
Percent ceded - first $1000000 of coverage | 9000.00% | ||
Percent ceded - excess of $1000000 of coverage | 10000.00% |
Property and Casualty Insura_10
Property and Casualty Insurance Activity (Details 7) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Fair Value of Financial Instruments and Real Estate | ||||
Provisional ceding commissions earned | $ 3,460,768 | $ 1,320,069 | $ 10,621,804 | $ 4,001,294 |
Contingent ceding commissions earned | (11,994) | (290,487) | 138,283 | (1,018,334) |
Total commissions earned | $ 3,448,774 | $ 1,029,582 | $ 10,760,087 | $ 2,982,960 |
Property and Casualty Insura_11
Property and Casualty Insurance Activity (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Fair Value of Financial Instruments and Real Estate | |||
Advance premiums | $ 4,919,256 | $ 3,191,512 | |
Incurred losses and loss adjustment expenses are net of reinsurance recoveries under reinsurance contracts | 23,826,986 | $ 8,849,440 | |
Prior year loss development | 279,727 | $ 11,186,029 | |
Net contingent ceding commissions payable | $ 2,864,000 | $ 2,886,000 |
Debt (Details)
Debt (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Long-term debt, net | $ 29,603,566 | $ 29,471,431 |
Issuance costs [Member] | ||
Long-term debt, net | (323,411) | (431,244) |
5.50% Senior Unsecured Notes [Member] | ||
Long-term debt, net | 30,000,000 | 30,000,000 |
Discount [Member] | ||
Long-term debt, net | $ (73,023) | $ (97,325) |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | |
Dec. 19, 2017 | Sep. 30, 2020 | Dec. 31, 2019 | |
Advances limit, description | Advances are limited to 5% of KICO’s net admitted assets as of the previous quarter and are due and payable within ninety days | ||
5.50% Senior Unsecured Notes [Member] | |||
Debt instrument, face amount | $ 30,000,000 | ||
Debt instrument, maturity date | Dec. 30, 2022 | ||
Debt instrument, interest rate | 5.50% | ||
Proceeds from issuance of unsecured notes | $ 29,121,630 | ||
Debt instrument, unamortized discount | 163,200 | ||
Debt instrument, transaction cost | $ 715,170 | ||
Debt instrument, yield percentage | 5.67% | ||
Amount used by company | $ 28,256,335 | ||
Federal Home Loan Bank of New York [Member] | |||
Advances limit, description | Advances are limited to 85% of the amount of available collateral, which was approximately $5,683,000 | ||
Maximum allowable advances | $ 11,732,000 | ||
Investment fair value | $ 11,200 | $ 15,180 |
Stockholders Equity (Details)
Stockholders Equity (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stockholders Equity | ||||
Dividend Yield | 3.14% | 2.87% | ||
Volatility | 37.69% | 36.11% | ||
Risk-Free Interest Rate | 1600.00% | 17.00% | 1.40% | 1.61% |
Expected Life | 2 years 9 months | 3 years 3 months |
Stockholders Equity (Details 1)
Stockholders Equity (Details 1) | 9 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | |
Number of options outstanding, beginning | 213,929 |
Number of options outstanding, ending | 312,318 |
Stock option [Member] | |
Number of options outstanding, beginning | 82,000 |
Number of options outstanding, granted | 74,523 |
Number of options outstanding, exercised | 0 |
Number of options outstanding, forfeited | (36,557) |
Number of options outstanding, ending | 119,966 |
Weighted Average Remaining Contractual, Beginning balance | 3 years 4 months 17 days |
Number of options outstanding, vested and exercisable | 50,000 |
Weighted Average Remaining Contractual term Granted | 4 years 4 months 2 days |
Weighted Average Remaining Contractual term, Ending balance | 3 years 9 months 18 days |
Weighted Average Remaining Contractual life, vested and exercisable | 1 year 4 months 2 days |
Weighted Average Exercise Price per Share | |
Weighted average exercise price, Beginning balance | $ / shares | $ 8.61 |
Weighted average exercise price, granted | $ / shares | 7.96 |
Weighted average exercise price, Forfeited | $ / shares | 8.43 |
Weighted average exercise price, Exercised | $ / shares | 0 |
Weighted average exercise price, Ending balance | $ / shares | 8.26 |
Weighted Average Price per share outstanding, vested and exercisable | $ / shares | $ 8.45 |
Aggregate Intrinsic value | |
Aggregate Intrinsic value, begining balance | $ | $ 0 |
Aggregate Intrinsic Value , vested and exercisable | $ | $ 0 |
Stockholders Equity (Details 2)
Stockholders Equity (Details 2) | 9 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | |
Investments | |
Number of options outstanding, beginning | shares | 213,929 |
Granted shares | shares | 209,518 |
Vested shares | shares | (91,863) |
Forfeited shares | shares | (19,266) |
Number of options outstanding, ending | shares | 312,318 |
Weighted Average Grant Date Fair Value per Share | |
Weighted Average Grant Date Fair Value per Share, beginning balance | $ / shares | $ 16.51 |
Weighted Average Grant Date Fair Value per Share, granted | $ / shares | 7.93 |
Weighted Average Grant Date Fair Value per Share, vested | $ / shares | 14.49 |
Weighted Average Grant Date Fair Value per Share, forfeited | $ / shares | 15.18 |
Weighted Average Grant Date Fair Value per Share, ending balance | $ / shares | $ 10.45 |
Aggregate Fair Value | |
Aggregate Fair Value, beginning balance | $ | $ 3,554,174 |
Aggregate Fair Value, granted | $ | 1,661,504 |
Aggregate Fair Value, vested | $ | (1,331,254) |
Aggregate Fair Value, Forfeited | $ | (292,455) |
Aggregate Fair Value, ending balance | $ | $ 3,591,969 |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 15, 2020 | Aug. 05, 2020 | Dec. 31, 2019 | |
Dividends declared | $ 1,530,390 | $ 2,827,276 | |||||
stock based compensation | $ 416,000 | $ 388,000 | 1,321,000 | 1,096,000 | |||
Stock-based compensation expense related to stock options is net of estimated forfeitures | $ 14,000 | $ 20,000 | $ 52,000 | $ 21,000 | |||
Stock-based compensation expense related to stock options is net of estimated forfeitures, rate | 1600.00% | 17.00% | 1.40% | 1.61% | |||
Weighted-average vesting period | 1 year 4 months 17 days | ||||||
Closing price of common stock | $ 5.89 | $ 5.89 | |||||
Stock option net forfeited | $ 0 | ||||||
Stock-based compensation, restricted stock awards | $ 78,000 | ||||||
Common stock shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | ||||
2014 Plan | Board Of Directors [Member] | |||||||
Common stock shares authorized | 700,000 | 700,000 | 1,400,000 | ||||
Shares reserved | 810,199 | 810,199 | |||||
Black - Scholes Option Pricing Model [Member] | |||||||
Dividend per share | $ 2.40 | $ 1.91 | $ 2.40 | $ 1.91 | $ 0.04 | $ 0.04 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Deferred tax asset: | ||
Net operating loss carryovers | $ 55,845 | $ 1,586,247 |
Claims reserve discount | 779,554 | 839,959 |
Unearned premium | 3,185,331 | 3,105,344 |
Deferred ceding commission revenue | 1,513,500 | 1,624,434 |
Other | 491,402 | 462,019 |
Total deferred tax assets | 6,025,632 | 7,618,003 |
Deferred tax Liabilities : | ||
Investment in KICO | 759,543 | 759,543 |
Deferred acquisition costs | 4,182,428 | 4,333,219 |
Intangibles | 105,000 | 105,000 |
Depreciation and amortization | 369,570 | 312,298 |
Net unrealized (losses) gains of securities - available for sale | 2,581,873 | 1,796,891 |
Total deferred tax liabilities | 7,998,414 | 7,306,951 |
Net deferred income tax asset | $ (1,972,782) | $ 311,052 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Income Taxes | ||
Federal only, current year | $ 0 | $ 1,517,866 |
State only | 1,864,863 | 1,616,568 |
Valuation allowance | (1,809,018) | (1,548,187) |
State only, net of valuation allowance | 55,845 | 68,381 |
Total deferred tax asset from net operating loss carryovers | $ 55,845 | $ 1,586,247 |
State only expiration date | December 31, 2040 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Net operating loss carryover | $ 28,690,000 | $ 24,901,000 | |
Deferred tax liability | $ 759,543 | ||
Corporate Tax rate | 2100.00% | ||
From 2014 and 2015 [Member] | |||
Corporate Tax rate | 3400.00% | ||
KICO [Member] | July1, 2009 [Member] | |||
Deferred tax liability | $ 759,543 | ||
principal amount | $ 3,750,000 | ||
Acquisition of common stock | 10000.00% | ||
Untaxed Interest | $ 1,169,000 | ||
Discount on the original purchase | $ 2,921,319 |
Earnings(Loss) Per Common Sha_3
Earnings(Loss) Per Common Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings (loss) per share : | ||||
Weighted average number of shares outstanding | 10,673,077 | 10,779,641 | 10,737,853 | 10,769,817 |
Weighted average number of shares outstanding, used for computing diluted earnings per share | 10,673,077 | 10,779,641 | 10,737,853 | 10,769,817 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Lease cost | ||
Operating lease | $ 61,297 | $ 183,891 |
Short-term leases | 0 | 0 |
Total lease cost | 61,297 | 183,891 |
Other information on operating leases | ||
Cash payments included in the measurement of lease liability in operating cash flows | $ 62,782 | $ 147,018 |
Discount rate | 5.50% | 5.50% |
Remaining lease term in years | 5 years |
Commitments and Contingencies_3
Commitments and Contingencies (Details 1) | Sep. 30, 2020USD ($) |
Commitments and Contingencies | |
Remainder of 2020 | $ 64,281 |
2021 | 264,571 |
2022 | 273,831 |
2023 | 283,415 |
2024 | 140,739 |
Thereafter | 192,916 |
Total undiscounted lease payments | 1,219,753 |
Less: present value adjustment | 188,522 |
Operating lease liability | $ 1,031,231 |
Commitments and Contingencies_4
Commitments and Contingencies (Details Narrative) - USD ($) | Oct. 14, 2019 | Jan. 31, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Rent expenses | $ 61,297 | $ 41,342 | $ 183,891 | $ 124,026 | ||
2020, 2021, 2022 [Member] | ||||||
Restricted stock issued | 136,500 | |||||
January, 2020 [Member] | Second Anniversary [Member] | ||||||
Restricted stock issued | 17,191 | |||||
Amended Employment Agreement [Member] | January, 2020 [Member] | ||||||
Restricted stock issued value | $ 157,431 | |||||
Restricted stock issued | 1,500,000 | 1,250,000 | ||||
Mr. Goldstein [Member] | ||||||
Employment agreement description | Mr. Goldstein’s granted but unvested restricted stock awards will vest. Mr. Goldstein would be entitled, under certain circumstances, to a payment equal to 3.82 times his then annual salary, the target LTC payment of $1,890,000 and his accrued 6% bonus in the event of the termination of his employment within eighteen months following a change of control of the Company. | |||||
Barry Goldstein, President, Chief Executive Officer and Executive Chairman of the Board [Member] | Employment Agreement [Member] | ||||||
Description of payments and benefits | (i) $381,111 (representing the amount of base salary he would have received had he remained employed through March 31, 2020), (ii) $5,000 in full satisfaction for any bonus payments payable under the existing employment agreements, (iii) continuing group health coverage commencing on the Separation Date and ending on March 31, 2020, and (iv) continued vesting of all stock awards previously granted to Mr. Thatcher in his capacity as an executive officer but which were unvested as of the Separation Date (Mr. Thatcher shall not be entitled to any further grants of stock awards after the Separation Date). | |||||
Salary | $ 500,000 | |||||
Employment agreement description | Mr. Goldstein’s granted but unvested restricted stock awards will vest. Mr. Goldstein would be entitled, under certain circumstances, to a payment equal to 3.82 times his then annual salary, the target LTC payment of $1,890,000 and his accrued 6% bonus in the event of the termination of his employment within eighteen months following a change of control of the Company. | |||||
Description Annual Bonus | annual bonus equal to 6% of the Company’s consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 2.5 times his base salary. In addition, pursuant to the Amended Employment Agreement, Mr. Goldstein is entitled to receive a long-term compensation (“LTC”) award of between $945,000 and $2,835,000 based on a specified minimum increase in the Company’s adjusted book value per share | |||||
Dale A. Thatcher [Member] | ||||||
Description of payments and benefits | 381,111 (representing the amount of base salary he would have received had he remained employed through March 31, 2020), (ii) $5,000 in full satisfaction for any bonus payments payable under the existing employment agreements, (iii) continuing group health coverage commencing on the Separation Date and ending on March 31, 2020, and (iv) continued vesting of all stock awards previously granted to Mr. Thatcher in his capacity as an executive officer but which were unvested as of the Separation Date (Mr. Thatcher shall not be entitled to any further grants of stock awards after the Separation Date). | |||||
Severance payments | $ 20,000 | |||||
Meryl Golden, Chief Operating Officer [Member] | Golden Emloyment Agreement [Member] | ||||||
Salary | $ 500,000 | |||||
Option purchase | 50,000 |
Deferred Compensation Plan (Det
Deferred Compensation Plan (Details Narrative) - USD ($) | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 18, 2018 |
Deferred compensation liability | $ 599,274 | $ 629,593 | $ 629,593 |
KICO [Member] | |||
Deferred compensation percent | 7500.00% | ||
Bonus and other compensation | 10000.00% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Nov. 04, 2020$ / shares |
Subsequent Event [Member] | Board OF Directors [Member] | |
Dividend | $ 0.04 |