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Share Name | Share Symbol | Market | Type |
---|---|---|---|
FedNat Holding Company | NASDAQ:FNHC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.20 | 0.20 | 0.2249 | 0 | 01:00:00 |
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Florida
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65-0248866
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(State or Other Jurisdiction of Incorporation or Organization)
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(IRS Employer Identification Number)
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14050 N.W. 14
th
Street, Suite 180, Sunrise, FL
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33323
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
800-293-2532
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Securities registered pursuant to Section 12(b) of the Exchange Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $0.01 per share
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NASDAQ Global Market
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Large accelerated filer ☐
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Accelerated filer ☒
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Non‑accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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(Do not check if a smaller reporting company)
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PART I
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ITEM 1
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ITEM 1A
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ITEM 1B
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ITEM 2
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ITEM 3
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ITEM 4
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PART II
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ITEM 5
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ITEM 6
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ITEM 7
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ITEM 7A
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ITEM 8
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ITEM 9
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ITEM 9A
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ITEM 9B
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PART III
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ITEM 10
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ITEM 11
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ITEM 12
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ITEM 13
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ITEM 14
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PART IV
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ITEM 15
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ITEM 16
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Year Ended December 31,
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2017
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2016
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2015
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||||||
Gross premiums written
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(In thousands)
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||||||||||
Homeowners:
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||||||
Florida
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$
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482,039
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$
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477,489
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$
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427,428
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Louisiana
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31,312
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25,385
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18,540
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South Carolina
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10,803
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6,531
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1,518
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Alabama
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4,110
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3,332
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2,280
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Texas
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8,491
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—
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—
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|||
Total homeowners
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536,755
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512,737
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449,766
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||||||
Personal automobile:
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||||||
Texas
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19,324
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34,239
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17,916
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Georgia
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22,479
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31,831
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2,762
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Florida
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1,265
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1,745
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1,200
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Alabama
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437
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1,664
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34
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Total personal automobile
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43,505
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69,479
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21,912
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||||||
Commercial general liability
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11,048
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13,256
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13,928
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||||||
Federal flood
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12,109
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10,013
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8,164
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Gross premiums written total
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$
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603,417
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$
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605,485
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$
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493,770
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•
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FNU and MNIC entered into a managing general agent and claims administration agreement, pursuant to which FNU provides underwriting, accounting, reinsurance placement and claims administration services to MNIC. FNU receives 4% of MNIC’s total written annual premium, excluding acquisition expenses payable to agents, for FNU’s managing general agent services; 3.6% of MNIC’s total earned annual premium for FNU’s claims administration services; and, a per-policy administrative fee of $25 for each policy underwritten for MNIC. We also receive an annual expense reimbursement for accounting and related services.
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•
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The Monarch Entities and Crosswinds AUM, a wholly owned subsidiary of Crosswinds Holdings, entered into an investment management agreement, pursuant to which Crosswinds AUM will manage the investment portfolios of the Monarch Entities. The management fee, on an annual basis, is 0.75% of assets under management up to $100 million 0.50% of assets under management of more than $100 million but less than $200 million; and, 0.30% of assets under management of more than $200 million.
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•
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MNIC and TransRe also entered into a reinsurance capacity right of first refusal agreement, pursuant to which TransRe has a right of first refusal for all quota share and excess of loss reinsurance agreements that MNIC deems necessary in its sole discretion for so long as TransRe remains a member of Monarch Delaware or the MNHC debt remains outstanding. TransRe also has the right to provide, at market rates and terms, a maximum of 15% of any reinsurance coverage obtained by MNIC in any individual reinsurance contract.
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•
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Our Chief Executive Officer holds his respective position and our Chief Accounting Officer holds the position of Chief Financial Officer with the Monarch Entities while each remain employed by us.
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•
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focusing on our core operations, the Homeowners line of business, while withdrawing from our Automobile and Commercial General Liability coverages;
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•
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leveraging our recently attained 100% ownership of MNIC by developing and implementing a plan in 2018 to expand upon MNIC’s pricing and product offerings in 2019 to increase market share in the risk-adjusted portion of the Florida homeowners market;
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focusing on operational efficiencies in our homeowners operations to reduce expenses and increase our use of technology;
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enhancing our property analytical metrics, such as an increased geographical dispersion of risks, while managing our underwriting appetite, whether new or renewal, to ensure a balanced book of business;
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continued expansion of our homeowners products into other states;
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maintaining a commitment to provide high quality customer service to our agents and insureds;
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strengthening of our marketing efforts by retaining key personnel and implementing direct marketing technologies;
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offering attractive incentives to our agents to place a high volume of quality business with our companies;
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continuing with our strong catastrophe reinsurance programs; and
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•
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additional strategies that may include possible mergers, acquisitions and joint ventures or dispositions of assets.
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Traditional local and global reinsurance markets including those in the United States (“U.S.”), Bermuda, London and Europe, accessed directly and through reinsurance intermediaries;
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Capital markets through insurance-linked securities and collateralized reinsurance transactions, such as catastrophe bonds, sidecars and similar vehicles; and,
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Other insurers that engage in both direct and assumed reinsurance.
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Proportional reinsurance, whereby we cede a specified percentage of premium and losses to reinsurers;
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Non-proportional or excess of loss reinsurance, whereby we cede all or a specified portion of losses in excess of a specified amount on a per risk, per occurrence (including catastrophe reinsurance) or aggregate basis; or
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•
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Facultative contracts that reinsure individual policies.
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•
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our operating results, including a shortfall in operating revenue or net income from that expected by securities analysts and investors;
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recognition of large unanticipated accounting charges, such as related to a loss reserve enhancement;
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changes in securities analysts’ estimates of our financial performance or the financial performance of our competitors or companies in our industry generally;
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the announcement of a material event or anticipated event involving us or our industry or the markets in which we operate;
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•
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the issuance of a significant number of shares; and,
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•
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the other risk factors described in this Annual Report, the accompanying notes and the documents incorporated by reference herein.
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prohibit cumulative voting in the election of our directors;
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establish a classified board of directors with staggered three-year terms;
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establish advance notice and disclosure procedures for shareholders to bring matters, including nominations for election to our board, before a meeting of our shareholders; and,
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eliminate the ability of shareholders to take action by written consent in lieu of a shareholder meeting.
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Quarter Ended:
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High
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Low
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||||
March 31, 2017
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$
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21.19
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$
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16.45
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June 30, 2017
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17.60
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14.46
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September 30, 2017
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17.34
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9.78
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December 31, 2017
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16.75
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12.84
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March 31, 2016
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$
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29.08
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$
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18.68
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June 30, 2016
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22.93
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18.00
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September 30, 2016
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22.45
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17.08
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December 31, 2016
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19.33
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14.03
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•
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In November 2017, the Company’s Board of Directors declared a dividend of $0.08 per common share, paid in March 2018, totaling $1.0 million.
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•
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In September 2017, the Company’s Board of Directors declared a dividend of $0.08 per common share, paid in December 2017, totaling $1.1 million.
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•
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In June 2017, the Company’s Board of Directors declared a dividend of $0.08 per common share, paid in September 2017, totaling $1.1 million.
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•
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In March 2017, the Company’s Board of Directors declared a dividend of $0.08 per common share, paid in June 2017, totaling $1.1 million.
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•
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In December 2016, our Board of Directors declared a dividend of $0.08 per common share, paid in March 2017, totaling $1.1 million.
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•
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In September 2016, our Board of Directors declared a dividend of $0.08 per common share, paid in December 2016, totaling $1.1 million.
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•
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In June 2016, our Board of Directors declared dividends of $0.06 per common share, respectively, paid in September 2016, totaling $1.7 million.
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•
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In January 2016, our Board of Directors declared a dividend of $0.05 per common share, paid in March 2016, totaling $0.7 million.
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Equity Compensation Plan Information
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|||||||||
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Number of securities
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remaining available for
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|||
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Number of securities to
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Weighted-average
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future issuance under
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be issued upon exercise of
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exercise price of
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equity compensation plans
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outstanding options,
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outstanding options,
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(excluding securities
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warrants and rights
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warrants and rights
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reflected in column (a))
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Plan category
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(a)
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(b)
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(c)
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Equity compensation plans approved by stockholders
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50,351
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3.72
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142,905
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Federated National Holding Company
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Period Ending
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||||||||||||||||
Index
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12/31/2012
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12/31/2013
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12/31/2014
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12/31/2015
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12/31/2016
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12/31/2017
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Federated National Holding Company
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100.00
|
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277.76
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460.35
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566.62
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362.79
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|
327.96
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NASDAQ Composite
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100.00
|
|
|
140.12
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|
|
160.78
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|
|
171.97
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187.22
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242.71
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SNL Insurance P&C
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100.00
|
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|
132.48
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|
|
152.15
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|
|
157.39
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|
|
185.75
|
|
|
212.37
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Year Ended December 31,
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||||||||||||||||||
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2017
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2016 (1)
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2015 (1)
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2014 (1)
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2013 (1)
|
||||||||||
Statement of Operations Data:
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(In thousands, except per share data)
|
||||||||||||||||||
Revenue:
|
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|
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|
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|
||||||||||
Net premiums earned
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$
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333,481
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$
|
261,369
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|
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$
|
213,020
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|
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$
|
173,774
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|
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$
|
104,381
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|
Net investment income
|
10,254
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|
|
9,063
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|
|
7,226
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|
|
5,385
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|
|
3,332
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|
|||||
Net realized investment gains
|
8,548
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|
3,045
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|
|
3,616
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|
|
4,426
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|
|
2,881
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|
|||||
Direct written policy fees
|
17,173
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|
|
16,619
|
|
|
9,740
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|
|
7,728
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|
|
3,976
|
|
|||||
Other income
|
22,206
|
|
|
17,429
|
|
|
9,869
|
|
|
7,303
|
|
|
4,352
|
|
|||||
Total revenue
|
391,662
|
|
|
307,525
|
|
|
243,471
|
|
|
198,616
|
|
|
118,922
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Losses and loss adjustment expenses
|
247,557
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|
|
197,810
|
|
|
112,710
|
|
|
81,224
|
|
|
58,610
|
|
|||||
Commissions and other underwriting expenses
|
114,867
|
|
|
90,378
|
|
|
52,862
|
|
|
48,294
|
|
|
35,350
|
|
|||||
General and administrative expenses
|
19,963
|
|
|
17,186
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|
|
14,698
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|
|
10,797
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|
|
7,529
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|
|||||
Interest expense
|
348
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|
|
348
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|
|
256
|
|
|
—
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|
|
—
|
|
|||||
Total costs and expenses
|
382,735
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|
|
305,722
|
|
|
180,526
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|
|
140,315
|
|
|
101,489
|
|
|||||
Income before income taxes
|
8,927
|
|
|
1,803
|
|
|
62,945
|
|
|
58,301
|
|
|
17,433
|
|
|||||
Income taxes
|
3,585
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|
|
542
|
|
|
24,089
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|
|
20,491
|
|
|
5,803
|
|
|||||
Net income
|
5,342
|
|
|
1,261
|
|
|
38,856
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|
|
37,810
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|
|
11,630
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|
|||||
Net (loss) income attributable to non-controlling interest
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(2,647
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)
|
|
246
|
|
|
(445
|
)
|
|
—
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|
—
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|
|||||
Net income attributable to Federated National Holding Company shareholders
|
$
|
7,989
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|
|
$
|
1,015
|
|
|
$
|
39,301
|
|
|
$
|
37,810
|
|
|
$
|
11,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|||||
Per share data:
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|
|||||
Net income per share attributable to Federated National
Holding Company shareholders:
|
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|
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|
|
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|
|||||
Basic
|
$
|
0.61
|
|
|
$
|
0.07
|
|
|
$
|
2.86
|
|
|
$
|
3.13
|
|
|
$
|
1.37
|
|
Diluted
|
$
|
0.60
|
|
|
$
|
0.07
|
|
|
$
|
2.81
|
|
|
$
|
3.04
|
|
|
$
|
1.33
|
|
Dividends
|
$
|
0.32
|
|
|
$
|
0.27
|
|
|
$
|
0.18
|
|
|
$
|
0.13
|
|
|
$
|
0.11
|
|
|
December 31,
|
||||||||||||||||||
|
2017
|
|
2016 (1)
|
|
2015 (1)
|
|
2014 (1)
|
|
2013 (1)
|
||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and invested assets
|
$
|
530,249
|
|
|
$
|
484,275
|
|
|
$
|
437,369
|
|
|
$
|
370,920
|
|
|
$
|
262,156
|
|
Total assets
|
$
|
904,873
|
|
|
$
|
815,390
|
|
|
$
|
701,373
|
|
|
$
|
506,828
|
|
|
$
|
317,167
|
|
Loss and loss adjustment expense reserves
|
$
|
230,515
|
|
|
$
|
158,110
|
|
|
$
|
97,706
|
|
|
$
|
78,587
|
|
|
$
|
61,203
|
|
Total liabilities
|
$
|
677,414
|
|
|
$
|
580,925
|
|
|
$
|
455,216
|
|
|
$
|
317,267
|
|
|
$
|
210,463
|
|
Total shareholders’ equity
|
$
|
227,459
|
|
|
$
|
234,465
|
|
|
$
|
246,157
|
|
|
$
|
189,561
|
|
|
$
|
106,704
|
|
Book value per share, excluding non-controlling interest
|
$
|
16.29
|
|
|
$
|
16.01
|
|
|
$
|
16.52
|
|
|
$
|
13.91
|
|
|
$
|
9.79
|
|
|
Year Ended December 31,
|
|||||||||
|
2017
|
|
% Change
|
|
2016
|
|||||
Revenue:
|
(Dollars in thousands)
|
|||||||||
Gross premiums written
|
$
|
603,417
|
|
|
(0.3
|
)%
|
|
$
|
605,485
|
|
Increase in unearned premiums
|
(224
|
)
|
|
(99.4
|
)%
|
|
(40,062
|
)
|
||
Gross premiums earned
|
603,193
|
|
|
6.7
|
%
|
|
565,423
|
|
||
Ceded premiums earned
|
(269,712
|
)
|
|
(11.3
|
)%
|
|
(304,054
|
)
|
||
Net premiums earned
|
333,481
|
|
|
27.6
|
%
|
|
261,369
|
|
||
Net investment income
|
10,254
|
|
|
13.1
|
%
|
|
9,063
|
|
||
Net realized investment gains
|
8,548
|
|
|
180.7
|
%
|
|
3,045
|
|
||
Direct written policy fees
|
17,173
|
|
|
3.3
|
%
|
|
16,619
|
|
||
Other income
|
22,206
|
|
|
27.4
|
%
|
|
17,429
|
|
||
Total revenue
|
391,662
|
|
|
27.4
|
%
|
|
307,525
|
|
||
|
|
|
|
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|||||
Losses and loss adjustment expenses
|
247,557
|
|
|
25.1
|
%
|
|
197,810
|
|
||
Commissions and other underwriting expenses
|
114,867
|
|
|
27.1
|
%
|
|
90,378
|
|
||
General and administrative expenses
|
19,963
|
|
|
16.2
|
%
|
|
17,186
|
|
||
Interest expense
|
348
|
|
|
—
|
%
|
|
348
|
|
||
Total costs and expenses
|
382,735
|
|
|
25.2
|
%
|
|
305,722
|
|
||
|
|
|
|
|
|
|||||
Income before income taxes
|
8,927
|
|
|
395.1
|
%
|
|
1,803
|
|
||
Income taxes
|
3,585
|
|
|
561.4
|
%
|
|
542
|
|
||
Net income
|
5,342
|
|
|
323.6
|
%
|
|
1,261
|
|
||
Net (loss) income attributable to non-controlling interest
|
(2,647
|
)
|
|
(1,176.0
|
)%
|
|
246
|
|
||
Net income attributable to Federated National Holding Company shareholders
|
$
|
7,989
|
|
|
687.1
|
%
|
|
$
|
1,015
|
|
|
|
|
|
|
|
|||||
Ratios to net premiums earned:
|
|
|
|
|
|
|
||||
Net loss ratio (1)
|
74.2
|
%
|
|
|
|
75.7
|
%
|
|||
Net expense ratio (2)
|
40.4
|
%
|
|
|
|
41.2
|
%
|
|||
Combined ratio (3)
|
114.6
|
%
|
|
|
|
116.9
|
%
|
(1)
|
Net loss ratio is calculated as losses and loss adjustment expenses divided by net premiums earned.
|
(2)
|
Net expense ratio is calculated as all operating expenses less interest expense divided by net premiums earned.
|
(3)
|
Combined ratio is calculated as the sum of losses and loss adjustment expenses and all operating expenses less interest expense divided by net premiums earned.
|
|
|
2017
|
|
2016
|
||||||||||||||||||||||||||||
|
|
Homeowners
|
|
Automobile
|
|
Other
|
|
Consolidated
|
|
Homeowners
|
|
Automobile
|
|
Other
|
|
Consolidated
|
||||||||||||||||
Revenue:
|
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||
Gross premiums written
|
|
$
|
536,755
|
|
|
$
|
43,505
|
|
|
$
|
23,157
|
|
|
$
|
603,417
|
|
|
$
|
512,737
|
|
|
$
|
69,479
|
|
|
$
|
23,269
|
|
|
$
|
605,485
|
|
(Increase) decrease in unearned premiums
|
|
(11,231
|
)
|
|
11,174
|
|
|
(167
|
)
|
|
(224
|
)
|
|
(28,384
|
)
|
|
(11,167
|
)
|
|
(511
|
)
|
|
(40,062
|
)
|
||||||||
Gross premiums earned
|
|
525,524
|
|
|
54,679
|
|
|
22,990
|
|
|
603,193
|
|
|
484,353
|
|
|
58,312
|
|
|
22,758
|
|
|
565,423
|
|
||||||||
Ceded premiums earned
|
|
(227,269
|
)
|
|
(31,037
|
)
|
|
(11,406
|
)
|
|
(269,712
|
)
|
|
(249,972
|
)
|
|
(44,291
|
)
|
|
(9,791
|
)
|
|
(304,054
|
)
|
||||||||
Net premiums earned
|
|
298,255
|
|
|
23,642
|
|
|
11,584
|
|
|
333,481
|
|
|
234,381
|
|
|
14,021
|
|
|
12,967
|
|
|
261,369
|
|
||||||||
Net investment income
|
|
—
|
|
|
—
|
|
|
10,254
|
|
|
10,254
|
|
|
—
|
|
|
—
|
|
|
9,063
|
|
|
9,063
|
|
||||||||
Net realized investment gains
|
|
—
|
|
|
—
|
|
|
8,548
|
|
|
8,548
|
|
|
—
|
|
|
—
|
|
|
3,045
|
|
|
3,045
|
|
||||||||
Direct written policy fees
|
|
8,715
|
|
|
7,846
|
|
|
612
|
|
|
17,173
|
|
|
7,844
|
|
|
8,171
|
|
|
604
|
|
|
16,619
|
|
||||||||
Other income
|
|
13,662
|
|
|
3,277
|
|
|
5,267
|
|
|
22,206
|
|
|
9,106
|
|
|
5,479
|
|
|
2,844
|
|
|
17,429
|
|
||||||||
Total revenue
|
|
320,632
|
|
|
34,765
|
|
|
36,265
|
|
|
391,662
|
|
|
251,331
|
|
|
27,671
|
|
|
28,523
|
|
|
307,525
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
|
206,842
|
|
|
32,752
|
|
|
7,963
|
|
|
247,557
|
|
|
169,920
|
|
|
14,885
|
|
|
13,005
|
|
|
197,810
|
|
||||||||
Commissions and other underwriting expenses
|
|
97,111
|
|
|
12,976
|
|
|
4,780
|
|
|
114,867
|
|
|
73,215
|
|
|
12,471
|
|
|
4,692
|
|
|
90,378
|
|
||||||||
General and administrative expenses
|
|
15,403
|
|
|
650
|
|
|
3,910
|
|
|
19,963
|
|
|
13,079
|
|
|
600
|
|
|
3,507
|
|
|
17,186
|
|
||||||||
Interest expense
|
|
348
|
|
|
—
|
|
|
—
|
|
|
348
|
|
|
348
|
|
|
—
|
|
|
—
|
|
|
348
|
|
||||||||
Total costs and expenses
|
|
319,704
|
|
|
46,378
|
|
|
16,653
|
|
|
382,735
|
|
|
256,562
|
|
|
27,956
|
|
|
21,204
|
|
|
305,722
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Income (loss) before income taxes
|
|
928
|
|
|
(11,613
|
)
|
|
19,612
|
|
|
8,927
|
|
|
(5,231
|
)
|
|
(285
|
)
|
|
7,319
|
|
|
1,803
|
|
||||||||
Income taxes
|
|
360
|
|
|
(4,481
|
)
|
|
7,706
|
|
|
3,585
|
|
|
(2,015
|
)
|
|
(111
|
)
|
|
2,668
|
|
|
542
|
|
||||||||
Net income (loss)
|
|
568
|
|
|
(7,132
|
)
|
|
11,906
|
|
|
5,342
|
|
|
(3,216
|
)
|
|
(174
|
)
|
|
4,651
|
|
|
1,261
|
|
||||||||
Net (loss) income attributable to non-controlling interest
|
|
(2,647
|
)
|
|
—
|
|
|
—
|
|
|
(2,647
|
)
|
|
246
|
|
|
—
|
|
|
—
|
|
|
246
|
|
||||||||
Net income (loss) attributable to Federated National Holding Company shareholders
|
|
$
|
3,215
|
|
|
$
|
(7,132
|
)
|
|
$
|
11,906
|
|
|
$
|
7,989
|
|
|
$
|
(3,462
|
)
|
|
$
|
(174
|
)
|
|
$
|
4,651
|
|
|
$
|
1,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ratios to net premiums earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net loss ratio
|
|
69.4
|
%
|
|
138.5
|
%
|
|
68.7
|
%
|
|
74.2
|
%
|
|
72.5
|
%
|
|
106.2
|
%
|
|
100.3
|
%
|
|
75.7
|
%
|
||||||||
Net expense ratio
|
|
37.7
|
%
|
|
|
|
|
|
|
|
40.4
|
%
|
|
36.8
|
%
|
|
|
|
|
|
|
|
41.2
|
%
|
||||||||
Combined ratio
|
|
107.1
|
%
|
|
|
|
|
|
|
|
114.6
|
%
|
|
109.3
|
%
|
|
|
|
|
|
|
|
116.9
|
%
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Gross premiums written:
|
|
(In thousands)
|
||||||
Homeowners Florida
|
|
$
|
482,039
|
|
|
$
|
477,489
|
|
Homeowners non-Florida
|
|
54,716
|
|
|
35,248
|
|
||
Personal automobile
|
|
43,505
|
|
|
69,479
|
|
||
Commercial general liability
|
|
11,048
|
|
|
13,256
|
|
||
Federal flood
|
|
12,109
|
|
|
10,013
|
|
||
Total gross premiums written
|
|
$
|
603,417
|
|
|
$
|
605,485
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Gross premiums earned:
|
|
(In thousands)
|
||||||
Homeowners Florida
|
|
$
|
481,541
|
|
|
$
|
455,252
|
|
Homeowners non-Florida
|
|
43,983
|
|
|
29,101
|
|
||
Personal automobile
|
|
54,679
|
|
|
58,312
|
|
||
Commercial general liability
|
|
12,216
|
|
|
13,675
|
|
||
Federal flood
|
|
10,774
|
|
|
9,083
|
|
||
Total gross premiums earned
|
|
$
|
603,193
|
|
|
$
|
565,423
|
|
|
|
Year Ended December 31,
|
|||||||||
|
|
2017
|
|
% Change
|
|
2016
|
|||||
|
|
(Dollars in thousands)
|
|||||||||
Other income:
|
|
|
|
|
|
|
|||||
Commission income
|
|
$
|
6,227
|
|
|
(19.4
|
)%
|
|
$
|
7,730
|
|
Brokerage revenue
|
|
11,781
|
|
|
61.0
|
%
|
|
7,316
|
|
||
Partnership income
|
|
1,973
|
|
|
722.1
|
%
|
|
240
|
|
||
Financing revenue
|
|
2,225
|
|
|
3.8
|
%
|
|
2,143
|
|
||
Total other income
|
|
$
|
22,206
|
|
|
27.4
|
%
|
|
$
|
17,429
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Commissions and other underwriting expenses:
|
|
(In thousands)
|
||||||
Homeowners Florida
|
|
$
|
57,151
|
|
|
$
|
55,370
|
|
All others
|
|
32,105
|
|
|
28,720
|
|
||
Ceded commissions
|
|
(19,199
|
)
|
|
(36,445
|
)
|
||
Total commissions and other fees
|
|
70,057
|
|
|
47,645
|
|
||
Salaries and wages
|
|
14,521
|
|
|
13,748
|
|
||
Other underwriting expenses
|
|
30,289
|
|
|
28,985
|
|
||
Total commissions and other underwriting expenses
|
|
$
|
114,867
|
|
|
$
|
90,378
|
|
|
|
Year Ended December 31,
|
|||||||||
|
|
2016
|
|
% Change
|
|
2015
|
|||||
Revenue:
|
|
(Dollars in thousands)
|
|||||||||
Gross premiums written
|
|
$
|
605,485
|
|
|
22.6
|
%
|
|
$
|
493,770
|
|
Increase in unearned premiums
|
|
(40,062
|
)
|
|
(34.9
|
)%
|
|
(61,537
|
)
|
||
Gross premiums earned
|
|
565,423
|
|
|
30.8
|
%
|
|
432,233
|
|
||
Ceded premiums earned
|
|
(304,054
|
)
|
|
38.7
|
%
|
|
(219,213
|
)
|
||
Net premiums earned
|
|
261,369
|
|
|
22.7
|
%
|
|
213,020
|
|
||
Net investment income
|
|
9,063
|
|
|
25.4
|
%
|
|
7,226
|
|
||
Net realized investment gains
|
|
3,045
|
|
|
(15.8
|
)%
|
|
3,616
|
|
||
Direct written policy fees
|
|
16,619
|
|
|
70.6
|
%
|
|
9,740
|
|
||
Other income
|
|
17,429
|
|
|
76.6
|
%
|
|
9,869
|
|
||
Total revenue
|
|
307,525
|
|
|
26.3
|
%
|
|
243,471
|
|
||
|
|
|
|
|
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|||||
Losses and loss adjustment expenses
|
|
197,810
|
|
|
75.5
|
%
|
|
112,710
|
|
||
Commissions and other underwriting expenses
|
|
90,378
|
|
|
71.0
|
%
|
|
52,862
|
|
||
General and administrative expenses
|
|
17,186
|
|
|
16.9
|
%
|
|
14,698
|
|
||
Interest expense
|
|
348
|
|
|
35.9
|
%
|
|
256
|
|
||
Total costs and expenses
|
|
305,722
|
|
|
69.4
|
%
|
|
180,526
|
|
||
|
|
|
|
|
|
|
|||||
Income before income taxes
|
|
1,803
|
|
|
(97.1
|
)%
|
|
62,945
|
|
||
Income taxes
|
|
542
|
|
|
(97.8
|
)%
|
|
24,089
|
|
||
Net income
|
|
1,261
|
|
|
(96.8
|
)%
|
|
38,856
|
|
||
Net income (loss) attributable to non-controlling interest
|
|
246
|
|
|
(155.3
|
)%
|
|
(445
|
)
|
||
Net income attributable to Federated National Holding Company shareholders
|
|
$
|
1,015
|
|
|
(97.4
|
)%
|
|
$
|
39,301
|
|
|
|
|
|
|
|
|
|
||||
Ratios to net premiums earned:
|
|
|
|
|
|
|
|
|
|
||
Net loss ratio
|
|
75.7
|
%
|
|
|
|
|
52.9
|
%
|
||
Net expense ratio
|
|
41.2
|
%
|
|
|
|
|
31.7
|
%
|
||
Combined ratio
|
|
116.9
|
%
|
|
|
|
|
84.6
|
%
|
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||||
|
|
Homeowners
|
|
Automobile
|
|
Other
|
|
Consolidated
|
|
Homeowners
|
|
Automobile
|
|
Other
|
|
Consolidated
|
||||||||||||||||
Revenue:
|
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||
Gross premiums written
|
|
$
|
512,737
|
|
|
$
|
69,479
|
|
|
$
|
23,269
|
|
|
$
|
605,485
|
|
|
$
|
449,766
|
|
|
$
|
21,912
|
|
|
$
|
22,092
|
|
|
$
|
493,770
|
|
Increase in unearned premiums
|
|
(28,384
|
)
|
|
(11,167
|
)
|
|
(511
|
)
|
|
(40,062
|
)
|
|
(52,940
|
)
|
|
(7,804
|
)
|
|
(793
|
)
|
|
(61,537
|
)
|
||||||||
Gross premiums earned
|
|
484,353
|
|
|
58,312
|
|
|
22,758
|
|
|
565,423
|
|
|
396,826
|
|
|
14,108
|
|
|
21,299
|
|
|
432,233
|
|
||||||||
Ceded premiums earned
|
|
(249,972
|
)
|
|
(44,291
|
)
|
|
(9,791
|
)
|
|
(304,054
|
)
|
|
(199,731
|
)
|
|
(11,101
|
)
|
|
(8,381
|
)
|
|
(219,213
|
)
|
||||||||
Net premiums earned
|
|
234,381
|
|
|
14,021
|
|
|
12,967
|
|
|
261,369
|
|
|
197,095
|
|
|
3,007
|
|
|
12,918
|
|
|
213,020
|
|
||||||||
Net investment income
|
|
—
|
|
|
—
|
|
|
9,063
|
|
|
9,063
|
|
|
—
|
|
|
—
|
|
|
7,226
|
|
|
7,226
|
|
||||||||
Net realized investment gains
|
|
—
|
|
|
—
|
|
|
3,045
|
|
|
3,045
|
|
|
—
|
|
|
—
|
|
|
3,616
|
|
|
3,616
|
|
||||||||
Direct written policy fees
|
|
7,844
|
|
|
8,171
|
|
|
604
|
|
|
16,619
|
|
|
7,020
|
|
|
2,115
|
|
|
605
|
|
|
9,740
|
|
||||||||
Other income
|
|
9,106
|
|
|
5,479
|
|
|
2,844
|
|
|
17,429
|
|
|
6,567
|
|
|
1,657
|
|
|
1,645
|
|
|
9,869
|
|
||||||||
Total revenue
|
|
251,331
|
|
|
27,671
|
|
|
28,523
|
|
|
307,525
|
|
|
210,682
|
|
|
6,779
|
|
|
26,010
|
|
|
243,471
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
|
169,920
|
|
|
14,885
|
|
|
13,005
|
|
|
197,810
|
|
|
97,219
|
|
|
5,196
|
|
|
10,295
|
|
|
112,710
|
|
||||||||
Commissions and other underwriting expenses
|
|
73,215
|
|
|
12,471
|
|
|
4,692
|
|
|
90,378
|
|
|
46,684
|
|
|
1,576
|
|
|
4,602
|
|
|
52,862
|
|
||||||||
General and administrative expenses
|
|
13,079
|
|
|
600
|
|
|
3,507
|
|
|
17,186
|
|
|
11,956
|
|
|
100
|
|
|
2,642
|
|
|
14,698
|
|
||||||||
Interest expense
|
|
348
|
|
|
—
|
|
|
—
|
|
|
348
|
|
|
256
|
|
|
—
|
|
|
—
|
|
|
256
|
|
||||||||
Total costs and expenses
|
|
256,562
|
|
|
27,956
|
|
|
21,204
|
|
|
305,722
|
|
|
156,115
|
|
|
6,872
|
|
|
17,539
|
|
|
180,526
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Income before income taxes
|
|
(5,231
|
)
|
|
(285
|
)
|
|
7,319
|
|
|
1,803
|
|
|
54,567
|
|
|
(93
|
)
|
|
8,471
|
|
|
62,945
|
|
||||||||
Income taxes
|
|
(2,015
|
)
|
|
(111
|
)
|
|
2,668
|
|
|
542
|
|
|
21,049
|
|
|
(36
|
)
|
|
3,076
|
|
|
24,089
|
|
||||||||
Net income
|
|
(3,216
|
)
|
|
(174
|
)
|
|
4,651
|
|
|
1,261
|
|
|
33,518
|
|
|
(57
|
)
|
|
5,395
|
|
|
38,856
|
|
||||||||
Net income (loss) attributable to non-controlling interest
|
|
246
|
|
|
—
|
|
|
—
|
|
|
246
|
|
|
(445
|
)
|
|
—
|
|
|
—
|
|
|
(445
|
)
|
||||||||
Net (loss) income attributable to Federated National Holding Company shareholders
|
|
$
|
(3,462
|
)
|
|
$
|
(174
|
)
|
|
$
|
4,651
|
|
|
$
|
1,015
|
|
|
$
|
33,963
|
|
|
$
|
(57
|
)
|
|
$
|
5,395
|
|
|
$
|
39,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ratios to net premiums earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net loss ratio
|
|
72.5
|
%
|
|
106.2
|
%
|
|
100.3
|
%
|
|
75.7
|
%
|
|
49.3
|
%
|
|
172.8
|
%
|
|
79.7
|
%
|
|
52.9
|
%
|
||||||||
Net expense ratio
|
|
36.8
|
%
|
|
|
|
|
|
|
|
41.2
|
%
|
|
29.8
|
%
|
|
|
|
|
|
|
31.7
|
%
|
|||||||||
Combined ratio
|
|
109.3
|
%
|
|
|
|
|
|
|
|
116.9
|
%
|
|
79.1
|
%
|
|
|
|
|
|
|
84.6
|
%
|
|
|
Year Ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Gross premiums written:
|
|
(In thousands)
|
||||||
Homeowners Florida
|
|
$
|
477,489
|
|
|
$
|
427,428
|
|
Homeowners non-Florida
|
|
35,248
|
|
|
22,338
|
|
||
Personal automobile
|
|
69,479
|
|
|
21,912
|
|
||
Commercial general liability
|
|
13,256
|
|
|
13,928
|
|
||
Federal flood
|
|
10,013
|
|
|
8,164
|
|
||
Total gross premiums written
|
|
$
|
605,485
|
|
|
$
|
493,770
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Gross premiums earned:
|
|
(In thousands)
|
||||||
Homeowners Florida
|
|
$
|
455,252
|
|
|
$
|
381,027
|
|
Homeowners non-Florida
|
|
29,101
|
|
|
15,799
|
|
||
Personal automobile
|
|
58,312
|
|
|
14,108
|
|
||
Commercial general liability
|
|
13,675
|
|
|
13,541
|
|
||
Federal flood
|
|
9,083
|
|
|
7,758
|
|
||
Total gross premiums earned
|
|
$
|
565,423
|
|
|
$
|
432,233
|
|
|
|
Year Ended December 31,
|
|||||||||
|
|
2016
|
|
% Change
|
|
2015
|
|||||
|
|
(Dollars in thousands)
|
|||||||||
Other income:
|
|
|
|
|
|
|
|||||
Commission income
|
|
$
|
7,730
|
|
|
159.9
|
%
|
|
$
|
2,974
|
|
Brokerage revenue
|
|
7,316
|
|
|
46.6
|
%
|
|
4,989
|
|
||
Partnership income (loss)
|
|
240
|
|
|
(2,500.0
|
)%
|
|
(10
|
)
|
||
Finance revenue
|
|
2,143
|
|
|
11.8
|
%
|
|
1,916
|
|
||
Total other income
|
|
$
|
17,429
|
|
|
76.6
|
%
|
|
$
|
9,869
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Commissions and other underwriting expenses:
|
|
(In thousands)
|
||||||
Homeowners Florida
|
|
$
|
55,370
|
|
|
$
|
37,799
|
|
All others
|
|
28,720
|
|
|
15,940
|
|
||
Ceded commissions
|
|
(36,445
|
)
|
|
(36,396
|
)
|
||
Total commissions and other fees
|
|
47,645
|
|
|
17,343
|
|
||
Salaries and wages
|
|
13,748
|
|
|
11,864
|
|
||
Other underwriting expenses
|
|
28,985
|
|
|
23,655
|
|
||
Total commissions and other underwriting expenses
|
|
$
|
90,378
|
|
|
$
|
52,862
|
|
|
|
Payments Due By Period
|
||||||||||||||||||
|
|
|
|
Less
|
|
|
|
|
|
More
|
||||||||||
|
|
|
|
than
|
|
1 - 3
|
|
3 - 5
|
|
than
|
||||||||||
|
|
Total
|
|
1 Year
|
|
Years
|
|
Years
|
|
5 Years
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Loss and loss adjustment expense reserves (1)
|
|
$
|
230,515
|
|
|
$
|
136,004
|
|
|
$
|
80,680
|
|
|
$
|
11,526
|
|
|
$
|
2,305
|
|
Long-term debt (2)
|
|
50,000
|
|
|
—
|
|
|
5,000
|
|
|
20,000
|
|
|
25,000
|
|
|||||
Interest payments on long-term debt (3)
|
|
27,685
|
|
|
4,202
|
|
|
12,549
|
|
|
8,225
|
|
|
2,709
|
|
|||||
Operating leases
|
|
12,760
|
|
|
780
|
|
|
4,464
|
|
|
2,640
|
|
|
4,876
|
|
|||||
Total long-term contractual obligations
|
|
$
|
320,960
|
|
|
$
|
140,986
|
|
|
$
|
102,693
|
|
|
$
|
42,391
|
|
|
$
|
34,890
|
|
•
|
Reported Loss Development Method
:
A reported loss development pattern is calculated based on historical loss development data, and this pattern is then used to project the latest evaluation of cumulative reported losses for each accident year or underwriting year, as appropriate, to ultimate levels;
|
•
|
Paid Development Method
:
A paid loss development pattern is calculated based on historical paid loss development data, and this pattern is then used to project the latest evaluation of cumulative paid losses for each accident year or underwriting year, as appropriate, to ultimate levels;
|
•
|
Expected Loss Ratio Method
:
Expected loss ratios are applied to premiums earned, based on historical company experience, or historical insurance industry results when company experience is deemed not to be sufficient; and
|
•
|
Bornhuetter-Ferguson Method
:
The results from the Expected Loss Ratio Method are essentially blended with either the Reported Loss Development Method or the Paid Development Method.
|
•
|
Expected loss ratios
represent management’s expectation of losses, in relation to earned premium, at the time business is written, before any actual claims experience has emerged. This expectation is a significant determinant of the estimate of loss reserves for recently written business where there is little paid or incurred loss data to consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost trends and known changes in the type of risks underwritten. For certain longer-tailed reinsurance business that are typically lower frequency, high severity classes, expected loss ratios are often used for the last several accident years or underwriting years, as appropriate.
|
•
|
Rate of loss
cost inflation (or deflation) represents management’s expectation of the inflation associated with the costs we may incur in the future to settle claims. Expected loss cost inflation is particularly important for longer-tailed classes.
|
•
|
Reported and paid loss
emergence patterns represent management’s expectation of how losses will be reported and ultimately paid in the future based on the historical emergence patterns of reported and paid losses and are derived from past experience of our subsidiaries, modified for current trends. These emergence patterns are used to project current reported or paid loss amounts to their ultimate settlement value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
||||||||||||||||
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
|
Amount
|
||||||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||
Principal amount by expected
maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
United States government
obligations and authorities
|
|
$
|
8,974
|
|
|
$
|
4,302
|
|
|
$
|
9,614
|
|
|
$
|
1,740
|
|
|
$
|
14,867
|
|
|
$
|
16,343
|
|
|
$
|
55,840
|
|
|
$
|
55,234
|
|
Obligations of states and
political subdivisions
|
|
5,085
|
|
|
7,430
|
|
|
8,910
|
|
|
5,030
|
|
|
9,920
|
|
|
23,670
|
|
|
60,045
|
|
|
66,266
|
|
||||||||
Corporate securities
|
|
24,847
|
|
|
28,677
|
|
|
29,370
|
|
|
26,364
|
|
|
33,139
|
|
|
87,976
|
|
|
230,373
|
|
|
234,785
|
|
||||||||
International securities
|
|
5,883
|
|
|
1,188
|
|
|
2,103
|
|
|
2,210
|
|
|
1,565
|
|
|
4,650
|
|
|
17,599
|
|
|
17,982
|
|
||||||||
Collateralized mortgage obligations
|
|
1,393
|
|
|
3,338
|
|
|
2,126
|
|
|
2,636
|
|
|
2,940
|
|
|
40,111
|
|
|
52,544
|
|
|
54,320
|
|
||||||||
Total investments
|
|
$
|
46,182
|
|
|
$
|
44,935
|
|
|
$
|
52,123
|
|
|
$
|
37,980
|
|
|
$
|
62,431
|
|
|
$
|
172,750
|
|
|
$
|
416,401
|
|
|
$
|
428,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Weighted average interest rate by
expected maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
United States government
obligations and authorities
|
|
0.77
|
%
|
|
1.62
|
%
|
|
0.99
|
%
|
|
1.35
|
%
|
|
1.64
|
%
|
|
1.99
|
%
|
|
1.48
|
%
|
|
|
|||||||||
Obligations of states and
political subdivisions
|
|
5.00
|
%
|
|
5.11
|
%
|
|
4.49
|
%
|
|
4.90
|
%
|
|
4.12
|
%
|
|
4.85
|
%
|
|
4.72
|
%
|
|
|
|||||||||
Corporate securities
|
|
3.52
|
%
|
|
3.55
|
%
|
|
3.05
|
%
|
|
3.28
|
%
|
|
3.32
|
%
|
|
3.65
|
%
|
|
3.46
|
%
|
|
|
|||||||||
International securities
|
|
3.07
|
%
|
|
6.91
|
%
|
|
2.76
|
%
|
|
2.82
|
%
|
|
3.09
|
%
|
|
4.20
|
%
|
|
3.56
|
%
|
|
|
|||||||||
Collateralized mortgage obligations
|
|
2.57
|
%
|
|
2.96
|
%
|
|
3.86
|
%
|
|
3.39
|
%
|
|
3.21
|
%
|
|
3.66
|
%
|
|
3.56
|
%
|
|
|
|||||||||
Total investments
|
|
3.06
|
%
|
|
3.67
|
%
|
|
2.94
|
%
|
|
3.39
|
%
|
|
3.04
|
%
|
|
3.68
|
%
|
|
3.39
|
%
|
|
|
|
|
|
PAGE
|
|
|
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
|
|
As Adjusted
|
||||
ASSETS
|
|
|
|
|
||||
Investments:
|
|
|
|
|
||||
Debt securities, available-for-sale, at fair value (amortized cost of $422,300 and $376,644, respectively)
|
|
$
|
423,238
|
|
|
$
|
374,756
|
|
Debt securities, held-to-maturity, at amortized cost
|
|
5,349
|
|
|
5,551
|
|
||
Equity securities, available-for-sale, at fair value (cost of $14,085 and $24,163, respectively)
|
|
15,434
|
|
|
29,375
|
|
||
Total investments (including $26,284 and $28,704 related to the VIE, respectively)
|
|
444,021
|
|
|
409,682
|
|
||
|
|
|
|
|
||||
Cash and cash equivalents (including $14,211 and $15,668 related to the VIE, respectively)
|
|
86,228
|
|
|
74,593
|
|
||
Prepaid reinsurance premiums
|
|
135,492
|
|
|
156,932
|
|
||
Premiums receivable, net of allowance of $70 and $55, respectively (including $1,184 and $1,584 related to the VIE, respectively)
|
|
46,393
|
|
|
54,854
|
|
||
Reinsurance recoverable, net
|
|
124,601
|
|
|
47,863
|
|
||
Deferred acquisition costs
|
|
40,893
|
|
|
41,892
|
|
||
Income taxes receivable
|
|
9,510
|
|
|
13,871
|
|
||
Deferred tax assets, net
|
|
307
|
|
|
—
|
|
||
Property and equipment, net
|
|
4,025
|
|
|
4,194
|
|
||
Other assets (including $2,322 and $371 related to the VIE, respectively)
|
|
13,403
|
|
|
11,509
|
|
||
TOTAL ASSETS
|
|
$
|
904,873
|
|
|
$
|
815,390
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
LIABILITIES:
|
|
|
|
|
||||
Loss and loss adjustment expense reserves
|
|
$
|
230,515
|
|
|
$
|
158,110
|
|
Unearned premiums
|
|
294,423
|
|
|
294,022
|
|
||
Reinsurance payable
|
|
71,944
|
|
|
79,154
|
|
||
Long-term debt, net of deferred financing costs of $749 and $91, respectively
|
|
49,251
|
|
|
4,909
|
|
||
Deferred revenue
|
|
6,222
|
|
|
6,834
|
|
||
Deferred tax liabilities, net
|
|
—
|
|
|
253
|
|
||
Other liabilities
|
|
25,059
|
|
|
37,643
|
|
||
Total liabilities
|
|
677,414
|
|
|
580,925
|
|
||
SHAREHOLDERS’ EQUITY:
|
|
|
|
|
||||
Preferred stock, $0.01 par value: 1,000,000 shares authorized
|
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value: 25,000,000 shares authorized; 12,988,247 and 13,473,120 shares issued
and outstanding, respectively |
|
130
|
|
|
134
|
|
||
Additional paid-in capital
|
|
139,728
|
|
|
136,779
|
|
||
Accumulated other comprehensive income
|
|
1,770
|
|
|
1,941
|
|
||
Retained earnings
|
|
70,009
|
|
|
76,884
|
|
||
Total shareholders’ equity attributable to Federated National Holding Company shareholders
|
|
211,637
|
|
|
215,738
|
|
||
Non-controlling interest
|
|
15,822
|
|
|
18,727
|
|
||
Total shareholders’ equity
|
|
227,459
|
|
|
234,465
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$
|
904,873
|
|
|
$
|
815,390
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
As Adjusted
|
|
As Adjusted
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Net premiums earned
|
|
$
|
333,481
|
|
|
$
|
261,369
|
|
|
$
|
213,020
|
|
Net investment income
|
|
10,254
|
|
|
9,063
|
|
|
7,226
|
|
|||
Net realized investment gains
|
|
8,548
|
|
|
3,045
|
|
|
3,616
|
|
|||
Direct written policy fees
|
|
17,173
|
|
|
16,619
|
|
|
9,740
|
|
|||
Other income
|
|
22,206
|
|
|
17,429
|
|
|
9,869
|
|
|||
Total revenue
|
|
391,662
|
|
|
307,525
|
|
|
243,471
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses:
|
|
|
|
|
|
|
||||||
Losses and loss adjustment expenses
|
|
247,557
|
|
|
197,810
|
|
|
112,710
|
|
|||
Commissions and other underwriting expenses
|
|
114,867
|
|
|
90,378
|
|
|
52,862
|
|
|||
General and administrative expenses
|
|
19,963
|
|
|
17,186
|
|
|
14,698
|
|
|||
Interest expense
|
|
348
|
|
|
348
|
|
|
256
|
|
|||
Total costs and expenses
|
|
382,735
|
|
|
305,722
|
|
|
180,526
|
|
|||
|
|
|
|
|
|
|
||||||
Income before income taxes
|
|
8,927
|
|
|
1,803
|
|
|
62,945
|
|
|||
Income taxes
|
|
3,585
|
|
|
542
|
|
|
24,089
|
|
|||
Net income
|
|
5,342
|
|
|
1,261
|
|
|
38,856
|
|
|||
Net (loss) income attributable to non-controlling interest
|
|
(2,647
|
)
|
|
246
|
|
|
(445
|
)
|
|||
Net income attributable to Federated National Holding Company shareholders
|
|
$
|
7,989
|
|
|
$
|
1,015
|
|
|
$
|
39,301
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net income per share attributable to Federated National Holding Company
|
|
|
|
|
|
|
|
|
|
|||
shareholders:
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
|
$
|
0.61
|
|
|
$
|
0.07
|
|
|
$
|
2.86
|
|
Diluted
|
|
$
|
0.60
|
|
|
$
|
0.07
|
|
|
$
|
2.81
|
|
|
|
|
|
|
|
|
||||||
Weighted average number of shares of common stock outstanding:
|
|
|
|
|
|
|
||||||
Basic
|
|
13,170
|
|
|
13,758
|
|
|
13,729
|
|
|||
Diluted
|
|
13,250
|
|
|
13,922
|
|
|
13,997
|
|
|||
|
|
|
|
|
|
|
||||||
Dividends declared per share of common stock
|
|
$
|
0.32
|
|
|
$
|
0.27
|
|
|
$
|
0.18
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
As Adjusted
|
|
As Adjusted
|
||||||
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
5,342
|
|
|
$
|
1,261
|
|
|
$
|
38,856
|
|
Change in net unrealized losses on investments, available-for-sale
|
|
(1,037
|
)
|
|
(2,786
|
)
|
|
(6,308
|
)
|
|||
Comprehensive income (loss) before income taxes
|
|
4,305
|
|
|
(1,525
|
)
|
|
32,548
|
|
|||
|
|
|
|
|
|
|
||||||
Income tax benefit related to items of other comprehensive income (loss)
|
|
608
|
|
|
1,046
|
|
|
2,454
|
|
|||
Comprehensive income (loss)
|
|
4,913
|
|
|
(479
|
)
|
|
35,002
|
|
|||
|
|
|
|
|
|
|
||||||
Less: Comprehensive (loss) income attributable to non-controlling interest
|
|
(2,905
|
)
|
|
550
|
|
|
(566
|
)
|
|||
Comprehensive income (loss) attributable to Federated National Holding
|
|
|
|
|
|
|
||||||
Company shareholders
|
|
$
|
7,818
|
|
|
$
|
(1,029
|
)
|
|
$
|
35,568
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
Total Shareholders’
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
Equity Attributable to
|
|
|
|
|
|||||||||||||||||
|
|
|
|
Common Stock
|
|
Additional
|
|
Comprehensive
|
|
Retained
|
|
Federated National
|
|
Non-
|
|
Total
|
|||||||||||||||||||
|
|
Preferred
|
|
Issued
|
|
|
|
Paid-in
|
|
Income
|
|
Earnings
|
|
Holding Company
|
|
controlling
|
|
Shareholders’
|
|||||||||||||||||
|
|
Stock
|
|
Shares
|
|
Amount
|
|
Capital
|
|
(Loss)
|
|
(Deficit)
|
|
Shareholders
|
|
Interest
|
|
Equity
|
|||||||||||||||||
Balance as of January 1, 2015 (As adjusted)
|
|
—
|
|
|
13,632,414
|
|
|
$
|
136
|
|
|
$
|
127,302
|
|
|
$
|
7,718
|
|
|
$
|
54,405
|
|
|
$
|
189,561
|
|
|
—
|
|
|
$
|
189,561
|
|
||
Net income (loss) (As adjusted)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,301
|
|
|
39,301
|
|
|
(445
|
)
|
|
38,856
|
|
||||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,733
|
)
|
|
—
|
|
|
(3,733
|
)
|
|
(121
|
)
|
|
(3,854
|
)
|
||||||||
Non-controlling interest capital contributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,743
|
|
|
18,743
|
|
||||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,847
|
)
|
|
(1,847
|
)
|
|
—
|
|
|
(1,847
|
)
|
||||||||
Shares issued under share-based compensation plans
|
|
—
|
|
|
166,359
|
|
|
2
|
|
|
169
|
|
|
—
|
|
|
—
|
|
|
171
|
|
|
—
|
|
|
171
|
|
||||||||
Tax benefits from share-based compensation awards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,564
|
|
|
—
|
|
|
—
|
|
|
1,564
|
|
|
—
|
|
|
1,564
|
|
||||||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,963
|
|
|
—
|
|
|
—
|
|
|
2,963
|
|
|
—
|
|
|
2,963
|
|
||||||||
Balance as of December 31, 2015 (As adjusted)
|
|
—
|
|
|
13,798,773
|
|
|
138
|
|
|
131,998
|
|
|
3,985
|
|
|
91,859
|
|
|
227,980
|
|
|
18,177
|
|
|
246,157
|
|
||||||||
Net income (As adjusted)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,015
|
|
|
1,015
|
|
|
246
|
|
|
1,261
|
|
||||||||
Other comprehensive (loss) income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,044
|
)
|
|
—
|
|
|
(2,044
|
)
|
|
304
|
|
|
(1,740
|
)
|
||||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,677
|
)
|
|
(4,677
|
)
|
|
—
|
|
|
(4,677
|
)
|
||||||||
Shares issued under share-based compensation plans
|
|
—
|
|
|
299,165
|
|
|
—
|
|
|
361
|
|
|
—
|
|
|
—
|
|
|
361
|
|
|
—
|
|
|
361
|
|
||||||||
Tax benefits from share-based compensation awards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
589
|
|
|
—
|
|
|
—
|
|
|
589
|
|
|
—
|
|
|
589
|
|
||||||||
Repurchases of common stock
|
|
—
|
|
|
(624,818
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(11,313
|
)
|
|
(11,317
|
)
|
|
—
|
|
|
(11,317
|
)
|
||||||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,831
|
|
|
—
|
|
|
—
|
|
|
3,831
|
|
|
—
|
|
|
3,831
|
|
||||||||
Balance as of December 31, 2016 (As adjusted)
|
|
—
|
|
|
13,473,120
|
|
|
134
|
|
|
136,779
|
|
|
1,941
|
|
|
76,884
|
|
|
215,738
|
|
|
18,727
|
|
|
234,465
|
|
||||||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,989
|
|
|
7,989
|
|
|
(2,647
|
)
|
|
5,342
|
|
||||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(171
|
)
|
|
—
|
|
|
(171
|
)
|
|
(258
|
)
|
|
(429
|
)
|
||||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,251
|
)
|
|
(4,251
|
)
|
|
—
|
|
|
(4,251
|
)
|
||||||||
Shares issued under share-based compensation plans
|
|
—
|
|
|
169,647
|
|
|
—
|
|
|
103
|
|
|
—
|
|
|
—
|
|
|
103
|
|
|
—
|
|
|
103
|
|
||||||||
Repurchases of common stock
|
|
—
|
|
|
(654,520
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(10,613
|
)
|
|
(10,617
|
)
|
|
—
|
|
|
(10,617
|
)
|
||||||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,846
|
|
|
—
|
|
|
—
|
|
|
2,846
|
|
|
—
|
|
|
2,846
|
|
||||||||
Balance as of December 31, 2017
|
|
$
|
—
|
|
|
12,988,247
|
|
|
$
|
130
|
|
|
$
|
139,728
|
|
|
$
|
1,770
|
|
|
$
|
70,009
|
|
|
$
|
211,637
|
|
|
$
|
15,822
|
|
|
$
|
227,459
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
As Adjusted
|
|
As Adjusted
|
||||||
Cash flow from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
5,342
|
|
|
$
|
1,261
|
|
|
$
|
38,856
|
|
Adjustments to reconcile net income to net cash provided by
|
|
|
|
|
|
|
||||||
operating activities:
|
|
|
|
|
|
|
||||||
Net realized investment gains
|
|
(8,548
|
)
|
|
(3,045
|
)
|
|
(3,616
|
)
|
|||
Amortization of investment premium or discount, net
|
|
3,909
|
|
|
5,346
|
|
|
5,645
|
|
|||
Depreciation and amortization
|
|
1,166
|
|
|
869
|
|
|
624
|
|
|||
Share-based compensation
|
|
2,846
|
|
|
4,420
|
|
|
4,527
|
|
|||
Tax impact related to share-based compensation
|
|
(193
|
)
|
|
—
|
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Prepaid reinsurance premiums
|
|
21,440
|
|
|
24,908
|
|
|
(84,875
|
)
|
|||
Premiums receivable, net
|
|
8,461
|
|
|
(16,260
|
)
|
|
(11,319
|
)
|
|||
Reinsurance recoverable, net
|
|
(76,738
|
)
|
|
(35,149
|
)
|
|
2,709
|
|
|||
Deferred acquisition costs
|
|
999
|
|
|
(24,226
|
)
|
|
(3,748
|
)
|
|||
Income taxes receivable, net
|
|
4,361
|
|
|
(11,769
|
)
|
|
(2,445
|
)
|
|||
Deferred revenue
|
|
(612
|
)
|
|
1,074
|
|
|
2,220
|
|
|||
Loss and loss adjustment expense reserves
|
|
72,405
|
|
|
60,404
|
|
|
19,119
|
|
|||
Unearned premiums
|
|
401
|
|
|
40,062
|
|
|
61,535
|
|
|||
Reinsurance payable
|
|
(7,210
|
)
|
|
18,085
|
|
|
18,606
|
|
|||
Deferred income taxes, net of other comprehensive income
|
|
235
|
|
|
(4,716
|
)
|
|
6,077
|
|
|||
Other, net
|
|
(15,158
|
)
|
|
8,486
|
|
|
(1,024
|
)
|
|||
Net cash provided by operating activities
|
|
13,106
|
|
|
69,750
|
|
|
52,891
|
|
|||
Cash flow from investing activities:
|
|
|
|
|
|
|
||||||
Proceeds from sales of debt securities
|
|
249,584
|
|
|
198,676
|
|
|
140,101
|
|
|||
Proceeds from sales of equity securities
|
|
57,125
|
|
|
30,621
|
|
|
17,118
|
|
|||
Maturities and redemptions of debt securities
|
|
38,038
|
|
|
81,812
|
|
|
12,760
|
|
|||
Purchases of debt securities
|
|
(339,667
|
)
|
|
(325,397
|
)
|
|
(213,799
|
)
|
|||
Purchases of equity securities
|
|
(35,811
|
)
|
|
(16,716
|
)
|
|
(18,085
|
)
|
|||
Purchases of property and equipment
|
|
(976
|
)
|
|
(2,147
|
)
|
|
(1,736
|
)
|
|||
Net cash used in investing activities
|
|
(31,707
|
)
|
|
(33,151
|
)
|
|
(63,641
|
)
|
|||
Cash flow from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
|
45,000
|
|
|
—
|
|
|
5,000
|
|
|||
Non-controlling interest equity investment
|
|
—
|
|
|
—
|
|
|
18,743
|
|
|||
Purchases of Federated National Holding Company common stock
|
|
(10,616
|
)
|
|
(11,317
|
)
|
|
—
|
|
|||
Issuance of common stock for share-based awards
|
|
103
|
|
|
361
|
|
|
171
|
|
|||
Tax impact related to share-based compensation
|
|
—
|
|
|
589
|
|
|
1,564
|
|
|||
Dividends paid
|
|
(4,251
|
)
|
|
(4,677
|
)
|
|
(1,847
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
30,236
|
|
|
(15,044
|
)
|
|
23,631
|
|
|||
Net increase in cash and cash equivalents
|
|
11,635
|
|
|
21,555
|
|
|
12,881
|
|
|||
Cash and cash equivalents at beginning of period
|
|
74,593
|
|
|
53,038
|
|
|
40,157
|
|
|||
Cash and cash equivalents at end of period
|
|
$
|
86,228
|
|
|
$
|
74,593
|
|
|
$
|
53,038
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
||||||
Cash (received) paid during the period for:
|
|
|
|
|
|
|
||||||
Income taxes
|
|
$
|
(354
|
)
|
|
$
|
14,360
|
|
|
$
|
15,662
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
||||||
Accrued dividends payable
|
|
$
|
1,055
|
|
|
$
|
1,115
|
|
|
$
|
712
|
|
•
|
Direct written policy fees and other fee income:
The Company re-evaluated the accounting treatment for up-front recognition of direct written policy fees across all lines of business and fee income generated through the Company’s personal automobile business. As a result of the re-evaluation, the Company concluded that the direct written policy fees and fee income should be recognized over the life of the underlying policies, net of cancellations, and not be recognized
|
•
|
Deferred acquisition costs:
The Company corrected an error in the calculation of deferred acquisition costs related to the over-amortization of the costs, resulting in an overstatement of expenses. Consistent with above, the timing of expense recognition will be consistent with the timing of the recognition of the related premiums and policy fees and the underlying policy term. This correction resulted in an impact to commissions and other underwriting expenses for all periods presented. This correction resulted in an after-tax net income impact of
$0.5 million
and
$0.7 million
for the years ended December 31, 2016 and 2015, respectively.
|
•
|
Automobile reinsurance agreements:
The Company corrected errors on the accounting for certain terms in its reinsurance coverage related to the automobile line of business. This correction was related to limits on the amount of premiums that could be ceded and other terms. The primary impact of the correction resulted in a lower inception-to-date quota share percentage on the reinsurance treaties impacted, which resulted in an overstatement of ceded premiums earned, ceded loss and LAE and ceded commissions. This correction resulted in an after-tax net loss impact of
$0.4 million
for the year ended December 31, 2016.
|
•
|
Income taxes:
The Company corrected errors in its tax provision related to tax deductions on executive compensation, which resulted in an after-tax net loss of
$0.4 million
and
$0.2 million
for the years ended December 31, 2016 and 2015, respectively. Additionally, a portion of the revisions includes a
$2.2 million
deferred tax adjustment which is part of the retained earnings beginning balance adjustment, as the item related to periods in 2014 and prior. This error was previously recorded as an out-of-period adjustment and disclosed in the 2016 financial statements.
|
•
|
Income statement reclassifications:
As previously disclosed and reclassified in the Company’s Quarterly Report on Form 10-Q (“Quarterly Report”) for the period ended June 30, 2017, the Company re-assessed the income statement classification of ceded commission income and salaries and wages from our claims department. As a result, the Company adjusted ceded commission from other income to commissions and other underwriting expenses and salaries and wages from the Company’s claims department from commissions and other underwriting expenses to loss and LAE. Refer to the Company’s Quarterly Report for the period ended June 30, 2017, for more detailed information.
|
•
|
Homeowners quota share agreements:
As previously disclosed and corrected in the Company’s Quarterly Report for the period ended September 30, 2015, the Company re-evaluated the accounting treatment for quota share reinsurance contracts with retrospective rating provisions and other adjustments. As part of these revisions, the Company recorded these adjustments in the appropriate period. These adjustments resulted in an impact to revenue, loss and LAE, commissions and other underwriting expenses and general and administrative expenses, which had an after-tax net loss impact of
$0.8 million
for the year ended December 31, 2015.
|
|
As of January 1, 2015
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Adjusted
|
||||||
|
|
|
|
|
|
||||||
Retained earnings
|
$
|
57,423
|
|
|
$
|
(3,018
|
)
|
|
$
|
54,405
|
|
|
December 31, 2016
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Adjusted
|
||||||
ASSETS
|
(In thousands, except share and per share data)
|
||||||||||
Investments:
|
|
|
|
|
|
||||||
Debt securities, available-for-sale, at fair value (amortized cost of $376,644)
|
$
|
374,756
|
|
|
$
|
—
|
|
|
$
|
374,756
|
|
Debt securities, held-to-maturity, at amortized cost
|
5,551
|
|
|
—
|
|
|
5,551
|
|
|||
Equity securities, available-for-sale, at fair value (cost of $24,163)
|
29,375
|
|
|
—
|
|
|
29,375
|
|
|||
Total investments (including $28,704 related to the VIE)
|
409,682
|
|
|
—
|
|
|
409,682
|
|
|||
|
|
|
|
|
|
||||||
Cash and cash equivalents (including $15,668 related to the VIE)
|
74,593
|
|
|
—
|
|
|
74,593
|
|
|||
Prepaid reinsurance premiums
|
156,932
|
|
|
—
|
|
|
156,932
|
|
|||
Premiums receivable, net of allowance of $55 (including 1,584 related to the VIE)
|
54,854
|
|
|
—
|
|
|
54,854
|
|
|||
Reinsurance recoverable, net
|
48,530
|
|
|
(667
|
)
|
|
47,863
|
|
|||
Deferred acquisition costs
|
38,962
|
|
|
2,930
|
|
|
41,892
|
|
|||
Income taxes receivable
|
13,871
|
|
|
—
|
|
|
13,871
|
|
|||
Property and equipment, net
|
4,194
|
|
|
—
|
|
|
4,194
|
|
|||
Other assets (including $371 related to the VIE)
|
11,509
|
|
|
—
|
|
|
11,509
|
|
|||
TOTAL ASSETS
|
$
|
813,127
|
|
|
$
|
2,263
|
|
|
$
|
815,390
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
||||||
LIABILITIES:
|
|
|
|
|
|
||||||
Loss and loss adjustment expense reserves
|
$
|
158,110
|
|
|
$
|
—
|
|
|
$
|
158,110
|
|
Unearned premiums
|
294,022
|
|
|
—
|
|
|
294,022
|
|
|||
Reinsurance payable
|
79,154
|
|
|
—
|
|
|
79,154
|
|
|||
Long-term debt
|
4,909
|
|
|
—
|
|
|
4,909
|
|
|||
Deferred revenue
|
—
|
|
|
6,834
|
|
|
6,834
|
|
|||
Deferred tax liabilities, net
|
1,433
|
|
|
(1,180
|
)
|
|
253
|
|
|||
Other liabilities
|
37,643
|
|
|
—
|
|
|
37,643
|
|
|||
Total liabilities
|
575,271
|
|
|
5,654
|
|
|
580,925
|
|
|||
SHAREHOLDERS’ EQUITY:
|
|
|
|
|
|
||||||
Preferred stock, $0.01 par value: 1,000,000 shares authorized
|
—
|
|
|
—
|
|
|
—
|
|
|||
Common stock, $0.01 par value: 25,000,000 shares authorized; 13,473,120 shares
issued and outstanding
|
134
|
|
|
—
|
|
|
134
|
|
|||
Additional paid-in capital
|
136,779
|
|
|
—
|
|
|
136,779
|
|
|||
Accumulated other comprehensive income
|
1,941
|
|
|
—
|
|
|
1,941
|
|
|||
Retained earnings
|
80,275
|
|
|
(3,391
|
)
|
|
76,884
|
|
|||
Total shareholders’ equity attributable to
Federated National Holding Company shareholders
|
219,129
|
|
|
(3,391
|
)
|
|
215,738
|
|
|||
Non-controlling interest
|
18,727
|
|
|
—
|
|
|
18,727
|
|
|||
Total shareholders’ equity
|
237,856
|
|
|
(3,391
|
)
|
|
234,465
|
|
|||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
813,127
|
|
|
$
|
2,263
|
|
|
$
|
815,390
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||
|
As Reported
|
|
Adjustments
|
|
As Adjusted
|
|
As Reported
|
|
Adjustments
|
|
As Adjusted
|
||||||||||||
Revenue:
|
(In thousands, except share and per share data)
|
||||||||||||||||||||||
Net premiums earned
|
$
|
259,872
|
|
|
$
|
1,497
|
|
|
$
|
261,369
|
|
|
$
|
210,020
|
|
|
$
|
3,000
|
|
|
$
|
213,020
|
|
Net investment income
|
9,063
|
|
|
—
|
|
|
9,063
|
|
|
7,226
|
|
|
—
|
|
|
7,226
|
|
||||||
Net realized investment gains
|
3,045
|
|
|
—
|
|
|
3,045
|
|
|
3,616
|
|
|
—
|
|
|
3,616
|
|
||||||
Direct written policy fees
|
17,730
|
|
|
(1,111
|
)
|
|
16,619
|
|
|
11,248
|
|
|
(1,508
|
)
|
|
9,740
|
|
||||||
Other income (loss)
|
26,674
|
|
|
(9,245
|
)
|
|
17,429
|
|
|
17,783
|
|
|
(7,914
|
)
|
|
9,869
|
|
||||||
Total revenue
|
316,384
|
|
|
(8,859
|
)
|
|
307,525
|
|
|
249,893
|
|
|
(6,422
|
)
|
|
243,471
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Losses and loss adjustment expenses
|
187,341
|
|
|
10,469
|
|
|
197,810
|
|
|
104,353
|
|
|
8,357
|
|
|
112,710
|
|
||||||
Commissions and other underwriting expenses
|
108,776
|
|
|
(18,398
|
)
|
|
90,378
|
|
|
64,868
|
|
|
(12,006
|
)
|
|
52,862
|
|
||||||
General and administrative expenses
|
17,186
|
|
|
—
|
|
|
17,186
|
|
|
15,223
|
|
|
(525
|
)
|
|
14,698
|
|
||||||
Interest expense
|
348
|
|
|
—
|
|
|
348
|
|
|
256
|
|
|
—
|
|
|
256
|
|
||||||
Total costs and expenses
|
313,651
|
|
|
(7,929
|
)
|
|
305,722
|
|
|
184,700
|
|
|
(4,174
|
)
|
|
180,526
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income before income taxes
|
2,733
|
|
|
(930
|
)
|
|
1,803
|
|
|
65,193
|
|
|
(2,248
|
)
|
|
62,945
|
|
||||||
Income taxes
|
2,683
|
|
|
(2,141
|
)
|
|
542
|
|
|
24,753
|
|
|
(664
|
)
|
|
24,089
|
|
||||||
Net income
|
50
|
|
|
1,211
|
|
|
1,261
|
|
|
40,440
|
|
|
(1,584
|
)
|
|
38,856
|
|
||||||
Net income (loss) attributable to non-controlling interest
|
246
|
|
|
—
|
|
|
246
|
|
|
(445
|
)
|
|
—
|
|
|
(445
|
)
|
||||||
Net (loss) income attributable to Federated National
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Holding Company shareholders
|
$
|
(196
|
)
|
|
$
|
1,211
|
|
|
$
|
1,015
|
|
|
$
|
40,885
|
|
|
$
|
(1,584
|
)
|
|
$
|
39,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net (loss) income per share attributable to Federated
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
National Holding Company shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
$
|
(0.01
|
)
|
|
$
|
0.08
|
|
|
$
|
0.07
|
|
|
$
|
2.98
|
|
|
$
|
(0.12
|
)
|
|
$
|
2.86
|
|
Diluted
|
$
|
(0.01
|
)
|
|
$
|
0.08
|
|
|
$
|
0.07
|
|
|
$
|
2.92
|
|
|
$
|
(0.11
|
)
|
|
$
|
2.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average number of shares of common stock
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
13,758
|
|
|
—
|
|
|
13,758
|
|
|
13,729
|
|
|
—
|
|
|
13,729
|
|
||||||
Diluted
|
13,758
|
|
|
164
|
|
|
13,922
|
|
|
13,997
|
|
|
—
|
|
|
13,997
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Dividends declared per share of common stock
|
$
|
0.27
|
|
|
$
|
—
|
|
|
$
|
0.27
|
|
|
$
|
0.18
|
|
|
$
|
—
|
|
|
$
|
0.18
|
|
•
|
Level 1
— Quoted market prices (unadjusted) for identical assets or liabilities in active markets is defined as a market where transactions for the financial statement occur with sufficient frequency and volume to provide pricing information on an ongoing basis, or observable inputs.
|
•
|
Level 2
— Quoted market prices for similar assets or liabilities and valuations, using models or other valuation techniques using observable market data. Significant other observable that can be corroborated by observable market data; and,
|
•
|
Level 3
— Instruments that use non-binding broker quotes or model driven valuations that do not have observable market data or those that are estimated based on an ownership interest to which a proportionate share of net assets is attributed.
|
|
|
December 31, 2017
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Debt securities - available-for-sale, at fair value:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
$
|
51,219
|
|
|
$
|
46,918
|
|
|
$
|
—
|
|
|
$
|
98,137
|
|
Obligations of states and political subdivisions
|
|
—
|
|
|
66,266
|
|
|
—
|
|
|
66,266
|
|
||||
Corporate securities
|
|
—
|
|
|
240,919
|
|
|
—
|
|
|
240,919
|
|
||||
International securities
|
|
—
|
|
|
17,916
|
|
|
—
|
|
|
17,916
|
|
||||
Debt securities, at fair value
|
|
51,219
|
|
|
372,019
|
|
|
—
|
|
|
423,238
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Equity securities, at fair value
|
|
15,434
|
|
|
—
|
|
|
—
|
|
|
15,434
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total investments, at fair value
|
|
$
|
66,653
|
|
|
$
|
372,019
|
|
|
$
|
—
|
|
|
$
|
438,672
|
|
|
|
December 31, 2016
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Debt securities - available-for-sale, at fair value:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
$
|
36,560
|
|
|
$
|
25,645
|
|
|
$
|
—
|
|
|
$
|
62,205
|
|
Obligations of states and political subdivisions
|
|
—
|
|
|
151,183
|
|
|
—
|
|
|
151,183
|
|
||||
Corporate securities
|
|
—
|
|
|
149,505
|
|
|
—
|
|
|
149,505
|
|
||||
International securities
|
|
—
|
|
|
11,863
|
|
|
—
|
|
|
11,863
|
|
||||
Debt securities, at fair value
|
|
36,560
|
|
|
338,196
|
|
|
—
|
|
|
374,756
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Equity securities, at fair value
|
|
28,960
|
|
|
415
|
|
|
—
|
|
|
29,375
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total investments, at fair value
|
|
$
|
65,520
|
|
|
$
|
338,611
|
|
|
$
|
—
|
|
|
$
|
404,131
|
|
•
|
United States Government Obligations and Authorities:
In determining the fair value for United States government securities in Level 1, the Company uses quoted prices (unadjusted) in active markets for identical or similar assets. In determining the fair value for United States government securities in Level 2, the Company uses the market approach utilizing primary valuation inputs including reported trades, dealer quotes for identical or similar assets in markets that are not active, benchmark yields, credit spreads, reference data and industry and economic events.
|
•
|
Obligations of States and Political Subdivisions:
In determining the fair value for state and municipal securities, the Company uses the market approach utilizing primary valuation inputs including reported trades, dealer quotes for identical or similar assets in markets that are not active, benchmark yields, credit spreads, reference data and industry and economic events.
|
•
|
Corporate and International Securities:
In determining the fair value for corporate securities the Company uses the market approach utilizing primary valuation inputs including reported trades, dealer quotes for identical or similar assets in markets that are not active, benchmark yields, credit spreads (for investment grade securities), observations of equity and credit default swap curves (for high-yield corporates), reference data and industry and economic events.
|
•
|
Equity Securities:
In determining the fair value for equity securities in Level 1, the Company uses quoted prices (unadjusted) in active markets for identical or similar assets. In determining the fair value for equity securities in Level 2, the Company uses the market approach utilizing primary valuation inputs including reported trades, dealer quotes for identical or similar assets in markets that are not active, benchmark yields, credit spreads, reference data and industry and economic events.
|
|
|
Amortized
|
|
Gross
|
|
Gross
|
|
|
||||||||
|
|
Cost
|
|
Unrealized
|
|
Unrealized
|
|
|
||||||||
|
|
or Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
||||||||
|
|
(In thousands)
|
||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
$
|
98,739
|
|
|
$
|
244
|
|
|
$
|
846
|
|
|
$
|
98,137
|
|
Obligations of states and political subdivisions
|
|
66,319
|
|
|
325
|
|
|
378
|
|
|
66,266
|
|
||||
Corporate securities
|
|
239,435
|
|
|
2,233
|
|
|
749
|
|
|
240,919
|
|
||||
International securities
|
|
17,807
|
|
|
136
|
|
|
27
|
|
|
17,916
|
|
||||
|
|
422,300
|
|
|
2,938
|
|
|
2,000
|
|
|
423,238
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
4,160
|
|
|
9
|
|
|
106
|
|
|
4,063
|
|
||||
Corporate securities
|
|
1,123
|
|
|
21
|
|
|
—
|
|
|
1,144
|
|
||||
International securities
|
|
66
|
|
|
1
|
|
|
—
|
|
|
67
|
|
||||
|
|
5,349
|
|
|
31
|
|
|
106
|
|
|
5,274
|
|
||||
Equity securities
|
|
14,085
|
|
|
1,628
|
|
|
279
|
|
|
15,434
|
|
||||
Total investments
|
|
$
|
441,734
|
|
|
$
|
4,597
|
|
|
$
|
2,385
|
|
|
$
|
443,946
|
|
|
|
Amortized
|
|
Gross
|
|
Gross
|
|
|
||||||||
|
|
Cost
|
|
Unrealized
|
|
Unrealized
|
|
|
||||||||
|
|
or Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
||||||||
|
|
(In thousands)
|
||||||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
$
|
62,881
|
|
|
$
|
177
|
|
|
$
|
853
|
|
|
$
|
62,205
|
|
Obligations of states and political subdivisions
|
|
152,823
|
|
|
427
|
|
|
2,067
|
|
|
151,183
|
|
||||
Corporate
|
|
149,053
|
|
|
1,347
|
|
|
895
|
|
|
149,505
|
|
||||
International
|
|
11,887
|
|
|
95
|
|
|
119
|
|
|
11,863
|
|
||||
|
|
376,644
|
|
|
2,046
|
|
|
3,934
|
|
|
374,756
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||
United States government obligations and authorities
|
|
$
|
4,163
|
|
|
$
|
22
|
|
|
$
|
118
|
|
|
$
|
4,067
|
|
Corporate
|
|
1,317
|
|
|
20
|
|
|
2
|
|
|
1,335
|
|
||||
International
|
|
71
|
|
|
—
|
|
|
—
|
|
|
71
|
|
||||
|
|
5,551
|
|
|
42
|
|
|
120
|
|
|
5,473
|
|
||||
Equity securities
|
|
24,163
|
|
|
5,500
|
|
|
288
|
|
|
29,375
|
|
||||
Total investments
|
|
$
|
406,358
|
|
|
$
|
7,588
|
|
|
$
|
4,342
|
|
|
$
|
409,604
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(In thousands)
|
||||||||||
Gross realized gains:
|
|
|
|
|
|
|
||||||
Debt securities
|
|
$
|
1,814
|
|
|
$
|
3,208
|
|
|
$
|
1,272
|
|
Equity securities
|
|
9,944
|
|
|
4,264
|
|
|
4,959
|
|
|||
Total gross realized gains
|
|
11,758
|
|
|
7,472
|
|
|
6,231
|
|
|||
|
|
|
|
|
|
|
||||||
Gross realized losses:
|
|
|
|
|
|
|
||||||
Debt securities
|
|
(1,671
|
)
|
|
(1,614
|
)
|
|
(805
|
)
|
|||
Equity securities
|
|
(1,539
|
)
|
|
(2,813
|
)
|
|
(1,810
|
)
|
|||
Total gross realized losses
|
|
(3,210
|
)
|
|
(4,427
|
)
|
|
(2,615
|
)
|
|||
Net realized gains on investments
|
|
$
|
8,548
|
|
|
$
|
3,045
|
|
|
$
|
3,616
|
|
|
|
December 31, 2017
|
||||||
|
|
Amortized
|
|
|
||||
|
|
Cost
|
|
Fair Value
|
||||
Securities with maturity dates:
|
|
(In thousands)
|
||||||
Debt securities, available-for-sale:
|
|
|
|
|
||||
One year or less
|
|
$
|
45,949
|
|
|
$
|
45,879
|
|
Over one through five years
|
|
194,427
|
|
|
194,463
|
|
||
Over five through ten years
|
|
177,657
|
|
|
178,664
|
|
||
Over ten years
|
|
4,267
|
|
|
4,232
|
|
||
|
|
422,300
|
|
|
423,238
|
|
||
Debt securities, held-to-maturity:
|
|
|
|
|
||||
One year or less
|
|
180
|
|
|
180
|
|
||
Over one through five years
|
|
4,097
|
|
|
4,028
|
|
||
Over five through ten years
|
|
1,072
|
|
|
1,066
|
|
||
|
|
5,349
|
|
|
5,274
|
|
||
Total
|
|
$
|
427,649
|
|
|
$
|
428,512
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(In thousands)
|
||||||||||
Interest income
|
|
$
|
9,776
|
|
|
$
|
7,920
|
|
|
$
|
6,638
|
|
Dividends income
|
|
478
|
|
|
1,143
|
|
|
588
|
|
|||
Net investment income
|
|
$
|
10,254
|
|
|
$
|
9,063
|
|
|
$
|
7,226
|
|
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
|
|
|
Gross
|
|
|
|
Gross
|
|
|
|
Gross
|
||||||||||||
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
||||||||||||
|
|
Value
|
|
Losses
|
|
Value
|
|
Losses
|
|
Value
|
|
Losses
|
||||||||||||
December 31, 2017
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
||||||||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States government obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
and authorities
|
|
$
|
52,368
|
|
|
$
|
517
|
|
|
$
|
19,287
|
|
|
$
|
329
|
|
|
$
|
71,655
|
|
|
$
|
846
|
|
Obligations of states and political subdivisions
|
|
32,030
|
|
|
221
|
|
|
5,676
|
|
|
157
|
|
|
37,706
|
|
|
378
|
|
||||||
Corporate
|
|
109,780
|
|
|
625
|
|
|
6,452
|
|
|
124
|
|
|
116,232
|
|
|
749
|
|
||||||
International
|
|
8,935
|
|
|
27
|
|
|
25
|
|
|
—
|
|
|
8,960
|
|
|
27
|
|
||||||
|
|
203,113
|
|
|
1,390
|
|
|
31,440
|
|
|
610
|
|
|
234,553
|
|
|
2,000
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity securities
|
|
4,312
|
|
|
279
|
|
|
—
|
|
|
—
|
|
|
4,312
|
|
|
279
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total investments
|
|
$
|
207,425
|
|
|
$
|
1,669
|
|
|
$
|
31,440
|
|
|
$
|
610
|
|
|
$
|
238,865
|
|
|
$
|
2,279
|
|
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
|
|
|
Gross
|
|
|
|
Gross
|
|
|
|
Gross
|
||||||||||||
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
||||||||||||
|
|
Value
|
|
Losses
|
|
Value
|
|
Losses
|
|
Value
|
|
Losses
|
||||||||||||
December 31, 2016
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
||||||||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
United States government obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
and authorities
|
|
$
|
45,255
|
|
|
$
|
850
|
|
|
$
|
111
|
|
|
$
|
3
|
|
|
$
|
45,366
|
|
|
$
|
853
|
|
Obligations of states and political subdivisions
|
|
103,724
|
|
|
2,066
|
|
|
1,007
|
|
|
1
|
|
|
104,731
|
|
|
2,067
|
|
||||||
Corporate
|
|
59,970
|
|
|
864
|
|
|
2,427
|
|
|
31
|
|
|
62,397
|
|
|
895
|
|
||||||
International
|
|
5,925
|
|
|
119
|
|
|
5
|
|
|
—
|
|
|
5,930
|
|
|
119
|
|
||||||
|
|
214,874
|
|
|
3,899
|
|
|
3,550
|
|
|
35
|
|
|
218,424
|
|
|
3,934
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities
|
|
4,701
|
|
|
253
|
|
|
434
|
|
|
35
|
|
|
5,135
|
|
|
288
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total investments
|
|
$
|
219,575
|
|
|
$
|
4,152
|
|
|
$
|
3,984
|
|
|
$
|
70
|
|
|
$
|
223,559
|
|
|
$
|
4,222
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(In thousands)
|
||||||
|
|
|
|
|
||||
Reinsurance recoverable on paid losses
|
|
$
|
26,256
|
|
|
$
|
7,451
|
|
Reinsurance recoverable on unpaid losses
|
|
98,345
|
|
|
40,412
|
|
||
Reinsurance recoverable, net
|
|
$
|
124,601
|
|
|
$
|
47,863
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(In thousands)
|
||||||||||
Net premiums written:
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
603,417
|
|
|
$
|
605,485
|
|
|
$
|
493,770
|
|
Ceded
|
|
(260,524
|
)
|
|
(285,986
|
)
|
|
(268,516
|
)
|
|||
Net premiums written
|
|
$
|
342,893
|
|
|
$
|
319,499
|
|
|
$
|
225,254
|
|
|
|
|
|
|
|
|
||||||
Net premiums earned:
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
603,193
|
|
|
$
|
565,423
|
|
|
$
|
432,233
|
|
Ceded
|
|
(269,712
|
)
|
|
(304,054
|
)
|
|
(219,213
|
)
|
|||
Net premiums earned
|
|
$
|
333,481
|
|
|
$
|
261,369
|
|
|
$
|
213,020
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(In thousands)
|
||||||||||
Gross reserves, beginning of period
|
|
$
|
158,110
|
|
|
$
|
97,706
|
|
|
$
|
78,330
|
|
Less: reinsurance recoverable (1)
|
|
(40,412
|
)
|
|
(7,496
|
)
|
|
(10,394
|
)
|
|||
Net reserves, beginning of period
|
|
117,698
|
|
|
90,210
|
|
|
67,936
|
|
|||
|
|
|
|
|
|
|
||||||
Incurred loss, net of reinsurance, related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
245,545
|
|
|
201,704
|
|
|
120,005
|
|
|||
Prior year loss development (2)
|
|
13,926
|
|
|
13,156
|
|
|
(9,466
|
)
|
|||
Ceded losses subject to offsetting experience account adjustments (3)
|
|
(11,914
|
)
|
|
(17,050
|
)
|
|
2,171
|
|
|||
Prior years
|
|
2,012
|
|
|
(3,894
|
)
|
|
(7,295
|
)
|
|||
Total incurred loss and LAE, net of reinsurance
|
|
247,557
|
|
|
197,810
|
|
|
112,710
|
|
|||
|
|
|
|
|
|
|
||||||
Paid loss, net of reinsurance, related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
160,945
|
|
|
123,364
|
|
|
54,710
|
|
|||
Prior years
|
|
72,140
|
|
|
46,958
|
|
|
35,726
|
|
|||
Total paid loss and LAE, net of reinsurance
|
|
233,085
|
|
|
170,322
|
|
|
90,436
|
|
|||
|
|
|
|
|
|
|
||||||
Net reserves, end of period
|
|
132,170
|
|
|
117,698
|
|
|
90,210
|
|
|||
Plus: reinsurance recoverable (1)
|
|
98,345
|
|
|
40,412
|
|
|
7,496
|
|
|||
Gross reserves, end of period
|
|
$
|
230,515
|
|
|
$
|
158,110
|
|
|
$
|
97,706
|
|
(1)
|
Reinsurance recoverable in this table includes only ceded loss and LAE reserves.
|
(2)
|
Reflects loss development from prior accident years impacting pre-tax net income. Excludes losses ceded under retrospective reinsurance treaties to the extent there is an offsetting experience account adjustment.
|
(3)
|
Reflects losses ceded under retrospective reinsurance treaties to the extent there is an offsetting experience account adjustment, such that there is no impact on pre-tax net income.
|
|
IBNR & Expected
|
Cumulative
|
|
|||||||||||||||||||||||||
|
|
Homeowners Incurred Losses and ALAE, Net of Reinsurance
|
Development on
|
Number of
|
|
|||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
Reported Claims
|
Reported Claims
(1)
|
Severity
(2)
|
|||||||||||||||||||||||
|
|
(Unaudited)
|
|
|
|
|
||||||||||||||||||||||
Accident Year
|
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2017
|
2017
|
2017
|
||||||||||||||
2008
|
|
18,305
|
|
15,784
|
|
15,811
|
|
15,977
|
|
15,659
|
|
16,021
|
|
15,661
|
|
15,604
|
|
15,609
|
|
15,608
|
|
5
|
|
1,710
|
|
9,125
|
|
|
2009
|
|
|
26,228
|
|
25,618
|
|
25,955
|
|
26,482
|
|
27,015
|
|
27,041
|
|
27,119
|
|
27,163
|
|
27,173
|
|
104
|
|
2,334
|
|
11,598
|
|
||
2010
|
|
|
|
24,825
|
|
25,056
|
|
26,151
|
|
27,895
|
|
28,968
|
|
29,407
|
|
29,945
|
|
30,459
|
|
35
|
|
2,389
|
|
12,735
|
|
|||
2011
|
|
|
|
|
20,492
|
|
21,344
|
|
23,007
|
|
23,932
|
|
24,582
|
|
25,957
|
|
26,143
|
|
27
|
|
2,423
|
|
10,778
|
|
||||
2012
|
|
|
|
|
|
23,032
|
|
23,301
|
|
24,186
|
|
24,468
|
|
25,889
|
|
26,356
|
|
14
|
|
2,677
|
|
9,840
|
|
|||||
2013
|
|
|
|
|
|
|
43,807
|
|
42,021
|
|
35,834
|
|
35,859
|
|
37,185
|
|
402
|
|
3,415
|
|
10,771
|
|
||||||
2014
|
|
|
|
|
|
|
|
64,312
|
|
63,300
|
|
61,770
|
|
62,206
|
|
1,730
|
|
7,564
|
|
7,995
|
|
|||||||
2015
|
|
|
|
|
|
|
|
|
99,497
|
|
92,411
|
|
95,129
|
|
6,260
|
|
13,292
|
|
6,686
|
|
||||||||
2016
|
|
|
|
|
|
|
|
|
|
171,264
|
|
162,043
|
|
18,842
|
|
26,562
|
|
5,391
|
|
|||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
202,844
|
|
81,261
|
|
54,717
|
|
2,222
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
685,146
|
|
|
|
|
|
|
Average Annual Payout of Losses and ALAE, Net of Reinsurance
|
|||||||||||||||||||
|
|
(Unaudited)
|
|||||||||||||||||||
|
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
||||||||||
Homeowners
|
|
55.8
|
%
|
25.2
|
%
|
6.9
|
%
|
3.8
|
%
|
2.8
|
%
|
3.0
|
%
|
1.2
|
%
|
0.9
|
%
|
0.2
|
%
|
—
|
%
|
|
IBNR & Expected
|
Cumulative
|
|
|||||||||||||||||||||||||
|
|
Commercial General Liability Incurred Losses and ALAE, Net of Reinsurance
|
Development on
|
Number of
|
|
|||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
Reported Claims
|
Reported Claim
|
Severity
|
|||||||||||||||||||||||
|
|
(Unaudited)
|
|
|
|
|
||||||||||||||||||||||
Accident Year
|
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2017
|
2017
|
2017
|
||||||||||||||
2008
|
|
16,615
|
|
17,448
|
|
17,271
|
|
17,260
|
|
16,083
|
|
15,584
|
|
16,297
|
|
16,839
|
|
18,453
|
|
20,039
|
|
—
|
|
1,553
|
|
12,903
|
|
|
2009
|
|
|
13,297
|
|
12,397
|
|
12,220
|
|
11,943
|
|
9,270
|
|
10,192
|
|
10,466
|
|
11,081
|
|
11,621
|
|
—
|
|
899
|
|
12,927
|
|
||
2010
|
|
|
|
8,552
|
|
7,582
|
|
7,474
|
|
7,045
|
|
7,535
|
|
7,597
|
|
7,645
|
|
7,809
|
|
—
|
|
673
|
|
11,603
|
|
|||
2011
|
|
|
|
|
6,436
|
|
5,854
|
|
4,749
|
|
4,603
|
|
4,760
|
|
5,409
|
|
6,254
|
|
136
|
|
856
|
|
7,147
|
|
||||
2012
|
|
|
|
|
|
5,279
|
|
4,952
|
|
4,801
|
|
4,700
|
|
4,658
|
|
4,346
|
|
127
|
|
452
|
|
9,334
|
|
|||||
2013
|
|
|
|
|
|
|
7,095
|
|
5,069
|
|
5,221
|
|
5,502
|
|
5,704
|
|
129
|
|
523
|
|
10,660
|
|
||||||
2014
|
|
|
|
|
|
|
|
7,475
|
|
7,709
|
|
6,384
|
|
6,620
|
|
178
|
|
578
|
|
11,145
|
|
|||||||
2015
|
|
|
|
|
|
|
|
|
8,082
|
|
7,008
|
|
6,020
|
|
260
|
|
660
|
|
8,727
|
|
||||||||
2016
|
|
|
|
|
|
|
|
|
|
10,727
|
|
5,809
|
|
658
|
|
617
|
|
8,348
|
|
|||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
8,289
|
|
4,038
|
|
391
|
|
10,872
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
82,511
|
|
|
|
|
|
|
Commercial General Liability Paid Losses and ALAE, Net of Reinsurance
|
||||||||||||||||||||
|
|
For the Years Ended December 31,
|
||||||||||||||||||||
|
|
(Unaudited)
|
|
|||||||||||||||||||
Accident Year
|
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
|||||||||||
2008
|
|
2,324
|
|
6,491
|
|
8,856
|
|
10,980
|
|
12,768
|
|
14,662
|
|
15,389
|
|
16,122
|
|
17,716
|
|
19,693
|
|
|
2009
|
|
|
|
2,253
|
|
4,236
|
|
6,466
|
|
7,384
|
|
8,046
|
|
8,593
|
|
10,130
|
|
10,454
|
|
11,308
|
|
|
2010
|
|
|
|
|
|
1,187
|
|
2,279
|
|
3,855
|
|
5,553
|
|
6,363
|
|
7,238
|
|
7,382
|
|
7,631
|
|
|
2011
|
|
|
|
|
|
|
|
764
|
|
2,763
|
|
3,366
|
|
3,673
|
|
4,246
|
|
4,866
|
|
5,831
|
|
|
2012
|
|
|
|
|
|
|
871
|
|
1,714
|
|
2,632
|
|
3,342
|
|
3,686
|
|
3,841
|
|
||||
2013
|
|
|
|
|
|
|
|
|
882
|
|
2,233
|
|
3,366
|
|
3,867
|
|
4,606
|
|
||||
2014
|
|
|
|
|
|
|
|
|
717
|
|
2,593
|
|
3,855
|
|
4,375
|
|
||||||
2015
|
|
|
|
|
|
|
|
|
|
|
798
|
|
2,296
|
|
3,249
|
|
||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
1,515
|
|
3,657
|
|
||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
1,592
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
65,783
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
All outstanding liabilities for unpaid claims and ALAE prior to 2008, net of reinsurance
|
|
383
|
|
|||||||||||||||||||
Total outstanding liabilities for unpaid claims and ALAE, net of reinsurance
|
|
$
|
17,111
|
|
|
|
Average Annual Payout of Losses and ALAE, Net of Reinsurance
|
|||||||||||||||||||
|
|
(Unaudited)
|
|||||||||||||||||||
|
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
||||||||||
Commercial General Liability
|
|
13.9
|
%
|
20.3
|
%
|
14.3
|
%
|
9.6
|
%
|
7.8
|
%
|
7.3
|
%
|
6.5
|
%
|
2.9
|
%
|
6.9
|
%
|
8.8
|
%
|
|
IBNR & Expected
|
Cumulative
|
|
|||||||||||||||||||||||||
|
|
Automobile Incurred Losses and ALAE, Net of Reinsurance
|
Development on
|
Number of
|
|
|||||||||||||||||||||||
|
|
For the Years Ended December 31,
|
Reported Claims
|
Reported Claims
|
Severity
|
|||||||||||||||||||||||
|
|
(Unaudited)
|
|
|
|
|
||||||||||||||||||||||
Accident Year
|
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2017
|
2017
|
2017
|
||||||||||||||
2008
|
|
752
|
|
615
|
|
562
|
|
561
|
|
572
|
|
554
|
|
554
|
|
554
|
|
554
|
|
554
|
|
—
|
|
170
|
|
3,259
|
|
|
2009
|
|
|
272
|
|
267
|
|
259
|
|
264
|
|
258
|
|
243
|
|
243
|
|
243
|
|
243
|
|
—
|
|
63
|
|
3,857
|
|
||
2010
|
|
|
|
2,823
|
|
2,963
|
|
3,111
|
|
3,088
|
|
3,044
|
|
3,035
|
|
3,059
|
|
3,041
|
|
—
|
|
1,139
|
|
2,670
|
|
|||
2011
|
|
|
|
|
3,580
|
|
3,350
|
|
2,954
|
|
2,912
|
|
2,762
|
|
2,848
|
|
2,796
|
|
—
|
|
918
|
|
3,046
|
|
||||
2012
|
|
|
|
|
|
1,735
|
|
1,741
|
|
1,717
|
|
1,424
|
|
1,455
|
|
1,491
|
|
—
|
|
918
|
|
1,624
|
|
|||||
2013
|
|
|
|
|
|
|
1,517
|
|
1,863
|
|
1,826
|
|
1,829
|
|
2,161
|
|
61
|
|
3,533
|
|
594
|
|
||||||
2014
|
|
|
|
|
|
|
|
2,038
|
|
3,213
|
|
3,551
|
|
4,315
|
|
—
|
|
6,109
|
|
706
|
|
|||||||
2015
|
|
|
|
|
|
|
|
|
3,045
|
|
2,882
|
|
2,781
|
|
49
|
|
6,883
|
|
397
|
|
||||||||
2016
|
|
|
|
|
|
|
|
|
|
13,414
|
|
20,205
|
|
1,258
|
|
40,384
|
|
469
|
|
|||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
20,411
|
|
8,912
|
|
23,557
|
|
488
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
57,998
|
|
|
|
|
|
|
Average Annual Payout of Losses and ALAE, Net of Reinsurance
|
|||||||||||||||||||
|
|
(Unaudited)
|
|||||||||||||||||||
|
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
||||||||||
Automobile
|
|
45.4
|
%
|
35.6
|
%
|
8.8
|
%
|
5.6
|
%
|
2.1
|
%
|
1.2
|
%
|
0.1
|
%
|
1.2
|
%
|
—
|
%
|
—
|
%
|
|
|
As of December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(In thousands)
|
||||||
Liabilities for unpaid losses and LAE:
|
|
|
|
|
||||
Homeowners
|
|
$
|
99,650
|
|
|
$
|
87,955
|
|
Commercial general liability
|
|
17,111
|
|
|
21,790
|
|
||
Automobile
|
|
11,030
|
|
|
7,792
|
|
||
Flood
|
|
—
|
|
|
—
|
|
||
Total liabilities for unpaid losses and LAE, net of reinsurance
|
|
127,791
|
|
|
117,537
|
|
||
|
|
|
|
|
||||
Reinsurance recoverables:
|
|
|
|
|
||||
Homeowners
|
|
81,852
|
|
|
20,968
|
|
||
Commercial general liability
|
|
—
|
|
|
35
|
|
||
Automobile
|
|
15,360
|
|
|
19,201
|
|
||
Flood
|
|
1,133
|
|
|
208
|
|
||
Total reinsurance recoverables
|
|
98,345
|
|
|
40,412
|
|
||
|
|
|
|
|
||||
Unallocated loss adjustment expenses
|
|
4,379
|
|
|
161
|
|
||
Gross liability for unpaid losses and LAE
|
|
$
|
230,515
|
|
|
$
|
158,110
|
|
•
|
Reported Loss Development Method
:
A reported loss development pattern is calculated based on historical loss development data, and this pattern is then used to project the latest evaluation of cumulative reported losses for each accident year or underwriting year, as appropriate, to ultimate levels;
|
•
|
Paid Development Method
:
A paid loss development pattern is calculated based on historical paid loss development data, and this pattern is then used to project the latest evaluation of cumulative paid losses for each accident year or underwriting year, as appropriate, to ultimate levels;
|
•
|
Expected Loss Ratio Method
:
Expected loss ratios are applied to premiums earned, based on historical company experience, or historical insurance industry results when company experience is deemed not to be sufficient; and
|
•
|
Bornhuetter-Ferguson Method
:
The results from the Expected Loss Ratio Method are essentially blended with either the Reported Loss Development Method or the Paid Development Method.
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(In thousands)
|
||||||
Senior Unsecured Floating Rate Notes, due December 31, 2027, net of deferred financing
|
|
|
|
||||
costs of $377
|
$
|
24,623
|
|
|
$
|
—
|
|
Senior Unsecured Fixed Rate Notes, due December 31, 2022, net of deferred financing
|
|
|
|
||||
costs of $302
|
19,698
|
|
|
—
|
|
||
Debt from consolidated VIE, due March 17, 2021, net of deferred financing costs of
|
|
|
|
||||
$70 and $91, respectively
|
4,930
|
|
|
4,909
|
|
||
Total long-term debt, net
|
$
|
49,251
|
|
|
$
|
4,909
|
|
|
|
Aggregate
|
||
For the Years Ending December 31,
|
|
Debt Maturities
|
||
|
|
(In thousands)
|
||
2018
|
|
$
|
—
|
|
2019
|
|
—
|
|
|
2020
|
|
—
|
|
|
2021
|
|
5,000
|
|
|
2022
|
|
20,000
|
|
|
Thereafter
|
|
25,000
|
|
|
Total debt maturities
|
|
50,000
|
|
|
Less: Deferred financing costs
|
|
(749
|
)
|
|
Total debt maturities, net
|
|
$
|
49,251
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(In thousands)
|
||||||||||
Federal:
|
|
|
|
|
|
|
||||||
Current
|
|
$
|
2,431
|
|
|
$
|
5,076
|
|
|
$
|
15,523
|
|
Deferred
|
|
810
|
|
|
(4,714
|
)
|
|
5,515
|
|
|||
Federal income tax expense
|
|
3,241
|
|
|
362
|
|
|
21,038
|
|
|||
State:
|
|
|
|
|
|
|
||||||
Current
|
|
494
|
|
|
674
|
|
|
2,489
|
|
|||
Deferred
|
|
(150
|
)
|
|
(494
|
)
|
|
562
|
|
|||
State income tax expense
|
|
344
|
|
|
180
|
|
|
3,051
|
|
|||
Total income tax expense
|
|
$
|
3,585
|
|
|
$
|
542
|
|
|
$
|
24,089
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(In thousands)
|
||||||||||
Computed expected tax expense provision, at federal rate
|
|
$
|
3,124
|
|
|
$
|
631
|
|
|
$
|
22,031
|
|
State tax, net of federal tax benefit
|
|
187
|
|
|
50
|
|
|
2,222
|
|
|||
Tax-exempt interest
|
|
(429
|
)
|
|
(571
|
)
|
|
(445
|
)
|
|||
Income subject to dividends-received deduction
|
|
(76
|
)
|
|
(219
|
)
|
|
(109
|
)
|
|||
Return to provision
|
|
329
|
|
|
183
|
|
|
119
|
|
|||
Rate changes
|
|
297
|
|
|
(38
|
)
|
|
—
|
|
|||
Executive compensation
|
|
185
|
|
|
382
|
|
|
203
|
|
|||
Meals and entertainment
|
|
76
|
|
|
130
|
|
|
—
|
|
|||
Other
|
|
(108
|
)
|
|
(6
|
)
|
|
68
|
|
|||
Total income tax expense
|
|
$
|
3,585
|
|
|
$
|
542
|
|
|
$
|
24,089
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(In thousands)
|
||||||
Deferred tax assets:
|
|
|
|
|
||||
Unearned premiums
|
|
$
|
9,543
|
|
|
$
|
13,975
|
|
Unpaid losses and loss adjustment expenses
|
|
1,050
|
|
|
1,869
|
|
||
Accrued expenses
|
|
689
|
|
|
692
|
|
||
Net operating loss carryforwards
|
|
1,567
|
|
|
7
|
|
||
Deferred revenue
|
|
—
|
|
|
2,637
|
|
||
Share-based compensation
|
|
255
|
|
|
—
|
|
||
Other
|
|
123
|
|
|
152
|
|
||
Total deferred tax assets
|
|
13,227
|
|
|
19,332
|
|
||
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
||||
Deferred acquisition costs
|
|
(11,742
|
)
|
|
(17,493
|
)
|
||
Depreciation and amortization
|
|
(548
|
)
|
|
(718
|
)
|
||
Unrealized gains on investment securities
|
|
(600
|
)
|
|
(1,277
|
)
|
||
Other
|
|
(30
|
)
|
|
(97
|
)
|
||
Total deferred tax liabilities
|
|
(12,920
|
)
|
|
(19,585
|
)
|
||
|
|
|
|
|
||||
Deferred tax asset (liability), net
|
|
$
|
307
|
|
|
$
|
(253
|
)
|
|
|
Aggregate Minimum
|
||
Year Ended December 31,
|
|
Lease Payments
|
||
|
|
(in thousands)
|
||
2018
|
|
$
|
780
|
|
2019
|
|
1,443
|
|
|
2020
|
|
1,488
|
|
|
2021
|
|
1,532
|
|
|
2022
|
|
1,579
|
|
|
Thereafter
|
|
5,938
|
|
|
Total
|
|
$
|
12,760
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(In thousands)
|
||||||||||
Restricted stock
|
|
$
|
2,846
|
|
|
$
|
3,831
|
|
|
$
|
2,930
|
|
Stock options
|
|
—
|
|
|
—
|
|
|
33
|
|
|||
Total share-based compensation expense
|
|
$
|
2,846
|
|
|
$
|
3,831
|
|
|
$
|
2,963
|
|
|
|
|
|
|
|
|
||||||
Intrinsic value of options exercised
|
|
$
|
3,714
|
|
|
$
|
13,732
|
|
|
$
|
1,124
|
|
Fair value of restricted stock vested
|
|
$
|
23,278
|
|
|
$
|
41,495
|
|
|
$
|
2,303
|
|
|
|
Number of Shares
|
|
Weighted Average
Option
Exercise Price
|
|||
Outstanding at January 1, 2015
|
|
219,285
|
|
|
$
|
3.79
|
|
Granted
|
|
—
|
|
|
$
|
—
|
|
Exercised
|
|
(44,652
|
)
|
|
$
|
3.81
|
|
Canceled
|
|
—
|
|
|
$
|
—
|
|
Outstanding at December 31, 2015
|
|
174,633
|
|
|
$
|
3.79
|
|
Granted
|
|
—
|
|
|
$
|
—
|
|
Exercised
|
|
(94,249
|
)
|
|
$
|
3.85
|
|
Canceled
|
|
(900
|
)
|
|
$
|
4.40
|
|
Outstanding at December 31, 2016
|
|
79,484
|
|
|
$
|
3.70
|
|
Granted
|
|
—
|
|
|
$
|
—
|
|
Exercised
|
|
(29,133
|
)
|
|
$
|
3.68
|
|
Canceled
|
|
—
|
|
|
$
|
—
|
|
Outstanding at December 31, 2017
|
|
50,351
|
|
|
$
|
3.72
|
|
|
|
Options Outstanding and Exercisable
|
||||||
|
|
|
|
Weighted Average
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
|
|
|
Shares Outstanding
|
|
Contractual Life
|
|
Weighted Average
|
|
Aggregate
|
Range of Exercise Price
|
|
and Exercisable
|
|
(years)
|
|
Exercise Price
|
|
Intrinsic Value
|
$2.45 - $4.40
|
|
50,351
|
|
3.79
|
|
$3.72
|
|
647,010
|
|
|
Number of Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|||
Outstanding at January 1, 2015
|
|
447,801
|
|
|
$
|
16.84
|
|
Granted
|
|
116,140
|
|
|
$
|
27.53
|
|
Vested
|
|
(145,134
|
)
|
|
$
|
15.87
|
|
Canceled
|
|
—
|
|
|
$
|
—
|
|
Outstanding at December 31, 2015
|
|
418,807
|
|
|
$
|
20.14
|
|
Granted
|
|
128,472
|
|
|
$
|
19.16
|
|
Vested
|
|
(204,916
|
)
|
|
$
|
20.25
|
|
Canceled
|
|
(5,160
|
)
|
|
20.58
|
|
|
Outstanding at December 31, 2016
|
|
337,203
|
|
|
$
|
19.69
|
|
Granted
|
|
106,454
|
|
|
$
|
17.95
|
|
Vested
|
|
(140,514
|
)
|
|
$
|
16.57
|
|
Canceled
|
|
(5,600
|
)
|
|
$
|
19.80
|
|
Outstanding at December 31, 2017
|
|
297,543
|
|
|
$
|
20.54
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
|
Before
Tax
|
|
Income
Tax
|
|
Net
|
|
Before
Tax
|
|
Income
Tax
|
|
Net
|
||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||
Accumulated other comprehensive income (loss),
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
beginning of period
|
|
$
|
3,324
|
|
|
$
|
(1,201
|
)
|
|
$
|
2,123
|
|
|
$
|
6,110
|
|
|
$
|
(2,247
|
)
|
|
$
|
3,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive income (loss) before reclassifications
|
|
7,511
|
|
|
(2,640
|
)
|
|
4,871
|
|
|
259
|
|
|
(111
|
)
|
|
148
|
|
||||||
Reclassification adjustment for realized gains included
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
in net income
|
|
(8,548
|
)
|
|
3,248
|
|
|
(5,300
|
)
|
|
(3,045
|
)
|
|
1,157
|
|
|
(1,888
|
)
|
||||||
|
|
(1,037
|
)
|
|
608
|
|
|
(429
|
)
|
|
(2,786
|
)
|
|
1,046
|
|
|
(1,740
|
)
|
||||||
Accumulated other comprehensive income (loss),
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
end of period
|
|
$
|
2,287
|
|
|
$
|
(593
|
)
|
|
$
|
1,694
|
|
|
$
|
3,324
|
|
|
$
|
(1,201
|
)
|
|
$
|
2,123
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(In thousands, except per share data)
|
||||||||||
Net income attributable to Federated National Holding Company shareholders
|
|
$
|
7,989
|
|
|
$
|
1,015
|
|
|
$
|
39,301
|
|
|
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding - basic
|
|
13,170
|
|
|
13,758
|
|
|
13,729
|
|
|||
Net income per share - basic
|
|
|
$0.61
|
|
|
|
$0.07
|
|
|
|
$2.86
|
|
|
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding - basic
|
|
13,170
|
|
|
13,758
|
|
|
13,729
|
|
|||
Dilutive effect of stock compensation plans
|
|
80
|
|
|
164
|
|
|
268
|
|
|||
Weighted average number of common shares outstanding - diluted
|
|
13,250
|
|
|
13,922
|
|
|
13,997
|
|
|||
Net income per share - diluted
|
|
$
|
0.60
|
|
|
$
|
0.07
|
|
|
$
|
2.81
|
|
|
|
|
|
|
|
|
||||||
Dividends per share
|
|
$
|
0.32
|
|
|
$
|
0.27
|
|
|
$
|
0.18
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(In thousands)
|
||||||
Assets:
|
|
|
||||||
Investments:
|
|
|
|
|
||||
Debt securities, available-for-sale, at amortized cost
|
|
$
|
25,111
|
|
|
$
|
27,100
|
|
Equity securities, available-for-sale, at fair value
|
|
1,173
|
|
|
1,604
|
|
||
Total investments
|
|
26,284
|
|
|
28,704
|
|
||
|
|
|
|
|
||||
Cash and cash equivalents
|
|
14,211
|
|
|
15,668
|
|
||
Reinsurance recoverable
|
|
3,323
|
|
|
—
|
|
||
Prepaid reinsurance premiums
|
|
2,481
|
|
|
1,070
|
|
||
Premiums receivable, net
|
|
1,184
|
|
|
1,584
|
|
||
Deferred acquisition costs
|
|
1,722
|
|
|
1,539
|
|
||
Other assets
|
|
2,322
|
|
|
371
|
|
||
Total assets
|
|
$
|
51,527
|
|
|
$
|
48,936
|
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
||||
Loss and loss adjustment expense reserves
|
|
6,356
|
|
|
1,659
|
|
||
Unearned premiums
|
|
8,752
|
|
|
8,406
|
|
||
Reinsurance payable
|
|
1,802
|
|
|
864
|
|
||
Debt
|
|
4,930
|
|
|
4,909
|
|
||
Other liabilities
|
|
1,825
|
|
|
1,026
|
|
||
Total liabilities
|
|
$
|
23,665
|
|
|
$
|
16,864
|
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
|
||||||||||||||||||||
|
|
As Reported
|
|
As Adjusted
|
|
As Reported
|
|
As Adjusted
|
|
As Reported
|
|
As Adjusted
|
|
|
|
|
||||||||||||||
|
|
(In thousands, except per share data)
|
||||||||||||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net premiums earned
|
|
$
|
78,493
|
|
|
$
|
81,660
|
|
|
$
|
83,159
|
|
|
$
|
83,554
|
|
|
$
|
78,663
|
|
|
$
|
80,764
|
|
|
$
|
87,503
|
|
|
|
Total revenue
|
|
$
|
92,923
|
|
|
$
|
93,054
|
|
|
$
|
97,563
|
|
|
$
|
98,159
|
|
|
$
|
95,892
|
|
|
$
|
98,697
|
|
|
$
|
101,752
|
|
|
|
Losses and loss adjustment expenses
|
|
$
|
50,831
|
|
|
$
|
56,899
|
|
|
$
|
54,956
|
|
|
$
|
56,417
|
|
|
$
|
72,935
|
|
|
$
|
75,367
|
|
|
$
|
58,874
|
|
|
|
Total costs and expenses
|
|
$
|
87,813
|
|
|
$
|
89,170
|
|
|
$
|
90,311
|
|
|
$
|
92,504
|
|
|
$
|
107,300
|
|
|
$
|
108,876
|
|
|
$
|
92,185
|
|
|
|
Net income (loss) attributable to Federated National Holding Company shareholders
|
|
$
|
3,145
|
|
|
$
|
2,422
|
|
|
$
|
4,945
|
|
|
$
|
3,995
|
|
|
$
|
(5,511
|
)
|
|
$
|
(4,724
|
)
|
|
$
|
6,296
|
|
|
|
Net income (loss) per share - basic
|
|
$
|
0.23
|
|
|
$
|
0.18
|
|
|
$
|
0.38
|
|
|
$
|
0.30
|
|
|
$
|
(0.42
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
0.48
|
|
|
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||||||||||||||||||
|
|
As Reported
|
|
As Adjusted
|
|
As Reported
|
|
As Adjusted
|
|
As Reported
|
|
As Adjusted
|
|
As Reported
|
|
As Adjusted
|
||||||||||||||||
|
|
(In thousands, except per share data)
|
||||||||||||||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net premiums earned
|
|
$
|
54,997
|
|
|
$
|
54,997
|
|
|
$
|
60,045
|
|
|
$
|
60,045
|
|
|
$
|
69,405
|
|
|
$
|
69,405
|
|
|
$
|
75,425
|
|
|
$
|
76,922
|
|
Total revenue
|
|
$
|
68,960
|
|
|
$
|
65,010
|
|
|
$
|
75,064
|
|
|
$
|
70,786
|
|
|
$
|
83,790
|
|
|
$
|
81,758
|
|
|
$
|
88,570
|
|
|
$
|
89,971
|
|
Losses and loss adjustment expenses
|
|
$
|
29,545
|
|
|
$
|
31,260
|
|
|
$
|
47,025
|
|
|
$
|
48,983
|
|
|
$
|
43,613
|
|
|
$
|
45,973
|
|
|
$
|
67,158
|
|
|
$
|
71,594
|
|
Total costs and expenses
|
|
$
|
53,562
|
|
|
$
|
51,770
|
|
|
$
|
73,249
|
|
|
$
|
71,090
|
|
|
$
|
82,250
|
|
|
$
|
78,914
|
|
|
$
|
104,590
|
|
|
$
|
103,948
|
|
Net income (loss) attributable to Federated National Holding Company shareholders
|
|
$
|
9,535
|
|
|
$
|
8,114
|
|
|
$
|
991
|
|
|
$
|
(405
|
)
|
|
$
|
1,394
|
|
|
$
|
2,099
|
|
|
$
|
(12,116
|
)
|
|
$
|
(8,793
|
)
|
Net income (loss) per share - basic
|
|
$
|
0.69
|
|
|
$
|
0.59
|
|
|
$
|
0.07
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.10
|
|
|
$
|
0.15
|
|
|
$
|
(0.89
|
)
|
|
$
|
(0.65
|
)
|
|
Six Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
June 30, 2017
|
|
September 30, 2017
|
||||||||||||
|
As Reported
|
|
As Adjusted
|
|
As Reported
|
|
As Adjusted
|
||||||||
Revenue:
|
(In thousands, except share and per share data)
|
||||||||||||||
Net premiums earned
|
$
|
161,652
|
|
|
$
|
165,214
|
|
|
$
|
240,315
|
|
|
$
|
245,978
|
|
Net investment income
|
4,878
|
|
|
4,878
|
|
|
7,481
|
|
|
7,481
|
|
||||
Net realized investment gains
|
2,543
|
|
|
2,543
|
|
|
8,644
|
|
|
8,644
|
|
||||
Direct written policy fees
|
9,571
|
|
|
9,519
|
|
|
13,222
|
|
|
13,617
|
|
||||
Other income
|
9,637
|
|
|
9,059
|
|
|
14,511
|
|
|
14,190
|
|
||||
Total revenue
|
188,281
|
|
|
191,213
|
|
|
284,173
|
|
|
289,910
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Losses and loss adjustment expenses
|
108,722
|
|
|
113,316
|
|
|
181,657
|
|
|
188,683
|
|
||||
Commissions and other underwriting expenses
|
57,336
|
|
|
58,497
|
|
|
86,578
|
|
|
86,883
|
|
||||
General and administrative expenses
|
9,695
|
|
|
9,695
|
|
|
14,737
|
|
|
14,737
|
|
||||
Interest expense
|
166
|
|
|
166
|
|
|
247
|
|
|
247
|
|
||||
Total costs and expenses
|
175,919
|
|
|
181,674
|
|
|
283,219
|
|
|
290,550
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes
|
12,362
|
|
|
9,539
|
|
|
954
|
|
|
(640
|
)
|
||||
Income taxes
|
4,573
|
|
|
3,423
|
|
|
350
|
|
|
(358
|
)
|
||||
Net income (loss)
|
7,789
|
|
|
6,116
|
|
|
604
|
|
|
(282
|
)
|
||||
Net loss attributable to non-controlling interest
|
(301
|
)
|
|
(301
|
)
|
|
(1,975
|
)
|
|
(1,975
|
)
|
||||
Net income attributable to Federated National
|
|
|
|
|
|
|
|
||||||||
Holding Company shareholders
|
$
|
8,090
|
|
|
$
|
6,417
|
|
|
$
|
2,579
|
|
|
$
|
1,693
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share attributable to Federated National
|
|
|
|
|
|
|
|
||||||||
Holding Company shareholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.61
|
|
|
$
|
0.48
|
|
|
$
|
0.20
|
|
|
$
|
0.13
|
|
Diluted
|
$
|
0.60
|
|
|
$
|
0.48
|
|
|
$
|
0.19
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares of common stock
|
|
|
|
|
|
|
|
||||||||
outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
13,305
|
|
|
13,305
|
|
|
13,211
|
|
|
13,211
|
|
||||
Diluted
|
13,405
|
|
|
13,405
|
|
|
13,302
|
|
|
13,302
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Dividends declared per share of common stock
|
$
|
0.16
|
|
|
$
|
0.16
|
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||||||||
|
March 31, 2017
|
|
June 30, 2017
|
|
September 30, 2017
|
||||||||||||||||||
|
As Reported
|
|
As Adjusted
|
|
As Reported
|
|
As Adjusted
|
|
As Reported
|
|
As Adjusted
|
||||||||||||
Revenue:
|
(In thousands, except share and per share data)
|
||||||||||||||||||||||
Net premiums earned
|
$
|
78,493
|
|
|
$
|
81,660
|
|
|
$
|
83,159
|
|
|
$
|
83,554
|
|
|
$
|
78,663
|
|
|
$
|
80,764
|
|
Net investment income
|
2,318
|
|
|
2,318
|
|
|
2,560
|
|
|
2,560
|
|
|
2,603
|
|
|
2,603
|
|
||||||
Net realized investment gains
|
(105
|
)
|
|
(105
|
)
|
|
2,648
|
|
|
2,648
|
|
|
6,101
|
|
|
6,101
|
|
||||||
Direct written policy fees
|
5,085
|
|
|
4,712
|
|
|
4,486
|
|
|
4,807
|
|
|
3,651
|
|
|
4,098
|
|
||||||
Other income
|
7,132
|
|
|
4,469
|
|
|
4,710
|
|
|
4,590
|
|
|
4,874
|
|
|
5,131
|
|
||||||
Total revenue
|
92,923
|
|
|
93,054
|
|
|
97,563
|
|
|
98,159
|
|
|
95,892
|
|
|
98,697
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Losses and loss adjustment expenses
|
50,831
|
|
|
56,899
|
|
|
54,956
|
|
|
56,417
|
|
|
72,935
|
|
|
75,367
|
|
||||||
Commissions and other underwriting expenses
|
32,279
|
|
|
27,568
|
|
|
30,197
|
|
|
30,929
|
|
|
29,242
|
|
|
28,386
|
|
||||||
General and administrative expenses
|
4,619
|
|
|
4,619
|
|
|
5,076
|
|
|
5,076
|
|
|
5,042
|
|
|
5,042
|
|
||||||
Interest expense
|
84
|
|
|
84
|
|
|
82
|
|
|
82
|
|
|
81
|
|
|
81
|
|
||||||
Total costs and expenses
|
87,813
|
|
|
89,170
|
|
|
90,311
|
|
|
92,504
|
|
|
107,300
|
|
|
108,876
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) before income taxes
|
5,110
|
|
|
3,884
|
|
|
7,252
|
|
|
5,655
|
|
|
(11,408
|
)
|
|
(10,179
|
)
|
||||||
Income taxes
|
1,938
|
|
|
1,435
|
|
|
2,635
|
|
|
1,988
|
|
|
(4,223
|
)
|
|
(3,781
|
)
|
||||||
Net income (loss)
|
3,172
|
|
|
2,449
|
|
|
4,617
|
|
|
3,667
|
|
|
(7,185
|
)
|
|
(6,398
|
)
|
||||||
Net income (loss) attributable to non-controlling interest
|
27
|
|
|
27
|
|
|
(328
|
)
|
|
(328
|
)
|
|
(1,674
|
)
|
|
(1,674
|
)
|
||||||
Net income (loss) attributable to Federated National
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Holding Company shareholders
|
$
|
3,145
|
|
|
$
|
2,422
|
|
|
$
|
4,945
|
|
|
$
|
3,995
|
|
|
$
|
(5,511
|
)
|
|
$
|
(4,724
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss) per share attributable to Federated
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
National Holding Company shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
$
|
0.23
|
|
|
$
|
0.18
|
|
|
$
|
0.38
|
|
|
$
|
0.30
|
|
|
$
|
(0.42
|
)
|
|
$
|
(0.36
|
)
|
Diluted
|
$
|
0.23
|
|
|
$
|
0.18
|
|
|
$
|
0.37
|
|
|
$
|
0.30
|
|
|
$
|
(0.42
|
)
|
|
$
|
(0.36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average number of shares of common stock
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
13,432
|
|
|
13,432
|
|
|
13,171
|
|
|
13,171
|
|
|
13,135
|
|
|
13,135
|
|
||||||
Diluted
|
13,559
|
|
|
13,559
|
|
|
13,256
|
|
|
13,256
|
|
|
13,135
|
|
|
13,135
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Dividends declared per share of common stock
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
|
|
|
(a)
|
The following documents are filed as part of this report.
|
|
|
|
|
(1)
|
Financial Statements
|
|
|
|
|
|
The following consolidated financial statements of the Company and the reports of independent auditors thereon are filed with this report:
|
|
|
|
|
|
Consolidated Balance Sheets as of December 31, 2017 and 2016
|
|
|
|
|
|
Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015.
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 2016 and 2015.
|
|
|
|
|
|
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2017, 2016 and 2015.
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015.
|
|
|
|
|
|
Notes to Consolidated Financial Statements for the years ended December 31, 2017, 2016 and 2015.
|
|
|
|
|
(2)
|
Financial Statement Schedules.
|
|
|
|
|
|
The following are included herein under Item 8, Financial Statements and Supplementary Data:
|
|
|
|
|
|
Schedule II, Condensed Financial Information of Registrant
|
|
|
|
|
|
Schedule V, Valuation and Qualifying Accounts
|
|
|
|
|
|
Schedule VI, Supplemental Information Concerning Insurance Operations
|
|
|
|
|
(3)
|
Exhibits.
|
Exhibit Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
Filed
Herewith
|
||
|
|
|
|
Form
|
Exhibit
|
Filing Date
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
10-Q
|
3.1
|
August 9, 2017
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
10-Q
|
3.2
|
August 9, 2017
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
SB-2
File No. 333-63623
|
4.1
|
October 27, 1998
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
|
8-K
|
4.1
|
January 3, 2018
|
|
|
|
|
|
|
|
|
|
|
4.3
|
|
|
8-K
|
4.2
|
January 3, 2018
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
|
8-K
|
4.3
|
January 3, 2018
|
|
|
|
|
|
|
|
|
|
4.5
|
|
|
8-K
|
4.4
|
January 3, 2018
|
|
|
|
|
|
|
|
|
|
|
4.6
|
|
|
8-K
|
4.5
|
January 3, 2018
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
10-Q/A
(Amendment No. 1)
|
10.2
|
May 26, 2017
|
|
|
|
|
|
|
|
|
|
|
10.2*
|
|
|
10-Q
|
10.2
|
November 9, 2017
|
|
|
|
|
|
|
|
|
|
|
10.3*
|
|
|
10-Q
|
10.1
|
November 9, 2017
|
|
|
|
|
|
|
|
|
|
|
10.4*
|
|
|
10-Q
|
10.3
|
November 9, 2017
|
|
|
|
|
|
|
|
|
|
|
10.5*
|
|
|
10-Q
|
10.4
|
November 9, 2017
|
|
|
|
|
|
|
|
|
|
|
10.6*
|
|
|
10-Q
|
10.5
|
November 9, 2017
|
|
|
|
|
|
|
|
|
|
|
10.7*
|
|
|
10-Q
|
10.6
|
November 9, 2017
|
|
|
|
|
|
|
|
|
|
|
10.8*
|
|
|
10-Q
|
10.7
|
November 9, 2017
|
|
|
|
|
|
|
|
|
|
|
10.9*
|
|
|
10-Q
|
10.8
|
November 9, 2017
|
|
|
|
|
|
|
|
|
|
|
10.10*
|
|
|
10-Q
|
10.9
|
November 9, 2017
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
|
10-Q
|
10.5
|
November 6, 2013
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
|
10-Q
|
10.6
|
November 6, 2013
|
|
|
|
|
|
|
|
|
|
|
10.13
|
|
|
10-Q
|
10.6
|
May 11, 2015
|
|
|
|
|
|
|
|
|
|
|
10.14
|
|
|
10-Q
|
10.1
|
May 11, 2015
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
|
10-Q
|
10.2
|
May 11, 2015
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
|
8-K
|
10.1
|
September 21, 2017
|
|
|
|
|
|
|
|
|
|
|
10.17+
|
|
|
10-Q
|
10.3
|
May 10, 2017
|
|
|
|
|
|
|
|
|
|
|
10.18+
|
|
|
10-Q
|
10.4
|
May 10, 2017
|
|
|
|
|
|
|
|
|
|
|
10.19+
|
|
|
10-K
|
10.30
|
March 16, 2017
|
|
|
|
|
|
|
|
|
|
|
10.20+
|
|
|
10-Q
|
10.5
|
May 10, 2017
|
|
|
|
|
|
|
|
|
|
|
10.21+
|
|
|
10-Q
|
10.2
|
May 10, 2017
|
|
|
|
|
|
|
|
|
|
|
10.22+
|
|
|
10-Q
|
10.1
|
May 10, 2017
|
|
|
|
|
|
|
|
|
|
|
10.23+
|
|
|
10-K
|
10.14
|
March 17, 2008
|
|
|
|
|
|
|
|
|
|
|
10.24+
|
|
|
8-K
|
10.1
|
August 7, 2013
|
|
|
|
|
|
|
|
|
|
|
10.25+
|
|
|
10-K
|
10.3
|
April 1, 2013
|
|
|
|
|
|
|
|
|
|
|
10.26+
|
|
|
Definitive Proxy Statement for 2009 Annual Meeting
|
Annex A
|
April 2, 2009
|
|
|
|
|
|
|
|
|
|
|
10.27+
|
|
|
8-K
|
10.1
|
January 20, 2012
|
|
|
|
|
|
|
|
|
|
|
10.28+
|
|
|
10-Q
|
10.3
|
May 11, 2015
|
|
|
|
|
|
|
|
|
|
|
10.29+
|
|
|
10-Q
|
10.4
|
May 11, 2015
|
|
|
|
|
|
|
|
|
|
|
10.30
|
|
|
8-K
|
10.2
|
January 20, 2012
|
|
|
|
|
|
|
|
|
|
|
10.31
|
|
|
10-Q
|
10.5
|
May 11, 2015
|
|
|
|
|
|
|
|
|
|
|
10.32+
|
|
|
10-K
|
10.31
|
March 16, 2017
|
|
|
|
|
|
|
|
|
|
|
10.33
|
|
|
8-K
|
2.1
|
November 28, 2017
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
23.1
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
101.INS**
|
|
XBRL Instance Document.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.SCH**
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.CAL**
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.LAB**
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.PRE**
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
X
|
|
FEDERATED NATIONAL HOLDING COMPANY
|
|
|
|
|
|
|
|
By:
|
/s/ Michael H. Braun
|
|
|
|
Michael H. Braun, Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
Signature
|
|
Title
|
Date
|
|
|
|
|
/s/ Michael H. Braun
|
|
Chief Executive Officer, President and Director
|
March 13, 2018
|
Michael H. Braun
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Ronald Jordan
|
|
Chief Financial Officer
|
March 13, 2018
|
Ronald A. Jordan
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Erick A. Fernandez
|
|
Chief Accounting Officer
|
March 13, 2018
|
Erick A. Fernandez
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Bruce F. Simberg
|
|
Chairman of the Board and Director
|
March 13, 2018
|
Bruce F. Simberg
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Jenifer G. Kimbrough
|
|
Director
|
March 13, 2018
|
Jenifer G. Kimbrough
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Thomas A. Rogers
|
|
Director
|
March 13, 2018
|
Thomas A. Rogers
|
|
|
|
|
|
|
|
|
|
|
|
/s/ William G. Stewart
|
|
Director
|
March 13, 2018
|
William G. Stewart
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Richard W. Wilcox, Jr.
|
|
Director
|
March 13, 2018
|
Richard W. Wilcox, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Roberta N. Young
|
|
Director
|
March 13, 2018
|
Roberta N. Young
|
|
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
ASSETS
|
|
(In thousands)
|
||||||
Investments in subsidiaries
|
|
$
|
220,901
|
|
|
$
|
280,277
|
|
Investments securities, available-for-sale, at fair value
|
|
15,826
|
|
|
31,750
|
|
||
Cash and cash equivalents
|
|
46,717
|
|
|
7,786
|
|
||
Deferred income taxes, net
|
|
—
|
|
|
—
|
|
||
Income taxes receivable
|
|
7,700
|
|
|
9,811
|
|
||
Other assets
|
|
1,938
|
|
|
2,031
|
|
||
Total assets
|
|
$
|
293,082
|
|
|
$
|
331,655
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
Due to subsidiaries
|
|
$
|
19,624
|
|
|
$
|
93,653
|
|
Deferred income taxes, net
|
|
(415
|
)
|
|
1,642
|
|
||
Long-term debt, net of deferred financing costs
|
|
44,321
|
|
|
—
|
|
||
Other liabilities
|
|
2,093
|
|
|
1,895
|
|
||
Total liabilities
|
|
65,623
|
|
|
97,190
|
|
||
|
|
|
|
|
||||
Preferred stock
|
|
—
|
|
|
—
|
|
||
Common stock
|
|
130
|
|
|
134
|
|
||
Additional paid-in capital
|
|
139,728
|
|
|
136,779
|
|
||
Accumulated other comprehensive income
|
|
1,770
|
|
|
1,941
|
|
||
Retained earnings
|
|
70,009
|
|
|
76,884
|
|
||
Total shareholders’ equity attributable to Federated National Holding Company shareholders
|
|
211,637
|
|
|
215,738
|
|
||
Non-controlling interest
|
|
15,822
|
|
|
18,727
|
|
||
Total shareholders’ equity
|
|
227,459
|
|
|
234,465
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
293,082
|
|
|
$
|
331,655
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(In thousands)
|
||||||||||
Revenue:
|
|
|
|
|
|
|
||||||
Management fees
|
|
$
|
2,611
|
|
|
$
|
2,492
|
|
|
$
|
2,489
|
|
Net investment income
|
|
501
|
|
|
623
|
|
|
609
|
|
|||
Equity in income of consolidated subsidiaries
|
|
16,902
|
|
|
8,550
|
|
|
69,657
|
|
|||
Total revenue
|
|
20,014
|
|
|
11,665
|
|
|
72,755
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses:
|
|
|
|
|
|
|
||||||
General and administrative expenses
|
|
11,087
|
|
|
9,862
|
|
|
9,810
|
|
|||
Total costs and expenses
|
|
11,087
|
|
|
9,862
|
|
|
9,810
|
|
|||
|
|
|
|
|
|
|
||||||
Income before income taxes
|
|
8,927
|
|
|
1,803
|
|
|
62,945
|
|
|||
Income taxes
|
|
3,585
|
|
|
542
|
|
|
24,089
|
|
|||
Net income
|
|
5,342
|
|
|
1,261
|
|
|
38,856
|
|
|||
Net (loss) income attributable to non-controlling interest
|
|
(2,647
|
)
|
|
246
|
|
|
(445
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net income attributable to Federated National Holding Company shareholders
|
|
$
|
7,989
|
|
|
$
|
1,015
|
|
|
$
|
39,301
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(In thousands)
|
||||||||||
Cash flow from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
5,342
|
|
|
$
|
1,261
|
|
|
$
|
38,856
|
|
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
||||||
Equity in undistributed income of consolidated subsidiaries
|
|
(16,902
|
)
|
|
(10,691
|
)
|
|
(70,321
|
)
|
|||
Depreciation and amortization
|
|
88
|
|
|
73
|
|
|
64
|
|
|||
Share-based compensation
|
|
2,846
|
|
|
4,420
|
|
|
4,527
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Deferred income taxes, net of other comprehensive income
|
|
(2,057
|
)
|
|
2,127
|
|
|
(153
|
)
|
|||
Income taxes receivable, net
|
|
6,411
|
|
|
2,978
|
|
|
24,352
|
|
|||
Capital contribution payable
|
|
—
|
|
|
—
|
|
|
(18,501
|
)
|
|||
Due to subsidiaries
|
|
20,468
|
|
|
23,574
|
|
|
6,430
|
|
|||
Other, net
|
|
1,450
|
|
|
3,786
|
|
|
2,057
|
|
|||
Net cash provided by (used in) operating activities
|
|
17,646
|
|
|
27,528
|
|
|
(12,689
|
)
|
|||
|
|
|
|
|
|
|
||||||
Cash flow from investing activities:
|
|
|
|
|
|
|
||||||
Capital contributions to consolidated subsidiaries, net
|
|
(25,000
|
)
|
|
—
|
|
|
(32,743
|
)
|
|||
Sales, maturities and redemptions of investments securities
|
|
42,979
|
|
|
76,928
|
|
|
38,612
|
|
|||
Purchases of investment securities
|
|
(26,828
|
)
|
|
(83,724
|
)
|
|
(21,354
|
)
|
|||
Purchases of property and equipment
|
|
(102
|
)
|
|
(299
|
)
|
|
(113
|
)
|
|||
Net cash used in investing activities
|
|
(8,951
|
)
|
|
(7,095
|
)
|
|
(15,598
|
)
|
|||
|
|
|
|
|
|
|
||||||
Cash flow from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
|
45,000
|
|
|
—
|
|
|
—
|
|
|||
Non-controlling interest equity investment
|
|
—
|
|
|
—
|
|
|
18,743
|
|
|||
Tax impact related to share-based compensation
|
|
—
|
|
|
589
|
|
|
1,564
|
|
|||
Issuance of common stock for share-based awards
|
|
103
|
|
|
361
|
|
|
171
|
|
|||
Purchases of Federated National Holding Company common stock
|
|
(10,616
|
)
|
|
(11,317
|
)
|
|
—
|
|
|||
Dividends paid
|
|
(4,251
|
)
|
|
(4,677
|
)
|
|
(1,847
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
30,236
|
|
|
(15,044
|
)
|
|
18,631
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
38,931
|
|
|
5,389
|
|
|
(9,656
|
)
|
|||
Cash and cash equivalents at beginning of period
|
|
7,786
|
|
|
2,397
|
|
|
12,053
|
|
|||
Cash and cash equivalents at end of period
|
|
$
|
46,717
|
|
|
$
|
7,786
|
|
|
$
|
2,397
|
|
|
|
|
|
|
|
Charged to
|
|
|
|
|
||||||||
|
|
|
|
Balance at
|
|
Costs and
|
|
|
|
Balance at
|
||||||||
Year
|
|
Description
|
|
January 1,
|
|
Expenses
|
|
Deductions
|
|
December 31,
|
||||||||
|
|
|
|
(in thousands)
|
||||||||||||||
2017
|
|
Allowance for uncollectible reinsurance recoverable
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Allowance for uncollectible premiums receivable
|
|
$
|
55
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
70
|
|
2016
|
|
Allowance for uncollectible reinsurance recoverable
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Allowance for uncollectible premiums receivable
|
|
$
|
302
|
|
|
$
|
(219
|
)
|
|
$
|
(28
|
)
|
|
$
|
55
|
|
2015
|
|
Allowance for uncollectible reinsurance recoverable
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Allowance for uncollectible premiums receivable
|
|
$
|
148
|
|
|
$
|
192
|
|
|
$
|
(38
|
)
|
|
$
|
302
|
|
|
|
|
|
At December 31,
|
|
For the Year Ended December 31,
|
|
|||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
Loss and
|
|
|
|
|
|
|
|
Claim and Claim
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
Loss
|
|
|
|
|
|
|
|
Adjustment Expenses
|
|
Amortization
|
|
Paid Claims
|
|
|
||||||||||||||||||||||
|
|
|
|
Deferred
|
|
Adjustment
|
|
|
|
|
|
Net
|
|
Incurred Related to
|
|
of Deferred
|
|
and Claim
|
|
Net
|
||||||||||||||||||||||
|
|
|
|
Acquisition
|
|
Expense
|
|
Unearned
|
|
Earned
|
|
Investment
|
|
Current
|
|
Prior
|
|
Acquisition
|
|
Adjustment
|
|
Premiums
|
||||||||||||||||||||
Year
|
|
Line of Business
|
|
Costs
|
|
Reserves
|
|
Premiums
|
|
Premiums
|
|
Income
|
|
Year
|
|
Year
|
|
Costs
|
|
Expenses
|
|
Written
|
||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||||||||||||||||||||
2017
|
|
Property and Casualty Insurance
|
|
$
|
40,893
|
|
|
$
|
230,515
|
|
|
$
|
294,423
|
|
|
$
|
333,481
|
|
|
$
|
10,254
|
|
|
$
|
245,545
|
|
|
$
|
2,012
|
|
|
$
|
87,310
|
|
|
$
|
233,085
|
|
|
$
|
342,893
|
|
2016
|
|
Property and Casualty Insurance
|
|
$
|
41,892
|
|
|
$
|
158,110
|
|
|
$
|
294,022
|
|
|
$
|
261,369
|
|
|
$
|
9,063
|
|
|
$
|
201,704
|
|
|
$
|
(3,894
|
)
|
|
$
|
57,452
|
|
|
$
|
170,322
|
|
|
$
|
319,499
|
|
2015
|
|
Property and Casualty Insurance
|
|
$
|
17,666
|
|
|
$
|
97,706
|
|
|
$
|
253,960
|
|
|
$
|
213,020
|
|
|
$
|
7,226
|
|
|
$
|
120,005
|
|
|
$
|
(7,295
|
)
|
|
$
|
31,340
|
|
|
$
|
90,436
|
|
|
$
|
225,254
|
|
1 Year FedNat Chart |
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